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 811-05309
Nuveen Investment Funds, Inc.
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive, Chicago, IL 60606
(Address of principal executive offices) (Zip code)
Kathleen L. Prudhomme
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: September 30
Date of reporting period: September 30, 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.
Mutual Funds |
Nuveen Non-Traditional
Strategies Fund |
| Annual Report September 30, 2016 |
Share Class / Ticker Symbol | ||||||||||||
Fund Name | Class A | Class C | Class I | |||||||||
| ||||||||||||
Nuveen Tactical Market Opportunities Fund | NTMAX | NTMCX | FGTYX |
| ||||||||||||
| ||||||||||||
Life is Complex. | ||||||||||||
Nuveen makes things e-simple. | ||||||||||||
It only takes a minute to sign up for e-Reports. Once enrolled, you’ll receive an e-mail as soon as your Nuveen Fund information is ready. No more waiting for delivery by regular mail. Just click on the link within the e-mail to see the report and save it on your computer if you wish. | ||||||||||||
Free e-Reports right to your e-mail! | ||||||||||||
www.investordelivery.com If you receive your Nuveen Fund distributions and statements from your financial advisor or brokerage account. | ||||||||||||
or | www.nuveen.com/accountaccess If you receive your Nuveen Fund distributions and statements directly from Nuveen.
Must be preceded by or accompanied by a prospectus.
NOT FDIC INSURED MAY LOSE VALUE | |||||||||||
| ||||||||||||
Table
4 | ||||
5 | ||||
8 | ||||
9 | ||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
17 | ||||
18 | ||||
19 | ||||
20 | ||||
22 | ||||
33 | ||||
34 | ||||
35 | ||||
40 |
NUVEEN | 3 |
to Shareholders
Dear Shareholders,
After a sluggish first half of 2016, the U.S. economy gained some momentum in the third quarter. In fact, it was the economy’s strongest quarterly acceleration in two years, propelled by healthy consumer spending, a temporary surge in exports and a turnaround in inventories. As the year winds down, 2016 looks on track to deliver the same steady-but-slow growth that has characterized the seven-year recovery.
A year ago, the U.S. Federal Reserve (Fed) took the first step toward policy “normalization” by raising its benchmark interest rate at its December 2015 meeting. Speculation about the Fed’s intentions since then has been a strong influence on the markets. Currently, with the economy modestly growing, the return to “full” employment and a recent uptick in inflation, the Fed may be encouraged to again raise its target rate at the December 2016 meeting, after remaining on hold for nearly a year.
Global conditions continue to look subdued by comparison. Investors continue to adjust to the idea of a slower Chinese economy, which has helped commodity prices stabilize and lift global inflation expectations. The U.K.’s June 23rd “Brexit” vote to leave the European Union introduced a new set of economic and political uncertainties to the already fragile conditions across Europe. Moreover, there are growing concerns that global central banks’ unprecedented efforts to revive growth may be showing signs of fatigue. Interest rates are currently negative in Europe and Japan and near or at zero in the U.S., U.K. and elsewhere; nonetheless, growth has remained subdued.
Given muted global growth, the risk of policy errors by central banks around the world, the unfolding Brexit process and an uncertain political outlook with the U.S. transitioning to a new presidential administration followed by key elections across Europe in 2017, we anticipate that turbulence remains on the horizon for the time being. In this environment, Nuveen remains committed to both managing downside risks and seeking upside potential. If you’re concerned about how resilient your investment portfolio might be, we encourage you to talk to your financial advisor. 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
November 22, 2016
4 | NUVEEN |
Comments
Nuveen Tactical Market Opportunities Fund
The Nuveen Tactical Market Opportunities Fund features portfolio management by Nuveen Asset Management, LLC (NAM), an affiliate of Nuveen Investments, Inc. During this reporting period, the team of managers included Keith B. Hembre, CFA, Derek B. Bloom, CFA, and David A. Friar.
Nuveen Tactical Market Opportunities Fund will be liquidated after the close of business on or near January 24, 2017.
Here the portfolio managers discuss economic and equity market conditions, key investment strategies and the performance of the Fund for the twelve-month reporting period ended September 30, 2016.
What factors affected the U.S. economy and financial markets during the twelve-month reporting period ended September 30, 2016?
During the twelve-month reporting period, U.S. economic data continued to point to subdued growth, rising employment and tame inflation. Economic activity has continued to hover around a 2% annualized growth rate since the end of the Great Recession in 2009, as measured by real gross domestic product (GDP), which is the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes. For the third quarter of 2016, real GDP increased at an annual rate of 2.9%, as reported by the “advance” estimate of the Bureau of Economic Analysis, up from 1.4% in the second quarter of 2016.
The labor and housing markets improved over the reporting period, although the momentum appeared to slow toward the end of the reporting period. As reported by the Bureau of Labor Statistics, the unemployment rate was little changed at 5.0% in September 2016 from 5.1% in September 2015, and job gains averaged slightly above 200,000 per month for the past twelve months. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.3% annual gain in August 2016 (most recent data available at the time this report was prepared) (effective July 26, 2016, the S&P/Case-Shiller U.S. National Home Price Index was renamed the S&P CoreLogic Case-Shiller U.S. National Home Price Index). The 10-City and 20-City Composites reported year-over-year increases of 4.3% and 5.1%, respectively.
Consumers, whose purchases comprise the largest component of the U.S. economy, benefited from employment growth and firming wages over the twelve-month reporting period. Although consumer spending gains were rather muted in the latter half of 2015, a spending surge in the second quarter of 2016 helped offset weaker business investment. A backdrop of low inflation also contributed to consumers’ willingness to buy. The Consumer Price Index (CPI) rose 1.5% over the twelve-month reporting period ended September 2016 on a seasonally adjusted basis, as reported by the U.S. Bureau of Labor Statistics. The core CPI (which excludes food and energy) increased 2.2% during the same period, slightly above the Fed’s unofficial longer term inflation objective of 2.0%.
Business investment remained weak over the reporting period. Corporate earnings growth slowed during 2015, reflecting an array of factors ranging from weakening demand amid sluggish U.S. and global growth to the impact of falling commodity prices and a strong U.S. dollar. Although energy prices rebounded off their lows and the dollar pared some of its gains in the first half of 2016, caution prevailed. Financial market turbulence in early 2016 and political uncertainties surrounding the U.K.’s “Brexit” vote to leave the European Union (EU) and the upcoming U.S. presidential election dampened capital spending.
With the current expansion considered to be on solid footing, the U.S. Federal Reserve (Fed) prepared to raise one of its main interest rates, which had been held near zero since December 2008, to help stimulate the economy. After delaying the rate change for
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 Fund disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein.
Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.
NUVEEN | 5 |
Portfolio Managers’ Comments (continued)
most of 2015 because of a weak global economic growth outlook, the Fed announced in December 2015 that it would raise the fed funds target rate by 0.25%. The news was widely expected and therefore had a relatively muted impact on the financial markets.
Although the Fed continued to emphasize future rate increases would be gradual, investors worried about the pace. This, along with uncertainties about the global macroeconomic backdrop, another downdraft in oil prices and a spike in stock market volatility triggered significant losses across assets that carry more risk and fueled demand for “safe haven” assets such as Treasury bonds and gold from January through mid-February. However, fear began to subside in March 2016, supporting assets that carry more risk. The Fed held the rate steady at both the January and March policy meetings, as well as lowered its expectations to two rate increases in 2016 from four. Also boosting investor confidence were reassuring statements from the European Central Bank (ECB), some positive economic data in the U.S. and abroad, a retreat in the U.S. dollar and an oil price rally. At its April 2016 meeting, the Fed indicated its readiness to raise its benchmark rate at the next policy meeting in June. However, a very disappointing jobs growth report in May and the significant uncertainty surrounding the U.K.’s Brexit vote led the Fed to again hold rates steady at its June and July meetings. At the September meeting, the Fed indicated the case for increasing rates had strengthened but left the rate unchanged in anticipation of further progress toward its objectives. The Fed’s policy making committee has one more meeting in 2016, with expectations favoring a rate hike potentially in December.
The U.K.’s vote on June 23, 2016 to leave the EU caught investors off guard. In response, U.K. sterling fell precipitously, global equities were turbulent and safe-haven assets such as gold, the U.S. dollar and U.S. Treasuries saw notable inflows. However, the markets stabilized fairly quickly, buoyed by reassurances from global central banks and a perception that the temporary price rout presented an attractive buying opportunity. July and August were relatively calm in the markets, then some headwinds resumed in September. Concerns about central bank actions, in the U.S., Europe and Japan, as well as an escalation of European banking sector woes and uncertainty about the U.S. presidential election triggered elevated volatility in the markets during the final month of the reporting period. After the close of the reporting period similar to the Brexit response, the unexpected result of the U.S. election contributed to choppy trading across global markets.
Despite several bouts of significant volatility, the U.S. equity market ended the period with strong gains of 15.43% as measured by the S&P 500® Index. Small-cap stocks in the U.S. recovered from last year’s underperformance, turning in results in line with their large-cap brethren with a 15.47% return according to the Russell 2000® Index. Across the capitalization spectrum in the U.S., investors favored the relatively safer, more defensive areas of the market for much of the reporting period, leading value stocks to strongly outperform growth stocks during this reporting period. Emerging markets outpaced other developed markets overseas as investors returned to this asset class in the second half of the reporting period, largely due to commodity price stability and the ongoing search for yield and returns. The MSCI Emerging Markets Index advanced 17.21%. Meanwhile, in developed overseas markets, Europe struggled and turned in slightly negative results, which were a drag on the overall return of 7.06% for the MSCI EAFE Index.
In fixed income markets, the Treasury yield curve flattened during the reporting period as rates went up on the short end, while longer rates moved lower, resulting in outperformance for longer maturity Treasuries. The broader bond market, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, posted a return of 5.19% for the reporting period. Corporate bonds recovered from the risk-off environment earlier in the reporting period on the back of rising commodity prices, slowing U.S. economic growth and the Fed’s more dovish tone regarding future rate hikes. After widening out significantly through mid-February, spreads tightened over the remainder of the reporting period and corporate bonds, particularly high yield, turned in strong results. The Bloomberg Barclays High Yield Index reported a gain of 12.73% during the reporting period.
How did the Fund perform during the twelve-month reporting period ended September 30, 2016?
The table in the Fund Performance and Expense Ratios section of this report provides total return performance information for the Fund for the one-year, five-year and since inception periods ended September 30, 2016. Comparative performance information is provided for the Fund’s Class A Shares at net asset value (NAV). The Fund’s Class A Shares at NAV underperformed the BofA/Merrill Lynch 3-Month U.S. Treasury Bill Index and the Lipper classification average over the twelve-month reporting period. Shareholders should note that the performance of the Lipper classification represents the overall average of returns for funds that invest in a wide range of asset classes, making direct comparisons less meaningful.
What strategies were used to manage the Fund and how did these strategies influence performance for the twelve-month reporting period ended September 30, 2016?
The Fund is an absolute return product designed to generate returns through tactical asset allocation positions that seeks to outperform the BofA/Merrill Lynch 3-Month U.S. Treasury Bill Index by 400 basis points on an annualized basis. To accomplish the Fund’s
6 | NUVEEN |
goal, we are able to invest in a variety of asset classes, long or short, throughout the world including alternative asset classes, such as currencies and commodities, and investment tools such as the VIX (Chicago Board Options Exchange (CBOE) Volatility Index) to take advantage of market opportunities, to further diversify the Fund or as part of our volatility management strategies. We focus on generating returns in the portfolio in three ways: income oriented positions, market directional positions and long and short relative value positions (spread trades) that produce returns through differential performance. The Fund may gain exposure to its asset classes by: investing in derivative instruments and exchange-traded funds (ETFs); creating custom baskets of securities; and investing directly in U.S. Treasury obligations, non-U.S. government obligations that have an investment grade rating from at least one rating agency and money market funds.
During the twelve-month reporting period, the Fund underperformed primarily due to its net short equity exposure as well as its long U.S. and Australian Treasuries/short German Bunds positioning. As anticipated, the equity market was more volatile during this reporting period resulting from events such as a rate hike by the Fed in December 2015 and the unexpected Brexit decision by U.K. voters in June 2016. Stocks dropped sharply in early 2016 in response to the Fed rate hike as well as plunging equity markets in China. The Fund performed very well during this reporting period and we took actions such as writing put options to lock in gains and partially cover the net short equity positioning. Equity markets, however, responded swiftly to slower rate increase expectations from the Fed and rallied into late June. After the Brexit vote, stocks fell sharply for several days, but once again spiked in response to further monetary stimulus from global central banks. Since then, stocks have drifted lower as a Fed rate hike in December 2016 appears more likely. We have maintained the Fund’s net short equity positions because we see very limited downside risk in holding that position, given the mature state of the economic and earnings cycle, historically high valuations and a constrained set of prospective policy options for global central banks moving forward.
We largely viewed global fixed income markets as unattractive from a long-only standpoint given the extremely low level of policy rates and government bond yields on a global basis. Therefore, we positioned the Fund with long U.S. and Australian Treasury exposure/short German Bund exposure to try to capture income and potential return from spread tightening among the regions. However, the surprise moves by the Bank of Japan and the ECB to negative policy rates in the first quarter of 2016 temporarily pushed these spreads back near the top end of their respective ranges and weighed on the Fund’s performance. We don’t see further scope for negative rate moves by the ECB or the Bank of Japan going forward. Long-only fixed income exposure is asymmetrically skewed toward potential losses if yields rise from current levels, while at the same time, the potential for further bond price increases is limited in most markets and income levels are largely insignificant for most global bonds. Given that U.S. and Australian bonds have much higher yields than European and Japanese bonds, these markets are more likely to see a substantial decline in yields in the event of a global “flight to quality” or to see yields increase less in a rising rate environment. Therefore, we anticipate these spreads will tighten over the balance of the year and moderately increased the Fund’s exposure to long U.S. and Australian Treasury/short German Bund positioning. Because of where we are in the credit cycle, we refrained from exposure to corporate bonds in the Fund because downgrades are outpacing upgrades and default rates continue to climb.
Natural gas prices fell sharply during the reporting period, reaching their lowest levels since the late 1990s in early March. Much of the weakness reflected subdued demand as a result of the warmest winter on record in North America. While the Fund’s long position in natural gas was a small component of its overall portfolio, the price decline was so significant that this was a notable detractor from performance during the reporting period. After we decided to maintain positioning, however, natural gas prices rose significantly throughout the summer months and the Fund recovered most of the underperformance from earlier in the reporting period.
Other positions in the portfolio largely reflected relative value opportunities that were expressed in long/short positions. After closing the Fund’s short Russell 2000® Index position versus the overall S&P 500® Index earlier in the year, we reinstated this trade following the large spike in risk assets in July. We maintained several other positions including: short consumer discretionary sector versus the overall S&P 500® Index, short S&P 500® Index versus the MSCI EAFE Index and short Nasdaq Index versus the overall S&P 500® Index. We also held long positions in select countries relative to the MSCI EAFE Index. We believe each of these positions offers relative value return potential that is independent of broader market performance. We also began to incrementally re-establish a long U.S. Dollar Index position following weakness in the first quarter.
Throughout the reporting period, we continued to invest in equity, interest rate and currency futures contracts, which were used to implement various absolute return, tactical market and hedging strategies in the Fund. Overall these futures contracts were a detractor to the Fund’s performance during the reporting period. We also utilized equity put and call options to generate returns and manage the Fund. Through these put and call options, we were able to implement our views on the direction of implied market volatility as well as to hedge against a decline or increase in the market, respectively. Overall, the put options were also a contributor to performance, while the call options had no meaningful effect on performance.
NUVEEN | 7 |
and Dividend Information
Risk Considerations
Mutual fund investing involves risk; principal loss is possible. There is no guarantee that the Fund will achieve its investment objective and the portfolio managers’ asset allocation decisions may adversely affect Fund performance. Absolute return funds are not intended to outperform stocks and bonds during market rallies. The Fund is exposed to the risks of the underlying derivative instruments, ETFs, U.S. Treasury bonds, foreign government bonds, commodities, and short-term securities that may be held in the portfolio. These risks include market risk, frequent trading risk, liquidity risk, interest rate risk, and credit risk. The credit risk and liquidity risk is heightened for non-investment grade or high yield securities. The use of derivatives involves substantial financial risks and transaction costs. Commodities may be highly volatile and foreign investments are subject to additional risks including currency fluctuations, and economic or political instability. These risks are magnified in emerging markets. In addition, the Fund will bear its proportionate share of any fees and expenses paid by the ETFs in which it invests.
Dividend Information
The Fund pays an annual dividend out of its income earned, net of expenses (net investment income). During the current fiscal period, dividend payments earned by the Fund were re-characterized by the ETFs in which the Fund invests as either a capital gain distribution or a return of capital. Due to the ETF re-characterization, the Fund distributed an amount greater than its net investment income, which resulted in the Fund re-characterizing a portion of its distributions for each class of the Fund’s shares as a return of capital, as presented in the table below.
