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 811-07484
Nuveen Massachusetts Premium Income Municipal Fund
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
(Address of principal executive offices) (Zip code)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
(Name and address of agent for service)
Registrant’s telephone number, including area code: (312) 917-7700
Date of fiscal year end: May 31
Date of reporting period: May 31, 2016
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
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Table of Contents
Chairman's Letter to Shareholders | 4 |
Portfolio Manager's Comments | 5 |
Fund Leverage | 10 |
Common Share Information | 11 |
Risk Considerations | 13 |
Performance Overview and Holding Summaries | 14 |
Shareholder Meeting Report | 16 |
Report of Independent Registered Public Accounting Firm | 17 |
Portfolios of Investments | 18 |
Statement of Assets and Liabilities | 31 |
Statement of Operations | 32 |
Statement of Changes in Net Assets | 33 |
Statement of Cash Flows | 34 |
Financial Highlights | 36 |
Notes to Financial Statements | 39 |
Additional Fund Information | 50 |
Glossary of Terms Used in this Report | 51 |
Reinvest Automatically, Easily and Conveniently | 53 |
Annual Investment Management Agreement Approval Process | 54 |
Board Members & Officers | 62 |
NUVEEN | 3 |
Chairman's Letter to Shareholders
Dear Shareholders,
The U.S. economy is now seven years into the recovery, but its pace remains stubbornly subpar compared to past recoveries. Economic data continues to be a mixed bag, as it has been throughout this expansion period. While the unemployment rate fell below its pre-recession level and wages have grown slightly, a surprisingly weak jobs growth report in May cast doubt over the future strength of the labor market. The June employment report was much stronger, however, easing fears that a significant downtrend was emerging. The housing market has improved markedly but its contribution to the recovery has been lackluster. Deflationary pressures, including the dramatic slide in commodity prices, have kept inflation much lower for longer than many expected.
U.S. growth remains modest, while economic conditions elsewhere continue to appear vulnerable. On June 23, 2016, the U.K. voted to leave the European Union, known as "Brexit." The outcome surprised the global markets, leading to high levels of volatility across equities, fixed income and currencies in the days following the vote. Although the turbulence subsided not long after and many asset classes have largely recovered, uncertainties remain about the Brexit separation process and the economic and political impacts on the U.K., Europe and the rest of the world.
In the meantime, global central banks remain accommodative in efforts to bolster growth. The European Central Bank and Bank of Japan have been providing aggressive monetary stimulus, including adopting negative interest rates in both Europe and Japan, as their economies continue to lag the U.S.'s recovery. China's policy makers have also continued to manage its slowdown, but investors are still worried about where the world's second-largest economy might ultimately land.
Many of these ambiguities – both domestic and international – have kept the U.S. Federal Reserve (Fed) from raising short-term interest rates any further since December's first and only increase thus far. While markets rallied earlier in the year on the widely held expectation that the Fed would defer any increases until June, the unusually weak May jobs report and the Brexit concerns compelled the Fed to hold rates steady at its June meeting. Although labor market conditions improved in June, Britain's "leave" vote is expected to keep the Fed on hold until later in 2016.
With global economic growth still looking fairly fragile, financial markets have become more volatile over the past year. Although sentiment has improved and conditions have generally recovered from the intense volatility seen in early 2016 and following the Brexit vote in June, we expect 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
July 26, 2016
Chairman of the Board
July 26, 2016
4 | NUVEEN |
Portfolio Manager's Comments
Nuveen Connecticut Premium Income Municipal Fund (NTC)
Nuveen Massachusetts Premium Income Municipal Fund (NMT)
Nuveen Massachusetts Premium Income Municipal Fund (NMT)
These Funds feature portfolio management by Nuveen Asset Management, LLC (NAM), an affiliate of Nuveen Investments, Inc. Portfolio manager Michael S. Hamilton discusses U.S. economic and municipal market conditions, key investment strategies and the twelve-month performance of the Nuveen Connecticut and Massachusetts Funds. Michael assumed portfolio management responsibility for these Funds in 2011.
What factors affected the U.S. economy and the national municipal market during the twelve-month reporting period ended May 31, 2016?
Over the twelve-month 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 first quarter of 2016, real GDP increased at an annual rate of 0.8%, as reported by the "second" estimate of the Bureau of Economic Analysis, down from 1.4% in the fourth quarter of 2015.
The labor and housing markets were among the bright spots in the economy during the reporting period, as both showed steady improvement. As reported by the Bureau of Labor Statistics, the unemployment rate fell to 4.7% in May 2016 from 5.5% in May 2015, and job gains averaged slightly above 200,000 per month for the past twelve months. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.0% annual gain in April 2016 (most recent data available at the time this report was prepared). The 10-City and 20-City Composites reported year-over-year increases of 4.7% and 5.4%, respectively.
Consumers, whose purchases comprise the largest component of the U.S. economy, benefited from lower gasoline prices and an improving jobs market but didn't necessarily spend more. Pessimism about the economy's future and lackluster wage growth likely contributed to consumers' somewhat muted spending. Lower energy prices and tepid wage growth also weighed on inflation during this reporting period. The Consumer Price Index (CPI) rose 1.0% over the twelve-month period ended May 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%.
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 manager as of the date of this report. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and the views expressed herein are subject to change at any time, due to numerous market and other factors. The Funds disclaim any obligation to update publicly or revise any forward-looking statements or views expressed herein.
Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor's (S&P), Moody's Investors Service, Inc. (Moody's) or Fitch, Inc. (Fitch). Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below investment grade ratings. Certain bonds backed by U.S. government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.
Bond insurance guarantees only the payment of principal and interest on the bond when due, and not the value of the bonds themselves, which will fluctuate with the bond market and the financial success of the issuer and the insurer. Insurance relates specifically to the bonds in the portfolio and not to the share prices of a Fund. No representation is made as to the insurers' ability to meet their commitments.
Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.
NUVEEN | 5 |
Portfolio Manager's Comments (continued)
Business investment was also rather restrained. 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. Energy, materials and industrials companies were hit particularly hard by the downturn in natural resource prices, as well as the expectation of rising interest rates, which would make their debts more costly to service. With demand waning, companies, especially in the health care and technology sectors, looked to consolidate with rivals as a way to boost revenues. Merger and acquisition deals, both in the U.S. and globally, reached record levels in the calendar year 2015.
With the current expansion 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 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 U.S. Treasury bonds and gold from January through mid-February. However, fear began to subside in March, propelling assets that carry more risk higher. 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, 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 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 referendum on whether Britain should leave the European Union (EU), colloquially known as "Brexit," dampened the Fed's outlook. These concerns led the Fed to again hold rates steady at its June meeting (after the close of this reporting period). Subsequent to the close of this reporting period, on June 23, 2016, the U.K. voted in favor of leaving the EU. The event triggered considerable market volatility, with a steep drop in the U.K. sterling, turbulence in global equity markets and a rotation into safe-haven assets such as gold, the U.S. dollar and U.S. Treasuries.
The broad municipal bond market performed well in the twelve-month reporting period, supported by falling interest rates, a favorable supply-demand balance and generally improving credit fundamentals. Early in the reporting period, interest rates rose on the expectation that the Fed would begin to raise short-term interest rates in the latter half of 2015. However, with the Fed's first increase delayed until December and its indication of a more gradual path of increases in 2016, interest rates trended lower over the remainder of the reporting period. Municipal market yields moved in tandem with broader interest rates, ending the reporting period below where they started. However, while the yields on intermediate- and longer-dated bonds posted sizeable declines, the yields of short-dated bonds increased slightly over the reporting period. This caused the municipal yield curve to flatten over the reporting period.
The municipal market's supply-demand balance was generally favorable over this reporting period. Over the twelve months ended May 31, 2016, municipal bond gross issuance nationwide totaled $384.5 billion, a 5.2% drop from the issuance for the twelve-month period ended May 31, 2015. Despite the drop, gross issuance remains elevated as issuers continue to actively and aggressively refund their outstanding debt given the very low interest rate environment. In these transactions, the issuers are issuing new bonds and taking the bond proceeds and redeeming (calling) old bonds. These refunding transactions have ranged from 40%-60% of total issuance over the past few years. Thus, the net issuance (all bonds issued less bonds redeemed) is actually much lower than the gross issuance. In fact, the total municipal bonds outstanding has actually declined in each of the past four calendar years. Overall, the gap between gross and net issuance has been a positive technical factor on municipal bond investment performance.
While supply has tightened, investor demand for municipal bonds has risen. Municipal bond mutual funds reported net inflows in 2015, and the inflows for the first four months of 2016 has already exceeded 2015's total volume for the year. The bouts of heightened volatility across other risky assets, uncertainty about the Fed's rate increases and the low to negative yields of European and
6 | NUVEEN |
Asian bonds have bolstered the appeal of municipal bonds' risk-adjusted returns and tax-equivalent yields. The municipal bond market is less directly influenced by the Fed's rate adjustments and its demand base is largely comprised of U.S. investors, factors which have helped municipal bonds deliver relatively attractive returns with less volatility than other market segments.
The fundamental backdrop also remained supportive for municipal bonds. Despite the U.S. economy's rather sluggish recovery, improving state and local balance sheets have contributed to generally good credit fundamentals. Higher tax revenue growth, better expense management and a more cautious approach to new debt issuance have led to credit upgrades and stable credit outlooks for many state and local issuers. While some pockets of weakness continued to grab headlines, including Illinois, New Jersey and Puerto Rico, their problems were largely contained, with minimal spillover into the broader municipal market.
What were the economic and market conditions in Connecticut and Massachusetts during the twelve-month reporting period ended May 31, 2016?
The Connecticut economy continues its slow recovery and is expected to continue to lag the national recovery for the near term. Employment gains in finance and manufacturing are now contributing to the recovery. As of May 2016, Connecticut's unemployment rate was 5.7%, exceeding the national rate of 4.7%. Connecticut has a high number of defense-related industries that could be vulnerable to cuts in federal defense spending. The loss of the headquarters of General Electric, which announced its relocation to Boston on January 14, 2016, is clearly not a positive sign for employment. On June 2, 2015, the Connecticut Legislature adopted the $40.3 billion 2016-2017 biennium budget. It is 6.1% larger than the adopted 2014-2015 biennium budget. It increased taxes on high income individuals from 6.7% to 6.99%. The state sales tax remained at 6.35%, but 0.5% was earmarked for cities and towns. Connecticut's pensions remain among the worst funded in the nation, which are likely to be a source of future financial strain at the state level. According to Moody's Investors Service, Inc. (Moody's), Connecticut's per-capita debt burden was the highest in the nation at $5,491 in 2014, in contrast to the national median of $1,012. Connecticut enjoyed the highest per-capita income of the 50 states, at 135% of the national average in 2014. Approximately $6.9 billion in Connecticut municipal bonds were issued during the twelve months ending May 31, 2016, an 8.7% year-over-year gross issuance decrease. At period end, Moody's rated Connecticut Aa3 with a negative outlook. Moody's changed its outlook from stable to negative on March 8, 2016 citing the State's weakening demographics and high fixed costs. S&P downgraded its rating on Connecticut from AA to AA- on May 19, 2016 citing the state's high fixed costs and underperforming revenues.
Massachusetts continues to benefit from a highly diverse economy. Biotechnology, pharmaceuticals and software development are increasingly driving the Massachusetts economy, aided by the Commonwealth's extensive education and health care sectors. Job growth in Massachusetts now exceeds the national average. Unemployment in the Commonwealth was 4.2% in May 2016, below the national average of 4.7%. According to the U.S. Department of Commerce, Bureau of Economic Analysis, Massachusetts' per capita income is second highest among the 50 states. At $59,182 for calendar year 2014, it is 128% of the national average. The Commonwealth's proposed $39.6 billion Fiscal Year 2017 budget represents a 3.8% increase over the adopted Fiscal Year 2016 budget. The proposed budget calls for no new taxes or fees, a $200 million deposit into the Commonwealth's rainy day fund, and a reduction in one-time revenue solutions. According to Moody's, Massachusetts' debt burden is second highest in the nation (after Connecticut) on a per capita basis ($4,887 versus the median of $1,012) and third highest as a percentage of the state GDP (7.4% versus the median of 2.2%). As of March 2016, Moody's rated Massachusetts Aa1 with a stable outlook, and S&P rated the commonwealth AA+ with a negative outlook. S&P changed its outlook from stable to negative on November 23, 2015 citing a reduction in the Commonwealth's reserve levels. For the twelve months ended May 31, 2016, Massachusetts' tax-exempt bond supply totaled $10.6 billion, a 1.9% gross issuance increase over the prior twelve months.
NUVEEN | 7 |
What key strategies were used to manage these Funds during the twelve-month reporting period ended May 31, 2016?
Municipal bonds delivered a strong gain over the twelve-month reporting period in an environment of falling interest rates, stronger credit fundamentals and a tight supply-demand balance. In some states, higher yielding municipal bond issuance is relatively scarce. With high yield municipal bond mutual funds experiencing surging inflows lately, demand for higher income issues has been very strong. As a result of the increased competition not only among state-specific funds but also with large, national mutual funds, we may have bought less of a new issue than we might have otherwise preferred. In some cases, particularly in Massachusetts, we chose not to buy certain issues because vigorous demand for the bonds narrowed their spreads to unattractive levels. Nevertheless, our trading activity continued to focus on pursuing the Funds' investment objectives. We continued to seek bonds in areas of the market that we expected to perform well as the economy continued to improve. The Funds' positioning emphasized intermediate and longer maturities, lower rated credits and sectors offering higher yields. To fund these purchases, we generally reinvested the proceeds from called and maturing bonds. In some cases, we sold bonds that we believed had deteriorating fundamentals or could be traded for a better relative value, as well as selling short-dated, higher quality issues that we tend to hold over short timeframes as a source of liquidity.
We've also continued to be more cautious in selecting individual securities. As investor demand for municipal securities has increased and created a slight supply-demand imbalance, we've started to see underwriters bring new issues to market that are structured with terms more favorable to the issuer and perhaps less advantageous to the investor than in the recent past. We believe this shift in the marketplace merits extra vigilance on our part to ensure that every credit considered for the portfolio offers adequate reward potential for the level of risk to the bondholder. In cases where our convictions have been less certain, we've sought compensation for the additional risk or have passed on the deal all together.
In NTC, our buying activity was fairly active in this reporting period. Generally, our purchases were bonds with maturities in the 14-to 30-year range and covered a diverse group of sectors, including local general obligation (GOs), higher education, special tax, health care and Guam Waterworks. The cash to fund these purchases was mainly from call proceeds, although we did sell some underperforming state GOs to boost the Fund's income distribution capability, as well as improve the tax efficiency of the overall portfolio. We also eliminated some uninsured Virgin Islands credits and Children's Trust Fund Puerto Rico Tobacco Settlement bonds due to credit concerns about these territories.
Similarly, NMT added bonds with 14- to 30-year maturities from a diverse group of issuers including state GOs, the Massachusetts Port Authority, health care, energy and Guam Waterworks. NMT also funded most of its purchases from the proceeds of called and maturing bonds. We did sell Puerto Rico University of the Sacred Heart revenue bonds early in the reporting period and some very short (30-day) paper toward the end of the reporting period.
As of May 31, 2016, the Funds continued to use inverse floating rate securities. We employ inverse floaters for a variety of reasons, including duration management, income enhancement and total return enhancement.
How did the Funds perform during the twelve-month reporting period ended May 31, 2016?
The tables in each Fund's Performance Overview and Holding Summaries section of this report provide the Funds' total returns for the one-year, five-year and ten-year periods ended May 31, 2016. Each Fund's total returns at common share net asset value (NAV) are compared with the performance of a corresponding market index and Lipper classification average.
For the twelve months ended May 31, 2016, the total returns at common share NAV for NTC and NMT outperformed the returns for their respective state's S&P Municipal Bond Index as well as the S&P Municipal Bond Index. For the same period, NTC lagged the average return for the Lipper Other States Municipal Debt Funds Classification Average, while NMT beat the Lipper average. Shareholders should note that the performance of the Lipper Other States classification represents the overall average of returns for funds from ten states with a wide variety of municipal market conditions, making direct comparisons less meaningful.
8 | NUVEEN |
The main contributors to the Funds' relative outperformance during this reporting period were duration and yield curve positioning, ratings allocations and credit selection. Our sector allocations were a minor detractor from relative performance. In terms of duration and yield curve positioning, longer maturity bonds outperformed shorter maturities in this reporting period. Overweight allocations to longer dated bonds (especially those with 8- to 12-year maturities in NTC and those dated 6-years and longer in NMT) and underweight exposures to shorter dated bonds (those with maturities less than 8-years in NTC and less than 6-years in NMT) were advantageous to relative performance.
Credit quality allocation was also beneficial to relative results for NTC in particular. The Connecticut Fund was aided by its underweight position in AAA rated credits, an overweight in AA rated bonds and a significant overweight in A rated bonds. However, a slightly underweight allocation to BBB rated credits was a small detractor from performance. Ratings allocations had a slightly positive impact on NMT's relative performance.
Further boosting relative performance for the two Funds was our credit selection. Our selections in longer dated and lower rated bonds performed well. In NTC, standouts during this reporting period included credits issued for Stamford Water Pollution Control and Yale New Haven Hospital. NMT was aided by favorable selections in higher education (including a Boston University credit maturing in 2059), health care (including a AA rated Children's Hospital bond) and Massachusetts state GOs. The Massachusetts Fund also saw gains from the bankruptcy settlement of the Boston Crosstown Center Hotel in March 2016, the terms of which were favorable to the Fund. Another source of positive performance during this reporting period was the two Funds' tender option bonds and leverage strategy. Leverage is discussed in more detail in the Fund's Leverage section of this report.