The following table presents the distributions for the Fund for the fiscal year ended September 30, 2016.
For year ended September 30, 2016 | Class A Shares | Class C Shares | Class I Shares | |||||||||
Regular annual per share distribution | ||||||||||||
From net investment income | $ | 0.1615 | $ | 0.0815 | $ | 0.1815 | ||||||
Return of capital | 0.0185 | 0.0185 | 0.0185 | |||||||||
Total | $ | 0.1800 | $ | 0.1000 | $ | 0.2000 |
For financial reporting purposes, the composition and per share amounts of the 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 the 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 |
and Expense Ratios
The Fund Performance and Expense Ratios for the Fund are shown within this section of the report.
Returns quoted represent past performance, which is no guarantee of future results. Investment returns and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than their original cost. Current performance may be higher or lower than the performance shown. Total returns for a period of less than one year are not annualized. Returns at net asset value (NAV) would be lower if the sales charge were included. Returns assume reinvestment of dividends and capital gains. For performance, current to the most recent month-end visit Nuveen.com or call (800) 257-8787.
Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
Returns may reflect fee waivers and/or expense reimbursements by the investment adviser during the periods presented. If any such waivers and/or reimbursements had not been in place, returns would have been reduced. See Notes to Financial Statements, Note 7—Management Fees and Other Transactions with Affiliates for more information.
Returns reflect differences in sales charges and expenses, which are primarily differences in distribution and service fees, and assume reinvestment of dividends and capital gains.
Comparative index and Lipper return information is provided for Class A Shares at NAV only.
The expense ratios shown reflect total operating expenses (before fee waivers and/or expense reimbursements, if any) as shown in the most recent prospectus. The expense ratios include management fees and other fees and expenses.
NUVEEN | 9 |
Fund Performance and Expense Ratios (continued)
Nuveen Tactical Market Opportunities Fund
Refer to the first page of this Fund Performance and Expense Ratios section for further explanation of the information included within this section. Refer to the Glossary of Terms Used in this Report for definitions of terms used within this section.
Fund Performance
Average Annual Total Returns as of September 30, 20161
Average Annual | ||||||||||||
1-Year | 5-Year | Since Inception | ||||||||||
Class A Shares at NAV | (3.87)% | (0.68)% | 0.23% | |||||||||
Class A Shares at maximum Offering Price | (9.37)% | (1.85)% | (0.83)% | |||||||||
BofA/Merrill Lynch 3-Month U.S. Treasury Bill Index | 0.27% | 0.10% | 0.11% | |||||||||
Lipper Flexible Portfolio Funds Classification Average | 7.97% | 6.68% | 4.33% | |||||||||
Class C Shares | (4.61)% | (1.45)% | (0.53)% | |||||||||
Class I Shares | (3.69)% | (0.43)% | 1.42% |
Since inception returns for Class A and Class C Shares and for the comparative index and Lipper category average, are from 2/24/11. Since inception returns for Class I Shares are from 12/30/09. Indexes and Lipper averages are not available for direct investments.
Class A Shares have a maximum 5.75% sales charge (Offering Price). Class A Share purchases of $1 million or more are sold at net asset value without an up-front sales charge but may be subject to a contingent deferred sales charge (CDSC), also known as a back-end sales charge, if redeemed within eighteen months (twelve months prior to November 1, 2015) of purchase. Such CDSC will be equal to 1% for any shares purchased on or after November 1, 2015 if redeemed within eighteen months of purchase. Class C Shares have a 1% CDSC for redemptions within less than twelve months, which is not reflected in the one-year total return. Class I Shares have no sales charge and may be purchased under limited circumstances or by specified classes of investors.
Expense Ratios as of Most Recent Prospectus
Share Class | ||||||||||||
Class A | Class C | Class I | ||||||||||
Expense Ratios2 | 1.38% | 2.14% | 1.14% |
1 | The Fund is an absolute return product designated to generate returns through tactical asset allocation positions that seeks to outperform the BofA/Merrill Lynch 3-Month U.S. Treasury Bill Index by 400 basis points over a reasonable period of time. |
2 | The expense ratios include acquired fund fees and expenses of 0.16%, which reflect the fees and expenses of the exchange-traded funds in which the Fund invests. |
10 | NUVEEN |
Growth of an Assumed $10,000 Investment as of September 30, 2016 – Class A Shares
The graphs do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or the redemption of Fund shares.
NUVEEN | 11 |
Summaries as of September 30, 2016
This data relates to the securities held in the Fund’s portfolio of investments as of the end of this reporting period. It should not be construed as a measure of performance for the Fund itself. Holdings are subject to change.
A copy of the most recent financial statements for the exchange-traded funds in which the Fund invests can be obtained directly from the Securities and Exchange Commission on its website at http://www.sec.gov.
Nuveen Tactical Market Opportunities Fund
Portfolio Allocation2,3
Long-Fixed Income | 26.4% | |||
Short-Fixed Income | (36.4)% | |||
Net Fixed Income | (10.0)% | |||
Long Equity | 3.7% | |||
Short Equity | (34.0)% | |||
Net Equity | (30.3)% | |||
Long Currency | 7.7% | |||
Short Currency | (0.6)% | |||
Net Currency | 7.1% | |||
Long Commodity | 2.1% |
Fund Allocation1
(% of net assets)
Exchange-Traded Funds | 7.1% | |||
Long-Term U.S. Government and Agency Obligations | 2.1% | |||
Money Market Funds | 18.4% | |||
Short-Term U.S. Government and Agency Obligations | 72.4% | |||
Other Assets Less Liabilities | 0.0% | |||
Net Assets | 100% |
Top Five Long Positions5
Australian 10-Year Bond Future | 14.0% | |||
U.S. 10-Year Treasury Note Future | 12.5% | |||
U.S. Dollar Index Future | 5.1% | |||
United States Natural Gas Fund, LP | 2.1% | |||
PowerShares DB US Dollar Index Bullish Fund | 2.0% |
Top Five Short Positions5
Euro-Bund Future | (33.8)% | |||
Russell 2000 Mini Index Future | (10.5)% | |||
S&P 500 E-Mini Future | (8.9)% | |||
S&P 500 E-Mini Utilities Sector Future | (6.4)% | |||
NASDAQ 100 E-Mini Future | (3.6)% |
Total Exposure4
Total Long Exposure | 39.9% | |||
Total Short Exposure | (71.0)% | |||
Total Net Exposure | (31.1)% | |||
Total Gross Exposure | 110.9% |
1 | Fund Allocation reports the percentage breakdown of the Fund’s cash investment as shown in the Fund’s portfolio of investments. |
2 | Portfolio Allocation reflects the investment exposure of the Fund by asset class investment category, including both cash positions and futures positions. The table reflects the market value of long-term cash investments and the notional value of both long and short futures contracts as presented in the Fund’s portfolio of investments as a percentage of total investments, but does not reflect the exposure associated with options. |
3 | Percentages are calculated based upon the market value of total investments as presented in the Fund’s portfolio of investments. |
4 | Net exposure provides an indication of the Fund’s directional exposure to the market at period end and reflects the value of the portfolio’s long positions minus the short positions across asset class investment categories. This is an indication of the Fund’s sensitivity to market movements. Gross exposure provides an indication of the total gross value of the Fund’s market investment exposure reflecting a summation of the absolute value of all long and short positions in the portfolio across asset class investment categories. This is an indication of the scale of the Fund’s total investment positions regardless of direction. |
5 | The top five long and short positions reflect the market value of long-term cash investments and the notional value of futures contracts as presented in the Fund’s portfolio of investments, but does not reflect the exposure associated with options. |
12 | NUVEEN |
Examples
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including up-front and back-end sales charges (loads) or redemption fees, where applicable; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees, where applicable; and other Fund expenses. The Examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Examples below are based on an investment of $1,000 invested at the beginning of the period and held through the period ended September 30, 2016.
The beginning of the period is April 1, 2016.
The information under “Actual Performance,” together with the amount you invested, allows you to estimate actual expenses incurred over the reporting period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.60) and multiply the result by the cost shown for your share class, in the row entitled “Expenses Incurred During Period” to estimate the expenses incurred on your account during this period.
The information under “Hypothetical Performance,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expense you incurred for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds or share classes. In addition, if these transaction costs were included, your costs would have been higher.
In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the exchange-traded funds in which the Fund invests. Because the exchange-traded funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. These exchange-traded fund fees and expenses are not included in the expenses shown in the table.
Nuveen Tactical Market Opportunities Fund
Share Class | ||||||||||||
Class A | Class C | Class I | ||||||||||
Actual Performance | ||||||||||||
Beginning Account Value | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | ||||||
Ending Account Value | $ | 987.10 | $ | 982.90 | $ | 988.20 | ||||||
Expenses Incurred During the Period | $ | 6.21 | $ | 9.91 | $ | 4.97 | ||||||
Hypothetical Performance (5% annualized return before expenses) | ||||||||||||
Beginning Account Value | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | ||||||
Ending Account Value | $ | 1,018.75 | $ | 1,015.00 | $ | 1,020.00 | ||||||
Expenses Incurred During the Period | $ | 6.31 | $ | 10.08 | $ | 5.05 |
For each class of the Fund, expenses are equal to the Fund’s annualized net expense ratio of 1.25%, 2.00% and 1.00% for Classes A, C and I, respectively, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
NUVEEN | 13 |
Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Nuveen Investment Funds, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Nuveen Tactical Market Opportunities Fund (a series of the Nuveen Investment Funds, Inc., hereinafter referred to as the “Fund”) at September 30, 2016, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2016 by correspondence with the custodian, provide a reasonable basis for our opinion.
As disclosed in Note 9 – Subsequent Events of the Notes to Financial Statements, after the close of business on January 24, 2017, the Fund will liquidate any remaining shareholder accounts and cease operations.
PricewaterhouseCoopers LLP
Chicago, IL
November 23, 2016
14 | NUVEEN |
Nuveen Tactical Market Opportunities Fund
Portfolio of Investments | September 30, 2016 |
Shares | Description (1), (2) | Value | ||||||||||||||||||
LONG-TERM INVESTMENTS – 9.2% | ||||||||||||||||||||
EXCHANGE-TRADED FUNDS – 7.1% | ||||||||||||||||||||
Commodity Funds – 2.0% | ||||||||||||||||||||
174,900 | United States Natural Gas Fund, LP, (3) | $ | 1,462,164 | |||||||||||||||||
Total Commodity Funds (cost $1,788,594) | 1,462,164 | |||||||||||||||||||
Currency Funds – 2.0% | ||||||||||||||||||||
56,500 | PowerShares DB US Dollar Index Bullish Fund, (3) | 1,394,420 | ||||||||||||||||||
Total Currency Funds (cost $1,405,155) | 1,394,420 | |||||||||||||||||||
Equity Funds – 3.1% | ||||||||||||||||||||
12,000 | iShares MSCI Australia ETF | 250,800 | ||||||||||||||||||
29,300 | iShares MSCI Germany ETF | 769,711 | ||||||||||||||||||
7,000 | iShares MSCI Hong Kong ETF | 154,070 | ||||||||||||||||||
25,000 | iShares MSCI Japan ETF | 313,500 | ||||||||||||||||||
13,000 | iShares MSCI Sweden ETF | 377,910 | ||||||||||||||||||
19,000 | iShares MSCI United Kingdom ETF | 300,960 | ||||||||||||||||||
Total Equity Funds (cost $2,291,447) | 2,166,951 | |||||||||||||||||||
Total Exchange-Traded Funds (cost $5,485,196) | 5,023,535 | |||||||||||||||||||
Principal Amount (000) | Description (1) | Coupon | Maturity | Ratings (4) | Value | |||||||||||||||
U.S. GOVERNMENT AND AGENCY OBLIGATIONS – 2.1% |
| |||||||||||||||||||
$ | 1,500 | U.S. Treasury Notes | 1.500% | 8/15/26 | Aaa | $ | 1,486,466 | |||||||||||||
Total U.S. Government and Agency Obligations (cost $1,471,992) | 1,486,466 | |||||||||||||||||||
Total Long-Term Investments (cost $6,957,188) | 6,510,001 | |||||||||||||||||||
Shares/ Principal | Description (1) | Coupon | Maturity | Ratings (4) | Value | |||||||||||||||
SHORT-TERM INVESTMENTS – 90.8% | ||||||||||||||||||||
Money Market Funds – 18.4% | ||||||||||||||||||||
12,965,027 | First American Treasury Obligations Fund, Class Z | 0.224% (5) | N/A | N/A | $ | 12,965,027 | ||||||||||||||
U.S. Government and Agency Obligations – 72.4% | ||||||||||||||||||||
$ | 23,000 | U.S. Treasury Bills | 0.000% | 11/03/16 | AAA | 22,996,021 | ||||||||||||||
15,000 | U.S. Treasury Bills | 0.000% | 12/08/16 | AAA | 14,994,915 | |||||||||||||||
13,000 | U.S. Treasury Bills, (6) | 0.000% | 2/02/17 | AAA | 12,985,609 | |||||||||||||||
$ | 51,000 | Total U.S. Government and Agency Obligations | 50,976,545 | |||||||||||||||||
Total Short-Term Investments (cost $63,919,603) |
| 63,941,572 | ||||||||||||||||||
Total Investments (cost $70,876,791) – 100.0% | 70,451,573 | |||||||||||||||||||
Other Assets Less Liabilities – 0.0% (7) | (34,867) | |||||||||||||||||||
Net Assets – 100% | $ | 70,416,706 |
NUVEEN | 15 |
Nuveen Tactical Market Opportunities Fund (continued)
Portfolio of Investments | September 30, 2016 |
Investments in Derivatives as of September 30, 2016
Futures Contracts
Description | Contract Position | Number of Contracts | Contract Expiration | Notional Amount at Value* | Variation Margin Receivable/ (Payable) | Unrealized Appreciation (Depreciation) | ||||||||||||||||||
Australian 10-Year Bond | Long | 131 | 12/16 | $ | 9,834,099 | $ | 70,999 | $ | 157,433 | |||||||||||||||
British Pound | Long | 5 | 12/16 | 406,156 | 312 | (6,547 | ) | |||||||||||||||||
E-mini Energy Select Sector | Short | (5 | ) | 12/16 | (352,850 | ) | (4,800 | ) | (2,711 | ) | ||||||||||||||
E-mini Financial Select Sector | Short | (6 | ) | 12/16 | (355,800 | ) | (5,025 | ) | 6,737 | |||||||||||||||
Euro FX | Short | (3 | ) | 12/16 | (422,888 | ) | (938 | ) | (965 | ) | ||||||||||||||
Euro-Bund | Short | (128 | ) | 12/16 | (23,825,925 | ) | 5,752 | (50,558 | ) | |||||||||||||||
Long Gilt | Short | (11 | ) | 12/16 | (1,857,048 | ) | 6,416 | 15,238 | ||||||||||||||||
Mini MSCI EAFE Index | Short | (4 | ) | 12/16 | (341,340 | ) | (3,020 | ) | (589 | ) | ||||||||||||||
NASDAQ 100 E-Mini | Short | (26 | ) | 12/16 | (2,532,530 | ) | (13,520 | ) | (51,092 | ) | ||||||||||||||
Nikkei 225 Index | Long | 5 | 12/16 | 414,875 | 875 | (12,523 | ) | |||||||||||||||||
Russell 2000 Mini Index | Short | (59 | ) | 12/16 | (7,364,970 | ) | (71,390 | ) | (225,291 | ) | ||||||||||||||
S&P 500 E-Mini | Short | (58 | ) | 12/16 | (6,265,160 | ) | (34,510 | ) | (128,885 | ) | ||||||||||||||
S&P 500 E-Mini Consumer Discretionary Sector | Short | (28 | ) | 12/16 | (2,251,760 | ) | (17,920 | ) | (20,500 | ) | ||||||||||||||
S&P 500 E-Mini Utilities Sector | Short | (91 | ) | 12/16 | (4,483,570 | ) | 33,670 | 29,803 | ||||||||||||||||
U.S. 10-Year Treasury Note | Long | 67 | 12/16 | 8,785,375 | (28,266 | ) | (16,676 | ) | ||||||||||||||||
U.S. Dollar Index | Long | 38 | 12/16 | 3,624,630 | (3,306 | ) | (7,158 | ) | ||||||||||||||||
$ | (26,988,706 | ) | $ | (64,671 | ) | $ | (314,284 | ) |
* | The aggregate Notional Amount at Value of long and short positions is $23,065,135 and $(50,053,841), respectively. |
Options Written
Option Type | Number of Contracts | Description | Notional Amount (8) | Expiration Date | Strike Price | Value | ||||||||||||||||
Put | (14 | ) | iShares U.S. Technology ETF | $ | (179,200 | ) | 10/21/16 | 128.0 | $ | (63 | ) | |||||||||||
Put | (37 | ) | SPDR Select Sector Fund | (173,900 | ) | 10/21/16 | 47.0 | (814 | ) | |||||||||||||
Put | (355 | ) | SPDR Select Sector Fund | (1,757,250 | ) | 10/21/16 | 49.5 | (37,098 | ) | |||||||||||||
Call | (245 | ) | United States Natural Gas Fund LP | (220,500 | ) | 10/21/16 | 9.0 | (2,205 | ) | |||||||||||||
Put | (250 | ) | United States Natural Gas Fund LP | (200,000 | ) | 10/21/16 | 8.0 | (3,375 | ) | |||||||||||||
Put | (140 | ) | United States Oil Fund | (126,000 | ) | 10/21/16 | 9.0 | (350 | ) | |||||||||||||
(1,041 | ) | Total Options Written (premiums received $40,198) | $ | (2,656,850 | ) | $ | (43,905 | ) |
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. |
(2) | A copy of the most recent financial statements for these exchange-traded funds can be obtained directly from the Securities and Exchange Commission on its website at http://www.sec.gov. |
(3) | Non-income producing; Fund has not declared a dividend within the past twelve months. |
(4) | For financial reporting purposes, the ratings disclosed are the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investors Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. This treatment of split-rated securities may differ from that used for other purposes, such as for Fund investment policies. 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. Ratings are not covered by the report of independent registered public accounting firm. |
(5) | The rate shown is the annualized seven-day effective yield as of the end of the reporting period. |
(6) | Investment, or portion of investment, segregated as collateral for investments in derivatives. |
(7) | Other assets less liabilities includes the unrealized appreciation (depreciation) of certain over-the-counter (“OTC”) derivatives as presented on the Statement of Assets and Liabilities, when applicable. The unrealized appreciation (depreciation) of OTC-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. Other assets less liabilities also includes the value of options as presented on the Statement of Assets and Liabilities. |
(8) | For disclosure purposes, Notional Amount is calculated by multiplying the Number of Contracts by the Strike Price by 100. |
N/A | Not Applicable |
DB | Deutsche Bank |
EAFE | Europe, Australasia and Far East |
ETF | Exchange-Traded Fund |
MSCI | Morgan Stanley Capital International Inc. |
NASDAQ | National Association of Securities Dealers Automated Quotations |
S&P | Standard & Poor’s |
See accompanying notes to financial statements.