An Update Involving Puerto Rico
As noted in the Funds' previous shareholder reports, we continue to monitor situations in the broader municipal market for any impact on the Funds' holdings and performance: the ongoing economic problems of Puerto Rico is one such case. Puerto Rico's continued economic weakening, escalating debt service obligations, and long-standing inability to deliver a balanced budget led to multiple downgrades on its debt over the past two years. Puerto Rico has warned investors since 2014 that the island's debt burden may be unsustainable and the Commonwealth has been exploring various strategies to deal with this burden, including Chapter 9 bankruptcy, which is currently not available by law. On June 30, 2016 (subsequent to the end of the reporting period), President Obama signed the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) into law. The legislation creates a path for Puerto Rico to establish an independent oversight board responsible for managing the government's financial operations and restructure debt. Implementation is expected to take time, as the law focuses on developing a comprehensive five-year fiscal plan.
In terms of Puerto Rico holdings, shareholders should note that NTC and NMT had limited exposure, which was insured to Puerto Rico debt, holding 1.5% and 0.53%, respectively, of each Fund's net assets as of the end of this reporting period. The Puerto Rico credits offered higher yields, added diversification and triple exemption (i.e., exemption from most federal, state and local taxes). Puerto Rico general obligation debt is currently rated Caa2/CC/CC (below investment grade) by Moody's, S&P and Fitch, respectively, with negative outlooks.
A Note About Investment Valuations
The municipal securities held by the Funds are valued by the Funds' pricing service using a range of market-based inputs and assumptions. A different municipal pricing service might incorporate different assumptions and inputs into its valuation methodology, potentially resulting in different values for the same securities. These differences could be significant, both as to such individual securities, and as to the value of a given Fund's portfolio in its entirety. Thus, the current net asset value of a Fund's shares may be impacted, higher or lower, if the Fund were to change pricing service, or if its pricing service were to materially change its valuation methodology. The Funds have received notification by their current municipal bond pricing service that such service has agreed to be acquired by the parent company of another pricing service, and that the transaction is under regulatory review. Thus there is an increased risk that the Funds' pricing service may change, or that the Funds' current pricing service may change its valuation methodology, either of which could have an impact on the net asset value of each Fund's shares.
NUVEEN | 9 |
Fund Leverage
IMPACT OF THE FUNDS' LEVERAGE STRATEGIES ON PERFORMANCE
One important factor impacting the returns of the Funds relative to their comparative benchmarks was the Funds' use of leverage through their issuance of preferred shares and/or investments in inverse floating rate securities, which represent leveraged investments in underlying bonds. The Funds use leverage because our research has shown that, over time, leveraging provides opportunities for additional income, particularly in the recent market environment where short-term market rates are at or near historical lows, meaning that the short-term rates the Fund has been paying on its leveraging instruments have been much lower than the interest the Fund has been earning on its portfolio of long-term bonds that it has bought with the proceeds of that leverage. However, use of leverage also can expose the Fund to additional price volatility. When a Fund uses leverage, the Fund will experience a greater increase in its net asset value if the municipal bonds acquired through the use of leverage increase in value, but it will also experience a correspondingly larger decline in its net asset value if the bonds acquired through leverage decline in value, which will make the Fund's net asset value more volatile, and its total return performance more variable over time. In addition, income in levered funds will typically decrease in comparison to unlevered funds when short-term interest rates increase and increase when short-term interest rates decrease. Leverage had a positive impact on the performance of these Funds over this reporting period.
As of May 31, 2016, the Funds' percentages of leverage are as shown in the accompanying table.
NTC | NMT | ||||||
Effective Leverage* | 36.36% | 36.19% | |||||
Regulatory Leverage* | 32.84% | 34.04% |
* | Effective Leverage is a Fund's effective economic leverage, and includes both regulatory leverage and the leverage effects of certain derivative and other investments in a Fund's portfolio that increase the Fund's investment exposure. Currently, the leverage effects of Tender Option Bond (TOB) inverse floater holdings are included in effective leverage values, in addition to any regulatory leverage. Regulatory leverage consists of preferred shares issued or borrowings of a Fund. Both of these are part of a Fund's capital structure. Regulatory leverage is subject to asset coverage limits set forth in the Investment Company Act of 1940. |
THE FUNDS' REGULATORY LEVERAGE
As of May 31, 2016, the Funds have issued and outstanding Variable Rate MuniFund Term Preferred (VMTP) Shares as shown in the accompanying table.
VMTP Shares | |||||||
Shares Issued at | |||||||
Series | Liquidation Value | ||||||
NTC | 2017 | $ | 106,000,000 | ||||
NMT | 2017 | $ | 74,000,000 |
Refer to Notes to Financial Statements, Note 4 — Fund Shares, Preferred Shares for further details on VMTP Shares and each Fund's respective transactions.
10 | NUVEEN |
Common Share Information
COMMON SHARE DISTRIBUTION INFORMATION
The following information regarding the Funds' distributions is current as of May 31, 2016. Each Fund's distribution levels may vary over time based on each Fund's investment activity and portfolio investments value changes.
During the current reporting period, each Fund's distributions to common shareholders were as shown in the accompanying table.
Per Common | |||||||
Share Amounts | |||||||
Monthly Distributions (Ex-Dividend Date) | NTC | NMT | |||||
June 2015 | 0.0570 | 0.0590 | |||||
July | 0.0570 | 0.0590 | |||||
August | 0.0570 | 0.0590 | |||||
September | 0.0570 | 0.0590 | |||||
October | 0.0570 | 0.0590 | |||||
November | 0.0570 | 0.0590 | |||||
December | 0.0570 | 0.0590 | |||||
January | 0.0570 | 0.0590 | |||||
February | 0.0570 | 0.0590 | |||||
March | 0.0570 | 0.0590 | |||||
April | 0.0570 | 0.0590 | |||||
May 2016 | 0.0570 | 0.0590 | |||||
Total Monthly Per Share Distributions | $ | 0.6840 | $ | 0.7080 | |||
Ordinary Income Distribution* | $ | 0.0023 | $ | 0.0015 | |||
Total Distributions from Net Investment Income | $ | 0.6863 | $ | 0.7095 | |||
Yields | |||||||
Market Yield** | 5.05 | % | 4.72 | % | |||
Taxable-Equivalent Yield** | 7.46 | % | 6.91 | % |
* | Distribution paid in December 2015 |
** | Market Yield is based on the Fund's current annualized monthly dividend divided by the Fund's current market price as of the end of the reporting period. Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.3% and 31.7% for Connecticut and Massachusetts, respectively. When comparing a Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield would be lower. |
Each Fund in this report seeks to pay regular monthly dividends out of their net investment income at a rate that reflects its past and projected net income performance. To permit each Fund to maintain a more stable monthly dividend, the Fund may pay dividends at a rate that may be more or less than the amount of net income actually earned by the Fund during the period. If a Fund has cumulatively earned more than it has paid in dividends, it will hold the excess in reserve as undistributed net investment income (UNII) as part of the Fund's net asset value. Conversely, if a Fund has cumulatively paid in dividends more than it has earned, the excess will constitute a negative UNII that will likewise be reflected in the Fund's net asset value. Each Fund will, over time, pay all its net investment income as dividends to shareholders.
NUVEEN | 11 |
Common Share Information (continued)
As of May 31, 2016, the Funds had positive UNII balances for tax purposes and positive UNII balances for financial reporting purposes.
All monthly dividends paid by each Fund during the current reporting period were paid from net investment income. If a portion of the Fund's monthly distributions was sourced from or comprised of elements other than net investment income, including capital gains and/or a return of capital, shareholders would have received a notice to that effect. For financial reporting purposes the composition and per share amounts of each Fund's dividends for the reporting period are presented in this report's Statement of Changes in Net Assets and Financial Highlights, respectively. For income tax purposes, distribution information for each Fund as of its most recent tax year end is presented in Note 6 — Income Tax Information within the Notes to Financial Statements of this report.
COMMON SHARE REPURCHASES
During August 2015, the Funds' Board of Trustees reauthorized an open-market share repurchase program, allowing each Fund to repurchase an aggregate of up to approximately 10% of its outstanding shares.
As of May 31, 2016, and since the inception of the Funds' repurchase programs, the Funds have cumulatively repurchased and retired common shares as shown in the accompanying table.
NTC | NMT | ||||||
Common shares cumulatively repurchased and retired | 155,000 | — | |||||
Common shares authorized for repurchase | 1,460,000 | 935,000 |
During the current reporting period, the Funds did not repurchased any of their outstanding common shares.
OTHER COMMON SHARE INFORMATION
As of May 31, 2016, and during the current reporting period, the Funds' common share prices were trading at a premium/(discount) to their common share NAVs as shown in the accompanying table.
NTC | NMT | ||||||
Common share NAV | $ | 14.92 | $ | 15.34 | |||
Common share price | $ | 13.54 | $ | 14.99 | |||
Premium/(Discount) to NAV | (9.25 | )% | (2.28 | )% | |||
12-month average premium/(discount) to NAV | (12.52 | )% | (6.99 | )% |
12 | NUVEEN |
Risk Considerations
Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation.
Nuveen Connecticut Premium Income Municipal Fund (NTC)
Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund's investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. Debt or fixed income securities such as those held by the Fund, are subject to market risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. Leverage increases return volatility and magnifies the Fund's potential return and its risks; there is no guarantee a fund's leverage strategy will be successful. State concentration makes the Fund more susceptible to local adverse economic, political, or regulatory changes affecting municipal bond issuers. These and other risk considerations such as inverse floater risk and tax risk are described in more detail on the Fund's web page at www.nuveen.com/NTC.
Nuveen Massachusetts Premium Income Municipal Fund (NMT)
Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund's investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. Debt or fixed income securities such as those held by the Fund, are subject to market risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. Leverage increases return volatility and magnifies the Fund's potential return and its risks; there is no guarantee a fund's leverage strategy will be successful. State concentration makes the Fund more susceptible to local adverse economic, political, or regulatory changes affecting municipal bond issuers. These and other risk considerations such as inverse floater risk and tax risk are described in more detail on the Fund's web page at www.nuveen.com/NMT.
NUVEEN | 13 |
NTC | |
Nuveen Connecticut Premium Income Municipal Fund | |
Performance Overview and Holding Summaries as of May 31, 2016 |
Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.
Average Annual Total Returns as of May 31, 2016
Average Annual | |||||||
1-Year | 5-Year | 10-Year | |||||
NTC at Common Share NAV | 8.97% | 5.93% | 5.32% | ||||
NTC at Common Share Price | 13.19% | 6.04% | 5.03% | ||||
S&P Municipal Bond Connecticut Index | 4.85% | 3.58% | 4.10% | ||||
S&P Municipal Bond Index | 5.72% | 5.23% | 4.84% | ||||
Lipper Other States Municipal Debt Funds Classification Average | 9.26% | 7.66% | 5.82% |
Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses, and assume reinvestment of distributions. Comparative index and Lipper return information is provided for the Fund's shares at NAV only. Indexes and Lipper averages are not available for direct investment.
This data relates to the securities held in the Fund's portfolio of investments as of the end of the reporting period. It should not be construed as a measure of performance for the Fund itself. Holdings are subject to change.
Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor's Group, Moody's Investors Service, Inc. or Fitch, Inc. Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below-investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.
Fund Allocation | |
(% of net assets) | |
Long-Term Municipal Bonds | 154.0% |
Other Assets Less Liabilities | 0.8% |
Net Assets Plus Floating Rate Obligations & VMTP Shares, at Liquidation Preference | 154.8% |
Floating Rate Obligations | (5.9)% |
VMTP Shares, at Liquidation Preference | (48.9)% |
Net Assets | 100% |
Portfolio Composition | |
(% of total investments) | |
Health Care | 22.2% |
Education and Civic Organizations | 17.5% |
Tax Obligation/General | 17.1% |
Tax Obligation/Limited | 13.3% |
U.S. Guaranteed | 12.5% |
Water and Sewer | 10.7% |
Other | 6.7% |
Total | 100% |
Credit Quality | |
(% of total investment exposure) | |
AAA/U.S. Guaranteed | 19.6% |
AA | 51.3% |
A | 23.9% |
BBB | 2.4% |
N/R (not rated) | 2.8% |
Total | 100% |
14 | NUVEEN |
NMT | |
Nuveen Massachusetts Premium Income Municipal Fund | |
Performance Overview and Holding Summaries as of May 31, 2016 |
Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.
Average Annual Total Returns as of May 31, 2016
Average Annual | |||||||
1-Year | 5-Year | 10-Year | |||||
NMT at Common Share NAV | 9.64% | 6.72% | 5.77% | ||||
NMT at Common Share Price | 20.01% | 7.44% | 5.87% | ||||
S&P Municipal Bond Massachusetts Index | 5.69% | 4.68% | 4.90% | ||||
S&P Municipal Bond Index | 5.72% | 5.23% | 4.84% | ||||
Lipper Other States Municipal Debt Funds Classification Average | 9.26% | 7.66% | 5.82% |
Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses, and assume reinvestment of distributions. Comparative index and Lipper return information is provided for the Fund's shares at NAV only. Indexes and Lipper averages are not available for direct investment.
This data relates to the securities held in the Fund's portfolio of investments as of the end of the reporting period. It should not be construed as a measure of performance for the Fund itself. Holdings are subject to change.
Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor's Group, Moody's Investors Service, Inc. or Fitch, Inc. Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below-investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.
Fund Allocation | |
(% of net assets) | |
Long-Term Municipal Bonds | 149.6% |
Other Assets Less Liabilities | 2.0% |
Net Assets Plus VMTP Shares, at Liquidation Preference | 151.6% |
VMTP Shares, at Liquidation Preference | (51.6)% |
Net Assets | 100% |
Portfolio Composition | |
(% of total investments) | |
Education and Civic Organizations | 27.6% |
Health Care | 17.5% |
U.S. Guaranteed | 13.4% |
Tax Obligation/Limited | 11.1% |
Tax Obligation/General | 10.4% |
Transportation | 6.0% |
Other | 14.0% |
Total | 100% |
Credit Quality | |
(% of total investment exposure) | |
AAA/U.S. Guaranteed | 16.7% |
AA | 47.3% |
A | 26.3% |
BBB | 5.7% |
BB or Lower | 2.1% |
N/R (not rated) | 1.9% |
Total | 100% |
NUVEEN | 15 |
Shareholder Meeting Report
The annual meeting of shareholders was held in the offices of Nuveen Investments on April 22, 2016 for NTC; at this meeting the shareholders were asked to elect Board Members.
NTC | |||||||
Common and | |||||||
Preferred | |||||||
shares | |||||||
voting together | Preferred | ||||||
as a class | Shares | ||||||
Approval of the Board Members was reached as follows: | |||||||
William C. Hunter | |||||||
For | — | 1,060 | |||||
Withhold | — | — | |||||
Total | — | 1,060 | |||||
William J. Schneider | |||||||
For | — | 1,060 | |||||
Withhold | — | — | |||||
Total | — | 1,060 | |||||
Judith M. Stockdale | |||||||
For | 12,038,578 | — | |||||
Withhold | 383,781 | — | |||||
Total | 12,422,359 | — | |||||
Carole E. Stone | |||||||
For | 12,054,493 | — | |||||
Withhold | 367,866 | — | |||||
Total | 12,422,359 | — | |||||
Margaret L. Wolff | |||||||
For | 12,031,585 | — | |||||
Withhold | 390,774 | — | |||||
Total | 12,422,359 | — |
16 | NUVEEN |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of
Nuveen Connecticut Premium Income Municipal Fund
Nuveen Massachusetts Premium Income Municipal Fund:
Nuveen Connecticut Premium Income Municipal Fund
Nuveen Massachusetts Premium Income Municipal Fund:
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Nuveen Connecticut Premium Income Municipal Fund and Nuveen Massachusetts Premium Income Municipal Fund (the "Funds") as of May 31, 2016, and the related statements of operations and cash flows for the year ended and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. The financial highlights for the periods presented through May 31, 2014, were audited by other auditors whose report dated July 28, 2014, expressed an unqualified opinion on those financial highlights. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. Our procedures included confirmation of securities owned as of May 31, 2016, by correspondence with the custodian and brokers or other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Funds as of May 31, 2016, the results of their operations and their cash flows for the year then ended and the changes in their net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
Chicago, Illinois
July 28, 2016
Chicago, Illinois
July 28, 2016
NUVEEN | 17 |
NTC | ||
Nuveen Connecticut Premium Income Municipal Fund | ||
Portfolio of Investments | May 31, 2016 |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
LONG-TERM INVESTMENTS – 154.0% (100.0% of Total Investments) | ||||||||||
MUNICIPAL BONDS – 154.0% (100.0% of Total Investments) | ||||||||||
Education and Civic Organizations – 27.0% (17.5% of Total Investments) | ||||||||||
$ | 840 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Chase Collegiate School, Series 2007A, 5.000%, 7/01/27 – RAAI Insured | 7/17 at 100.00 | AA | $ | 873,692 | ||||
1,000 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Connecticut College, Series 2007G, 4.500%, 7/01/37 – NPFG Insured | 7/17 at 100.00 | AA– | 1,018,640 | ||||||
1,150 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Connecticut College, Series 2011H, 5.000%, 7/01/41 | 7/21 at 100.00 | A2 | 1,314,761 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Fairfield University, Series 2010-O: | ||||||||||
800 | 5.000%, 7/01/35 | 7/20 at 100.00 | A– | 903,376 | ||||||
4,000 | 5.000%, 7/01/40 | 7/20 at 100.00 | A– | 4,516,880 | ||||||
1,065 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Fairfield University, Series 2016Q-1, 5.000%, 7/01/46 | 7/26 at 100.00 | A– | 1,255,220 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Loomis Chaffee School, Series 2005F: | ||||||||||
440 | 5.250%, 7/01/18 – AMBAC Insured | No Opt. Call | A2 | 477,501 | ||||||
1,510 | 5.250%, 7/01/19 – AMBAC Insured | No Opt. Call | A2 | 1,693,586 | ||||||
1,125 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Norwich Free Academy, Series 2013B, 4.000%, 7/01/34 | 7/23 at 100.00 | A1 | 1,220,963 | ||||||
7,030 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Quinnipiac University, Refunding Series 2015L, 5.000%, 7/01/45 | 7/25 at 100.00 | A– | 8,134,413 | ||||||
260 | 5.000%, 7/01/34 | 7/26 at 100.00 | A– | 309,439 | ||||||
1,650 | 5.000%, 7/01/35 | 7/26 at 100.00 | A– | 1,955,778 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Sacred Heart University, Series 2011G: | ||||||||||
250 | 5.125%, 7/01/26 | 7/21 at 100.00 | BBB+ | 283,440 | ||||||
3,260 | 5.625%, 7/01/41 | 7/21 at 100.00 | BBB+ | 3,686,864 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Sacred Heart University, Series 2012H: | ||||||||||
1,500 | 5.000%, 7/01/26 – AGM Insured | 7/22 at 100.00 | AA | 1,744,410 | ||||||
1,000 | 5.000%, 7/01/28 – AGM Insured | 7/22 at 100.00 | AA | 1,152,750 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, The Loomis Chaffee School Issue, Series 2011-I: | ||||||||||
560 | 5.000%, 7/01/23 – AGM Insured | 7/21 at 100.00 | A2 | 650,076 | ||||||
225 | 5.000%, 7/01/24 – AGM Insured | 7/21 at 100.00 | A2 | 262,085 | ||||||
17,000 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Yale University, Series 2007Z-3, 5.050%, 7/01/42 (UB) (4) | 7/17 at 100.00 | AAA | 17,764,490 | ||||||
5,580 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Connecticut State University System, Series 2013N, 5.000%, 11/01/31 | 11/23 at 100.00 | AA– | 6,814,463 | ||||||
515 | University of Connecticut, Student Fee Revenue Bonds, Refunding Series 2010A, 5.000%, 11/15/27 | 11/19 at 100.00 | Aa2 | 579,926 | ||||||
1,500 | University of Connecticut, Student Fee Revenue Bonds, Refunding Series 2012A, 5.000%, 11/15/29 | No Opt. Call | Aa2 | 1,814,940 | ||||||
52,260 | Total Education and Civic Organizations | 58,427,693 |
18 | NUVEEN |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
Health Care – 34.2% (22.2% of Total Investments) | ||||||||||
$ | 5,500 | Connecticut Health and Educational Facilities Authority Revenue Bonds, Hartford HealthCare, Series 2015F, 5.000%, 7/01/45 | 7/25 at 100.00 | A | $ | 6,314,605 | ||||
4,540 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Ascension Health Series 2010A, 5.000%, 11/15/40 | 11/19 at 100.00 | AA+ | 5,052,021 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Bristol Hospital, Series 2002B: | ||||||||||
560 | 5.500%, 7/01/21 – RAAI Insured | 8/16 at 100.00 | AA | 561,747 | ||||||
3,000 | 5.500%, 7/01/32 – RAAI Insured | 8/16 at 100.00 | AA | 3,006,390 | ||||||
1,010 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Catholic Health East Series 2010, 4.750%, 11/15/29 | 11/20 at 100.00 | AA | 1,120,322 | ||||||
200 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Danbury Hospital, Series 2006H, 4.500%, 7/01/33 – AMBAC Insured | 8/16 at 100.00 | A | 200,256 | ||||||
20 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Eastern Connecticut Health Network, Series 2000A, 6.125%, 7/01/20 – RAAI Insured | 8/16 at 100.00 | AA | 20,081 | ||||||
840 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Eastern Connecticut Health Network, Series 2005, 5.000%, 7/01/25 – RAAI Insured | 8/16 at 100.00 | AA | 841,831 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Griffin Hospital, Series 2005B: | ||||||||||
1,970 | 5.000%, 7/01/20 – RAAI Insured | 8/16 at 100.00 | A3 | 1,975,240 | ||||||
1,050 | 5.000%, 7/01/23 – RAAI Insured | 8/16 at 100.00 | A3 | 1,052,457 | ||||||
7,025 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Hartford HealthCare, Series 2011A, 5.000%, 7/01/41 | 7/21 at 100.00 | A | 7,782,225 | ||||||
500 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Hartford HealthCare, Series 2014E, 5.000%, 7/01/42 | No Opt. Call | A | 574,970 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Hospital For Special Care, Series 2007C: | ||||||||||
1,065 | 5.250%, 7/01/32 – RAAI Insured | 7/17 at 100.00 | AA | 1,109,155 | ||||||
300 | 5.250%, 7/01/37 – RAAI Insured | 7/17 at 100.00 | AA | 311,676 | ||||||
2,000 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Lawrence and Memorial Hospitals, Series 2011F, 5.000%, 7/01/36 | 7/21 at 100.00 | A | 2,220,600 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Middlesex Hospital, Series 2011N: | ||||||||||
1,105 | 5.000%, 7/01/25 | 7/21 at 100.00 | A2 | 1,254,728 | ||||||
400 | 5.000%, 7/01/26 | 7/21 at 100.00 | A2 | 452,864 | ||||||
500 | 5.000%, 7/01/27 | 7/21 at 100.00 | A2 | 563,130 | ||||||
1,915 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Middlesex Hospital, Series 2015O, 5.000%, 7/01/36 | 7/25 at 100.00 | A2 | 2,224,943 | ||||||
1,275 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Stamford Hospital, Series 2010-I, 5.000%, 7/01/30 | 7/20 at 100.00 | A | 1,429,301 | ||||||
7,000 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Stamford Hospital, Series 2012J, 5.000%, 7/01/42 | 7/22 at 100.00 | A | 7,762,720 | ||||||
2,600 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Trinity Health Credit Group, Series 2016 CT, 5.000%, 12/01/45 | 6/26 at 100.00 | AA | 3,083,418 | ||||||
3,905 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Western Connecticut Health, Series 2011M, 5.375%, 7/01/41 | 7/21 at 100.00 | A | 4,416,789 | ||||||
4,000 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Western Connecticut Health, Series 2011N, 5.000%, 7/01/29 | 7/21 at 100.00 | A | 4,504,000 | ||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Yale-New Haven Health Issue, Series 2014E: | ||||||||||
2,610 | 5.000%, 7/01/32 | 7/24 at 100.00 | Aa3 | 3,152,723 | ||||||
2,740 | 5.000%, 7/01/33 | 7/24 at 100.00 | Aa3 | 3,300,741 | ||||||
900 | 5.000%, 7/01/34 | 7/24 at 100.00 | Aa3 | 1,080,504 |
NUVEEN | 19 |
NTC | Nuveen Connecticut Premium Income Municipal Fund | |
Portfolio of Investments (continued) | May 31, 2016 |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
Health Care (continued) | ||||||||||
$ | 7,475 | Monroe County Industrial Development Corporation, New York, FHA Insured Mortgage Revenue Bonds, Unity Hospital of Rochester Project, Series 2010, 5.500%, 8/15/40 | 2/21 at 100.00 | AA | $ | 8,757,860 | ||||
66,005 | Total Health Care | 74,127,297 | ||||||||
Housing/Single Family – 1.8% (1.2% of Total Investments) | ||||||||||
3,900 | Connecticut Housing Finance Authority, Housing Mortgage Finance Program Bonds, Series 2006D, 4.650%, 11/15/27 | 8/16 at 100.00 | AAA | 3,907,449 | ||||||
Long-Term Care – 2.0% (1.2% of Total Investments) | ||||||||||
1,100 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Duncaster, Inc., Series 2014A, 5.000%, 8/01/44 | 8/24 at 100.00 | BBB– | 1,159,851 | ||||||
100 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Healthcare Facility Expansion Church Home of Hartford Inc. Project, Series 2016A, 5.000%, 9/01/46 | 9/26 at 100.00 | BB | 107,710 | ||||||
1,500 | Connecticut Housing Finance Authority, Special Needs Housing Mortgage Finance Program Special Obligation Bonds, Series 2002SNH-1, 5.000%, 6/15/32 – AMBAC Insured | 8/16 at 100.00 | N/R | 1,501,905 | ||||||
1,285 | Connecticut Housing Finance Authority, State Supported Special Obligation Bonds, Refunding Series 2010-16, 5.000%, 6/15/30 | 6/20 at 100.00 | AA– | 1,457,910 | ||||||
3,985 | Total Long-Term Care | 4,227,376 | ||||||||
Tax Obligation/General – 26.3% (17.1% of Total Investments) | ||||||||||
Bridgeport, Connecticut, General Obligation Bonds, Series 2014A: | ||||||||||
2,345 | 5.000%, 7/01/32 – AGM Insured | 7/24 at 100.00 | AA | 2,749,137 | ||||||
1,600 | 5.000%, 7/01/34 – AGM Insured | 7/24 at 100.00 | AA | 1,861,824 | ||||||
5,100 | Connecticut State, General Obligation Bonds, Green Series 2014G, 5.000%, 11/15/31 | 11/24 at 100.00 | AA– | 6,126,528 | ||||||
2,100 | Connecticut State, General Obligation Bonds, Refunding Series 2006E, 5.000%, 12/15/20 | 12/16 at 10.00 | AA– | 2,153,403 | ||||||
2,290 | Connecticut State, General Obligation Bonds, Refunding Series 2012E, 5.000%, 9/15/32 | 9/22 at 100.00 | AA– | 2,680,743 | ||||||
2,740 | Connecticut State, General Obligation Bonds, Refunding Series 2016B, 5.000%, 5/15/27 (WI/DD, Settling 6/14/16) | 5/26 at 100.00 | AA | 3,374,063 | ||||||
1,000 | Connecticut State, General Obligation Bonds, Series 2011D, 5.000%, 11/01/31 | 11/21 at 100.00 | AA– | 1,162,930 | ||||||
2,600 | Connecticut State, General Obligation Bonds, Series 2014A, 5.000%, 3/01/31 | 3/24 at 100.00 | AA– | 3,083,470 | ||||||
3,500 | Connecticut State, General Obligation Bonds, Series 2014F, 5.000%, 11/15/34 | 11/24 at 100.00 | AA– | 4,160,205 | ||||||
2,630 | Connecticut State, General Obligation Bonds, Series 2015F, 5.000%, 11/15/34 | 11/25 at 100.00 | AA– | 3,143,902 | ||||||
100 | Greenwich, Connecticut, General Obligation Bonds, Refunding Series 2016, 4.000%, 7/15/33 | 7/24 at 100.00 | Aaa | 113,160 | ||||||
1,000 | Hartford, Connecticut, General Obligation Bonds, Refunding Series 2013A, 5.000%, 4/01/31 | 4/23 at 100.00 | A+ | 1,127,310 | ||||||
870 | Hartford, Connecticut, General Obligation Bonds, Series 2009A, 5.000%, 8/15/28 | 8/19 at 100.00 | AA | 958,044 | ||||||
2,000 | Hartford, Connecticut, General Obligation Bonds, Series 2013B, 5.000%, 4/01/33 | 4/23 at 100.00 | A+ | 2,251,980 | ||||||
2,150 | New Haven, Connecticut, General Obligation Bonds, Refunding Series 2006, 5.000%, 11/01/17 – AMBAC Insured | 11/16 at 100.00 | A– | 2,189,668 | ||||||
985 | New Haven, Connecticut, General Obligation Bonds, Series 2014A, 5.000%, 8/01/33 – AGM Insured | 8/24 at 100.00 | AA | 1,166,654 | ||||||
New Haven, Connecticut, General Obligation Bonds, Series 2015: | ||||||||||
790 | 5.000%, 9/01/32 – AGM Insured | 9/25 at 100.00 | AA | 947,842 | ||||||
1,620 | 5.000%, 9/01/33 – AGM Insured | 9/25 at 100.00 | AA | 1,939,237 | ||||||
500 | 5.000%, 9/01/35 – AGM Insured | 9/25 at 100.00 | AA | 594,455 | ||||||
900 | North Haven, Connecticut, General Obligation Bonds, Series 2006, 5.000%, 7/15/24 | No Opt. Call | Aa1 | 1,125,369 | ||||||
3,890 | Oregon State, General Obligation Bonds, Oregon University System Projects, Series 2011G, 5.000%, 8/01/36 | 8/21 at 100.00 | AA+ | 4,529,283 | ||||||
2,500 | Stamford, Connecticut, General Obligation Bonds, Refunding Series 2014, 3.000%, 8/15/22 | 8/21 at 100.00 | AAA | 2,717,400 | ||||||
600 | Stratford, Connecticut, General Obligation Bonds, Series 2014, 5.000%, 12/15/32 | 12/22 at 100.00 | AA | 722,862 |
20 | NUVEEN |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
Tax Obligation/General (continued) | ||||||||||
Suffield, Connecticut, General Obligation Bonds, Refunding Series 2005: | ||||||||||
$ | 800 | 5.000%, 6/15/17 | No Opt. Call | AA+ | $ | 836,016 | ||||
820 | 5.000%, 6/15/19 | No Opt. Call | AA+ | 920,122 | ||||||
1,400 | 5.000%, 6/15/21 | No Opt. Call | AA+ | 1,661,828 | ||||||
Waterbury, Connecticut, General Obligation Bonds, Lot A Series 2015: | ||||||||||
445 | 5.000%, 8/01/30 – BAM Insured | 8/25 at 100.00 | AA | 535,789 | ||||||
390 | 5.000%, 8/01/31 – BAM Insured | 8/25 at 100.00 | AA | 467,298 | ||||||
610 | 5.000%, 8/01/32 – BAM Insured | 8/25 at 100.00 | AA | 728,151 | ||||||
445 | 5.000%, 8/01/33 – BAM Insured | 8/25 at 100.00 | AA | 530,396 | ||||||
445 | 5.000%, 8/01/34 – BAM Insured | 8/25 at 100.00 | AA | 528,001 | ||||||
49,165 | Total Tax Obligation/General | 57,087,070 | ||||||||
Tax Obligation/Limited – 20.5% (13.3% of Total Investments) | ||||||||||
Connecticut State, Special Tax Obligation Bonds, Transportation Infrastructure Purposes, Series 2014A: | ||||||||||
3,835 | 5.000%, 9/01/33 | 9/24 at 100.00 | AA | 4,644,185 | ||||||
1,000 | 5.000%, 9/01/34 | 9/24 at 100.00 | AA | 1,206,810 | ||||||