16 | NUVEEN |
Assets and Liabilities | September 30, 2016 |
Assets | ||||
Long-term investments, at value (cost $6,957,188) | $ | 6,510,001 | ||
Short-term investments, at value (cost $63,919,603) | 63,941,572 | |||
Cash | 161,535 | |||
Receivables: | ||||
Due from broker | 1,546 | |||
Interest | 5,410 | |||
Shares sold | 28,272 | |||
Variation margin on futures contracts | 118,024 | |||
Other assets | 28,202 | |||
Total assets | 70,794,562 | |||
Liabilities | ||||
Options written, at value (premiums received $40,198) | 43,905 | |||
Payables: | ||||
Shares redeemed | 45,400 | |||
Variation margin on futures contracts | 182,695 | |||
Accrued expenses: | ||||
12b-1 distribution and service fees | 2,536 | |||
Directors fees | 4,129 | |||
Management fees | 44,722 | |||
Professional fees | 26,424 | |||
Other | 28,045 | |||
Total liabilities | 377,856 | |||
Net assets | $ | 70,416,706 | ||
Class A Shares | ||||
Net assets | $ | 3,269,437 | ||
Shares outstanding | 328,069 | |||
Net asset value (“NAV”) per share | $ | 9.97 | ||
Offering price per share (NAV per share plus maximum sales charge of 5.75% of offering price) | $ | 10.58 | ||
Class C Shares | ||||
Net assets | $ | 2,189,935 | ||
Shares outstanding | 223,739 | |||
Net asset value, offering and redemption price per share | $ | 9.79 | ||
Class I Shares | ||||
Net assets | $ | 64,957,334 | ||
Shares outstanding | 6,485,037 | |||
Net asset value, offering and redemption price per share | $ | 10.02 | ||
Net Assets Consist of: | ||||
Capital paid-in | $ | 81,588,879 | ||
Undistributed (Over-distribution of) net investment income | (281,916 | ) | ||
Accumulated net realized gain (loss) | (10,147,048 | ) | ||
Net unrealized appreciation (depreciation) | (743,209 | ) | ||
Net assets | $ | 70,416,706 | ||
Authorized shares – per class | 2 Billion | |||
Par value per share | $ | 0.0001 |
See accompanying notes to financial statements.
NUVEEN | 17 |
Operations | Year Ended September 30, 2016 |
Investment Income | ||||
Dividend income | $ | 80,480 | ||
Interest income | 295,841 | |||
Securities lending income, net | 26,847 | |||
Total investment income | 403,168 | |||
Expenses | ||||
Management fees | 571,507 | |||
12b-1 service fees – Class A Shares | 9,364 | |||
12b-1 distribution and service fees – Class C Shares | 29,564 | |||
Shareholder servicing agent fees | 18,107 | |||
Custodian fees | 14,696 | |||
Directors fees | 2,010 | |||
Professional fees | 49,593 | |||
Shareholder reporting expenses | 36,834 | |||
Federal and state registration fees | 49,194 | |||
Other | 3,397 | |||
Total expenses | 784,266 | |||
Net investment income (loss) | (381,098 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) from: | ||||
Investments and foreign currency | (3,720,441 | ) | ||
Futures contracts | (1,653,762 | ) | ||
Options purchased | (93,438 | ) | ||
Options written | 484,453 | |||
Change in net unrealized appreciation (depreciation) of: | ||||
Investments and foreign currency | 3,046,489 | |||
Futures contracts | (592,801 | ) | ||
Options purchased | (13,390 | ) | ||
Options written | 19,245 | |||
Net realized and unrealized gain (loss) | (2,523,645 | ) | ||
Net increase (decrease) in net assets from operations | $ | (2,904,743 | ) |
See accompanying notes to financial statements.
18 | NUVEEN |
Changes in Net Assets |
Year Ended 9/30/16 | Year Ended 9/30/15 | |||||||
Operations | ||||||||
Net investment income (loss) | $ | (381,098 | ) | $ | 695,719 | |||
Net realized gain (loss) from: | ||||||||
Investments and foreign currency | (3,720,441 | ) | 2,327,593 | |||||
Futures contracts | (1,653,762 | ) | 1,137,085 | |||||
Options purchased | (93,438 | ) | (29,337 | ) | ||||
Options written | 484,453 | 547,295 | ||||||
Change in net unrealized appreciation (depreciation) of: | ||||||||
Investments and foreign currency | 3,046,489 | (5,106,689 | ) | |||||
Futures contracts | (592,801 | ) | (212,591 | ) | ||||
Options purchased | (13,390 | ) | 13,390 | |||||
Options written | 19,245 | (22,952 | ) | |||||
Net increase (decrease) in net assets from operations | (2,904,743 | ) | (650,487 | ) | ||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Class A Shares | (55,140 | ) | (177,899 | ) | ||||
Class C Shares | (25,741 | ) | (110,814 | ) | ||||
Class I Shares | (1,215,211 | ) | (2,461,104 | ) | ||||
Return of capital | ||||||||
Class A Shares | (6,790 | ) | — | |||||
Class C Shares | (5,417 | ) | — | |||||
Class I Shares | (121,393 | ) | — | |||||
Decrease in net assets from distributions to shareholders | (1,429,692 | ) | (2,749,817 | ) | ||||
Fund Share Transactions | ||||||||
Proceeds from sale of shares | 4,590,483 | 4,175,123 | ||||||
Proceeds from shares issued to shareholders due to reinvestment of distributions | 1,420,671 | 2,596,515 | ||||||
6,011,154 | 6,771,638 | |||||||
Cost of shares redeemed | (13,296,917 | ) | (18,335,600 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | (7,285,763 | ) | (11,563,962 | ) | ||||
Net increase (decrease) in net assets | (11,620,198 | ) | (14,964,266 | ) | ||||
Net assets at the beginning of period | 82,036,904 | 97,001,170 | ||||||
Net assets at the end of period | $ | 70,416,706 | $ | 82,036,904 | ||||
Undistributed (Over-distribution of) net investment income at the end of period | $ | (281,916 | ) | $ | 1,425,576 |
See accompanying notes to financial statements.
NUVEEN | 19 |
Highlights
Selected data for a share outstanding throughout each period:
Investment Operations | Less Distributions | |||||||||||||||||||||||||||||||||||||||
Class (Commencement Date)
| Beginning 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 | Ending NAV | |||||||||||||||||||||||||||||||
Class A (2/11) |
| |||||||||||||||||||||||||||||||||||||||
Year Ended 9/30: | ||||||||||||||||||||||||||||||||||||||||
2016 | $ | 10.55 | $ | (0.07 | ) | $ | (0.33 | ) | $ | (0.40 | ) | $ | (0.16 | ) | $ | — | $ | (0.02 | ) | $ | (0.18 | ) | $ | 9.97 | ||||||||||||||||
2015 | 10.96 | 0.06 | (0.16 | ) | (0.10 | ) | (0.31 | ) | — | — | (0.31 | ) | 10.55 | |||||||||||||||||||||||||||
2014(g) | 10.69 | 0.15 | 0.12 | 0.27 | — | — | — | — | 10.96 | |||||||||||||||||||||||||||||||
Year Ended 10/31: | ||||||||||||||||||||||||||||||||||||||||
2013 | 11.29 | 0.03 | (0.53 | ) | (0.50 | ) | (0.04 | ) | (0.03 | ) | (0.03 | ) | (0.10 | ) | 10.69 | |||||||||||||||||||||||||
2012 | 11.22 | 0.02 | 0.25 | 0.27 | (0.03 | ) | (0.17 | ) | — | (0.20 | ) | 11.29 | ||||||||||||||||||||||||||||
2011(d) | 10.59 | 0.04 | 0.59 | 0.63 | — | — | — | — | 11.22 | |||||||||||||||||||||||||||||||
Class C (2/11): |
| |||||||||||||||||||||||||||||||||||||||
Year Ended 9/30: | ||||||||||||||||||||||||||||||||||||||||
2016 | 10.36 | (0.14 | ) | (0.33 | ) | (0.47 | ) | (0.08 | ) | | — | | (0.02 | ) | (0.10 | ) | 9.79 | |||||||||||||||||||||||
2015 | 10.76 | (0.01 | ) | (0.17 | ) | (0.18 | ) | (0.22 | ) | — | — | (0.22 | ) | 10.36 | ||||||||||||||||||||||||||
2014(g) | 10.57 | 0.07 | 0.12 | 0.19 | — | — | — | — | 10.76 | |||||||||||||||||||||||||||||||
Year Ended 10/31: | ||||||||||||||||||||||||||||||||||||||||
2013 | 11.17 | (0.05 | ) | (0.52 | ) | (0.57 | ) | — | (0.03 | ) | — | (0.03 | ) | 10.57 | ||||||||||||||||||||||||||
2012 | 11.17 | (0.07 | ) | 0.24 | 0.17 | — | (0.17 | ) | — | (0.17 | ) | 11.17 | ||||||||||||||||||||||||||||
2011(d) | 10.59 | — | * | 0.58 | 0.58 | — | — | — | — | 11.17 | ||||||||||||||||||||||||||||||
Class I (12/09) |
| |||||||||||||||||||||||||||||||||||||||
Year Ended 9/30: | ||||||||||||||||||||||||||||||||||||||||
2016 | 10.61 | (0.05 | ) | (0.34 | ) | (0.39 | ) | (0.18 | ) | — | (0.02 | ) | (0.20 | ) | 10.02 | |||||||||||||||||||||||||
2015 | 11.01 | 0.09 | (0.15 | ) | (0.06 | ) | (0.34 | ) | — | — | (0.34 | ) | 10.61 | |||||||||||||||||||||||||||
2014(g) | 10.72 | 0.17 | 0.12 | 0.29 | — | — | — | — | 11.01 | |||||||||||||||||||||||||||||||
Year Ended 10/31: | ||||||||||||||||||||||||||||||||||||||||
2013 | 11.32 | 0.06 | (0.53 | ) | (0.47 | ) | (0.06 | ) | (0.03 | ) | (0.04 | ) | (0.13 | ) | 10.72 | |||||||||||||||||||||||||
2012 | 11.25 | 0.05 | 0.25 | 0.30 | (0.06 | ) | (0.17 | ) | — | (0.23 | ) | 11.32 | ||||||||||||||||||||||||||||
2011 | 10.62 | 0.14 | 0.59 | 0.73 | (0.08 | ) | (0.02 | ) | — | (0.10 | ) | 11.25 |
20 | NUVEEN |
Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||
Ratios to Average Net Assets Before Waiver/Reimbursement | Ratios to Average Net Assets After Waiver/Reimbursement(c) | |||||||||||||||||||||||||||||||||
Total Return(b) | Ending Net Assets | Expenses(e) | Net Investment Income (Loss) | Expenses(e) | Net Investment Income (Loss) | Portfolio Turnover Rate(f) | ||||||||||||||||||||||||||||
(3.87 | )% | $ | 3,269 | 1.26 | % | (0.73 | )% | 1.26 | % | (0.73 | )% | 163 | % | |||||||||||||||||||||
(0.90 | ) | 4,146 | 1.23 | 0.61 | 1.23 | 0.61 | 135 | |||||||||||||||||||||||||||
2.53 | 7,241 | 1.19 | ** | 1.46 | ** | 1.16 | ** | 1.50 | ** | 36 | ||||||||||||||||||||||||
(4.44 | ) | 24,710 | 1.21 | 0.23 | 1.17 | 0.26 | 220 | |||||||||||||||||||||||||||
2.45 | 59,751 | 1.19 | 0.13 | 1.18 | 0.14 | 189 | ||||||||||||||||||||||||||||
5.95 | 3,558 | 1.67 | ** | 0.06 | ** | 1.19 | ** | 0.54 | ** | 177 | ||||||||||||||||||||||||
(4.61 | ) | 2,190 | 2.01 | (1.43 | ) | 2.01 | (1.43 | ) | 163 | |||||||||||||||||||||||||
(1.63 | ) | 3,938 | 1.99 | (0.14 | ) | 1.99 | (0.14 | ) | 135 | |||||||||||||||||||||||||
1.80 | 5,744 | 1.94 | ** | 0.67 | ** | 1.91 | ** | 0.70 | ** | 36 | ||||||||||||||||||||||||
(5.12 | ) | 10,131 | 1.96 | (0.47 | ) | 1.92 | (0.43 | ) | 220 | |||||||||||||||||||||||||
1.55 | 15,045 | 1.93 | (0.65 | ) | 1.93 | (0.65 | ) | 189 | ||||||||||||||||||||||||||
5.48 | 475 | 2.31 | ** | (0.37 | )** | 1.94 | ** | — | *** | 177 | ||||||||||||||||||||||||
(3.69 | ) | 64,957 | 1.01 | (0.46 | ) | 1.01 | (0.46 | ) | 163 | |||||||||||||||||||||||||
(0.54 | ) | 73,953 | 0.99 | 0.86 | 0.99 | 0.86 | 135 | |||||||||||||||||||||||||||
2.71 | 84,016 | 0.94 | ** | 1.66 | ** | 0.91 | ** | 1.68 | ** | 36 | ||||||||||||||||||||||||
(4.18 | ) | 107,280 | 0.96 | 0.49 | 0.92 | 0.53 | 220 | |||||||||||||||||||||||||||
2.69 | 195,709 | 0.94 | 0.41 | 0.93 | 0.43 | 189 | ||||||||||||||||||||||||||||
6.95 | 48,860 | 1.18 | 1.01 | 0.94 | 1.25 | 177 |
(a) | Per share Net Investment Income (Loss) is calculated using the average daily shares method. |
(b) | Total return is the combination of changes in NAV without any sales charge, reinvested dividend income at NAV and reinvested capital gains distributions at NAV, if any. Total returns are not annualized. |
(c) | After fee waiver and/or expense reimbursement from the Adviser, where applicable. |
(d) | For the period February 24, 2011 (commencement of operations) through October 31, 2011. |
(e) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the exchange-traded funds in which the Fund invests. These exchange-traded fund fees and expenses are not reflected in the expense ratios. Because the exchange-traded funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. |
(f) | Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales (as disclosed in Note 5 – Investment Transactions) divided by the average long-term market value during the period. |
(g) | For the eleven months ended September 30, 2014. |
* | Rounds to less than $0.01 per share. |
** | Annualized. |
*** | Annualized ratio rounds to less than 0.01%. |
See accompanying notes to financial statements.
NUVEEN | 21 |
Financial Statements
1. General Information and Significant Accounting Policies
General Information
Trust and Fund Information
Nuveen Investment Funds, Inc. (the “Trust”), is an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Trust is comprised of Nuveen Tactical Market Opportunities Fund (the “Fund”), as a diversified fund, among others. The Trust was incorporated in the state of Maryland on August 20, 1987.
The end of the reporting period for the Fund is September 30, 2016, and the period covered by these Notes to Financial Statements is the fiscal year ended September 30, 2016 (the “current fiscal period”).
Investment Adviser
The Fund’s investment adviser is Nuveen Fund Advisors, LLC (the “Adviser”), a wholly-owned subsidiary of Nuveen Investments, Inc. (“Nuveen”). Nuveen is an operating division of TIAA Global Asset Management. The Adviser has overall responsibility for management of the Funds, oversees the management of the Fund’s portfolio, manages the Fund’s business affairs and provides certain clerical, bookkeeping and other administrative services, and, if necessary, asset allocation decisions. The Adviser has entered into a sub-advisory agreement with Nuveen Asset Management, LLC (the “Sub-Adviser”), a subsidiary of the Adviser, under which the Sub-Adviser manages the investment portfolio of the Fund.
Investment Objective
The Fund seeks to earn a positive total return over a reasonable period of time, regardless of market conditions.
The Fund’s most recent prospectus provides further descriptions of the Fund’s investment objective, principal investment strategies and principal risks.
Significant Accounting Policies
The 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 Fund in the preparation of its financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and losses from investment transactions are determined on the specific identification method, which is the same basis used for federal income tax purposes. Investments purchased on a when-issued/delayed delivery basis may have extended settlement periods. Any investments so purchased are subject to market fluctuation during this period. The Fund has earmarked securities in its portfolio 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 Fund 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 includes accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Securities lending income is comprised of fees earned from borrowers and income earned on cash collateral investments, net of lending agent fees.
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 Shareholders
Dividends from net investment income are declared and distributed to shareholders annually. 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 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.
22 | NUVEEN |
The tax character of Fund distributions for a fiscal year is dependent upon the amount and tax character of distributions received from securities held in the Fund’s portfolio. Distributions received from the exchange-traded funds (“ETFs”) in which the Fund invests may be characterized for tax purposes as ordinary income, long-term capital gain and/or a return of capital. The issuer of a security reports the tax character of its distributions only once per year, generally during the first two months of the calendar year. The distribution is included in the Fund’s ordinary income until such time the Fund is notified by the issuer of the actual tax character.
Share Classes and Sales Charges
Class A Shares are generally sold with an up-front sales charge and incur a 0.25% annual 12b-1 service fee. Class A Share purchases of $1 million or more are sold at net asset value (“NAV”) without an up-front sales charge but may be subject to a contingent deferred sales charge (“CDSC”) if redeemed within eighteen months (twelve months prior to November 1, 2015) of purchase. Such CDSC will be equal to 1% for any shares purchased on or after November 1, 2015 if redeemed within eighteen months of purchase. Class C Shares are sold without an up-front sales charge but incur a 0.75% annual 12b-1 distribution fee and a 0.25% annual 12b-1 service fee. Class C Shares are subject to a CDSC of 1% if redeemed within twelve months of purchase. Class I Shares are not subject to any sales charge or 12b-1 distribution or service fees.
Multiclass Operations and Allocations
Income and expenses of the Fund that are not directly attributable to a specific class of shares are prorated among the classes based on the relative net assets of each class. Expenses directly attributable to a class of shares are recorded to the specific class. Currently, the only expenses that are allocated on a class-specific basis are 12b-1 distribution and service fees.
Realized and unrealized capital gains and losses of the Fund are prorated among the classes based on the relative net assets of each class.
Indemnifications
Under the Trust’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business, the Trust enters into contracts that provide general indemnifications to other parties. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. However, the Trust has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
Netting Agreements
In the ordinary course of business, the Fund may enter into transactions subject to enforceable International Swaps and Derivative Association, Inc. (“ISDA”) master agreements or other similar arrangements (“netting agreements”). Generally, the right to offset in netting agreements allows the Fund to offset certain securities and derivatives with a specific counterparty, when applicable, as well as any collateral received or delivered to that counterparty based on the terms of the agreements. Generally, the Fund manages its cash collateral and securities collateral on a counterparty basis.
The Fund’s 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 from operations during the reporting period. Actual results may differ from those estimates.
2. Investment Valuation and Fair Value Measurements
The fair valuation 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 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). |
NUVEEN | 23 |
Notes to Financial Statements (continued)
ETFs 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.
Prices of fixed-income securities are provided by an independent pricing service (“pricing service”) approved by the Fund’s Board of Directors (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 observability of the significant inputs.
Investments in investment companies are valued at their respective NAVs on valuation date and are generally classified as Level 1.
The value of exchange-traded options are based on the mean of the closing bid and ask prices and are generally classified as Level 1. Options traded in the over-the counter market are valued using an evaluated mean price and are generally classified as Level 2.
Futures contracts are valued using the closing settlement price or, in the absence of such a price, the last traded price and are generally classified as Level 1.
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 Fund’s 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 New York Stock Exchange 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 Fund’s NAV is determined, or if under the Fund’s 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 observability 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 Level 3 depending on the observability 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.
The inputs or methodologies used for valuing securities are not an indication of the risks associated with investing in those securities. The following is a summary of the Fund’s fair value measurements as of the end of the reporting period:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Long-Term Investments: | ||||||||||||||||
Exchange-Traded Funds* | $ | 5,023,535 | $ | — | $ | — | $ | 5,023,535 | ||||||||
U.S. Government and Agency Obligations | — | 1,486,466 | — | 1,486,466 | ||||||||||||
Short-Term Investments: | ||||||||||||||||
Money Market Funds | 12,965,027 | — | — | 12,965,027 | ||||||||||||
U.S. Government and Agency Obligations | — | 50,976,545 | — | 50,976,545 | ||||||||||||
Investments in Derivatives: | ||||||||||||||||
Futures Contracts** | (314,284 | ) | — | — | (314,284 | ) | ||||||||||
Options Written | (43,905 | ) | — | — | (43,905 | ) | ||||||||||
Total | $ | 17,630,373 | $ | 52,463,011 | $ | — | $ | 70,093,384 |
* | Refer to the Fund’s Portfolio of Investments for further information on the exchange-traded funds in which the Fund invests. |
** | 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,
24 | NUVEEN |
evaluating the effectiveness of the Fund’s 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 Fund, the Valuation Committee, among other things, conducts due diligence reviews of the pricing services and monitors the quality of security prices received through various testing reports conducted by the Securities Valuation Team.
The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making a fair value determination, based on the facts and circumstances specific to the portfolio instrument. Fair value determinations generally will be derived as follows, using public or private market information:
(i) | If available, fair value determinations shall be derived by extrapolating from recent transactions or quoted prices for identical or comparable securities. |
(ii) | If such information is not available, an analytical valuation methodology may be used based on other available information including, but not limited to: analyst appraisals, research reports, corporate action information, issuer financial statements and shelf registration statements. Such analytical valuation methodologies may include, but are not limited to: multiple of earnings, discount from market value of a similar freely-traded security, discounted cash flow analysis, book value or a multiple thereof, risk premium/yield analysis, yield to maturity and/or fundamental investment analysis. |
The purchase price of a portfolio instrument will be used to fair value the instrument only if no other valuation methodology is available or deemed appropriate, and it is determined that the purchase price fairly reflects the instrument’s current value.
For each portfolio security that has been fair valued pursuant to the policies adopted by the Board, 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 the 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, the Fund’s investments denominated in that currency will lose value because their 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.
The books and records of the Fund 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 the Fund and the amounts actually received.
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 and foreign currency” 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 and foreign currency” 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.
Securities Lending
In order to generate additional income, the Fund may lend securities representing up to one-third of the value of its total assets (which includes collateral for securities on loan) to broker-dealers, banks or other institutions. When loaning securities, the Fund retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. The Fund also has the ability to recall the securities on loan at any time.
NUVEEN | 25 |
Notes to Financial Statements (continued)
The Fund’s policy is to receive, at the inception of a loan, cash collateral equal to at least 102% of the value of securities loaned, which is recognized as “Payable for collateral from securities lending program” on the Statement of Assets and Liabilities. Collateral for securities on loan is invested in a money market fund, which is recognized as “Investments purchased with collateral from securities lending, at value” on the Statement of Assets and Liabilities. The market value of the securities loaned is determined at the close of each business day in order to determine the adequacy of the collateral. If the value of the securities on loan increases such that the level of collateralization falls below 100%, additional collateral is received from the borrower on the next business day, which is recognized as “Due from broker” on the Statement of Assets and Liabilities.
Securities out on loan are subject to termination at any time at the option of the borrower or the Fund. Upon termination, the borrower is required to return to the Fund securities identical to the securities loaned. Generally, in the event the borrower defaults on its obligation to return the loaned securities, the Fund has the right to use the collateral to acquire identical securities. In the event the Fund is delayed or prevented from exercising its right to dispose of the collateral, there may be a loss to the Fund. Under the Fund’s securities lending agreement, however, the securities lending agent has indemnified the Fund against losses resulting from borrower default, except to the extent that those losses result from a decrease in the value of the collateral due to its investment by the Fund. The Fund bears the risk of loss with respect to the investment of collateral.
The Fund’s custodian, U.S. Bank National Association, serves as its securities lending agent. The Fund pays the custodian a fee based on the Fund’s proportional share of the custodian’s expense of operating its securities lending program. Income earned from the securities lending program is paid to the Fund, net of any fees paid. Income from securities lending, net of fees paid, is recognized as “Securities lending income, net” on the Statement of Operations.
The Fund had no securities out on loan as of the end of the reporting period.
Securities lending fees paid by the Fund during the current fiscal period were as follows:
Securities lending fees paid | $ | 3,484 |
Zero Coupon Securities
A zero coupon security does not pay a regular interest coupon to its holders during the life of the security. Income to the holder of the security comes from accretion of the difference between the original purchase price of the security at issuance and the par value of the security at maturity and is effectively paid at maturity. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically.
Investments in Derivatives
The Fund is authorized to invest in certain derivative instruments. The Fund records derivative instruments at fair value, with changes in fair value recognized on the Statement of Operations, when applicable. Even though the Fund’s investments in derivatives may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes.
Futures Contracts
Upon execution of a futures contract, the 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 held by the broker to cover initial margin requirements on open futures contracts, if any, is recognized as “Cash collateral at brokers” on the Statement of Assets and Liabilities. Investments in futures contracts obligate the Fund and the clearing broker to settle monies on a daily basis representing changes in the prior days “mark-to-market” of the open contracts. If the Fund has unrealized appreciation the clearing broker would credit the Fund’s account with an amount equal to appreciation and conversely if the Fund has unrealized depreciation the clearing broker would debit the Fund’s account with an amount equal to depreciation. These daily cash settlements are also known as “variation margin.” Variation margin is recognized as a receivable and/or payable for “Variation margin on futures contracts” on the Statement of Assets and Liabilities.
During the period the futures contract is open, changes in the value of the contract are recognized as an unrealized gain or loss by “marking-to-market” on a daily basis to reflect the changes in market value of the contract, which is recognized as a component of “Change in net unrealized appreciation (depreciation) of futures contracts” on the Statement of Operations. When the contract is closed or expired, the Fund records a realized gain or loss equal to the difference between the value of the contract on the closing date and value of the contract when originally entered into, which is recognized as a component of “Net realized gain (loss) from futures contracts” on the Statement of Operations.
Risks of investments in futures contracts include the possible adverse movement in the price of the securities or indices underlying the contracts, the possibility that there may not be a liquid secondary market for the contracts and/or that a change in the value of the contract may not correlate with a change in the value of the underlying securities or indices.
During the current fiscal period, the Fund continued to invest in equity, interest rate and currency futures contracts, which were used to implement various absolute return, tactical market and hedging strategies.
The average notional amount of futures contracts outstanding during the current fiscal period was as follows:
Average notional amount of futures contracts outstanding* | $ | 66,856,511 |
* | The average notional amount is calculated based on the absolute aggregate notional amount of contracts outstanding at the beginning of the fiscal period and at the end of each fiscal quarter within the current fiscal period. |
26 | NUVEEN |
The following table presents the fair value of all futures contracts held by the Fund 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 | ||||||||||||||
Asset Derivatives | (Liability) Derivatives | |||||||||||||
Underlying Risk Exposure | Derivative Instrument | Location | Value | Location | Value | |||||||||
Equity | Futures contracts | Receivable for variation margin on futures contracts* | $ | 29,803 | Payable for variation margin on futures contracts* | $ | 6,737 | |||||||
Receivable for variation margin on futures contracts* | (12,523 | ) | Payable for variation margin on futures contracts* | (429,068 | ) | |||||||||
Foreign Currency Exchange Rate | Futures contracts | Receivable for variation margin on futures contracts* | (6,547 | ) | Payable for variation margin on futures contracts* | (8,123 | ) | |||||||
Interest rate | Futures contracts | Receivable for variation margin on futures contracts* | 172,671 | — | — | |||||||||
Receivable for variation margin on futures contracts* | (50,558 | ) | Payable for variation margin on futures contracts* | (16,676 | ) | |||||||||
Total | $ | 132,846 | $ | (447,130 | ) |
* | Value represents unrealized appreciation (depreciation) of futures contracts as reported in the Fund’s Portfolio of Investments, and not the asset and/or liability derivative location as described in the table above. |
The following table presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized on futures contracts on the Statement of Operations during the current fiscal period, and the primary underlying risk exposure.
Underlying | Derivative Instrument | Net Realized Gain (Loss) from | Change in Net Unrealized Appreciation (Depreciation) of Futures Contracts | |||||||
Equity | Futures contracts | $ | (754,825 | ) | $(917,693) | |||||
Foreign currency exchange rate | Futures contracts | 253,116 | (40,253 | ) | ||||||
Interest rate | Futures contracts | (1,152,053 | ) | 365,145 | ||||||
Total | $ | (1,653,762 | ) | $ | (592,801 | ) |
Options Transactions
The purchase of options and/or swaptions involves the risk of loss of all or a part of the cash paid for the options (the premium). The market risk associated with purchasing options and/or swaptions is limited to the premium paid. The counterparty credit risk of purchasing options, however, needs also to take into account the current value of the option, as this is the performance expected from the counterparty. When the Fund purchases an option and/or swaption, an amount equal to the premium paid (the premium plus commission) is recognized as a component of “Options and/or Swaptions purchased, at value” on the Statement of Assets and Liabilities. When the Fund writes an option and/or swaption, an amount equal to the net premium received (the premium less commission) is recognized as a component of “Options and/or Swaptions written, at value” on the Statement of Assets and Liabilities and is subsequently adjusted to reflect the current value of the written option and/or swaption until the option and/or swaption is exercised or expires or the Fund enters into a closing purchase transaction. The changes in the value of options and/or swaptions purchased during the fiscal period are recognized as a component of “Change in net unrealized appreciation (depreciation) of options and/or swaptions purchased” on the Statement of Operations. The changes in the value of options and/or swaptions written during the fiscal period are recognized as a component of “Change in net unrealized appreciation (depreciation) of options and/or swaptions written” on the Statement of Operations. When an option and/or swaption is exercised or expires or the Fund enters into a closing purchase transaction, the difference between the net premium received and any amount paid at expiration or on executing a closing purchase transaction, including commission, is recognized as a component of “Net realized gain (loss) from options and/or swaptions purchased and/or written” on the Statement of Operations. The Fund, as a writer of an option and/or swaption has no control over whether the underlying instrument may be sold (called) or purchased (put) and as a result bears the risk of an unfavorable change in the market value of the instrument underlying the written option and/or swaption. There is also the risk the Fund may not be able to enter into a closing transaction because of an illiquid market.
During the current fiscal period, the Fund used equity call and put options to generate return and manage the Fund. These put and call options were purchased as a way to implement views on the direction of implied market volatility as well as hedge against a decrease or increase in the market, respectively.
The average notional amount of outstanding options purchased and options written during the current fiscal period was as follows:
Average notional amount of outstanding options purchased* | $ | 494,000 |
Average notional amount of outstanding options written* | $ | (3,181,800 | ) |
* | 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. |
NUVEEN | 27 |
Notes to Financial Statements (continued)
The following table presents the fair value of all options held by the Fund 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 | ||||||||||||||
Asset Derivatives | (Liability) Derivatives | |||||||||||||
Underlying Risk Exposure | Derivative Instrument | Location | Value | Location | Value | |||||||||
Commodity | Options | — | $ | — | Options written, at value | $ | (5,930 | ) | ||||||
Equity price | Options | — | — | Options written, at value | (37,912 | ) | ||||||||
Interest Rate | Options | — | — | Options written, at value | (63 | ) | ||||||||
Total | $ | — | $ | (43,905 | ) |
The following table presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized on options purchased and options written on the Statement of Operations during the current fiscal period, and the primary underlying risk exposure.