2,500 | Connecticut State, Special Tax Obligation Transportation Infrastructure Purposes Bonds, Series 2012A, 5.000%, 1/01/33 | No Opt. Call | AA | 2,953,675 | ||||||
3,855 | Connecticut State, Special Tax Obligation Transportation Infrastructure Purposes Bonds, Series 2013A, 5.000%, 10/01/33 | 10/23 at 100.00 | AA | 4,628,467 | ||||||
1,380 | Connecticut State, Special Tax Obligation Transportation Infrastructure Purposes Bonds, Series 2015A, 5.000%, 8/01/33 | 8/25 at 100.00 | AA | 1,672,353 | ||||||
Government of Guam, Business Privilege Tax Bonds, Series 2011A: | ||||||||||
840 | 5.250%, 1/01/36 | 1/22 at 100.00 | A | 952,174 | ||||||
3,200 | 5.125%, 1/01/42 | 1/22 at 100.00 | A | 3,570,624 | ||||||
3,000 | Harbor Point Infrastructure Improvement District, Connecticut, Special Obligation Revenue Bonds, Harbor Point Project, Series 2010A, 7.875%, 4/01/39 | 4/20 at 100.00 | N/R | 3,545,160 | ||||||
1,500 | Puerto Rico Municipal Finance Agency, Series 2002A, 5.250%, 8/01/21 – AGM Insured | 8/16 at 100.00 | AA | 1,522,575 | ||||||
2,550 | Puerto Rico Municipal Finance Agency, Series 2005C, 5.000%, 8/01/16 – AGM Insured | No Opt. Call | AA | 2,558,492 | ||||||
2,600 | University of Connecticut, General Obligation Bonds, Series 2010A, 5.000%, 2/15/28 | 2/20 at 100.00 | AA– | 2,936,310 | ||||||
University of Connecticut, General Obligation Bonds, Series 2013A: | ||||||||||
2,290 | 5.000%, 8/15/20 | No Opt. Call | AA– | 2,631,096 | ||||||
2,500 | 5.000%, 8/15/32 | 8/23 at 100.00 | AA– | 3,027,025 | ||||||
760 | University of Connecticut, General Obligation Bonds, Series 2014A, 5.000%, 2/15/31 | 2/24 at 100.00 | AA– | 907,668 | ||||||
1,415 | University of Connecticut, General Obligation Bonds, Series 2015A, 5.000%, 2/15/34 | No Opt. Call | AA– | 1,686,496 | ||||||
1,355 | University of Connecticut, General Obligation Bonds, Series 2016A, 5.000%, 3/15/32 | 3/26 at 100.00 | AA– | 1,646,162 | ||||||
1,790 | Virgin Islands Public Finance Authority, Gross Receipts Taxes Loan Note, Refunding Series 2012A, 5.000%, 10/01/32 – AGM Insured | No Opt. Call | AA | 1,999,179 | ||||||
2,150 | Virgin Islands Public Finance Authority, Matching Fund Loan Notes Revenue Bonds, Senior Lien Series 2010A, 5.000%, 10/01/29 | 10/20 at 100.00 | BBB | 2,355,476 | ||||||
38,520 | Total Tax Obligation/Limited | 44,443,927 | ||||||||
Transportation – 0.2% (0.2% of Total Investments) | ||||||||||
450 | Virgin Islands Port Authority, Marine Revenue Bonds, Refunding Series 2014B, 5.000%, 9/01/44 | 9/24 at 100.00 | BBB+ | 504,491 | ||||||
U.S. Guaranteed – 19.3% (12.5% of Total Investments) (5) | ||||||||||
Connecticut Health and Educational Facilities Authority, Child Care Facilities Program Revenue Bonds, Series 2006F: | ||||||||||
2,525 | 5.000%, 7/01/31 (Pre-refunded 7/01/16) – AGC Insured | 7/16 at 100.00 | AA (5) | 2,534,267 | ||||||
1,930 | 5.000%, 7/01/36 (Pre-refunded 7/01/16) – AGC Insured | 7/16 at 100.00 | AA (5) | 1,937,083 | ||||||
4,405 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Quinnipiac University, Series 2007-I, 5.000%, 7/01/25 (Pre-refunded 7/01/17) – NPFG Insured | 7/17 at 100.00 | AA– (5) | 4,605,339 | ||||||
NUVEEN | 21 |
NTC | Nuveen Connecticut Premium Income Municipal Fund | |
Portfolio of Investments (continued) | May 31, 2016 |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
U.S. Guaranteed (5) (continued) | ||||||||||
Connecticut Health and Educational Facilities Authority, Revenue Bonds, Renbrook School, Series 2007A: | ||||||||||
$ | 465 | 5.000%, 7/01/30 (Pre-refunded 7/01/17) – AMBAC Insured | 7/17 at 100.00 | N/R (5) | $ | 486,148 | ||||
735 | 5.000%, 7/01/37 (Pre-refunded 7/01/17) – AMBAC Insured | 7/17 at 100.00 | N/R (5) | 768,428 | ||||||
4,140 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Wesleyan University, Series 2010G, 5.000%, 7/01/35 (Pre-refunded 7/01/20) | 7/20 at 100.00 | AA (5) | 4,720,635 | ||||||
775 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, William W. Backus Hospital, Series 2005F, 5.125%, 7/01/35 (Pre-refunded 7/01/18) – AGM Insured | 7/18 at 100.00 | AA (5) | 844,192 | ||||||
9,950 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Yale University, Series 2007Z-1, 5.000%, 7/01/42 (Pre-refunded 7/01/16) | 7/16 at 100.00 | AAA | 9,987,011 | ||||||
1,240 | Connecticut Health and Educational Facilities Authority, Revenue Bonds, Yale-New Haven Hospital, Series 2010M, 5.500%, 7/01/40 (Pre-refunded 7/01/20) | 7/20 at 100.00 | Aa3 (5) | 1,458,624 | ||||||
1,125 | Connecticut State Development Authority, Health Facilities Revenue Bonds, Alzheimer's Resource Center of Connecticut, Inc., Series 2007, 5.500%, 8/15/27 (Pre-refunded 8/15/17) | 8/17 at 100.00 | N/R (5) | 1,188,371 | ||||||
3,500 | Connecticut State, General Obligation Bonds, Series 2006A, 4.750%, 12/15/24 (Pre-refunded 12/15/16) | 12/16 at 100.00 | AA– (5) | 3,581,900 | ||||||
5,000 | Connecticut State, Special Tax Obligation Transportation Infrastructure Bonds, Series 2007A, 5.000%, 8/01/27 (Pre-refunded 8/01/17) – AMBAC Insured | 8/17 at 100.00 | AA (5) | 5,252,950 | ||||||
870 | Hartford, Connecticut, General Obligation Bonds, Series 2009A, 5.000%, 8/15/28 (Pre-refunded 8/15/19) – AGC Insured | 8/19 at 100.00 | AA (5) | 981,638 | ||||||
40 | New Haven, Connecticut, General Obligation Bonds, Series 2002A, 5.250%, 11/01/17 – AMBAC Insured (ETM) | No Opt. Call | A– (5) | 41,485 | ||||||
1,010 | Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 1998A, 5.125%, 6/01/24 – AMBAC Insured (ETM) | No Opt. Call | Aaa | 1,194,739 | ||||||
1,725 | Stamford, Connecticut, Special Obligation Revenue Bonds, Mill River Corridor Project, Series 2011aA, 7.000%, 4/01/41 (Pre-refunded 4/01/21) | 4/21 at 100.00 | N/R (5) | 2,172,603 | ||||||
39,435 | Total U.S. Guaranteed | 41,755,413 | ||||||||
Utilities – 6.3% (4.1% of Total Investments) | ||||||||||
4,375 | Connecticut Development Authority, Water Facility Revenue Bonds, Aquarion Water Company Project, Series 2007, 5.100%, 9/01/37 – SYNCORA GTY Insured (Alternative Minimum Tax) | 9/17 at 100.00 | N/R | 4,486,781 | ||||||
Connecticut Municipal Electric Energy Cooperative, Power Supply System Revenue Bonds, Tender Option Bond Trust 1164: | ||||||||||
1,295 | 16.125%, 1/01/32 (IF) (4) | 1/23 at 100.00 | Aa3 | 2,156,046 | ||||||
410 | 15.979%, 1/01/38 (IF) (4) | 1/23 at 100.00 | Aa3 | 642,704 | ||||||
Connecticut Transmission Municipal Electric Energy Cooperative, Transmission System Revenue Bonds, Series 2012A: | ||||||||||
655 | 5.000%, 1/01/31 | 1/22 at 100.00 | Aa3 | 772,337 | ||||||
500 | 5.000%, 1/01/32 | 1/22 at 100.00 | Aa3 | 588,110 | ||||||
2,830 | 5.000%, 1/01/42 | 1/22 at 100.00 | Aa3 | 3,276,348 | ||||||
1,765 | Eastern Connecticut Resource Recovery Authority, Solid Waste Revenue Bonds, Wheelabrator Lisbon Project, Series 1993A, 5.500%, 1/01/20 (Alternative Minimum Tax) | 7/16 at 100.00 | A– | 1,776,720 | ||||||
11,830 | Total Utilities | 13,699,046 | ||||||||
Water and Sewer – 16.4% (10.7% of Total Investments) | ||||||||||
Greater New Haven Water Pollution Control Authority, Connecticut, Regional Wastewater System Revenue Bonds, Refunding Series 2014B: | ||||||||||
500 | 5.000%, 8/15/30 | 8/24 at 100.00 | AA | 603,470 | ||||||
1,000 | 5.000%, 8/15/31 | 8/24 at 100.00 | AA | 1,203,300 | ||||||
500 | 5.000%, 8/15/32 | 8/24 at 100.00 | AA | 599,995 | ||||||
55 | Greater New Haven Water Pollution Control Authority, Connecticut, Regional Wastewater System Revenue Bonds, Series 2005A, 5.000%, 8/15/35 �� NPFG Insured | 11/16 at 100.00 | AA | 55,195 | ||||||
2,050 | Guam Government Waterworks Authority, Water and Wastewater System Revenue Bonds, Series 2010, 5.625%, 7/01/40 | 7/20 at 100.00 | A– | 2,295,467 |
22 | NUVEEN |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
Water and Sewer (continued) | ||||||||||
$ | 1,125 | Guam Government Waterworks Authority, Water and Wastewater System Revenue Bonds, Series 2016, 5.000%, 1/01/46 | 7/26 at 100.00 | A– | $ | 1,303,571 | ||||
6,815 | Hartford County Metropolitan District, Connecticut, Clean Water Project Revenue Bonds, Refunding Green Bond Series 2014A, 5.000%, 11/01/42 | 11/24 at 100.00 | AA | 8,123,616 | ||||||
Hartford County Metropolitan District, Connecticut, Clean Water Project Revenue Bonds, Series 2013A: | ||||||||||
4,100 | 5.000%, 4/01/36 | 4/22 at 100.00 | AA | 4,803,519 | ||||||
2,500 | 5.000%, 4/01/39 | 4/22 at 100.00 | AA | 2,913,925 | ||||||
795 | South Central Connecticut Regional Water Authority Water System Revenue Bonds, Thirtieth Series 2014A, 5.000%, 8/01/44 | 8/24 at 100.00 | Aa3 | 928,814 | ||||||
1,840 | South Central Connecticut Regional Water Authority, Water System Revenue Bonds, Twentieth Series, 2007A, 5.000%, 8/01/30 – NPFG Insured | 8/16 at 100.00 | AA– | 1,853,598 | ||||||
4,870 | South Central Connecticut Regional Water Authority, Water System Revenue Bonds, Twentieth-Sixth Series, 2011, 5.000%, 8/01/41 | 8/21 at 100.00 | Aa3 | 5,641,554 | ||||||
4,000 | South Central Connecticut Regional Water Authority, Water System Revenue Bonds, Twenty-Seventh Series 2012, 5.000%, 8/01/33 | No Opt. Call | Aa3 | 4,718,240 | ||||||
500 | Stamford, Connecticut, Water Pollution Control System and Facility Revenue Bonds, Series 2013A, 5.250%, 8/15/43 | 8/23 at 100.00 | AA+ | 603,680 | ||||||
30,650 | Total Water and Sewer | 35,647,944 | ||||||||
$ | 296,200 | Total Long-Term Investments (cost $311,078,419) – 154.0% | 333,827,706 | |||||||
Floating Rate Obligations – (5.9)% | (12,750,000 | ) | ||||||||
Variable Rate MuniFund Term Preferred Shares, at Liquidation Preference – (48.9)% (6) | (106,000,000 | ) | ||||||||
Other Assets Less Liabilities – 0.8% | 1,710,197 | |||||||||
Net Assets Applicable to Common Shares – 100% | $ | 216,787,903 |
(1) | All percentages shown in the Portfolio of Investments are based on net assets applicable to common shares unless otherwise noted. |
(2) | Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. |
(3) | Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor's Group ("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's") or Fitch, Inc. ("Fitch") rating. Ratings below BBB by Standard & Poor's, Baa by Moody's or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
(4) | Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in inverse floating rate transactions. |
(5) | Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities, which ensure the timely payment of principal and interest. Certain bonds backed by U.S. Government or agency securities are recognized as having an implied rating equal to the rating of such securities. |
(6) | Variable Rate MuniFund Term Preferred Shares, at Liquidation Preference as a percentage of Total Investments is 31.8%. |
(ETM) | Escrowed to maturity. |
(IF) | Inverse floating rate investment. |
(UB) | Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Note 3 – Portfolio Securities and Investments in Derivatives, Inverse Floating Rate Securities for more information. |
(WI/DD) | Investment, or portion of investment, purchased on a when-issued or delayed delivery basis. |
See accompanying notes to financial statements.
NUVEEN | 23 |
NMT | ||
Nuveen Massachusetts Premium Income Municipal Fund | ||
Portfolio of Investments | May 31, 2016 |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
LONG-TERM INVESTMENTS – 149.6% (100.0% of Total Investments) | ||||||||||
MUNICIPAL BONDS – 149.6% (100.0% of Total Investments) | ||||||||||
Education and Civic Organizations – 41.2% (27.6% of Total Investments) | ||||||||||
$ | 2,200 | Massachusetts Development Finance Agency, Revenue Bonds, Boston College Issue, Series 2013S, 5.000%, 7/01/38 | 7/23 at 100.00 | AA– | $ | 2,595,626 | ||||
750 | Massachusetts Development Finance Agency, Revenue Bonds, Boston University, Series 2009V-1, 5.000%, 10/01/29 | 10/19 at 100.00 | A+ | 848,895 | ||||||
Massachusetts Development Finance Agency, Revenue Bonds, Boston University, Tender Option Bond Trust 1163: | ||||||||||
1,880 | 16.051%, 10/01/48 (IF) (4) | 10/23 at 100.00 | A+ | 3,139,732 | ||||||
575 | 15.960%, 10/01/48 (IF) (4) | 10/23 at 100.00 | A+ | 959,813 | ||||||
2,150 | Massachusetts Development Finance Agency Revenue Bonds, Lesley University Issue Series B-1 and B-2, 5.250%, 7/01/33 – AGM Insured | 7/21 at 100.00 | AA | 2,474,908 | ||||||
1,400 | Massachusetts Development Finance Agency, Revenue Bonds, Emerson College, Series 2010A, 5.000%, 1/01/40 | 1/20 at 100.00 | BBB+ | 1,514,716 | ||||||
Massachusetts Development Finance Agency, Revenue Bonds, MCPHS University Issue, Series 2015H: | ||||||||||
450 | 3.500%, 7/01/35 | 7/25 at 100.00 | AA | 477,000 | ||||||
190 | 5.000%, 7/01/37 | 7/25 at 100.00 | AA | 224,989 | ||||||
550 | Massachusetts Development Finance Agency, Revenue Bonds, Northeastern University, Series 2012, 5.000%, 10/01/31 | No Opt. Call | A2 | 648,038 | ||||||
Massachusetts Development Finance Agency, Revenue Bonds, Northeastern University, Series 2014A: | ||||||||||
875 | 5.000%, 3/01/39 | 3/24 at 100.00 | A2 | 1,012,200 | ||||||
1,400 | 5.000%, 3/01/44 | 3/24 at 100.00 | A2 | 1,611,078 | ||||||
500 | Massachusetts Development Finance Agency, Revenue Bonds, Simmons College, Series 2013J, 5.250%, 10/01/39 | No Opt. Call | BBB+ | 581,765 | ||||||
1,000 | Massachusetts Development Finance Agency, Revenue Bonds, Sterling and Francine Clark Art Institute, Series 2011A, 5.000%, 7/01/41 | 7/21 at 100.00 | AA | 1,146,400 | ||||||
1,230 | Massachusetts Development Finance Agency, Revenue Bonds, Sterling and Francine Clark Art Institute, Series 2015, 5.000%, 7/01/33 | 7/25 at 100.00 | AA | 1,504,192 | ||||||
3,000 | Massachusetts Development Finance Agency, Revenue Bonds, The Broad Institute, Series 2011A, 5.250%, 4/01/37 | 4/21 at 100.00 | AA– | 3,490,620 | ||||||
875 | Massachusetts Development Finance Agency, Revenue Bonds, Tufts University, Series 2015Q, 5.000%, 8/15/38 | 8/25 at 100.00 | Aa2 | 1,057,053 | ||||||
2,095 | Massachusetts Development Finance Agency, Revenue Bonds, Worcester Polytechnic Institute, Series 2007, 5.000%, 9/01/37 – NPFG Insured | 9/17 at 100.00 | AA– | 2,197,739 | ||||||
1,365 | Massachusetts Development Finance Agency, Revenue Bonds, Worcester Polytechnic Institute, Series 2012, 5.000%, 9/01/50 | 9/22 at 100.00 | A1 | 1,557,875 | ||||||
3,000 | Massachusetts Development Finance Authority, Revenue Bonds, WGBH Educational Foundation, Series 2002A, 5.750%, 1/01/42 – AMBAC Insured | No Opt. Call | A+ | 3,983,039 | ||||||
9,950 | Massachusetts Development Finance Authority, Revenue Bonds, WGBH Educational Foundation, Series 2008A, 5.000%, 1/01/42 – AGC Insured | 1/18 at 100.00 | AA | 10,508,889 | ||||||
Massachusetts Development Finance Authority, Revenue Refunding Bonds, Boston University, Series 1999P: | ||||||||||
1,090 | 6.000%, 5/15/29 | No Opt. Call | A1 | 1,393,543 | ||||||
1,000 | 6.000%, 5/15/59 | 5/29 at 105.00 | A1 | 1,322,830 | ||||||
315 | Massachusetts Educational Financing Authority, Education Loan Revenue Bonds, Series 2008H, 6.350%, 1/01/30 – AGC Insured (Alternative Minimum Tax) | 1/18 at 100.00 | AA | 330,646 |
24 | NUVEEN |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
Education and Civic Organizations (continued) | ||||||||||
$ | 720 | Massachusetts Educational Financing Authority, Educational Loan Revenue, Series 2011J, 5.625%, 7/01/33 (Alternative Minimum Tax) | 7/21 at 100.00 | AA | $ | 800,575 | ||||
255 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Northeastern University, Series 2010A, 4.875%, 10/01/35 | 10/20 at 100.00 | A2 | 287,938 | ||||||
1,500 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Springfield College, Series 2010, 5.500%, 10/15/31 | 10/19 at 100.00 | Baa1 | 1,656,120 | ||||||
2,030 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Wheaton College Issues, Series 2010F, 5.000%, 1/01/41 | 1/20 at 100.00 | A3 | 2,263,389 | ||||||
75 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Williams College, Series 2007L, 5.000%, 7/01/31 | 7/16 at 100.00 | AA+ | 75,266 | ||||||
500 | Massachusetts Health and Educational Facilities Authority, Revenue Refunding Bonds, Suffolk University Issue, Series 2009A, 5.750%, 7/01/39 | 7/19 at 100.00 | BBB | 557,460 | ||||||
2,000 | University of Massachusetts Building Authority, Project Revenue Bonds, Senior Series 2014-1, 5.000%, 11/01/44 | 11/24 at 100.00 | Aa2 | 2,382,360 | ||||||
4,000 | University of Massachusetts Building Authority, Project Revenue Bonds, Senior Series 2015-1, 5.000%, 11/01/40 | 11/25 at 100.00 | Aa2 | 4,819,439 | ||||||
1,510 | University of Massachusetts Building Authority, Senior Lien Project Revenue Bonds, Series 2009-1, 5.000%, 5/01/39 | No Opt. Call | Aa2 | 1,673,684 | ||||||
50,430 | Total Education and Civic Organizations | 59,097,817 | ||||||||
Health Care – 26.2% (17.5% of Total Investments) | ||||||||||
1,000 | Massachusetts Development Finance Agency Revenue Bonds, Baystate Medical Center Issue, Series 2014N, 5.000%, 7/01/44 | 7/24 at 100.00 | A+ | 1,149,170 | ||||||
1,000 | Massachusetts Development Finance Agency Revenue Bonds, Children's Hospital Issue, Series 2014P, 5.000%, 10/01/46 | 10/24 at 100.00 | AA | 1,181,210 | ||||||
1,340 | Massachusetts Development Finance Agency Revenue Bonds, South Shore Hospital, Series 2016I, 5.000%, 7/01/41 | 7/26 at 100.00 | A– | 1,572,302 | ||||||
1,410 | Massachusetts Development Finance Agency, Hospital Revenue Bonds, Cape Cod Healthcare Obligated Group, Series 2013, 5.250%, 11/15/41 | 11/23 at 100.00 | A | 1,645,625 | ||||||
Massachusetts Development Finance Agency, Revenue Bonds, Berkshire Health Systems, Series 2012G: | ||||||||||
895 | 5.000%, 10/01/29 | 10/21 at 100.00 | A | 1,010,097 | ||||||
700 | 5.000%, 10/01/31 | 10/21 at 100.00 | A | 786,289 | ||||||
Massachusetts Development Finance Agency, Revenue Bonds, CareGroup Issue, Series 2015H-1: | ||||||||||
900 | 5.000%, 7/01/30 | 7/25 at 100.00 | A– | 1,080,585 | ||||||
1,000 | 5.000%, 7/01/32 | 7/25 at 100.00 | A– | 1,191,700 | ||||||
500 | 5.000%, 7/01/33 | 7/25 at 100.00 | A– | 594,515 | ||||||
1,500 | Massachusetts Development Finance Agency, Revenue Bonds, CareGroup Issue, Series 2016-I, 5.000%, 7/01/37 | 7/26 at 100.00 | A– | 1,768,635 | ||||||
1,000 | Massachusetts Development Finance Agency, Revenue Bonds, Covenant Health System Obligated Group, Series 2012, 5.000%, 7/01/31 | 7/22 at 100.00 | A– | 1,124,930 | ||||||
Massachusetts Development Finance Agency, Revenue Bonds, Lahey Health System Obligated Group Issue, Series 2015F: | ||||||||||
1,345 | 5.000%, 8/15/35 | 8/25 at 100.00 | A+ | 1,592,588 | ||||||
3,500 | 5.000%, 8/15/45 | 8/25 at 100.00 | A+ | 4,084,149 | ||||||
1,080 | Massachusetts Development Finance Agency, Revenue Bonds, Milford Regional Medical Center Issue, Series 2014F, 5.750%, 7/15/43 | 7/23 at 100.00 | BBB– | 1,221,426 | ||||||
2,200 | Massachusetts Development Finance Agency, Revenue Bonds, Partners HealthCare System, Series 2011K-6, 5.375%, 7/01/41 | 7/20 at 100.00 | AA | 2,517,592 | ||||||
1,000 | Massachusetts Development Finance Agency, Revenue Bonds, Partners HealthCare System, Series 2012L, 5.000%, 7/01/36 | 7/21 at 100.00 | AA | 1,160,040 | ||||||
820 | Massachusetts Development Finance Agency, Revenue Bonds, Southcoast Health System Obligated Group Issue, Series 2013F, 5.000%, 7/01/37 | 7/23 at 100.00 | A– | 943,402 |
NUVEEN | 25 |
NMT | Nuveen Massachusetts Premium Income Municipal Fund | |
Portfolio of Investments (continued) | May 31, 2016 |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
Health Care (continued) | ||||||||||
Massachusetts Development Finance Agency, Revenue Bonds, The Lowell General Hospital, Series 2013G: | ||||||||||
$ | 1,000 | 5.000%, 7/01/37 | 7/23 at 100.00 | BBB+ | $ | 1,116,270 | ||||
2,200 | 5.000%, 7/01/44 | 7/23 at 100.00 | BBB+ | 2,448,402 | ||||||
500 | Massachusetts Development Finance Agency, Revenue Bonds, UMass Memorial Health, Series 2011H, 5.500%, 7/01/31 | 7/21 at 100.00 | BBB+ | 569,255 | ||||||
445 | Massachusetts Development Finance Agency, Revenue Bonds, UMass Memorial Healthcare, Refunding Series 2016I, 5.000%, 7/01/36 | 7/26 at 100.00 | A– | 522,568 | ||||||
945 | Massachusetts Health and Educational Facilities Authority, Partners HealthCare System Inc., Series 2007G, 5.000%, 7/01/32 | 7/17 at 100.00 | AA | 986,986 | ||||||
160 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Baystate Medical Center, Series 2009I, 5.750%, 7/01/36 | 7/19 at 100.00 | A+ | 180,490 | ||||||
500 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Cape Cod Healthcare Obligated Group, Series 2004D, 5.125%, 11/15/35 – AGC Insured | 11/19 at 100.00 | AA | 564,055 | ||||||
2,000 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Children's Hospital, Series 2009M, 5.500%, 12/01/39 | 12/19 at 100.00 | AA | 2,267,320 | ||||||
2,500 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Dana-Farber Cancer Institute, Series 2008K, 5.000%, 12/01/37 | 12/18 at 100.00 | A1 | 2,721,650 | ||||||
1,495 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Milford Regional Medical Center, Series 2007E, 5.000%, 7/15/32 | 7/17 at 100.00 | BBB– | 1,539,177 | ||||||
32,935 | Total Health Care | 37,540,428 | ||||||||
Housing/Multifamily – 3.5% (2.4% of Total Investments) | ||||||||||
500 | Boston Housing Authority, Massachusetts, Capital Program Revenue Bonds, Series 2008, 5.000%, 4/01/20 – AGM Insured | 4/18 at 100.00 | AA | 536,450 | ||||||
2,495 | Massachusetts Development Finance Authority, Multifamily Housing Revenue Bonds, Emerson Manor Project, Series 2007, 4.800%, 7/20/48 | 7/17 at 100.00 | BB– | 2,535,469 | ||||||
2,000 | Massachusetts Housing Finance Agency, Housing Bonds, Series 2003H, 5.125%, 6/01/43 | 8/16 at 100.00 | AA– | 2,002,760 | ||||||
4,995 | Total Housing/Multifamily | 5,074,679 | ||||||||
Long-Term Care – 3.4% (2.3% of Total Investments) | ||||||||||
460 | Massachusetts Development Finance Agency, Revenue Bonds, Berkshire Retirement Community Lennox, Series 2015, 5.000%, 7/01/31 | No Opt. Call | A– | 538,849 | ||||||
285 | Massachusetts Development Finance Agency, Revenue Bonds, Carleton-Willard Village, Series 2010, 5.625%, 12/01/30 | 12/19 at 100.00 | A– | 320,998 | ||||||
1,000 | Massachusetts Development Finance Agency, Revenue Bonds, Loomis Communities, Series 2013A, 5.250%, 1/01/26 | 1/23 at 100.00 | BBB– | 1,142,790 | ||||||
500 | Massachusetts Development Finance Agency, Revenue Bonds, North Hill Communities Issue, Series 2013A, 6.250%, 11/15/28 | 11/23 at 100.00 | N/R | 553,220 | ||||||
2,410 | Massachusetts Development Finance Agency, Revenue Bonds, Orchard Cove, Series 2007, 5.250%, 10/01/26 | 10/16 at 101.00 | N/R | 2,436,823 | ||||||
4,655 | Total Long-Term Care | 4,992,680 | ||||||||
Tax Obligation/General – 15.6% (10.4% of Total Investments) | ||||||||||
2,000 | Hampden-Wilbraham Regional School District, Hampden County, Massachusetts, General Obligation Bonds, Series 2011, 5.000%, 2/15/41 | 2/21 at 100.00 | Aa3 | 2,279,720 | ||||||
1,250 | Hudson, Massachusetts, General Obligation Bonds, Municipal Purpose Loan Series 2011, 5.000%, 2/15/32 | 2/20 at 100.00 | AA | 1,413,025 | ||||||
1,010 | Massachusetts Bay Transportation Authority, General Obligation Transportation System Bonds, Series 1991A, 7.000%, 3/01/21 | No Opt. Call | AA+ | 1,186,568 | ||||||
2,440 | Massachusetts State, General Obligation Bonds, Consolidated Loan, Refunding Series 2014C, 5.000%, 8/01/22 | No Opt. Call | AA+ | 2,976,654 | ||||||
1,500 | Massachusetts State, General Obligation Bonds, Consolidated Loan, Series 2004B, 5.250%, 8/01/21 – AGM Insured | No Opt. Call | AA+ | 1,806,075 |
26 | NUVEEN |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
Tax Obligation/General (continued) | ||||||||||
$ | 2,000 | Massachusetts State, General Obligation Bonds, Consolidated Loan, Series 2015C, 5.000%, 7/01/45 | 7/25 at 100.00 | AA+ | $ | 2,400,400 | ||||
1,000 | Newburyport, Massachusetts, General Obligation Bonds, Municipal Purpose Loan, Refunding Series 2013, 4.000%, 1/15/30 | 1/23 at 100.00 | AAA | 1,105,150 | ||||||
1,775 | North Reading, Massachusetts, General Obligation Bonds, Municipal Purpose Loan Series 2012, 5.000%, 5/15/35 – AMBAC Insured | 5/22 at 100.00 | Aa2 | 2,092,210 | ||||||
1,760 | Norwell, Massachusetts, General Obligation Bonds, Series 2003, 5.000%, 11/15/20 – FGIC Insured | No Opt. Call | AAA | 2,019,266 | ||||||
Quincy, Massachusetts, General Obligation Bonds, State Qualified Municipal Purpose Loan Series 2011: | ||||||||||
1,280 | 5.125%, 12/01/33 | 12/20 at 100.00 | Aa2 | 1,471,040 | ||||||
2,000 | 5.250%, 12/01/38 | 12/20 at 100.00 | Aa2 | 2,309,300 | ||||||
1,220 | Worcester, Massachusetts, General Obligation Bonds, Series 2005A, 5.000%, 7/01/19 – FGIC Insured | 8/16 at 100.00 | AA– | 1,252,135 | ||||||
19,235 | Total Tax Obligation/General | 22,311,543 | ||||||||
Tax Obligation/Limited – 16.7% (11.1% of Total Investments) | ||||||||||
Government of Guam, Business Privilege Tax Bonds, Series 2011A: | ||||||||||
2,000 | 5.250%, 1/01/36 | 1/22 at 100.00 | A | 2,267,080 | ||||||
1,310 | 5.125%, 1/01/42 | 1/22 at 100.00 | A | 1,461,724 | ||||||
Government of Guam, Business Privilege Tax Bonds, Series 2012B-1: | ||||||||||
400 | 5.000%, 1/01/37 | 1/22 at 100.00 | A | 444,964 | ||||||
1,055 | 5.000%, 1/01/42 | 1/22 at 100.00 | A | 1,169,573 | ||||||
855 | Martha's Vineyard Land Bank, Massachusetts, Revenue Bonds, Refunding Green Series 2014, 5.000%, 5/01/33 – BAM Insured | 11/24 at 100.00 | AA | 1,020,614 | ||||||
1,000 | Massachusetts Bay Transportation Authority, Assessment Bonds, Series 2012A, 5.000%, 7/01/41 | 7/22 at 100.00 | AAA | 1,177,300 | ||||||
770 | Massachusetts Bay Transportation Authority, Sales Tax Revenue Bonds, Refunding Senior Lien Series 2004C, 5.250%, 7/01/21 | No Opt. Call | AA+ | 921,652 | ||||||
Massachusetts College Building Authority, Project Revenue Bonds, Green Series 2014B: | ||||||||||
360 | 5.000%, 5/01/39 | 5/24 at 100.00 | AA | 427,115 | ||||||
1,610 | 5.000%, 5/01/44 | 5/24 at 100.00 | AA | 1,901,233 | ||||||
1,000 | Massachusetts College Building Authority, Project Revenue Refunding Bonds, Series 2003B, 5.375%, 5/01/23 – SYNCORA GTY Insured | No Opt. Call | Aa2 | 1,255,700 | ||||||
855 | Massachusetts College Building Authority, Revenue Bonds, Refunding Series 2012B, 5.000%, 5/01/37 | 5/22 at 100.00 | AA | 1,001,607 | ||||||
1,350 | Massachusetts School Building Authority, Dedicated Sales Tax Revenue Bonds, Senior Refunding Series 2015C, 5.000%, 8/15/37 | 8/25 at 100.00 | AA+ | 1,637,078 | ||||||
1,875 | Massachusetts School Building Authority, Dedicated Sales Tax Revenue Bonds, Senior Series 2013A, 5.000%, 5/15/38 | 5/23 at 100.00 | AA+ | 2,223,825 | ||||||
5 | Massachusetts School Building Authority, Dedicated Sales Tax Revenue Bonds, Series 2007A, 5.000%, 8/15/37 – AMBAC Insured | 8/17 at 100.00 | AA+ | 5,242 | ||||||
Massachusetts School Building Authority, Dedicated Sales Tax Revenue Bonds, Series 2011B: | ||||||||||
975 | 5.000%, 10/15/35 | No Opt. Call | AA+ | 1,143,168 | ||||||
1,000 | 5.000%, 10/15/41 | 10/21 at 100.00 | AA+ | 1,175,290 | ||||||
1,070 | Massachusetts State, Special Obligation Dedicated Tax Revenue Bonds, Series 2005, 5.000%, 1/01/20 – FGIC Insured | No Opt. Call | AA– | 1,213,391 | ||||||
1,500 | Massachusetts, Transportation Fund Revenue Bonds, Accelerated Bridge Program, Series 2013A, 5.000%, 6/01/38 | 6/21 at 100.00 | AAA | 1,747,800 | ||||||
520 | Virgin Islands Public Finance Authority, Gross Receipts Taxes Loan Note, Refunding Series 2012A, 5.000%, 10/01/32 – AGM Insured | No Opt. Call | AA | 580,767 | ||||||
1,000 | Virgin Islands Public Finance Authority, Matching Fund Loan Notes Revenue Bonds, Series 2012A, 5.000%, 10/01/32 – AGM Insured | 10/22 at 100.00 | AA | 1,116,860 | ||||||
20,510 | Total Tax Obligation/Limited | 23,891,983 |
NUVEEN | 27 |
NMT | Nuveen Massachusetts Premium Income Municipal Fund | |
Portfolio of Investments (continued) | May 31, 2016 |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
Transportation – 9.0% (6.0% of Total Investments) | ||||||||||
$ | 400 | Massachusetts Department of Transportation, Metropolitan Highway System Revenue Bonds, Commonwealth Contract Assistance Secured, Refunding Series 2010B, 5.000%, 1/01/35 | 1/20 at 100.00 | AA+ | $ | 454,208 | ||||
1,000 | Massachusetts Port Authority, Airport System Revenue Bonds, Series 2010A, 5.000%, 7/01/30 | 7/20 at 100.00 | AA | 1,148,610 | ||||||
1,000 | Massachusetts Port Authority, Revenue Bonds, Series 2012B, 5.000%, 7/01/33 | 7/22 at 100.00 | AA | 1,184,240 | ||||||
Massachusetts Port Authority, Revenue Bonds, Series 2014A: | ||||||||||
1,000 | 5.000%, 7/01/39 | 7/24 at 100.00 | AA | 1,189,990 | ||||||
2,500 | 5.000%, 7/01/44 | 7/24 at 100.00 | AA | 2,960,850 | ||||||
Massachusetts Port Authority, Revenue Bonds, Series 2015A: | ||||||||||
715 | 5.000%, 7/01/40 | 7/25 at 100.00 | AA | 858,143 | ||||||
1,000 | 5.000%, 7/01/45 | 7/25 at 100.00 | AA | 1,194,820 | ||||||
1,400 | Massachusetts Port Authority, Special Facilities Revenue Bonds, BOSFUEL Corporation, Series 2007, 5.000%, 7/01/32 – FGIC Insured (Alternative Minimum Tax) | 7/17 at 100.00 | AA– | 1,449,364 | ||||||
1,225 | Massachusetts Port Authority, Special Facilities Revenue Bonds, Delta Air Lines Inc., Series 2001A, 5.000%, 1/01/27 – AMBAC Insured (Alternative Minimum Tax) | 7/16 at 100.00 | N/R | 1,229,863 | ||||||
730 | Metropolitan Boston Transit Parking Corporation, Massachusetts, Systemwide Senior Lien Parking Revenue Bonds, Series 2011, 5.000%, 7/01/41 | 7/21 at 100.00 | A+ | 844,143 | ||||||
330 | Virgin Islands Port Authority, Marine Revenue Bonds, Refunding Series 2014B, 5.000%, 9/01/44 | 9/24 at 100.00 | BBB+ | 369,960 | ||||||
11,300 | Total Transportation | 12,884,191 | ||||||||
U.S. Guaranteed – 20.1% (13.4% of Total Investments) (5) | ||||||||||
450 | Massachusetts Bay Transportation Authority, General Obligation Transportation System Bonds, Series 1991A, 7.000%, 3/01/21 (ETM) | No Opt. Call | N/R (5) | 470,381 | ||||||
Massachusetts Bay Transportation Authority, Sales Tax Revenue Bonds, Senior Lien Series 2006C: | ||||||||||
25 | 5.000%, 7/01/26 (Pre-refunded 7/01/18) | 7/18 at 100.00 | AA+ (5) | 27,190 | ||||||
975 | 5.000%, 7/01/26 (Pre-refunded 7/01/18) | 7/18 at 100.00 | AA+ (5) | 1,060,391 | ||||||
2,500 | Massachusetts College Building Authority, Project Revenue Bonds, Series 2008A, 5.000%, 5/01/33 (Pre-refunded 5/01/18) – AGC Insured | 5/18 at 100.00 | AA (5) | 2,702,225 | ||||||
2,185 | Massachusetts Development Finance Agency, Revenue Bonds, Draper Laboratory, Series 2008, 5.875%, 9/01/30 (Pre-refunded 9/01/18) | 9/18 at 100.00 | Aa3 (5) | 2,431,643 | ||||||