Underlying Risk Exposure | Derivative Instrument | Net Realized Gain (Loss) from Options Purchased/Written | Change in Net Unrealized Appreciation (Depreciation) of Options Purchased/Written | |||||||
Commodity | Options written | $ | 193,619 | $ | 28,917 | |||||
Equity price | Options purchased | (93,438 | ) | (13,390 | ) | |||||
Equity price | Options written | 284,412 | (12,299 | ) | ||||||
Interest rate | Options written | 6,422 | 2,627 | |||||||
Total | $ | 391,015 | $ | 5,855 |
Market and Counterparty Credit Risk
In the normal course of business the Fund may invest in financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to the transaction to perform (counterparty credit risk). The potential loss could exceed the value of the financial assets recorded on the financial statements. Financial assets, which potentially expose the Fund to counterparty credit risk, consist principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of the Fund’s exposure to counterparty credit risk in respect to these financial assets approximates their carrying value as recorded on the Statement of Assets and Liabilities.
The Fund helps manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations and by having the Adviser monitor the financial stability of the counterparties. Additionally, counterparties may be required to pledge collateral daily (based on the daily valuation of the financial asset) on behalf of the Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when the Fund has an unrealized loss, the Fund has instructed the custodian to pledge assets of the Fund as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the valuations fluctuate, either up or down, by at least the pre-determined threshold amount.
4. Fund Shares
Transactions in Fund shares during the current and prior fiscal period were as follows:
Year Ended 9/30/16 | Year Ended 9/30/15 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares sold: | ||||||||||||||||
Class A | 85,458 | $ | 870,780 | 58,372 | $ | 622,768 | ||||||||||
Class C | 17,632 | 178,807 | 23,058 | 239,821 | ||||||||||||
Class I | 347,161 | 3,540,896 | 310,209 | 3,312,534 | ||||||||||||
Shares issued to shareholders due to reinvestment of distributions: | ||||||||||||||||
Class A | 5,838 | 59,377 | 16,235 | 170,628 | ||||||||||||
Class C | 2,966 | 29,810 | 10,524 | 109,239 | ||||||||||||
Class I | 130,410 | 1,331,484 | 219,587 | 2,316,648 | ||||||||||||
589,465 | 6,011,154 | 637,985 | 6,771,638 | |||||||||||||
Shares redeemed: | ||||||||||||||||
Class A | (156,052 | ) | (1,587,509 | ) | (342,674 | ) | (3,644,742 | ) | ||||||||
Class C | (176,775 | ) | (1,776,399 | ) | (187,671 | ) | (1,957,464 | ) | ||||||||
Class I | (962,185 | ) | (9,933,009 | ) | (1,188,646 | ) | (12,733,394 | ) | ||||||||
(1,295,012 | ) | (13,296,917 | ) | (1,718,991 | ) | (18,335,600 | ) | |||||||||
Net increase (decrease) | (705,547 | ) | $ | (7,285,763 | ) | (1,081,006 | ) | $ | (11,563,962 | ) |
28 | NUVEEN |
5. Investment Transactions
Long-term purchases and sales (including maturities but excluding investments purchased with collateral from securities lending and derivative transactions when applicable) during the current fiscal period were as follows:
Purchases | $ | 17,117,902 | ||
Sales and maturities | 26,921,485 |
Transactions in options written during the current fiscal period were as follows:
Number of Contracts | Premiums Received | |||||||
Options outstanding, beginning of period | 4,162 | $ | 221,392 | |||||
Options written | 14,127 | 661,351 | ||||||
Options terminated in closing purchase transactions | (2,012 | ) | (240,800 | ) | ||||
Options expired | (11,065 | ) | (462,021 | ) | ||||
Options exercised | (4,171 | ) | (139,724 | ) | ||||
Options outstanding, end of period | 1,041 | $ | 40,198 |
6. Income Tax Information
The Fund intends to distribute substantially all of its net investment income and net capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income tax provision is required.
For all open tax years and all major taxing jurisdictions, management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). Furthermore, management of the Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to 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 Fund.
As of September 30, 2016, the cost and unrealized appreciation (depreciation) of investments (excluding investments in derivatives), as determined on a federal income tax basis, were as follows:
Cost of investments | $ | 70,572,021 | ||
Gross unrealized: | ||||
Appreciation | $ | 74,183 | ||
Depreciation | (194,631 | ) | ||
Net unrealized appreciation (depreciation) of investments | $ | (120,448 | ) |
Permanent differences, primarily due to federal taxes paid, investments in partnerships, foreign currency transactions and net operating losses resulted in reclassifications among the Fund’s components of net assets as of September 30, 2016, the Fund’s tax year end, as follows:
Capital paid-in | $ | (1,282,225 | ) | |
Undistributed (Over-distribution of) net investment income | (30,302 | ) | ||
Accumulated net realized gain (loss) | 1,312,527 |
The tax components of undistributed net ordinary income and net long-term capital gains as of September 30, 2016, the Fund’s tax year end, were as follows:
Undistributed net ordinary income1 | $ | — | ||
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. |
NUVEEN | 29 |
Notes to Financial Statements (continued)
The tax character of distributions paid during the Fund’s tax years ended September 30, 2016 and September 30, 2015, was designated for purposes of the dividends paid deduction as follows:
2016 | ||||
Distributions from net ordinary income1 | $ | 1,296,091 | ||
Distributions from net long-term capital gains | — | |||
Return of capital | 133,600 | |||
2015 | ||||
Distributions from net ordinary income1 | $ | 2,749,817 | ||
Distributions from net long-term capital gains | — | |||
Return of capital | — |
1 | Net ordinary income consists of net taxable income derived from dividends, interest and net short-term capital gains, if any. |
As of September 30, 2016, the Fund’s tax year end, the Fund had unused capital losses carrying forward available for federal income tax purposes to be applied against future capital gains, if any. The capital losses are not subject to expiration.
Capital losses to be carried forward – not subject to expiration | $ | 10,923,538 |
The Fund has 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 following fiscal year. The Fund has elected to defer losses as follows:
Post-October capital losses2 | $ | — | ||
Late-year ordinary losses3 | 278,201 |
2 | Capital losses incurred from November 1, 2015 through September 30, 2016, the Fund’s tax year end. |
3 | Ordinary losses incurred from January 1, 2016 through September 30, 2016 and/or specified losses incurred from November 1, 2015 through September 30, 2016. |
7. Management Fees and Other Transactions with Affiliates
Management Fees
The Fund’s management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Sub-Adviser is compensated for its services to the Fund from the management fees paid to the Adviser.
The Fund’s management fee consists of two components – a fund-level fee, based only on the amount of assets within the Fund, and a complex-level fee, based on the aggregate amount of all eligible fund assets managed by the Adviser. This pricing structure enables Fund shareholders to benefit from growth in the assets within the Fund as well as from growth in the amount of complex-wide assets managed by the Adviser.
The annual Fund-level fee, payable monthly, is calculated according to the following schedule:
Average Daily Net Assets | Fund-Level Fee | |||
For the first $125 million | 0.6000 | % | ||
For the next $125 million | 0.5875 | |||
For the next $250 million | 0.5750 | |||
For the next $500 million | 0.5625 | |||
For the next $1 billion | 0.5500 | |||
For net assets over $2 billion | 0.5250 |
30 | NUVEEN |
The annual complex-level fee, payable monthly, is determined by taking the complex-level fee rate, which is based on the aggregate amount of “eligible assets” of all Nuveen funds as set forth in the schedule below, and making, as appropriate, an upward adjustment to that rate based upon the percentage of the particular fund’s assets that are not “eligible assets.” The complex-level fee schedule for the Fund is as follows:
Complex-Level Asset Breakpoint Level* | Effective Rate at Breakpoint Level | |||
$55 billion | 0.2000 | % | ||
$56 billion | 0.1996 | |||
$57 billion | 0.1989 | |||
$60 billion | 0.1961 | |||
$63 billion | 0.1931 | |||
$66 billion | 0.1900 | |||
$71 billion | 0.1851 | |||
$76 billion | 0.1806 | |||
$80 billion | 0.1773 | |||
$91 billion | 0.1691 | |||
$125 billion | 0.1599 | |||
$200 billion | 0.1505 | |||
$250 billion | 0.1469 | |||
$300 billion | 0.1445 |
* | The complex-level fee is calculated based upon the aggregate daily “eligible assets” of all Nuveen funds. Eligible assets do not include assets attributable to investments in other Nuveen funds or assets in excess of a determined amount (originally $2 billion) added to the Nuveen fund complex in connection with the Adviser’s assumption of the management of the former First American Funds effective January 1, 2011. Eligible assets include closed-end fund assets managed by the Adviser that are attributable to certain types of leverage. For these purposes, leverage includes the closed-end funds’ use of preferred stock and borrowings and certain investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by the 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 eligible assets in certain circumstances. As of September 30, 2016, the complex-level fee for the Fund was 0.1713%. |
Other Transactions with Affiliates
The Trust pays no compensation directly to those of its directors who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Trust from the Adviser or its affiliates. The Board has adopted a deferred compensation plan for independent directors that enable directors 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.
During the current fiscal period, Nuveen Securities, LLC (the “Distributor”), a wholly-owned subsidiary of Nuveen, collected sales charges on purchases of Class A Shares, the majority of which were paid out as concessions to financial intermediaries as follows:
Sales charges collected (Unaudited) | $ | 8,337 | ||
Paid to financial intermediaries (Unaudited) | 8,226 |
The Distributor also received 12b-1 service fees on Class A Shares, substantially all of which were paid to compensate financial intermediaries for providing services to shareholders relating to their investments.
During the current fiscal period, the Distributor compensated financial intermediaries directly with commission advances at the time of purchase as follows:
Commission advances (Unaudited) | $ | 8,436 |
To compensate for commissions advanced to financial intermediaries all 12b-1 service and distribution fees collected on Class C Shares during the first year following a purchase are retained by the Distributor. During the current fiscal period, the Distributor retained such 12b-1 fees as follows:
12b-1 fees retained (Unaudited) | $ | 2,489 |
The remaining 12b-1 fees charged to the Fund were paid to compensate financial intermediaries for providing services to shareholders relating to their investments.
The Distributor also collected and retained CDSC on share redemptions during the current fiscal period, as follows:
CDSC retained (Unaudited) | $ | 43 |
8. Borrowing Arrangements
Uncommitted Line of Credit
During the current fiscal period, the Fund participated in an unsecured bank line of credit (“Unsecured Credit Line”) under which outstanding balances would bear interest at a variable rate. Although the Fund participated in the Unsecured Credit Line, it did not have any outstanding balances during the current fiscal period.
NUVEEN | 31 |
Notes to Financial Statements (continued)
Committed Line of Credit
The Fund, along with certain other funds managed by the Adviser (“Participating Funds”), has established a 364-day, approximately $2.5 billion standby credit facility with a group of lenders, under which the Participating Funds may borrow for various purposes other than leveraging for investment purposes. A large portion of this facility’s capacity (and its associated costs as described below) is currently dedicated for use by a small number of Participating Funds, which does not include the Fund covered by this shareholder report. The remaining capacity under the facility (and the corresponding portion of the facility’s annual costs) is separately dedicated to most of the other open-end funds in the Nuveen fund family, including the Fund covered by this shareholder report, along with a number of Nuveen closed-end funds. The credit facility expires in July 2017 unless extended or renewed.
The credit facility has the following terms: a fee of 0.15% per annum on unused commitment amounts, and interest at a rate equal to the higher of (a) one-month LIBOR (London Inter-Bank Offered Rate) plus 1.25% per annum or (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statement of Operations, and along with commitment fees, have been allocated among such participating Funds based upon the relative proportions of the facility’s aggregate capacity reserved for them and other factors deemed relevant by the Adviser and the Board of each Participating Fund.
During the current fiscal period, the Fund did not utilize this facility.
9. Subsequent Events
Fund Liquidation
On November 18, 2016, the Adviser announced that the Fund will be liquidated after the close of business on January 24, 2017, as approved by the Fund’s Board of Directors (the “Board”). Effective December 19, 2016, the Fund will stop accepting purchases from new investors and existing shareholders, except that defined contribution retirement plans that hold Fund shares as of November 18, 2016 may continue to purchase Fund shares until January 19, 2017. Existing shareholders may continue to reinvest dividends and capital gains distributions received from the Fund. After the close of business on January 24, 2017, the Fund will liquidate any remaining shareholder accounts and will send shareholders the proceeds of the liquidation.
32 | NUVEEN |
Fund Information (Unaudited)
Fund Manager Nuveen Fund Advisors, LLC 333 West Wacker Drive Chicago, IL 60606
Sub-Adviser Nuveen Asset Management, 333 West Wacker Drive Chicago, IL 60606 | Independent Registered PricewaterhouseCoopers LLP One North Wacker Drive Chicago, IL 60606
Custodian U.S. Bank National 1555 North RiverCenter Milwaukee, WI 53202 | Legal Counsel Chapman and Cutler Chicago, IL 60603 | Transfer Agent and Boston Financial Data Services, Inc. Nuveen Investor Services P.O. Box 8530 Boston, MA 02266-8530 (800) 257-8787 |
| ||||||||||||||
Distribution Information: The Fund hereby designates its percentage of dividends paid from net ordinary income as dividends qualifying for the 70% dividends received deduction (“DRD”) for corporations and its percentage as qualified dividend income (“QDI”) for individuals under Section 1(h)(11) of the Internal Revenue Code as shown in the accompanying table. The actual qualified dividend income distributions will be reported to shareholders on Form 1099-DIV which will be sent to shareholders shortly after calendar year end. | ||||||||||||||
% QDI | 5% | |||||||||||||
% DRD | 0% | |||||||||||||
| ||||||||||||||
Quarterly Form N-Q Portfolio of Investments Information: The Fund is required to file its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. You may obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov or in person at the SEC’s Public Reference Room in Washington, D.C. Call the SEC toll-free at (800) SEC-0330 for room hours and operation. | ||||||||||||||
| ||||||||||||||
Nuveen Funds’ Proxy Voting Information: You may obtain (i) information regarding how each fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30, without charge, upon request, by calling Nuveen toll-free at (800) 257-8787 or on Nuveen’s website at www.nuveen.com and (ii) a description of the policies and procedures that each fund used to determine how to vote proxies relating to portfolio securities without charge, upon request, by calling Nuveen toll-free at (800) 257-8787. You may also obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov. | ||||||||||||||
| ||||||||||||||
FINRA BrokerCheck: The Financial Industry Regulatory Authority (FINRA) provides information regarding the disciplinary history of FINRA member firms and associated investment professionals. This information as well as an investor brochure describing FINRA BrokerCheck is available to the public by calling the FINRA BrokerCheck Hotline number at (800) 289-9999 or by visiting www.FINRA.org. |
NUVEEN | 33 |
Used in this Report (Unaudited)
Average Annual Total Return: This is a commonly used method to express an investment’s performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment’s actual cumulative performance (including change in NAV or offer price and reinvested dividends and capital gains distributions, if any) over the time period being considered.
BofA/Merrill Lynch 3-Month U.S. Treasury Bill Index: An unmanaged index that is comprised of a single U.S. Treasury issue with approximately three months to final maturity, purchased at the beginning of each month and held for one full month. The index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.
Chicago Board Options Exchange (CBOE) Volatility Index (the “VIX”): A measure of market expectations of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500® Index options. The index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.
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.
Lipper Flexible Portfolio Funds Classification Average: Represents the average annualized total return for all reporting funds in the Lipper Flexible Portfolio Funds Classification. Lipper returns account for the effects of management fees and assume reinvestment of distributions but do not reflect any applicable sales charges.
MSCI EAFE Index: The MSCI (Morgan Stanley Capital International) EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization weighted index designed to measure developed market equity performance, excluding the U.S. and Canada. The index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.
Net Asset Value (NAV) Per Share: A fund’s Net Assets is equal to its total assets (securities, cash and accrued earnings) less its total liabilities. For funds with multiple classes, Net Assets are determined separately for each share class. NAV per share is equal to the fund’s (or share class’) Net Assets divided by its number of shares outstanding.
S&P 500® Index: An unmanaged index generally considered representative of the U.S. stock market. Index returns assume reinvestment of distributions, but do not include the effects of any applicable sales charges or management fees.
Tax Equalization: The practice of treating a portion of the distribution made to a redeeming shareholder, which represents his proportionate part of undistributed net investment income and capital gain as a distribution for tax purposes. Such amounts are referred to as the equalization debits (or payments) and will be considered a distribution to the shareholder of net investment income and capital gain for calculation of the fund’s dividends paid deduction.