1,055 | Massachusetts Health and Educational Facilities Authority, Partners HealthCare System Inc., Series 2007G, 5.000%, 7/01/32 (Pre-refunded 7/01/17) | 7/17 at 100.00 | N/R (5) | 1,104,279 | ||||||
410 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, CareGroup Inc., Series 1998A, 5.000%, 7/01/25 (Pre-refunded 7/01/21) – NPFG Insured | 7/21 at 100.00 | AA– (5) | 472,915 | ||||||
Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Caregroup Inc., Series B1 Capital Asset Program Converted June 13,2008: | ||||||||||
3,380 | 5.375%, 2/01/26 (Pre-refunded 8/01/18) – NPFG Insured | 8/18 at 100.00 | AA– (5) | 3,708,129 | ||||||
600 | 5.375%, 2/01/27 (Pre-refunded 8/01/18) – NPFG Insured | 8/18 at 100.00 | AA– (5) | 658,248 | ||||||
770 | 5.375%, 2/01/28 (Pre-refunded 8/01/18) – NPFG Insured | 8/18 at 100.00 | AA– (5) | 844,752 | ||||||
Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Caregroup Inc., Series B2, Capital Asset Program, Converted June 9, 2009: | ||||||||||
2,000 | 5.375%, 2/01/27 (Pre-refunded 8/01/18) – NPFG Insured | 8/18 at 100.00 | AA– (5) | 2,194,160 | ||||||
1,500 | 5.375%, 2/01/28 (Pre-refunded 8/01/18) – NPFG Insured | 8/18 at 100.00 | AA– (5) | 1,645,620 | ||||||
3,000 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Lahey Medical Center, Series 2007D, 5.250%, 8/15/28 (Pre-refunded 8/15/17) | 8/17 at 100.00 | A+ (5) | 3,166,080 | ||||||
350 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Tufts University, Series 2008O, 5.375%, 8/15/38 (Pre-refunded 8/15/18) | 8/18 at 100.00 | Aa2 (5) | 385,200 | ||||||
515 | Massachusetts Health and Educational Facilities Authority, Revenue Bonds, Williams College, Series 2007L, 5.000%, 7/01/31 (Pre-refunded 7/01/16) | 7/16 at 100.00 | N/R (5) | 516,854 | ||||||
1,870 | Massachusetts School Building Authority, Dedicated Sales Tax Revenue Bonds, Series 2007A, 5.000%, 8/15/37 (Pre-refunded 8/15/17) – AMBAC Insured | 8/17 at 100.00 | N/R (5) | 1,966,978 | ||||||
1,000 | Massachusetts State, General Obligation Bonds, Consolidated Loan, Series 2009A, 5.000%, 3/01/21 (Pre-refunded 3/01/19) | 3/19 at 100.00 | AA+ (5) | 1,109,520 |
28 | NUVEEN |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
U.S. Guaranteed (5) (continued) | ||||||||||
Massachusetts Water Pollution Abatement Trust, Pooled Loan Program Bonds, Series 2006-12: | ||||||||||
$ | 785 | 4.375%, 8/01/31 (Pre-refunded 8/01/16) | 8/16 at 100.00 | N/R (5) | $ | 790,024 | ||||
1,215 | 4.375%, 8/01/31 (Pre-refunded 8/01/16) | 8/16 at 100.00 | AAA | 1,222,776 | ||||||
95 | Massachusetts Water Resources Authority, General Revenue Bonds, Series 2005A, 5.000%, 8/01/28 (Pre-refunded 8/01/17) – NPFG Insured | 8/17 at 100.00 | Aa1 (5) | 99,772 | ||||||
1,000 | Massachusetts Water Resources Authority, General Revenue Bonds, Series 2006A, 4.000%, 8/01/46 (Pre-refunded 8/01/16) | 8/16 at 100.00 | AA+ (5) | 1,005,590 | ||||||
1,065 | Puerto Rico, Highway Revenue Bonds, Highway and Transportation Authority, Series 2003AA, 5.500%, 7/01/19 – NPFG Insured (ETM) | No Opt. Call | A3 (5) | 1,197,848 | ||||||
26,745 | Total U.S. Guaranteed | 28,780,575 | ||||||||
Utilities – 4.5% (3.0% of Total Investments) | ||||||||||
2,580 | Guam Power Authority, Revenue Bonds, Series 2010A, 5.000%, 10/01/37 – AGM Insured | 10/20 at 100.00 | AA | 2,928,945 | ||||||
1,265 | Massachusetts Clean Energy Cooperative Corporation, Revenue Bonds, Massachusetts Municipal Lighting Plant Cooperative, Series 2013, 5.000%, 7/01/32 | 7/23 at 100.00 | A1 | 1,501,593 | ||||||
2,010 | Massachusetts Development Finance Agency, Resource Recovery Revenue Refunding Bonds, Covanta Energy Project, Series 2012B, 4.875%, 11/01/42 | 11/17 at 100.00 | BB+ | 2,021,718 | ||||||
5,855 | Total Utilities | 6,452,256 | ||||||||
Water and Sewer – 9.4% (6.3% of Total Investments) | ||||||||||
500 | Boston Water and Sewerage Commission, Massachusetts, General Revenue Bonds, Senior Lien Refunding Series 2010A, 5.000%, 11/01/30 | 11/19 at 100.00 | AA+ | 567,580 | ||||||
565 | Guam Government Waterworks Authority, Water and Wastewater System Revenue Bonds, Refunding Series 2014A, 5.000%, 7/01/29 | 7/24 at 100.00 | A– | 655,462 | ||||||
735 | Guam Government Waterworks Authority, Water and Wastewater System Revenue Bonds, Series 2016, 5.000%, 7/01/36 | 7/26 at 100.00 | A– | 861,376 | ||||||
415 | Lynn Water and Sewer Commission, Massachusetts, General Revenue Bonds, Series 2003A, 5.000%, 12/01/32 – NPFG Insured | 8/16 at 100.00 | AA– | 416,469 | ||||||
2,300 | Massachusetts Clean Water Trust, State Revolving Fund Bonds, Green 18 Series 2015, 5.000%, 2/01/45 | 2/24 at 100.00 | AAA | 2,735,919 | ||||||
60 | Massachusetts Water Pollution Abatement Trust, Pooled Loan Program Bonds, Series 2003-9, 5.000%, 8/01/22 | 8/16 at 100.00 | AAA | 60,238 | ||||||
400 | Massachusetts Water Pollution Abatement Trust, Revenue Bonds, MWRA Loan Program, Series 2002A, 5.250%, 8/01/20 | 8/16 at 100.00 | AAA | 401,676 | ||||||
1,820 | Massachusetts Water Resources Authority General Revenue Refunding Bonds, 2016 Series C (Green Bonds), 5.000%, 8/01/40 | 8/26 at 100.00 | AA+ | 2,228,026 | ||||||
Massachusetts Water Resources Authority, General Revenue Bonds, Refunding Series 2016B: | ||||||||||
455 | 5.000%, 8/01/40 | 8/26 at 100.00 | AA+ | 557,006 | ||||||
1,000 | 4.000%, 8/01/40 | 8/26 at 100.00 | AA+ | 1,111,120 | ||||||
1,000 | Massachusetts Water Resources Authority, General Revenue Bonds, Series 2002J, 5.250%, 8/01/19 – AGM Insured | No Opt. Call | AA+ | 1,135,600 | ||||||
1,405 | Massachusetts Water Resources Authority, General Revenue Bonds, Series 2005A, 5.000%, 8/01/28 | 8/17 at 100.00 | AA+ | 1,471,358 | ||||||
720 | Springfield Water and Sewer Commission, Massachusetts, General Revenue Bonds, Refunding Series 2010B, 5.000%, 11/15/30 – AGC Insured | 11/20 at 100.00 | AA | 831,031 |
NUVEEN | 29 |
NMT | Nuveen Massachusetts Premium Income Municipal Fund | |
Portfolio of Investments (continued) | May 31, 2016 |
Principal | Optional Call | |||||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||||
Water and Sewer (continued) | ||||||||||
Springfield Water and Sewer Commission, Massachusetts, General Revenue Bonds, Series 2014A: | ||||||||||
$ | 185 | 5.000%, 7/15/22 | No Opt. Call | AA– | $ | 223,778 | ||||
150 | 5.000%, 7/15/23 | No Opt. Call | AA– | 184,656 | ||||||
11,710 | Total Water and Sewer | 13,441,295 | ||||||||
$ | 188,370 | Total Long-Term Investments (cost $196,875,371) – 149.6% | 214,467,447 | |||||||
Variable Rate MuniFund Term Preferred Shares, at Liquidation Preference – (51.6)% (6) | (74,000,000 | ) | ||||||||
Other Assets Less Liabilities – 2.0% | 2,927,079 | |||||||||
Net Assets Applicable to Common Shares – 100% | $ | 143,394,526 |
(1) | All percentages shown in the Portfolio of Investments are based on net assets applicable to common shares unless otherwise noted. |
(2) | Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. |
(3) | Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor's Group ("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's") or Fitch, Inc. ("Fitch") rating. Ratings below BBB by Standard & Poor's, Baa by Moody's or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
(4) | Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in inverse floating rate transactions. |
(5) | Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities, which ensure the timely payment of principal and interest. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. |
(6) | Variable Rate MuniFund Term Preferred Shares, at Liquidation Preference as a percentage of Total Investments is 34.5%. |
(ETM) | Escrowed to maturity. |
(IF) | Inverse floating rate investment. |
See accompanying notes to financial statements.
30 | NUVEEN |
Statement of | ||
Assets and Liabilities | May 31, 2016 |
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Assets | |||||||
Long-term investments, at value (cost $311,078,419 and $196,875,371, respectively) | $ | 333,827,706 | $ | 214,467,447 | |||
Cash | 765,150 | — | |||||
Receivable for: | |||||||
Interest | 4,797,975 | 2,975,111 | |||||
Investments sold | 625,000 | 2,150,000 | |||||
Deferred offering costs | 34,483 | 51,784 | |||||
Other assets | 14,714 | 4,786 | |||||
Total assets | 340,065,028 | 219,649,128 | |||||
Liabilities | |||||||
Cash overdraft | — | 1,438,400 | |||||
Floating rate obligations | 12,750,000 | — | |||||
Payable for: | |||||||
Dividends | 800,057 | 533,078 | |||||
Interest | 120,917 | 83,160 | |||||
Investments purchased | 3,351,897 | — | |||||
Variable Rate MuniFund Term Preferred ("VMTP") Shares, at liquidation preference | 106,000,000 | 74,000,000 | |||||
Accrued expenses: | |||||||
Management fees | 173,638 | 111,870 | |||||
Trustees fees | 10,999 | 764 | |||||
Other | 69,617 | 87,330 | |||||
Total liabilities | 123,277,125 | 76,254,602 | |||||
Net assets applicable to common shares | $ | 216,787,903 | $ | 143,394,526 | |||
Common shares outstanding | 14,533,976 | 9,346,877 | |||||
Net asset value ("NAV") per common share outstanding | $ | 14.92 | $ | 15.34 | |||
Net assets applicable to common shares consist of: | |||||||
Common shares, $0.01 par value per share | $ | 145,340 | $ | 93,469 | |||
Paid-in surplus | 200,637,594 | 129,728,795 | |||||
Undistributed (Over-distribution of) net investment income | 357,445 | 369,320 | |||||
Accumulated net realized gain (loss) | (7,101,763 | ) | (4,389,134 | ) | |||
Net unrealized appreciation (depreciation) | 22,749,287 | 17,592,076 | |||||
Net assets applicable to common shares | $ | 216,787,903 | $ | 143,394,526 | |||
Authorized shares: | |||||||
Common | Unlimited | Unlimited | |||||
Preferred | Unlimited | Unlimited |
See accompanying notes to financial statements.
NUVEEN | 31 |
Statement of | ||
Operations | Year Ended May 31, 2016 |
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Investment Income | $ | 13,257,942 | $ | 8,736,496 | |||
Expenses | |||||||
Management fees | 2,022,224 | 1,299,200 | |||||
Interest expense and amortization of offering costs | 1,271,733 | 804,522 | |||||
Custodian fees | 40,456 | 33,592 | |||||
Trustees fees | 8,541 | 5,743 | |||||
Professional fees | 33,521 | 35,297 | |||||
Shareholder reporting expenses | 24,477 | 14,078 | |||||
Shareholder servicing agent fees | 23,880 | 20,561 | |||||
Stock exchange listing fees | 7,912 | 7,912 | |||||
Investor relations expenses | 24,607 | 17,080 | |||||
Other | 56,523 | 25,328 | |||||
Total expenses | 3,513,874 | 2,263,313 | |||||
Net investment income (loss) | 9,744,068 | 6,473,183 | |||||
Realized and Unrealized Gain (Loss) | |||||||
Net realized gain (loss) from investments | 776,785 | (382,258 | ) | ||||
Change in net unrealized appreciation (depreciation) of investments | 7,661,915 | 6,805,418 | |||||
Net realized and unrealized gain (loss) | 8,438,700 | 6,423,160 | |||||
Net increase (decrease) in net assets applicable to common shares from operations | $ | 18,182,768 | $ | 12,896,343 |
See accompanying notes to financial statements.
32 | NUVEEN |
Statement of | |
Changes in Net Assets |
Connecticut | Massachusetts | ||||||||||||
Premium Income (NTC) | Premium Income (NMT) | ||||||||||||
Year | Year | Year | Year | ||||||||||
Ended | Ended | Ended | Ended | ||||||||||
5/31/16 | 5/31/15 | 5/31/16 | 5/31/15 | ||||||||||
Operations | |||||||||||||
Net investment income (loss) | $ | 9,744,068 | $ | 10,248,489 | $ | 6,473,183 | $ | 6,247,262 | |||||
Net realized gain (loss) from investments | 776,785 | 704,598 | (382,258 | ) | 209,352 | ||||||||
Change in net unrealized appreciation (depreciation) of investments | 7,661,915 | (780,480 | ) | 6,805,418 | 466,272 | ||||||||
Net increase (decrease) in net assets applicable to common shares from operations | 18,182,768 | 10,172,607 | 12,896,343 | 6,922,886 | |||||||||
Distributions to Common Shareholders | |||||||||||||
From net investment income | (9,974,668 | ) | (9,962,073 | ) | (6,631,609 | ) | (6,312,065 | ) | |||||
Decrease in net assets applicable to common shares from distributions to common shareholders | (9,974,668 | ) | (9,962,073 | ) | (6,631,609 | ) | (6,312,065 | ) | |||||
Capital Share Transactions | |||||||||||||
Common shares: | |||||||||||||
Issued in the reorganizations | — | — | — | 66,532,407 | |||||||||
Cost of shares repurchased and retired | — | (1,192,296 | ) | — | — | ||||||||
Net increase (decrease) in net assets applicable to common shares from capital share transactions | — | (1,192,296 | ) | — | 66,532,407 | ||||||||
Net increase (decrease) in net assets applicable to common shares | 8,208,100 | (981,762 | ) | 6,264,734 | 67,143,228 | ||||||||
Net assets applicable to common shares at the beginning of period | 208,579,803 | 209,561,565 | 137,129,792 | 69,986,564 | |||||||||
Net assets applicable to common shares at the end of period | $ | 216,787,903 | $ | 208,579,803 | $ | 143,394,526 | $ | 137,129,792 | |||||
Undistributed (Over-distribution of) net investment income at the end of period | $ | 357,445 | $ | 500,382 | $ | 369,320 | $ | 490,882 |
See accompanying notes to financial statements.
NUVEEN | 33 |
Statement of | ||
Cash Flows | Year Ended May 31, 2016 |
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Cash Flows from Operating Activities: | |||||||
Net Increase (Decrease) in Net Assets Applicable to Common Shares from Operations | $ | 18,182,768 | $ | 12,896,343 | |||
Adjustments to reconcile the net increase (decrease) in net assets applicable to common shares from operations to net cash provided by (used in) operating activities: | |||||||
Purchases of investments | (36,968,899 | ) | (28,090,022 | ) | |||
Proceeds from sales and maturities of investments | 38,159,592 | 27,015,056 | |||||
Amortization/(Accretion) of premiums and discounts, net | 2,075,518 | 1,224,721 | |||||
Amortization of deferred offering costs | 46,061 | 42,137 | |||||
(Increase) Decrease in: | |||||||
Receivable for interest | (23,356 | ) | 110,910 | ||||
Receivable for investments sold | (263,791 | ) | (2,150,000 | ) | |||
Other assets | (1,579 | ) | 73 | ||||
Increase (Decrease) in: | |||||||
Payable for interest | 25,807 | 18,019 | |||||
Payable for investments purchased | 3,351,897 | — | |||||
Accrued management fees | 3,686 | 2,902 | |||||
Accrued Trustees fees | 1,626 | (19 | ) | ||||
Accrued other expenses | (52,252 | ) | (105,770 | ) | |||
Net realized (gain) loss from investments | (776,785 | ) | 382,258 | ||||
Change in net unrealized (appreciation) depreciation of investments | (7,661,915 | ) | (6,805,418 | ) | |||
Net cash provided by (used in) operating activities | 16,098,378 | 4,541,190 | |||||
Cash Flows from Financing Activities: | |||||||
Increase (Decrease) in: | |||||||
Cash overdraft | — | 1,438,400 | |||||
Floating rate obligations | (6,620,000 | ) | — | ||||
Cash distributions paid to common shareholders | (9,973,350 | ) | (6,630,758 | ) | |||
Net cash provided by (used in) financing activities | (16,593,350 | ) | (5,192,358 | ) | |||
Net Increase (Decrease) in Cash | (494,972 | ) | (651,168 | ) | |||
Cash at the beginning of period | 1,260,122 | 651,168 | |||||
Cash at the end of period | $ | 765,150 | $ | — |
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
Supplemental Disclosure of Cash Flow Information | (NTC | ) | (NMT | ) | |||
Cash paid for interest (excluding amortization of offering costs) | $ | 1,198,529 | $ | 741,312 |
See accompanying notes to financial statements.
34 | NUVEEN |
THIS PAGE INTENTIONALLY LEFT BLANK
NUVEEN | 35 |
Financial | |
Highlights |
Selected data for a common share outstanding throughout each period:
Less Distributions to | |||||||||||||||||||||||||||||||
Investment Operations | Common Shareholders | Common Share | |||||||||||||||||||||||||||||
Beginning Common Share NAV | Net Investment Income (Loss) | Net Realized/ Unrealized Gain (Loss) | Total | From Net Investment Income | From Accum- ulated Net Realized Gains | Total | Discount Per Share Repurchased and Retired | Ending NAV | Ending Share Price | ||||||||||||||||||||||
Connecticut Premium Income (NTC) | |||||||||||||||||||||||||||||||
Year Ended 5/31: | |||||||||||||||||||||||||||||||
2016 | $ | 14.35 | $ | 0.67 | $ | 0.59 | $ | 1.26 | $ | (0.69 | ) | $ | — | $ | (0.69 | ) | $ | — | $ | 14.92 | $ | 13.54 | |||||||||
2015 | 14.33 | 0.70 | (0.01 | ) | 0.69 | (0.68 | ) | — | (0.68 | ) | 0.01 | 14.35 | 12.62 | ||||||||||||||||||
2014 | 15.00 | 0.60 | (0.59 | ) | 0.01 | (0.68 | ) | — | * | (0.68 | ) | — | * | 14.33 | 12.68 | ||||||||||||||||
2013 | 15.34 | 0.56 | (0.19 | ) | 0.37 | (0.70 | ) | (0.01 | ) | (0.71 | ) | — | 15.00 | 13.65 | |||||||||||||||||
2012 | 14.22 | 0.58 | 1.29 | 1.87 | (0.71 | ) | (0.04 | ) | (0.75 | ) | — | 15.34 | 14.19 | ||||||||||||||||||
Massachusetts Premium Income (NMT) | |||||||||||||||||||||||||||||||
Year Ended 5/31: | |||||||||||||||||||||||||||||||
2016 | 14.67 | 0.69 | 0.69 | 1.38 | (0.71 | ) | — | (0.71 | ) | — | 15.34 | 14.99 | |||||||||||||||||||
2015 | 14.65 | 0.65 | 0.05 | 0.70 | (0.68 | ) | — | (0.68 | ) | — | 14.67 | 13.14 | |||||||||||||||||||
2014 | 15.12 | 0.58 | (0.37 | ) | 0.21 | (0.67 | ) | (0.01 | ) | (0.68 | ) | — | 14.65 | 13.33 | |||||||||||||||||
2013 | 15.45 | 0.62 | (0.19 | ) | 0.43 | (0.71 | ) | (0.05 | ) | (0.76 | ) | — | 15.12 | 13.64 | |||||||||||||||||
2012 | 14.16 | 0.67 | 1.44 | 2.11 | (0.77 | ) | (0.05 | ) | (0.82 | ) | — | 15.45 | 15.12 |
(a) | Total Return Based on Common Share NAV is the combination of changes in common share NAV, reinvested dividend income at NAV and reinvested capital gains distributions at NAV, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending NAV. The actual reinvest price for the last dividend declared in the period may often be based on the Fund's market price (and not its NAV), and therefore may be different from the price used in the calculation. Total returns are not annualized. |
Total Return Based on Common Share Price is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized. |
36 | NUVEEN |
Common Share Supplemental Data/ | |||||||||||||||||
Ratios Applicable to Common Shares | |||||||||||||||||
Common Share | |||||||||||||||||
Total Returns | Ratios to Average Net Assets(b) | ||||||||||||||||
Based | Ending | Net | |||||||||||||||
Based | on | Net | Investment | Portfolio | |||||||||||||
on | Share | Assets | Income | Turnover | |||||||||||||
NAV | (a) | Price | (a) | (000 | ) | Expenses | (c) | (Loss | ) | Rate | (d) | ||||||
8.97 | % | 13.19 | % | $ | 216,788 | 1.66 | % | 4.61 | % | 11 | % | ||||||
4.96 | 5.03 | 208,580 | 1.68 | 4.85 | 15 | ||||||||||||
0.41 | (1.72 | ) | 209,562 | 2.88 | 4.33 | 17 | |||||||||||
2.35 | 1.02 | 220,267 | 2.68 | 4.05 | 12 | ||||||||||||
13.45 | 13.59 | 82,318 | 3.08 | 3.93 | 11 | ||||||||||||
9.64 | 20.01 | 143,395 | 1.62 | 4.65 | 13 | ||||||||||||
4.84 | 3.75 | 137,130 | 1.96 | 4.57 | 14 | ||||||||||||
1.61 | 2.96 | 69,987 | 3.09 | 4.17 | 18 | ||||||||||||
2.81 | (5.18 | ) | 72,250 | 2.86 | 3.99 | 10 | |||||||||||
15.29 | 17.78 | 73,758 | 3.03 | 4.48 | 12 |
(b) | Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to preferred shares issued by the Fund. |
(c) | The expense ratios reflect, among other things, all interest expense and other costs related to preferred shares (as described in Note 4 – Fund Shares, Preferred Shares) and/or the interest expense deemed to have been paid by the Fund on the floating rate certificates issued by the special purpose trusts for the self-deposited inverse floaters held by the Fund (as described in Note 3 – Portfolio Securities and Investments in Derivatives, Inverse Floating Rate Securities), where applicable, as follows: |
Connecticut Premium Income (NTC) | ||||
Year Ended 5/31: | ||||
2016 | 0.60 | % | ||
2015 | 0.58 | |||
2014 | 1.71 | |||
2013 | 1.55 | |||
2012 | 1.54 |
Massachusetts Premium Income (NMT) | ||||
Year Ended 5/31: | ||||
2016 | 0.58 | % | ||
2015 | 0.86 | |||
2014 | 1.71 | |||
2013 | 1.64 | |||
2012 | 1.74 |
(d) | 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. |
* | Rounds to less than $0.01 per share. |
See accompanying notes to financial statements.
NUVEEN | 37 |
Financial Highlights (continued)
MTP Shares | VMTP Shares | ||||||||||||
at the End of Period(a) | at the End of Period | ||||||||||||
Aggregate | Asset | Aggregate | Asset | ||||||||||
Amount | Coverage | Amount | Coverage | ||||||||||
Outstanding | Per $10 | Outstanding | Per $100,000 | ||||||||||
(000 | ) | Share | (000 | ) | Share | ||||||||
Connecticut Premium Income (NTC) | |||||||||||||
Year Ended 5/31: | |||||||||||||
2016 | $ | — | $ | — | $ | 106,000 | $ | 304,517 | |||||
2015 | — | — | 106,000 | 296,773 | |||||||||
2014 | — | — | 106,000 | 297,700 | |||||||||
2013 | 105,500 | 30.88 | — | — | |||||||||
2012 | 36,080 | 32.82 | — | — | |||||||||
Massachusetts Premium Income (NMT) | |||||||||||||
Year Ended 5/31: | |||||||||||||
2016 | — | — | 74,000 | 293,776 | |||||||||
2015 | — | — | 74,000 | 285,311 | |||||||||
2014 | 36,645 | 29.10 | — | — | |||||||||
2013 | 36,645 | 29.72 | — | — | |||||||||
2012 | 36,645 | 30.13 | — | — |
(a) | The Ending and Average Market Value Per Share for each Series of the Fund's MTP Shares were as follows: |
2015 | 2014 | 2013 | 2012 | ||||||||||
Connecticut Premium Income (NTC) | |||||||||||||
Series 2015 (NTC PRC) | |||||||||||||
Ending Market Value per Share | $ | — | $ | — | $ | 10.06 | $ | 10.05 | |||||
Average Market Value per Share | — | 10.03 | ΩΩ | 10.07 | 10.08 | ||||||||
Series 2016 (NTC PRD) | |||||||||||||
Ending Market Value per Share | — | — | 10.07 | 10.10 | |||||||||
Average Market Value per Share | — | 10.03 | ΩΩ | 10.11 | 10.06 | ||||||||
Series 2015 (NTC PRE) (b) | |||||||||||||
Ending Market Value per Share | — | — | 10.07 | — | |||||||||
Average Market Value per Share | — | 10.03 | ΩΩ | 10.06 | Ω | — | |||||||
Series 2015-1 (NTC PRF) (b) | |||||||||||||
Ending Market Value per Share | — | — | 10.06 | — | |||||||||
Average Market Value per Share | — | 10.03 | ΩΩ | 10.07 | Ω | — | |||||||
Series 2015-1 (NTC PRG) (b) | |||||||||||||
Ending Market Value per Share | — | — | 10.08 | — | |||||||||
Average Market Value per Share | — | 10.03 | ΩΩ | 10.08 | Ω | — | |||||||
Massachusetts Premium Income (NMT) | |||||||||||||
Series 2015 (NMT PRC) | |||||||||||||
Ending Market Value per Share | $ | — | $ | 10.06 | $ | 10.07 | $ | 10.10 | |||||
Average Market Value per Share | 10.02 | ΩΩΩ | 10.04 | 10.09 | 10.08 | ||||||||
Series 2016 (NMT PRD) | |||||||||||||
Ending Market Value per Share | — | 10.06 | 10.12 | 10.10 | |||||||||
Average Market Value per Share | 10.03 | ΩΩΩ | 10.06 | 10.11 | 10.08 | ||||||||
Series 2015 (NMT PRE) (b) | |||||||||||||
Ending Market Value per Share | — | 10.06 | 10.09 | 10.10 | |||||||||
Average Market Value per Share | 10.00 | ∆ | 10.04 | 10.08 | 10.07 | ||||||||
Series 2015-1 (NMT PRF) (b) | |||||||||||||
Ending Market Value per Share | — | 10.02 | 10.05 | 10.10 | |||||||||
Average Market Value per Share | 10.00 | ∆ | 10.04 | 10.09 | 10.08 |
(b) | MTP Shares issued in connection with the reorganizations. |
Ω | For the period July 9, 2012 (effective date of the reorganizations) through May 31, 2013. |
ΩΩ | For the period June 1, 2013 through March 3, 2014. |
ΩΩΩ | For the period June 1, 2014 through July 11, 2014. |
∆ | For the period June 9, 2014 (effective date of the reorganizations) through July 11, 2014. |
38 | NUVEEN |
Notes to Financial Statements
1. General Information and Significant Accounting Policies
General Information
Fund Information
The state funds covered in this report and their corresponding New York Stock Exchange ("NYSE") symbols are as follows (each a "Fund" and collectively, the "Funds"):
The state funds covered in this report and their corresponding New York Stock Exchange ("NYSE") symbols are as follows (each a "Fund" and collectively, the "Funds"):
• | Nuveen Connecticut Premium Income Municipal Fund (NTC) ("Connecticut Premium Income (NTC)") | |
• | Nuveen Massachusetts Premium Income Municipal Fund (NMT) ("Massachusetts Premium Income (NMT)") |
The Funds are registered under the Investment Company Act of 1940, as amended, as diversified closed-end management investment companies. Connecticut Premium Income (NTC) and Massachusetts Premium Income (NMT) were organized as Massachusetts business trusts on January 12, 1993.
The end of the reporting period for the Funds is May 31, 2016, and the period covered by these Notes to Financial Statements is the fiscal year ended May 31, 2016 (the "current fiscal period").
Investment Adviser
The Funds' investment adviser is Nuveen Fund Advisors, LLC (the "Adviser"), a wholly-owned subsidiary of Nuveen Investments, Inc. ("Nuveen"). Nuveen is an operating division of TIAA Global Asset Management. The Adviser is responsible for each Fund's overall investment strategy and asset allocation decisions. The Adviser has entered into sub-advisory agreements with Nuveen Asset Management, LLC (the "Sub-Adviser"), a subsidiary of the Adviser, under which the Sub-Adviser manages the investment portfolios of the Funds.
The Funds' 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 is responsible for each Fund's overall investment strategy and asset allocation decisions. The Adviser has entered into sub-advisory agreements with Nuveen Asset Management, LLC (the "Sub-Adviser"), a subsidiary of the Adviser, under which the Sub-Adviser manages the investment portfolios of the Funds.
Investment Objectives and Principal Investment Strategies
Each Fund seeks to provide current income exempt from both regular federal and designated state income taxes by investing primarily in a portfolio of municipal obligations issued by state and local government authorities within a single state or certain U.S. territories.
Each Fund seeks to provide current income exempt from both regular federal and designated state income taxes by investing primarily in a portfolio of municipal obligations issued by state and local government authorities within a single state or certain U.S. territories.
Significant Accounting Policies
Each Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946 "Financial Services – Investment Companies." The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").
Each Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946 "Financial Services – Investment Companies." The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and losses from investment transactions are determined on the specific identification method, which is the same basis used for federal income tax purposes. Investments purchased on a when-issued/delayed delivery basis may have extended settlement periods. Any investments so purchased are subject to market fluctuation during this period. The Funds have earmarked securities in their portfolios with a current value at least equal to the amount of the when-issued/delayed delivery purchase commitments.
Investment transactions are recorded on a trade date basis. Realized gains and losses from investment transactions are determined on the specific identification method, which is the same basis used for federal income tax purposes. Investments purchased on a when-issued/delayed delivery basis may have extended settlement periods. Any investments so purchased are subject to market fluctuation during this period. The Funds have earmarked securities in their portfolios with a current value at least equal to the amount of the when-issued/delayed delivery purchase commitments.
As of the end of the reporting period, the following Fund's outstanding when-issued/delayed delivery purchase commitments were as follows:
Connecticut | ||||
Premium | ||||
Income | ||||
(NTC | ) | |||
Outstanding when-issued/delayed delivery purchase commitments | $ | 3,351,897 |
Investment Income
Investment income, which reflects the amortization of premiums and accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Investment income also reflects paydown gains and losses, if any.
Investment income, which reflects the amortization of premiums and accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Investment income also reflects paydown gains and losses, if any.
NUVEEN | 39 |
Notes to Financial Statements (continued)
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.
Professional fees presented on the Statement of Operations consist of legal fees incurred in the normal course of operations, audit fees, tax consulting fees and, in some cases, workout expenditures. Workout expenditures are incurred in an attempt to protect or enhance an investment or to pursue other claims or legal actions on behalf of Fund shareholders. If a refund is received for workout expenditures paid in a prior reporting period, such amounts will be recognized as "Legal fee refund" on the Statement of Operations.
Dividends and Distributions to Common Shareholders
Dividends from net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders at least annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards.
Dividends from net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders at least annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards.
Distributions to common shareholders of net investment income, net realized capital gains and/or market discount, if any, are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.
Indemnifications
Under the Funds' organizational documents, their officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
Under the Funds' organizational documents, their officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
Netting Agreements
In the ordinary course of business, the Funds may enter into transactions subject to enforceable International Swaps and Derivative Association, Inc. ("ISDA") master agreements or other similar arrangements ("netting agreements"). Generally, the right to offset in netting agreements allows each Fund to offset certain securities and derivatives with a specific counterparty, when applicable, as well as any collateral received or delivered to that counterparty based on the terms of the agreements. Generally, each Fund manages its cash collateral and securities collateral on a counterparty basis.
In the ordinary course of business, the Funds 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 each Fund to offset certain securities and derivatives with a specific counterparty, when applicable, as well as any collateral received or delivered to that counterparty based on the terms of the agreements. Generally, each Fund manages its cash collateral and securities collateral on a counterparty basis.
The Funds' investments subject to netting agreements as of the end of the reporting period, if any, are further described in Note 3 – Portfolio Securities and Investments in Derivatives.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to common shares from operations during the reporting period. Actual results may differ from those estimates.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to common shares from operations during the reporting period. Actual results may differ from those estimates.
2. Investment Valuation and Fair Value Measurements
The fair valuation input levels as described below are for fair value measurement purposes.
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 adjusted 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). |
Prices of fixed income securities are provided by an independent pricing service ("pricing service") approved by the Funds' Board of Trustees (the "Board"). The pricing service establishes a security's fair value using methods that may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor's credit characteristics considered relevant. These securities are generally classified as Level 2. In pricing certain securities, particularly less liquid and lower quality securities, the pricing service may consider information about a security, its issuer or market activity, provided by the Adviser. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs.
40 | NUVEEN |
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 net asset value ("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 priority of the significant inputs. Regardless of the method employed to value a particular security, all valuations are subject to review by the Board and/or its appointee.
The inputs or methodologies used for valuing securities are not an indication of the risks associated with investing in those securities. The following is a summary of each Fund's fair value measurements as of the end of the reporting period:
Connecticut Premium Income (NTC) | Level 1 | Level 2 | Level 3 | Total | |||||||||
Long-Term Investments*: | |||||||||||||
Municipal Bonds | $ | — | $ | 333,827,706 | $ | — | $ | 333,827,706 | |||||
Massachusetts Premium Income (NMT) | |||||||||||||
Long-Term Investments*: | |||||||||||||
Municipal Bonds | $ | — | $ | 214,467,447 | $ | — | $ | 214,467,447 |
* | Refer to the Fund's Portfolio of Investments for industry classifications. |
The Board is responsible for the valuation process and has appointed the oversight of the daily valuation process to the Adviser's Valuation Committee. The Valuation Committee, pursuant to the valuation policies and procedures adopted by the Board, is responsible for making fair value determinations, evaluating the effectiveness of the Funds' pricing policies and reporting to the Board. The Valuation Committee is aided in its efforts by the Adviser's dedicated Securities Valuation Team, which is responsible for administering the daily valuation process and applying fair value methodologies as approved by the Valuation Committee. When determining the reliability of independent pricing services for investments owned by the Funds, the Valuation Committee, among other things, conducts due diligence reviews of the pricing services and monitors the quality of security prices received through various testing reports conducted by the Securities Valuation Team.
The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making a fair value determination, based on the facts and circumstances specific to the portfolio instrument. Fair value determinations generally will be derived as follows, using public or private market information:
(i) | If available, fair value determinations shall be derived by extrapolating from recent transactions or quoted prices for identical or comparable securities. | |
(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.
NUVEEN | 41 |
Notes to Financial Statements (continued)
3. Portfolio Securities and Investments in Derivatives
Portfolio Securities
Inverse Floating Rate Securities
Each Fund is authorized to invest in inverse floating rate securities. An inverse floating rate security is created by depositing a municipal bond (referred to as an "Underlying Bond"), typically with a fixed interest rate, into a special purpose tender option bond ("TOB") trust (referred to as the "TOB Trust") created by or at the direction of one or more Funds. In turn, the TOB Trust issues (a) floating rate certificates (referred to as "Floaters"), in face amounts equal to some fraction of the Underlying Bond's par amount or market value, and (b) an inverse floating rate certificate (referred to as an "Inverse Floater") that represents all remaining or residual interest in the TOB Trust. Floaters typically pay short-term tax-exempt interest rates to third parties who are also provided a right to tender their certificate and receive its par value, which may be paid from the proceeds of a remarketing of the Floaters, by a loan to the TOB Trust from a third party liquidity provider ("Liquidity Provider"), or by the sale of assets from the TOB Trust. The Inverse Floater is issued to a long term investor, such as one or more of the Funds. The income received by the Inverse Floater holder varies inversely with the short-term rate paid to holders of the Floaters, and in most circumstances the Inverse Floater holder bears substantially all of the Underlying Bond's downside investment risk and also benefits disproportionately from any potential appreciation of the Underlying Bond's value. The value of an Inverse Floater will be more volatile than that of the Underlying Bond because the interest rate is dependent on not only the fixed coupon rate of the Underlying Bond but also on the short-term interest paid on the Floaters, and because the Inverse Floater essentially bears the risk of loss (and possible gain) of the greater face value of the Underlying Bond.