34 | NUVEEN |
Annual Investment Management Agreement
Approval Process (Unaudited)
The Board of Directors of the Fund (the “Board,” and each Director a “Board Member”), including the Board Members who are not parties to the Fund’s advisory or sub-advisory agreements or “interested persons” of any such parties (the “Independent Board Members”), is responsible for overseeing the performance of the investment adviser and sub-adviser to the Fund and determining whether to continue the Fund’s advisory agreement (the “Investment Management Agreement”) between the Fund and Nuveen Fund Advisors, LLC (the “Adviser”) and the sub-advisory agreement (the “Sub-Advisory Agreement” and, together with the Investment Management Agreement, the “Advisory Agreements”) between the Adviser and Nuveen Asset Management, LLC (the “Sub-Adviser”). Following the initial term upon the Fund’s commencement of operations, the Board reviews the Investment Management Agreement and the Sub-Advisory Agreement and votes to determine whether the respective Advisory Agreement should be renewed. Accordingly, at an in-person meeting held on May 24-26, 2016 (the “May Meeting”), the Board, including a majority of the Independent Board Members, considered and approved the existing Advisory Agreements for the Fund.
During the year, the Board and its Committees met regularly to receive materials and discuss a variety of topics impacting the Fund including, among other things, overall market conditions and market performance, Fund investment performance, brokerage execution, valuation of securities, Rule 12b-1 plans and payments, sub-transfer agency and other payments to financial intermediaries, compliance matters, securities lending, risk management and ongoing initiatives. The Board had established several standing Committees, including the Open-end Fund Committee and Closed-end Fund Committee which permit the Board Members to delve further into the topics particularly relevant to the respective product line and enhance the Board’s effectiveness and oversight of the Fund. The Board also seeks to meet with the Sub-Adviser and its investment team at least once over a multiple year rotation through site visits. The information and knowledge the Board gained throughout the year from the Board and Committee meetings, site visits and the related materials were relevant to the Board’s evaluation of the Advisory Agreements, and the Board took such information into account in its review of the Advisory Agreements.
In addition to the materials received throughout the year, the Board received additional materials prepared specifically for its annual review of the Advisory Agreements in response to a request by independent legal counsel on behalf of the Independent Board Members. The materials addressed a variety of topics, including a description of the services provided by the Adviser and the Sub-Adviser (each, a “Fund Adviser”); a review of fund performance with a detailed focus on any performance outliers; an analysis of the investment teams; an analysis of the fees and expense ratio of the Fund, including information comparing such fees and expenses to that of a peer group; an assessment of shareholder services for the Fund and of the performance of certain service providers; and a review of initiatives instituted or continued during the past year; as well as information regarding the profitability of the Fund Advisers, the compensation of portfolio managers, and compliance and risk matters.
As part of its annual review, the Board held a separate meeting on April 12-13, 2016 to review the Fund’s investment performance and consider an analysis by the Adviser of the Sub-Adviser examining, among other things, the team’s assets under management, investment performance, investment approach, and the stability and structure of the Sub-Adviser’s organization and investment team. During the review, the Independent Board Members requested and received additional information from management. Throughout the year and throughout their review of the Advisory Agreements, the Independent Board Members were assisted by independent legal counsel. The Independent Board Members met separately with independent legal counsel without management present and received a memorandum from such counsel outlining their fiduciary duties and legal standards in reviewing the Advisory Agreements. The Independent Board Members’ review of the Advisory Agreements reflected an ongoing process that incorporated the information and considerations that occurred over the years, including the most recent year, as well as the information specifically furnished for the renewal process. In deciding to renew the Advisory Agreements, the Independent Board Members did not identify a particular factor as controlling, but rather the decision reflected the comprehensive consideration of all the information presented. The following summarizes the principal factors, but not all the factors, the Board considered in its review of the Advisory Agreements and its conclusions.
A. Nature, Extent and Quality of Services
In evaluating the renewal of the Advisory Agreements, the Independent Board Members received and considered information regarding the nature, extent and quality of the applicable Fund Adviser’s services provided to the Fund and the initiatives undertaken during the past year by the Adviser. The Board recognized the comprehensive set of services the Adviser provided to manage and operate the Nuveen funds, including (a) product management (such as setting dividends, positioning the product in the marketplace, managing the relationships with the distribution platforms, maintaining and enhancing shareholder communications and reporting to the Board); (b) investment services (such as overseeing sub-advisers and other service providers; analyzing investment performance and risks; overseeing risk management and disclosure; developing and interpreting investment policies; assisting in the development of products; helping to prepare financial statements and marketing disclosures; and overseeing trade execution); (c) fund administration (such as helping to prepare fund tax returns and complete other tax compliance matters; and helping to prepare regulatory filings and shareholder reports); (d) fund Board administration (such as preparing Board materials and organizing and providing assistance
NUVEEN | 35 |
Annual Investment Management Agreement Approval Process (continued)
for Board meetings); (e) compliance (such as helping to devise and maintain the funds’ compliance program and related testing); and (f) legal support (such as helping to prepare registration statements and proxy statements, interpreting regulations and policies and overseeing fund activities).
The Board reviewed the continued investment the Adviser had made in its business to continue to strengthen the breadth and quality of its services to the benefit of the Nuveen funds. The Board noted the Adviser’s additional staffing in key areas that support the funds and the Board, including in investment services, operations, fund governance, compliance, fund administration, product management, retail distribution and information technology. Among the enhancements to its services, the Board recognized the Adviser’s (a) expanded activities and support required as a result of regulatory developments, including in areas of compliance and reporting; (b) increased support for dividend management; (c) continued investment in its technical capabilities as the Adviser continued to build out a centralized fund data platform, enhance mobility and remote access capabilities, rationalize and upgrade software platforms, and automate certain regulatory liquidity determinations; (d) continued efforts to rationalize the product line through mergers, liquidations and re-positioning of Nuveen funds with the goal of increasing efficiencies, reducing costs, improving performance and addressing shareholder needs; (e) continued efforts to develop new lines of business designed to enhance the Nuveen product line and meet investor demands; and (f) continued commitment to enhance risk oversight, including the formation of the operational risk group to provide operational risk assessment, the access to platforms which provide better risk reporting to support investment teams, and the development of a new team to initially review new products and major product initiatives. The Board also recognized the Adviser’s efforts to renegotiate certain fees of other service providers which culminated in reduced expenses for all funds for custody and accounting services without diminishing the breadth and quality of the services provided. The Board considered the Chief Compliance Officer’s report regarding the Adviser’s compliance program, the Adviser’s continued development, execution and management of its compliance program, and the additions to the compliance team to support the continued growth of the Nuveen fund family and address regulatory developments.
The Board also considered information highlighting the various initiatives that the Adviser had implemented or continued during the year to enhance or support the open-end fund product line. The Board noted the Adviser’s continued initiatives (a) to develop and offer new outcome-oriented funds; (b) to refine the reports to the Board, including enhanced reporting regarding payments to intermediaries, as well as provide presentations to the Board to keep it apprised of various topics that are relevant to the open-end fund product line (such as marketing initiatives, portfolio analytics and sales results); (c) to modify the contingent deferred sales load structure for Class A shares to be more competitive with peers; (d) to launch a new share class to attract institutional clients; and (e) to change portfolio managers on various funds. The Board recognized that initiatives that attract assets to the Nuveen family of funds benefited the funds as fixed costs would be spread over a larger asset base and, as described below, through the complex-wide arrangement which generally would provide that the management fees of the funds (subject to limited exceptions) are reduced as asset levels for the complex increase. The Board also considered the Adviser’s review of the pricing on its entire open-end fund line which resulted in either a reduction in the contractual management fee, a reduction in a temporary expense cap or a combination thereof for numerous funds in the complex helping to better position such funds for future growth.
As noted, the Adviser also oversees the Sub-Adviser who primarily provides the portfolio advisory services to the Fund. The Board recognized the skill and competency of the Adviser in monitoring and analyzing the performance of the Sub-Adviser and managing the sub-advisory relationship. The Board noted that the Adviser recommended the renewal of the Sub-Advisory Agreement.
Based on their review, the Independent Board Members found that, overall, the nature, extent and quality of services provided to the Fund under each Advisory Agreement were satisfactory.
B. The Investment Performance of the Fund and Fund Advisers
The Board considered the long-term and short-term performance history of the Nuveen funds. As noted above, the Board reviewed fund performance at its quarterly meetings throughout the year and took into account the information derived from the discussions with representatives of the Adviser about fund performance at these meetings. The Board also considered the Adviser’s analysis of fund performance with particular focus on any performance outliers and the factors contributing to such performance and any steps the investment team had taken to address performance concerns. The Board reviewed, among other things, the Fund’s investment performance both on an absolute basis and in comparison to peer funds (the “Performance Peer Group”) and to a recognized benchmark for the quarter-, one- and three-year periods ending December 31, 2015, as well as performance information reflecting the first quarter of 2016.
In evaluating performance information, the Board recognized the following factors may impact the performance data as well as the consideration to be given to particular performance data:
• | The performance data reflected a snapshot in time, in this case as of the end of the most recent calendar year or quarter. A different performance period, however, could generate significantly different results. |
• | Long-term performance can be adversely affected by even one period of significant underperformance so that a single investment decision or theme had the ability to disproportionately affect long-term performance. |
• | Shareholders evaluate performance based on their own holding period which may differ from the performance period reviewed by the Board, leading to different performance results. |
36 | NUVEEN |
• | Open-end funds offered multiple classes and the performance data provided for open-end funds was based on Class A shares. The performance of the other classes of a fund, however, should be substantially similar on a relative basis because all of the classes would be invested in the same portfolio of securities and differences in performance among classes could be principally attributed to the variations in distribution and servicing expenses of each class. |
• | The Board recognized the difficulty in establishing appropriate peer groups and benchmarks for certain funds, including the Fund. The Board noted that management classified the Performance Peer Groups as low, medium and high in relevancy and took the relevancy of the Performance Peer Group into account when considering the comparative performance data. If the Performance Peer Group differed somewhat from a fund, the Board recognized that the comparative performance data may be of limited value. The Board also recognized that each fund operated pursuant to its own investment objective(s), parameters and restrictions which may differ from that of the Performance Peer Group or benchmark and that these variations lead to differences in performance results. |
With respect to any Nuveen funds for which the Board has identified performance concerns, the Board monitors such funds closely until performance improves, discusses with the Adviser the reasons for such results, considers those steps necessary or appropriate to address such issues, and reviews the results of any efforts undertaken. The Board was aware, however, that shareholders chose to invest or remain invested in a fund knowing that the Adviser and the applicable sub-adviser manage the fund, knowing the fund’s investment strategy and seeking exposure to that strategy (even if the strategy was “out of favor” in the marketplace) and knowing the fund’s fee structure.
The Board noted that, although the Fund ranked in its Performance Peer Group in the fourth quartile in the three-year period and underperformed its benchmark in the one- and three-year periods, the Fund ranked in the first quartile in the one-year period. Given the Fund’s challenged performance in the three-year period, the Board will continue to monitor closely the Fund’s progress.
C. Fees, Expenses and Profitability
1. Fees and Expenses
The Board evaluated the management fees and other fees and expenses of the Fund. The Board reviewed, among other things, the gross and net management fees and net total expenses of the Fund (expressed as a percentage of average net assets) in absolute terms and also in comparison to the fee and expense levels of a comparable universe of funds (the “Peer Universe”) and to a more focused subset in the Peer Universe (the “Peer Group”), each selected by an independent third-party fund data provider. The Independent Board Members also reviewed the methodology regarding the construction of the applicable Peer Universe and Peer Group.
In their evaluation of the management fee schedule, the Independent Board Members considered the fund-level and complex-wide breakpoint schedules, as described in further detail below. The Independent Board Members also took into account any fee waivers and/or expense reimbursements provided by Nuveen. In this regard, as noted above, the Board considered that management recently completed a review of the pricing of its open-end funds which resulted in the reduction of management fees and/or expense caps of various open-end funds. The Independent Board Members considered that the foregoing changes were estimated to result in significant savings to the funds either through a reduction in advisory fees paid or an increase in the fee waivers absorbed by Nuveen.
In reviewing the comparative fee and expense information, the Independent Board Members recognized that various factors such as the limited size and particular composition of the Peer Universe or Peer Group (including the inclusion of other Nuveen funds in the peer set); expense anomalies; changes in the funds comprising the Peer Universe or Peer Group from year to year; levels of reimbursement or fee waivers; the timing of information used; and differences in services provided can impact the usefulness of the comparative data in helping to assess the appropriateness of a fund’s fees and expenses. In addition, in reviewing a fund’s fees and expenses compared to the fees and expenses of its peers, the Board generally considered the fund’s expenses and fees to be higher if they were over 10 basis points higher, slightly higher if they were 6 to 10 basis points higher, in line if they were within approximately 5 basis points higher than the peer average and below if they were below the peer average of the Peer Group. The Board reviewed the net expense ratio in recognition that the net expense ratio generally best represented the net experience of the shareholders of a fund as it directly reflected the costs of investing in the respective fund. The Board noted that the majority of the Nuveen funds had a net expense ratio near or below the average of the respective peers. For funds with a net expense ratio of 6 basis points or higher than their respective peer average, the Independent Board Members reviewed the reasons for the outlier status and were satisfied with the explanation for the difference or with any steps taken to address the difference.
The Board noted that the Fund had a net management fee higher than the peer average but a net expense ratio below the peer average.
Based on their review of the fee and expense information provided, the Independent Board Members determined that the Fund’s management fees (as applicable) to a Fund Adviser were reasonable in light of the nature, extent and quality of services provided to the Fund.
2. Comparisons with the Fees of Other Clients
The Board also reviewed information regarding the fee rates for other types of clients advised or sub-advised by the respective Fund Adviser. For the Adviser and/or its affiliated sub-advisers, such other clients may include: separately managed accounts (such as retail, institutional or wrap
NUVEEN | 37 |
Annual Investment Management Agreement Approval Process (continued)
accounts), hedge funds, other investment companies that are not offered by Nuveen but are sub-advised by one of Nuveen’s affiliated sub-advisers, foreign investment companies offered by Nuveen, and collective investment trusts.
The Board recognized that the Fund had an affiliated sub-adviser. With respect to affiliated sub-advisers, including the Sub-Adviser, the Board reviewed, among other things, the range of advisory fee rates and average fee rate assessed for the different types of clients. The Board reviewed information regarding the different types of services provided to the Fund compared to that provided to other clients which typically did not require the same breadth of day-to-day services required for registered funds. The Board further considered information regarding the differences in, among other things, the distribution systems, investment policies, investor profiles, and account sizes between the Nuveen funds and the other types of clients. In addition, the Independent Board Members also recognized that the management fee rates of the foreign funds advised by the Adviser may also vary due to, among other things, differences in the client base, governing bodies, operational complexities and services covered by the management fee. The Independent Board Members recognized that the foregoing variations resulted in different economics among the product structures and culminated in varying management fees among the types of clients and funds.
The Board also was aware that, since the Fund had a sub-adviser, the Fund’s management fee reflected two components, the fee retained by the Adviser for its services and the fee the Adviser paid to the Sub-Adviser. The Board noted that many of the administrative services provided to support the Fund by the Adviser may not be required to the same extent or at all for the institutional clients or other clients. In general, the Board noted that higher fee levels reflected higher levels of service provided by the Fund Adviser, increased investment management complexity, greater product management requirements and higher levels of business risk or some combination of the foregoing. Given the inherent differences in the various products, particularly the extensive services provided to the Fund, the Independent Board Members concluded such facts justify the different levels of fees.
3. Profitability of Fund Advisers
In conjunction with their review of fees, the Independent Board Members also considered the profitability of Nuveen for its advisory activities on an absolute basis and in comparison to other investment advisers. The Independent Board Members reviewed, among other things, Nuveen’s adjusted operating margins, the gross and net revenue margins (pre-tax and after-tax) for advisory activities for the Nuveen funds, and the revenues, expenses, and net income (pre-tax and after-tax) of Nuveen for each of the last two calendar years. The Independent Board Members reviewed an analysis of the key drivers behind the changes in revenues and expenses that impacted profitability in 2015. The Independent Board Members also noted that the sub-advisory fee for the Fund is paid by the Adviser, however, the Board recognized that the Sub-Adviser is affiliated with Nuveen. In their review, the Independent Board Members recognized that profitability data is rather subjective as various allocation methodologies may be reasonable to employ but yet yield different results. The Board also reviewed the results of certain alternative methodologies. The Board considered the allocation methodology employed to prepare the profitability data as well as a summary of the refinements to the methodology that had been adopted over the years which may limit some of the comparability of Nuveen’s revenue margins over time. Two Independent Board Members also served as point persons for the Board throughout the year to review and discuss the methodology employed to develop the profitability analysis and any proposed changes thereto and to keep the Board apprised of such changes during the year. In reviewing the profitability data, the Independent Board Members noted that Nuveen’s operating margin as well as its margins for its advisory activities to the Nuveen funds for 2015 were consistent with such margins for 2014.
The Board also considered Nuveen’s adjusted operating margins compared to that of other comparable investment advisers (based on asset size and composition) with publicly available data. The Independent Board Members recognized, however, the limitations of the comparative data as the other advisers may have a different business mix, employ different allocation methodologies, have different capital structure and costs, may not be representative of the industry or other factors that limit the comparability of the profitability information. Nevertheless, the Independent Board Members noted that Nuveen’s adjusted operating margins appeared comparable to the adjusted margins of the peers.
Further, as the Adviser is a wholly-owned subsidiary of Nuveen which in turn is an operating division of TIAA Global Asset Management, the investment management arm of Teachers Insurance and Annuity Association of America (“TIAA-CREF”), the Board reviewed a balance sheet for TIAA-CREF reflecting its assets, liabilities and capital and contingency reserves for the last two calendar years to have a better understanding of the financial stability and strength of the TIAA-CREF complex, together with Nuveen.
Based on the information provided, the Independent Board Members noted that the Adviser appeared to be sufficiently profitable to operate as a viable investment management firm and to honor its obligations as a sponsor of the Nuveen funds.
With respect to the Sub-Adviser, the Independent Board Members also considered the profitability of the Sub-Adviser from its relationship with the Nuveen funds. The Independent Board Members reviewed the Sub-Adviser’s revenues, expenses and revenue margins (pre- and post-tax) for its advisory activities for the calendar year ended December 31, 2015. The Independent Board Members also reviewed profitability analysis reflecting the revenues, expenses and revenue margin (pre- and post-tax) by asset type for the Sub-Adviser for the calendar year ending December 31, 2015.
In evaluating the reasonableness of the compensation, the Independent Board Members also considered other amounts paid to a Fund Adviser by the Fund as well as indirect benefits (such as soft dollar arrangements), if any, the Fund Adviser and its affiliates received or were expected to
38 | NUVEEN |
receive that were directly attributable to the management of the Fund. See Section E below for additional information on indirect benefits a Fund Adviser may receive as a result of its relationship with the Fund.
Based on their review, the Independent Board Members determined that the Adviser’s and the Sub-Adviser’s levels of profitability were reasonable in light of the respective services provided.
D. Economies of Scale and Whether Fee Levels Reflect These Economies of Scale
The Independent Board Members recognized that, as the assets of a particular fund or the Nuveen complex in the aggregate increase over time, economies of scale may be realized with respect to the management of the funds, and the Independent Board Members considered the extent to which these economies are shared with the funds and their shareholders. Although the Independent Board Members recognized that economies of scale are difficult to measure with precision, the Board noted that there were several acceptable means to share economies of scale, including through breakpoints in the management fee schedule reducing the fee rates as asset levels grow, fee waiver and expense limitation agreements and the Adviser’s investment in its business which can enhance the services provided to the funds. With respect to breakpoints, the Independent Board Members noted that, subject to certain exceptions, the funds in the Nuveen complex, including the Fund, pay a management fee to the Adviser which is generally comprised of a fund-level component and complex-level component. The fund-level fee component declines as the assets of the particular fund grow and the complex-level fee component declines when eligible assets of all the funds in the Nuveen complex combined grow. The complex-wide fee arrangement was designed to capture economies of scale achieved when total fund complex assets increase, even if the assets of a particular fund are unchanged or decrease. The approach reflected the notion that some of Nuveen’s costs were attributable to services provided to all its funds in the complex, and therefore all funds should benefit if these costs were spread over a larger asset base.
The Independent Board Members reviewed the breakpoint and complex-wide schedules and any savings achieved from expense caps (as applicable), fund-level breakpoints and complex-wide fee reductions for the 2015 calendar year for the funds.
In addition, the Independent Board Members recognized the Adviser’s ongoing investment in its business to expand or enhance the services provided to the Nuveen funds. The Independent Board Members noted, among other things, the additions to groups who play a key role in supporting the funds including in fund administration, operations, fund governance, investment services, compliance, product management, retail distribution and technology. The Independent Board Members also recognized the investments in systems necessary to manage the funds including in areas of risk oversight, information technology and compliance.
Based on their review, the Independent Board Members concluded that the current fee structure was acceptable and reflected economies of scale to be shared with shareholders when assets under management increase.
E. Indirect Benefits
The Independent Board Members received and considered information regarding other additional benefits the respective Fund Adviser or its affiliates may receive as a result of their relationship with the Fund, including compensation paid to affiliates and research received in connection with brokerage transactions (i.e., soft dollar arrangements). In this regard, the Independent Board Members recognized that an affiliate of the Adviser served as the Fund’s principal underwriter and may receive compensation therefore from, among other things, sales charges, distribution fees and shareholder services fees (which included fees received pursuant to any 12b-1 plan). The Independent Board Members therefore took into account, among other things, the 12b-1 fees retained by Nuveen during the last calendar year.
In addition to the above, the Independent Board Members considered that the Fund’s portfolio transactions are allocated by the Sub-Adviser and the Sub-Adviser may benefit from research received through soft-dollar arrangements. The Board noted, however, that with respect to transactions in fixed income securities, such securities generally trade on a principal basis and do not generate soft dollar credits. Although the Board recognized the Sub-Adviser may benefit from a soft dollar arrangement if it does not have to pay for this research out of its own assets, the Board also recognized that any such research may benefit the Fund to the extent it enhances the ability of the Sub-Adviser to manage the Fund.
Based on their review, the Independent Board Members concluded that any indirect benefits received by a Fund Adviser as a result of its relationship with the Fund were reasonable and within acceptable parameters.
F. Other Considerations
The Independent Board Members did not identify any single factor discussed previously as all-important or controlling. The Board Members, including the Independent Board Members, concluded that the terms of each Advisory Agreement were fair and reasonable, that the respective Fund Adviser’s fees were reasonable in light of the services provided to the Fund and that the Advisory Agreements be renewed.
NUVEEN | 39 |
and Officers (Unaudited)
The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board of Trustees of the Funds. The number of directors of the Funds is set at twelve, effective July 1, 2016. None of the trustees who are not “interested” persons of the Funds (referred to herein as “independent trustees”) has ever been a director or employee of, or consultant to, Nuveen or its affiliates. The names and business addresses of the trustees and officers of the Funds, their principal occupations and other affiliations during the past five years, the number of portfolios each oversees and other directorships they hold are set forth below.
The Funds’ Statement of Additional Information (“SAI”) includes more information about the trustees. To request a free copy, call Nuveen Investments at (800) 257-8787 or visit the Funds’ website at www.nuveen.com.
Name, Year of Birth & Address | Position(s) Held with the Funds | Year First Elected or Appointed (1) | Principal Occupation(s) Including other Directorships During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee | ||||
Independent Trustee: | ||||||||
William J. Schneider 1944 333 W. Wacker Drive Chicago, IL 60606 | Chairman and Trustee | 1996 | Chairman of Miller-Valentine Partners, a real estate investment company; Board Member of Med-America Health System and WDPR Public Radio station; formerly, Senior Partner and Chief Operating Officer (retired (2004) of Miller-Valentine Group; formerly, Board member, Business Advisory Council of the Cleveland Federal Reserve Bank and University of Dayton Business School Advisory Council; past Chair and Director, Dayton Development Coalition. | 178 | ||||
Jack B. Evans 1948 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 1999 | President, The Hall-Perrine Foundation, a private philanthropic corporation (since 1996); Director and Chairman, United Fire Group, a publicly held company; Director, The Gazette Company; Life Trustee of Coe College and the Iowa College Foundation; formerly, President Pro-Tem of the Board of Regents for the State of Iowa University System; formerly, Director, Alliant Energy; formerly, Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm. | 178 | ||||
William C. Hunter 1948 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 2003 | Dean Emeritus, formerly, Dean, Tippie College of Business, University of Iowa (2006-2012); Director (since 2004) of Xerox Corporation; Director (since 2005), and past President (2010-2014) Beta Gamma Sigma, Inc., The International Business Honor Society; Director of Wellmark, Inc. (since 2009); formerly, Dean and Distinguished Professor of Finance, School of Business at the University of Connecticut (2003-2006); previously, Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago (1995-2003); formerly, Director (1997-2007), Credit Research Center at Georgetown University. | 178 | ||||
David J. Kundert 1942 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 2005 | Formerly, Director, Northwestern Mutual Wealth Management Company (2006-2013); retired (since 2004) as Chairman, JPMorgan Fleming Asset Management, President and CEO, Banc One Investment Advisors Corporation, and President, One Group Mutual Funds; prior thereto, Executive Vice President, Banc One Corporation and Chairman and CEO, Banc One Investment Management Group; Regent Emeritus, Member of Investment Committee, Luther College; member of the Wisconsin Bar Association; member of Board of Directors and Chair of Investment Committee, Greater Milwaukee Foundation; member of the Board of Directors (Milwaukee), College Possible; Board member of Milwaukee Repertory Theatre (since 2016). | 178 |
40 | NUVEEN |
Name, Year of Birth & Address | Position(s) Held with the Funds | Year First Elected or Appointed (1) | Principal Occupation(s) Including other Directorships During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee | ||||
Albin F. Moschner(2) 1952 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 2016 | Founder and Chief Executive Officer, Northcroft Partners, LLC, a management consulting firm (since 2012); previously, held positions at Leap Wireless International, Inc., including Consultant (2011-2012), Chief Operating Officer (2008-2011), and Chief Marketing Officer (2004-2008); formerly, President, Verizon Card Services division of Verizon Communications, Inc. (2000-2003); formerly, President, One Point Services at One Point Communications (1999-2000); formerly, Vice Chairman of the Board, Diba, Incorporated (1996-1997); formerly, various executive positions with Zenith Electronics Corporation (1991-1996). Director, USA Technologies, Inc., a provider of solutions and services to facilitate electronic payment transactions (since 2012); formerly, Director, Wintrust Financial Corporation (1996-2016). | 178 | ||||
John K. Nelson 1962 333 West Wacker Drive Chicago, IL 60606 | Trustee | 2013 | Member of Board of Directors of Core12 LLC (since 2008), a private firm which develops branding, marketing and communications strategies for clients; Director of The Curran Center for Catholic American Studies (since 2009) and The President’s Council, Fordham University (since 2010); formerly senior external advisor to the financial services practice of Deloitte Consulting LLP (2012-2014); formerly, Chairman of the Board of Trustees of Marian University (2010 as trustee, 2011-2014 as Chairman); formerly, Chief Executive Officer of ABN AMRO N.V. North America, and Global Head of its Financial Markets Division (2007-2008); prior senior positions held at ABN AMRO include Corporate Executive Vice President and Head of Global Markets—the Americas (2006-2007), CEO of Wholesale Banking—North America and Global Head of Foreign Exchange and Futures Markets (2001-2006), and Regional Commercial Treasurer and Senior Vice President Trading—North America (1996-2001); formerly, Trustee at St. Edmund Preparatory School in New York City. | 178 | ||||
Judith M. Stockdale 1947 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 1997 | Board Member, Land Trust Alliance (since 2013) and U.S. Endowment for Forestry and Communities (since 2013); formerly, Executive Director (1994-2012), Gaylord and Dorothy Donnelley Foundation; prior thereto, Executive Director, Great Lakes Protection Fund (1990-1994). | 178 | ||||
Carole E. Stone 1947 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 2007 | Director, Chicago Board Options Exchange (since 2006), C2 Options Exchange, Incorporated (since 2009); Director, CBOE Holdings, Inc. (since 2010); formerly, Commissioner, New York State Commission on Public Authority Reform (2005-2010). | 178 | ||||
Terence J. Toth 1959 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 2008 | Managing Partner, Promus Capital (since 2008); Director, Fulcrum IT Service LLC (since 2010) and Quality Control Corporation (since 2012); member: Catalyst Schools of Chicago Board (since 2008) and Mather Foundation Board (since 2012), and chair of its investment committee; formerly, Director, Legal & General Investment Management America, Inc. (2008-2013); formerly, CEO and President, Northern Trust Global Investments (2004-2007); Executive Vice President, Quantitative Management & Securities Lending (2000-2004); prior thereto, various positions with Northern Trust Company (since 1994); formerly, Member, Northern Trust Mutual Funds Board (2005-2007), Northern Trust Global Investments Board (2004-2007), Northern Trust Japan Board (2004-2007), Northern Trust Securities Inc. Board (2003-2007) and Northern Trust Hong Kong Board (1997-2004). | 178 |
NUVEEN | 41 |
Trustees and Officers (Unaudited) (continued)
Name, Year of Birth & Address | Position(s) Held with the Funds | Year First Elected or Appointed (1) | Principal Occupation(s) Including other Directorships During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee | ||||
Margaret L. Wolff 1955 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 2016 | Member of the Board of Directors (since 2013) of Travelers Insurance Company of Canada and The Dominion of Canada General Insurance Company (each, a part of Travelers Canada, the Canadian operation of The Travelers Companies, Inc.); formerly, Of Counsel, Skadden, Arps, Slate, Meagher & Flom LLP (Mergers & Acquisitions Group) (2005-2014); Member of the Board of Trustees of New York-Presbyterian Hospital (since 2005); Member (since 2004) and Chair (since 2015) of the Board of Trustees of The John A. Hartford Foundation (a philanthropy dedicated to improving the care of older adults); formerly, Member (2005-2015) and Vice Chair (2011-2015) of the Board of Trustees of Mt. Holyoke College. | 178 | ||||
Interested Trustee: | ||||||||
William Adams IV(3) 1955 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 2013 | Co-Chief Executive Officer and Co-President (since March 2016), formerly, Senior Executive Vice President, Global Structured Products (2010-2016), prior thereto, Executive Vice President, U.S. Structured Products (1999-2010) of Nuveen Investments, Inc.; Co-President of Nuveen Fund Advisors, LLC (since 2011); Co-Chief Executive Officer (since 2016), formerly, Senior Executive Vice President of Nuveen Securities, LLC; President (since 2011), of Nuveen Commodities Asset Management, LLC; Board Member of the Chicago Symphony Orchestra and of Gilda’s Club Chicago. | 178 | ||||
Margo L. Cook(2)(3) 1964 333 W. Wacker Drive Chicago, IL 60606 | Trustee | 2016 | Co-Chief Executive Officer and Co-President (since March 2016), formerly, Senior Executive Vice President of Nuveen Investments, Inc; Co-Chief Executive Officer (since 2015), previously, Executive Vice President (2013-2015) of Nuveen Securities, LLC; Co-President (since October 2016), formerly, Senior Executive Vice President (2015-2016) of Nuveen Fund Advisors, LLC (Executive Vice President 2011-2015); formerly, Managing Director of Nuveen Commodities Asset Management, LLC (2011- 2016); Chartered Financial Analyst. | 178 |
Name, Year of Birth & Address | Position(s) Held with the Funds | Year First Elected or Appointed (4) | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Officer | ||||
Officers of the Funds: | ||||||||
Greg A. Bottjer 1971 333 West Wacker Drive Chicago, IL 60606 | Chief Administrative Officer | 2016 | Managing Director (since 2011), formerly, Senior Vice President (2007-2010) of Nuveen Investments Holdings, Inc.; Managing Director (since October 2016) of Nuveen Fund Advisors, LLC; Chartered Financial Analyst. | 104 | ||||
Lorna C. Ferguson 1945 333 W. Wacker Drive Chicago, IL 60606 | Vice President | 1998 | Managing Director (since 2005) of Nuveen Fund Advisors, LLC and Nuveen Securities, LLC (since 2004). | 179 | ||||
Stephen D. Foy 1954 333 W. Wacker Drive Chicago, IL 60606 | Vice President and Controller | 1998 | Managing Director (since 2014), formerly, Senior Vice President (2013-2014) and Vice President (2005-2013) of Nuveen Fund Advisors, LLC; Chief Financial Officer of Nuveen Commodities Asset Management, LLC (since 2010); Managing Director (since 2016) of Nuveen Securities, LLC; Certified Public Accountant. | 179 |
42 | NUVEEN |
Name, Year of Birth & Address | Position(s) Held with the Funds | Year First Elected or Appointed (4) | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Officer | ||||
Nathaniel T. Jones 1979 333 W. Wacker Drive Chicago, IL 60606 | Vice President and Treasurer | 2016 | Senior Vice President (since 2016), formerly, Vice President (2011- 2016) of Nuveen Investments Holdings, Inc.; Chartered Financial Analyst. | 179 | ||||
Walter M. Kelly 1970 333 W. Wacker Drive Chicago, IL 60606 | Chief Compliance Officer and Vice President | 2003 | Senior Vice President (since 2008) of Nuveen Investments Holdings, Inc. | 179 | ||||
Tina M. Lazar 1961 333 W. Wacker Drive Chicago, IL 60606 | Vice President | 2002 | Senior Vice President of Nuveen Investments Holdings, Inc. and Nuveen Securities, LLC | 179 | ||||
Kevin J. McCarthy 1966 333 W. Wacker Drive Chicago, IL 60606 | Vice President and Assistant Secretary | 2007 | Executive Vice President, Secretary and General Counsel (since March 2016), formerly, Managing Director and Assistant Secretary of Nuveen Investments, Inc.; Executive Vice President (since March 2016), formerly, Managing Director, and Assistant Secretary (since 2008) of Nuveen Securities, LLC; Executive Vice President and Secretary (since March 2016), formerly, Managing Director (2008-2016) and Assistant Secretary (2007-2016), and Co-General Counsel (since 2011) of Nuveen Fund Advisors, LLC; Executive Vice President and Secretary (since March 2016), formerly, Managing Director, Assistant Secretary (2011-2016), and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Executive Vice President and Secretary of Nuveen Investments Advisers, LLC; Vice President (since 2007) and Secretary (since March 2016) of NWQ Investment Management Company, LLC, Symphony Asset Management LLC, Santa Barbara Asset Management, LLC, Winslow Capital Management, LLC (since 2010) and Tradewinds Global Investors, LLC (since 2016); Vice President (since 2010) and Secretary (since 2016), formerly, Assistant Secretary of Nuveen Commodities Asset Management, LLC. | 179 | ||||
Kathleen L. Prudhomme 1953 901 Marquette Avenue Minneapolis, MN 55402 | Vice President and Secretary | 2011 | Managing Director, Assistant Secretary and Co-General Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Managing Director and Assistant Secretary (since 2011) of Nuveen Securities, LLC; formerly, Deputy General Counsel, FAF Advisors, Inc. (2004-2010). | 179 | ||||
Christopher M. Rohrbacher 1971 333 West Wacker Drive Chicago, IL 60606 | Vice President and Assistant Secretary | 2008 | Senior Vice President (since 2011) formerly, Vice President (2008-2011) and Assistant General Counsel (since 2008) of Nuveen Investments Holdings, Inc.; Senior Vice President and Assistant Secretary (since October 2016) of Nuveen Fund Advisors, LLC; Vice President and Assistant Secretary (since 2010) of Nuveen Commodities Asset Management, LLC. | 179 | ||||
Joel T. Slager 1978 333 West Wacker Drive Chicago, IL 60606 | Vice President and Assistant Secretary | 2013 | Fund Tax Director for Nuveen Funds (since 2013); previously, Vice President of Morgan Stanley Investment Management, Inc., Assistant Treasurer of the Morgan Stanley Funds (from 2010 to 2013). | 179 | ||||
Jeffery M. Wilson 1956 333 West Wacker Drive Chicago, IL 60606 | Vice President | 2011 | Senior Vice President of Nuveen Investments Holdings, Inc. (since 2011); formerly Senior Vice President of Nuveen Securities, LLC (since 2011); formerly, Senior Vice President of FAF Advisors, Inc. (2000-2010). | 104 |
NUVEEN | 43 |
Trustees and Officers (Unaudited) (continued)
Name, Year of Birth & Address | Position(s) Held with the Funds | Year First Elected or Appointed (4) | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Officer | ||||
Gifford R. Zimmerman 1956 333 W. Wacker Drive Chicago, IL 60606 | Vice President and Assistant Secretary | 1988 | Managing Director (since 2002), and Assistant Secretary of Nuveen Securities, LLC; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Managing Director (since 2002), Assistant Secretary (since 1997) and Co-General Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel of Nuveen Asset Management, LLC (since 2011); Managing Director and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002), and Symphony Asset Management LLC (since 2003); Vice President and Assistant Secretary of NWQ Investment Management Company, LLC (since 2002), Santa Barbara Asset Management, LLC (since 2006) and of Winslow Capital Management, LLC, (since 2010); Vice President and Assistant Secretary (since 2013), formerly, Chief Administrative Officer and Chief Compliance Officer (2006-2013) of Nuveen Commodities Asset Management, LLC; Chartered Financial Analyst. | 179 |
(1) | Trustees serve an indefinite term until his/her successor is elected or appointed. The year first elected or appointed represents the year in which the director was first elected or appointed to any fund in the Nuveen Fund Complex. |
(2) | On June 22, 2016, Ms. Cook and Mr. Moschner were appointed as Board Members, effective July 1, 2016. |
(3) | “Interested persons” of the Trust, as defined in the 1940 Act, by reason of their positions with Nuveen and certain of its subsidiaries. |
(4) | Officers serve one year terms through August of each year. The year first elected or appointed represents the year in which the officer was first elected or appointed to any fund in the Nuveen Fund Complex. |
44 | NUVEEN |
Notes
NUVEEN | 45 |
Notes
46 | NUVEEN |
Notes
NUVEEN | 47 |
| ||||||||||||||
| ||||||||||||||
Nuveen: | ||||||||||||||
Serving Investors for Generations | ||||||||||||||
| ||||||||||||||
Since 1898, financial advisors and their clients have relied on Nuveen to provide dependable investment solutions through continued adherence to proven, long-term investing principles. Today, we offer a range of high quality equity and fixed-income solutions designed to be integral components of a well-diversified core portfolio. | ||||||||||||||
| ||||||||||||||
Focused on meeting investor needs.
Nuveen helps secure the long-term goals of individual investors and the advisors who serve them. As an operating division of TIAA Global Asset Management, Nuveen provides access to investment expertise from leading asset managers and solutions across traditional and alternative asset classes. Built on more than a century of industry leadership, Nuveen’s teams of experts align with clients’ specific financial needs and goals, demonstrating commitment to advisors and investors through market perspectives and wealth management and portfolio advisory services. Nuveen manages $244 billion in assets as of September 30, 2016. | ||||||||||||||
| ||||||||||||||
Find out how we can help you. To learn more about how the products and services of Nuveen may be able to help you meet your financial goals, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Investors should consider the investment objective and policies, risk considerations, charges and expenses of any investment carefully. Where applicable, be sure to obtain a prospectus, which contains this and other relevant information. To obtain a prospectus, please contact your securities representative or Nuveen, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money.
Learn more about Nuveen Funds at: www.nuveen.com/mf | ||||||||||||||
| ||||||||||||||
Distributed by Nuveen Securities, LLC | 333 West Wacker Drive Chicago, IL 60606 | www.nuveen.com/mf |
MAN-FTMO-0916P 20913-INV-Y-11/17
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no amendments to or waivers from the code during the period covered by this report. The registrant has posted the code of ethics on its website at www.nuveen.com/MutualFunds/ShareholderResources/FundGovernance.aspx. (To view the code, click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant’s Board of Directors or Trustees (“Board”) determined that the registrant has at least one “audit committee financial expert” (as defined in Item 3 of Form N-CSR) serving on its Audit Committee. The registrant’s audit committee financial experts are Carole E. Stone and Jack B. Evans, who are “independent” for purposes of Item 3 of Form N-CSR.
Ms. Stone served for five years as Director of the New York State Division of the Budget. As part of her role as Director, Ms. Stone was actively involved in overseeing the development of the State’s operating, local assistance and capital budgets, its financial plan and related documents; overseeing the development of the State’s bond-related disclosure documents and certifying that they fairly presented the State’s financial position; reviewing audits of various State and local agencies and programs; and coordinating the State’s system of internal audit and control. Prior to serving as Director, Ms. Stone worked as a budget analyst/examiner with increasing levels of responsibility over a 30 year period, including approximately five years as Deputy Budget Director. Ms. Stone has also served as Chair of the New York State Racing Association Oversight Board, as Chair of the Public Authorities Control Board, as a Commissioner on the New York State Commission on Public Authority Reform and as a member of the Boards of Directors of several New York State public authorities. These positions have involved overseeing operations and finances of certain entities and assessing the adequacy of project/entity financing and financial reporting. Currently, Ms. Stone is on the Board of Directors of CBOE Holdings, Inc., of the Chicago Board Options Exchange, and of C2 Options Exchange. Ms. Stone’s position on the boards of these entities and as a member of both CBOE Holdings’ Audit Committee and its Finance Committee has involved, among other things, the oversight of audits, audit plans and preparation of financial statements.
Mr. Evans was formerly President and Chief Operating Officer of SCI Financial Group, Inc., a full service registered broker-dealer and registered investment adviser (“SCI”). As part of his role as President and Chief Operating Officer, Mr. Evans actively supervised the Chief Financial Officer (the “CFO”) and actively supervised the CFO’s preparation of financial statements and other filings with various regulatory authorities. In such capacity, Mr. Evans was actively involved in the preparation of SCI’s financial statements and the resolution of issues raised in connection therewith. Mr. Evans has also served on the audit committee of various reporting companies. At such companies, Mr. Evans was involved in the oversight of audits, audit plans, and the preparation of financial statements. Mr. Evans also formerly chaired the audit committee of the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following tables show the amount of fees that PricewaterhouseCoopers LLP, the Funds’ auditor, billed to the Funds’ during the Funds’ last two full fiscal years. The Audit Committee approved in advance all audit services and non-audit services that PricewaterhouseCoopers LLP provided to the Funds, except for those non-audit services that were subject to the pre-approval exception under Rule 2-01 of Regulation S-X (the “pre-approval exception”). The preapproval exception for services provided directly to the Funds waives the pre-approval requirement for services other than audit, review or attest services if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid by the Funds during the fiscal year in which the services are provided; (B) the Funds did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee’s attention, and the Committee (or its delegate) approves the services before the audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in his absence, any other member of the Audit Committee).
Fiscal Year Ended September 30, 2016 | Audit Fees Billed to Fund 1 | Audit-Related Fees Billed to Fund 2 | Tax Fees Billed to Fund 3 | All Other Fees Billed to Fund 4 | ||||||||||||
Fund Name | ||||||||||||||||
Nuveen Tactical Market Opportunities Fund | 17,567 | 0 | 0 | 0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 17,567 | $ | 0 | $ | 0 | $ | 0 |
1 | “Audit Fees” are the aggregate fees billed for professional services for the audit of the Fund’s annual financial statements and services provided in connection with statutory and regulatory filings or engagements. |
2 | “Audit-Related Fees” are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements that are not reported under “Audit Fees”. These fees include offerings related to the Fund’s common shares and leverage. |
3 | “Tax Fees” are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. These fees include: all global withholding tax services; excise and state tax reviews; capital gain, tax equalization and taxable basis calculations performed by the principal accountant. |
4 | “All Other Fees” are the aggregate fees billed for products and services other than “Audit Fees”, “Audit-Related Fees” and “Tax Fees”. These fees represent all “Agreed-Upon Procedures” engagements pertaining to the Fund’s use of leverage. |
Percentage Approved Pursuant to Pre-approval Exception | ||||||||||||||||
Audit Fees Billed to Fund | Audit-Related Fees Billed to Fund | Tax Fees Billed to Fund | All Other Fees Billed to Fund | |||||||||||||
Fund Name | ||||||||||||||||
Nuveen Tactical Market Opportunities Fund | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Fiscal Year Ended September 30, 2015 | Audit Fees Billed to Fund 1 | Audit-Related Fees Billed to Fund 2 | Tax Fees Billed to Fund 3 | All Other Fees Billed to Fund 4 | ||||||||||||
Fund Name | ||||||||||||||||
Nuveen Tactical Market Opportunities Fund | 13,206 | 0 | 11 | 0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 13,206 | $ | 0 | $ | 11 | $ | 0 |
1 | “Audit Fees” are the aggregate fees billed for professional services for the audit of the Fund’s annual financial statements and services provided in connection with statutory and regulatory filings or engagements. |
2 | “Audit-Related Fees” are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements that are not reported under “Audit Fees”. These fees include offerings related to the Fund’s common shares and leverage. |
3 | “Tax Fees” are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. These fees include: all global withholding tax services; excise and state tax reviews; capital gain, tax equalization and taxable basis calculations performed by the principal accountant. |
4 | “All Other Fees” are the aggregate fees billed for products and services other than “Audit Fees”, “Audit-Related Fees” and “Tax Fees”. These fees represent all “Agreed-Upon Procedures” engagements pertaining to the Fund’s use of leverage. |
Percentage Approved Pursuant to Pre-approval Exception | ||||||||||||||||
Audit Fees Billed to Fund | Audit-Related Fees Billed to Fund | Tax Fees Billed to Fund | All Other Fees Billed to Fund | |||||||||||||
Fund Name | ||||||||||||||||
Nuveen Tactical Market Opportunities Fund | 0 | % | 0 | % | 0 | % | 0 | % |
Fiscal Year Ended September 30, 2016 | Audit-Related Fees Billed to Adviser and Affiliated Fund Service Providers | Tax Fees Billed to Adviser and Affiliated Fund Service Providers | All Other Fees Billed to Adviser and Affiliated Fund Service Providers | |||||||||
Nuveen Investment Funds, Inc. | $ | 0 | $ | 0 | $ | 0 | ||||||
Percentage Approved Pursuant to Pre-approval Exception | ||||||||||||
Audit-Related Fees Billed to Adviser and Affiliated Fund Service Providers | Tax Fees Billed to Adviser and Affiliated Fund Service Providers | All Other Fees Billed to Adviser and Affiliated Fund Service Providers | ||||||||||
0 | % | 0 | % | 0 | % | |||||||
Fiscal Year Ended September 30, 2015 | Audit-Related Fees Billed to Adviser and Affiliated Fund Service Providers | Tax Fees Billed to Adviser and Affiliated Fund Service Providers | All Other Fees Billed to Adviser and Affiliated Fund Service Providers | |||||||||
Nuveen Investment Funds, Inc. | $ | 0 | $ | 0 | $ | 0 | ||||||
Percentage Approved Pursuant to Pre-approval Exception | ||||||||||||
Audit-Related Fees Billed to Adviser and Affiliated Fund Service Providers | Tax Fees Billed to Adviser and Affiliated Fund Service Providers | All Other Fees Billed to Adviser and Affiliated Fund Service Providers | ||||||||||
0 | % | 0 | % | 0 | % |
Fiscal Year Ended September 30, 2016 | Total Non-Audit Fees Billed to Trust | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Trust) | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements) | Total | ||||||||||||
Fund Name | ||||||||||||||||
Nuveen Tactical Market Opportunities Fund | 0 | 0 | 0 | 0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
“Non-Audit Fees billed to Fund” for both fiscal year ends represent “Tax Fees” and “All Other Fees” billed to Fund in their respective amounts from the previous table.
Less than 50 percent of the hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.
Fiscal Year Ended September 30, 2015 | Total Non-Audit Fees Billed to Trust | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Trust) | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements) | Total | ||||||||||||
Fund Name | ||||||||||||||||
Nuveen Tactical Market Opportunities Fund | 11 | 0 | 0 | 11 | ||||||||||||
|
|
|
| �� |
|
|
|
| ||||||||
Total | $ | 11 | $ | 0 | $ | 0 | $ | 11 |
“Non-Audit Fees billed to Fund” for both fiscal year ends represent “Tax Fees” and “All Other Fees” billed to Fund in their respective amounts from the previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit Committee must approve (i) all non-audit services to be performed for the Funds by the Funds’ independent accountant and (ii) all audit and non-audit services to be performed by the Funds’ independent accountant for the Affiliated Fund Service Providers with respect to the operations and financial reporting of the Funds. Regarding tax and research projects conducted by the independent accountant for the Funds and Affiliated Fund Service Providers (with respect to operations and financial reports of the Trust), such engagements will be (i) pre-approved by the Audit Committee if they are expected to be for amounts greater than $10,000; (ii) reported to the Audit Committee Chairman for his verbal approval prior to engagement if they are expected to be for amounts under $10,000 but greater than $5,000; and (iii) reported to the Audit Committee at the next Audit Committee meeting if they are expected to be for an amount under $5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to this registrant.
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 registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable to this registrant.
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 of Trustees implemented after the registrant last provided disclosure in response to this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form.
(a)(1) | Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable because the code is posted on registrant’s website at www.nuveen.com/MutualFunds/ShareholderResources/FundGovernance.aspx and there were no amendments during the period covered by this report. (To view the code, click on Code of Conduct.) | |
(a)(2) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: 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 to this registrant. | |
(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 Investment Funds, Inc.
By (Signature and Title) | /s/ Kathleen L. Prudhomme | |
Kathleen L. Prudhomme | ||
Vice President and Secretary |
Date: December 8, 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/ Greg A. Bottjer | |
Greg A. Bottjer | ||
Chief Administrative Officer | ||
(principal executive officer) |
Date: December 8, 2016
By (Signature and Title) | /s/ Stephen D. Foy | |
Stephen D. Foy | ||
Vice President and Controller | ||
(principal financial officer) |
Date: December 8, 2016