Each Fund is authorized to invest in inverse floating rate securities. An inverse floating rate security is created by depositing a municipal bond (referred to as an "Underlying Bond"), typically with a fixed interest rate, into a special purpose tender option bond ("TOB") trust (referred to as the "TOB Trust") created by or at the direction of one or more Funds. In turn, the TOB Trust issues (a) floating rate certificates (referred to as "Floaters"), in face amounts equal to some fraction of the Underlying Bond's par amount or market value, and (b) an inverse floating rate certificate (referred to as an "Inverse Floater") that represents all remaining or residual interest in the TOB Trust. Floaters typically pay short-term tax-exempt interest rates to third parties who are also provided a right to tender their certificate and receive its par value, which may be paid from the proceeds of a remarketing of the Floaters, by a loan to the TOB Trust from a third party liquidity provider ("Liquidity Provider"), or by the sale of assets from the TOB Trust. The Inverse Floater is issued to a long term investor, such as one or more of the Funds. The income received by the Inverse Floater holder varies inversely with the short-term rate paid to holders of the Floaters, and in most circumstances the Inverse Floater holder bears substantially all of the Underlying Bond's downside investment risk and also benefits disproportionately from any potential appreciation of the Underlying Bond's value. The value of an Inverse Floater will be more volatile than that of the Underlying Bond because the interest rate is dependent on not only the fixed coupon rate of the Underlying Bond but also on the short-term interest paid on the Floaters, and because the Inverse Floater essentially bears the risk of loss (and possible gain) of the greater face value of the Underlying Bond.
The Inverse Floater held by a Fund gives the Fund the right to (a) cause the holders of the Floaters to tender their certificates at par, (or slightly more than par in certain circumstances) and (b) have the trustee of the TOB Trust (the "Trustee") transfer the Underlying Bond held by the TOB Trust to the Fund, thereby collapsing the TOB Trust.
The Fund may acquire an Inverse Floater in a transaction where it (a) transfers an Underlying Bond that it owns to a TOB Trust created by a third party or (b) transfers an Underlying Bond that it owns, or that it has purchased in a secondary market transaction for the purpose of creating an Inverse Floater, to a TOB Trust created at its direction, and in return receives the Inverse Floater of the TOB Trust (referred to as a "self-deposited Inverse Floater"). A Fund may also purchase an Inverse Floater in a secondary market transaction from a third party creator of the TOB Trust without first owning the Underlying Bond (referred to as an "externally-deposited Inverse Floater").
An investment in a self-deposited Inverse Floater is accounted for as a "financing" transaction (i.e., a secured borrowing). For a self-deposited Inverse Floater, the Underlying Bond deposited into the TOB Trust is identified in the Fund's Portfolio of Investments as "(UB) – Underlying bond of an inverse floating rate trust reflected as a financing transaction," with the Fund recognizing as liabilities, labeled "Floating rate obligations" on the Statement of Assets and Liabilities, (a) the liquidation value of Floaters issued by the TOB Trust, and (b) the amount of any borrowings by the TOB Trust from a Liquidity Provider to enable the TOB Trust to purchase outstanding Floaters in lieu of a remarketing. In addition, the Fund recognizes in "Investment Income" the entire earnings of the Underlying Bond, and recognizes (a) the interest paid to the holders of the Floaters or on the TOB Trust's borrowings, and (b) other expenses related to remarketing, administration, trustee, liquidity and other services to a TOB Trust, as a component of "Interest expense and amortization of offering costs" on the Statement of Operations.
In contrast, an investment in an externally-deposited Inverse Floater is accounted for as a purchase of the Inverse Floater and is identified in the Fund's Portfolio of Investments as "(IF) – Inverse floating rate investment." For an externally-deposited Inverse Floater, a Fund's Statement of Assets and Liabilities recognizes the Inverse Floater and not the Underlying Bond as an asset, and the Fund does not recognize the Floaters, or any related borrowings from a Liquidity Provider, as a liability. Additionally, the Fund reflects in "Investment Income" only the net amount of earnings on the Inverse Floater (net of the interest paid to the holders of the Floaters or the Liquidity Provider as lender, and the expenses of the Trust), and does not show the amount of that interest paid or the expenses of the TOB Trust as described above as interest expense on the Statement of Operations.
Fees paid upon the creation of a TOB Trust for self-deposited Inverse Floaters and externally-deposited Inverse Floaters are recognized as part of the cost basis of the Inverse Floater and are capitalized over the term of the TOB Trust.
As of the end of the reporting period, the aggregate value of Floaters issued by each Fund's TOB Trust for self-deposited Inverse Floaters and externally-deposited Inverse Floaters was as follows:
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
Floating Rate Obligations Outstanding | (NTC | ) | (NMT | ) | |||
Floating rate obligations: self-deposited Inverse Floaters | $ | 12,750,000 | $ | — | |||
Floating rate obligations: externally-deposited Inverse Floaters | 5,085,000 | 7,325,000 | |||||
Total | $ | 17,835,000 | $ | 7,325,000 |
42 | NUVEEN |
During the current fiscal period, the average amount of Floaters (including any borrowings from a Liquidity Provider) outstanding, and the average annual interest rate and fees related to self-deposited Inverse Floaters, were as follows:
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
Self-Deposited Inverse Floaters | (NTC | ) | (NMT | ) | |||
Average floating rate obligations outstanding | $ | 16,602,623 | $ | — | |||
Average annual interest rate and fees | 0.70 | % | — | % |
TOB Trusts are supported by a liquidity facility provided by a Liquidity Provider pursuant to which the Liquidity Provider agrees, in the event that Floaters are (a) tendered to the Trustee for remarketing and the remarketing does not occur, or (b) subject to mandatory tender pursuant to the terms of the TOB Trust agreement, to either purchase Floaters or to provide the Trustee with an advance from a loan facility to fund the purchase of Floaters by the TOB Trust. In certain circumstances, the Liquidity Provider may otherwise elect to have the Trustee sell the Underlying Bond to retire the Floaters that were tendered and not remarketed prior to providing such a loan. In these circumstances, the Liquidity Provider remains obligated to provide a loan to the extent that the proceeds of the sale of the Underlying Bond are not sufficient to pay the purchase price of the Floaters.
The size of the commitment under the loan facility for a given TOB Trust is at least equal to the balance of that TOB Trust's outstanding Floaters plus any accrued interest. In consideration of the loan facility, fee schedules are in place and are charged by the Liquidity Provider(s). Any loans made by the Liquidity Provider will be secured by the purchased Floaters held by the TOB Trust. Interest paid on any outstanding loan balances will be effectively borne by the Fund that owns the Inverse Floaters of the TOB Trust that has incurred the borrowing and may be at a rate that is greater than the rate that would have been paid had the Floaters been successfully remarketed.
As described above, any amounts outstanding under a liquidity facility are recognized as a component of "Floating rate obligations" on the Statement of Assets and Liabilities by the Fund holding the corresponding Inverse Floaters issued by the borrowing TOB Trust. As of the end of the reporting period, there were no loans outstanding under any such facility.
Each Fund may also enter into shortfall and forbearance agreements (sometimes referred to as a "recourse arrangement" or "credit recovery swap") (TOB Trusts involving such agreements are referred to herein as "Recourse Trusts"), under which a Fund agrees to reimburse the Liquidity Provider for the Trust's Floaters, in certain circumstances, for the amount (if any) by which the liquidation value of the Underlying Bond held by the TOB Trust may fall short of the sum of the liquidation value of the Floaters issued by the TOB Trust plus any amounts borrowed by the TOB Trust from the Liquidity Provider, plus any shortfalls in interest cash flows. Under these agreements, a Fund's potential exposure to losses related to or on an Inverse Floater may increase beyond the value of the Inverse Floater as a Fund may potentially be liable to fulfill all amounts owed to holders of the Floaters or the Liquidity Provider. Any such shortfall amount in the aggregate is recognized as "Unrealized depreciation on Recourse Trusts" on the Statement of Assets and Liabilities.
As of the end of the reporting period, each Fund's maximum exposure to the Floaters issued by Recourse Trusts for self-deposited Inverse Floaters and externally-deposited Inverse Floaters was as follows:
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
Floating Rate Obligations – Recourse Trusts | (NTC | ) | (NMT | ) | |||
Maximum exposure to Recourse Trusts: self deposited Inverse Floaters | $ | 12,750,000 | $ | — | |||
Maximum exposure to Recourse Trusts: externally deposited Inverse Floaters | 5,085,000 | 7,325,000 | |||||
Total | $ | 17,835,000 | $ | 7,325,000 |
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.
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
In addition to the inverse floating rate securities in which each Fund may invest, which are considered portfolio securities for financial reporting purposes, each Fund is authorized to invest in certain derivative instruments such as futures, options and swap contracts. Each Fund limits its investments in futures, options on futures and swap contracts to the extent necessary for the Adviser to claim the exclusion from registration by the Commodity Futures Trading Commission as a commodity pool operator with respect to the Fund. The Funds record derivative instruments at fair value, with changes in fair value recognized on the Statement of Operations, when applicable. Even though the Funds' investments in derivatives may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes.
In addition to the inverse floating rate securities in which each Fund may invest, which are considered portfolio securities for financial reporting purposes, each Fund is authorized to invest in certain derivative instruments such as futures, options and swap contracts. Each Fund limits its investments in futures, options on futures and swap contracts to the extent necessary for the Adviser to claim the exclusion from registration by the Commodity Futures Trading Commission as a commodity pool operator with respect to the Fund. The Funds record derivative instruments at fair value, with changes in fair value recognized on the Statement of Operations, when applicable. Even though the Funds' investments in derivatives may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes.
NUVEEN | 43 |
Notes to Financial Statements (continued)
Although the Funds are authorized to invest in derivative instruments and may do so in the future, they did not make any such investments during the current fiscal period.
Market and Counterparty Credit Risk
In the normal course of business each Fund may invest in financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to the transaction to perform (counterparty credit risk). The potential loss could exceed the value of the financial assets recorded on the financial statements. Financial assets, which potentially expose each Fund to counterparty credit risk, consist principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of each Fund's exposure to counterparty credit risk in respect to these financial assets approximates their carrying value as recorded on the Statement of Assets and Liabilities.
In the normal course of business each Fund may invest in financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to the transaction to perform (counterparty credit risk). The potential loss could exceed the value of the financial assets recorded on the financial statements. Financial assets, which potentially expose each Fund to counterparty credit risk, consist principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of each Fund's exposure to counterparty credit risk in respect to these financial assets approximates their carrying value as recorded on the Statement of Assets and Liabilities.
Each Fund helps manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations and by having the Adviser monitor the financial stability of the counterparties. Additionally, counterparties may be required to pledge collateral daily (based on the daily valuation of the financial asset) on behalf of each Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when each Fund has an unrealized loss, the Funds have instructed the custodian to pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the valuations fluctuate, either up or down, by at least the pre-determined threshold amount.
4. Fund Shares
Common Share Transactions
Transactions in common shares for the Funds during the Funds' current and prior fiscal period were as follows:
Transactions in common shares for the Funds during the Funds' current and prior fiscal period were as follows:
Connecticut | Massachusetts | ||||||||||||
Premium Income (NTC) | Premium Income (NMT) | ||||||||||||
Year | Year | Year | Year | ||||||||||
Ended | Ended | Ended | Ended | ||||||||||
5/31/16 | 5/31/15 | 5/31/16 | 5/31/15 | ||||||||||
Common shares: | |||||||||||||
Issued in the reorganizations | — | — | — | 4,569,950 | |||||||||
Repurchased and retired | — | (95,000 | ) | — | — | ||||||||
Weighted average common share: | |||||||||||||
Price per share repurchased and retired | — | $ | 12.53 | — | — | ||||||||
Discount per share repurchased and retired | — | 13.26 | % | — | — |
Preferred Shares
Variable Rate MuniFund Term Preferred Shares
The Funds have issued and have outstanding Variable Rate MuniFund Term Preferred ("VMTP") Shares, with a $100,000 liquidation preference per share. VMTP Shares are issued via private placement and are not publicly available.
The Funds have issued and have outstanding Variable Rate MuniFund Term Preferred ("VMTP") Shares, with a $100,000 liquidation preference per share. VMTP Shares are issued via private placement and are not publicly available.
As of the end of the reporting period, VMTP Shares outstanding, at liquidation preference, for each Fund were as follows:
Shares | Liquidation | |||||||||
Fund | Series | Outstanding | Preference | |||||||
Connecticut Premium Income (NTC) | 2017 | 1,060 | $ | 106,000,000 | ||||||
Massachusetts Premium Income (NMT) | 2017 | 740 | $ | 74,000,000 |
Each Fund is obligated to redeem its VMTP Shares by the date as specified in its offering document ("Term Redemption Date"), unless earlier redeemed or repurchased by the Fund. VMTP Shares are subject to optional and mandatory redemption in certain circumstances. The VMTP Shares may be redeemed at the option of each Fund, subject to payment of premium for one year following the date of issuance ("Premium Expiration Date"), and at the redemption price per share thereafter. The redemption price per share is equal to the sum of the liquidation preference per share plus any accumulated but unpaid dividends. Each Fund may be obligated to redeem certain of the VMTP Shares if a Fund fails to maintain certain asset coverage and leverage ratio requirements and such failures are not cured by the applicable cure date. The Term Redemption Date and Premium Expiration Date for each Fund's VMTP Shares are as follows:
Term | Premium | |||||||||
Fund | Series | Redemption Date | Expiration Date | |||||||
Connecticut Premium Income (NTC) | 2017 | March 1, 2017 | February 28, 2015 | |||||||
Massachusetts Premium Income (NMT) | 2017 | August 1, 2017 | June 30, 2015 |
44 | NUVEEN |
The average liquidation preference of VMTP Shares outstanding and annualized dividend rate for each Fund during the current fiscal period were as follows:
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Average liquidation preference of VMTP Shares outstanding | $ | 106,000,000 | $ | 74,000,000 | |||
Annualized dividend rate | 1.05 | % | 1.03 | % |
VMTP Shares are subject to restrictions on transfer, generally do not trade, and market quotations are generally not available. VMTP Shares are short-term or short/intermediate-term instruments that pay a variable dividend rate tied to a short-term index, plus an additional fixed "spread" amount established at the time of issuance. The fair value of VMTP Shares is expected to be approximately their liquidation preference so long as the fixed "spread" on the VMTP Shares remains roughly in line with the "spread" being demanded by investors on instruments having similar terms in the current market environment. In present market conditions, the Funds' Adviser has determined that fair value of VMTP Shares is approximately their liquidation preference, but their fair value could vary if market conditions change materially. For financial reporting purposes, the liquidation preference of VMTP Shares is a liability and is recognized as "Variable Rate MuniFund Term Preferred ("VMTP") Shares, at liquidation preference" on the Statement of Assets and Liabilities.
Dividends on the VMTP shares (which are treated as interest payments for financial reporting purposes) are set weekly. Unpaid dividends on VMTP Shares are recognized as a component of "Interest payable" on the Statement of Assets and Liabilities, when applicable. Dividends accrued on VMTP Shares are recognized as a component of "Interest expense and amortization of offering costs" on the Statement of Operations.
Costs incurred in connection with each Fund's offering of VMTP Shares were recorded as a deferred charge, which are amortized over the life of the shares and are recognized as components of "Deferred offering costs" on the Statement of Assets and Liabilities and "Interest expense and amortization of offering costs" on the Statement of Operations.
Preferred Share Transactions
Transactions in preferred shares for the Funds during the Funds' current and prior fiscal period, where applicable, are noted in the following tables.
Transactions in preferred shares for the Funds during the Funds' current and prior fiscal period, where applicable, are noted in the following tables.
Transactions in MTP Shares for the Funds, where applicable, were as follows:
Year Ended | |||||||||||||
May 31, 2015 | |||||||||||||
NYSE | |||||||||||||
Massachusetts Premium Income (NMT) | Series | Ticker | Shares | Amount | |||||||||
MTP Shares issued in connection with reorganizations: | 2015 | NMT PRE | 1,472,500 | $ | 14,725,000 | ||||||||
2015-1 | NMT PRF | 2,207,500 | 22,075,000 | ||||||||||
MTP Shares redeemed: | 2015 | NMT PRC | (2,021,000 | ) | (20,210,000 | ) | |||||||
2016 | NMT PRD | (1,643,500 | ) | (16,435,000 | ) | ||||||||
2015-1 | NMT PRE | (1,472,500 | ) | (14,725,000 | ) | ||||||||
2015-1 | NMT PRF | (2,207,500 | ) | (22,075,000 | ) | ||||||||
Net increase (decrease) | (3,664,500 | ) | $ | (36,645,000 | ) |
Transactions in VMTP Shares for the Funds, where applicable, were as follows:
Year Ended | ||||||||||
May 31, 2015 | ||||||||||
Massachusetts Premium Income (NMT) | Series | Shares | Amount | |||||||
VMTP Shares issued | 2017 | 740 | $ | 74,000,000 |
5. Investment Transactions
Long-term purchases and sales (including maturities) during the current fiscal period were as follows:
Long-term purchases and sales (including maturities) during the current fiscal period were as follows:
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Purchases | $ | 36,968,899 | $ | 28,090,022 | |||
Sales and maturities | 38,159,592 | 27,015,056 |
NUVEEN | 45 |
Notes to Financial Statements (continued)
6. Income Tax Information
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all of its net investment income and net capital gains to shareholders and 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. Furthermore, each Fund intends to satisfy conditions that will enable interest from municipal securities, which is exempt from regular federal and designated state income taxes, to retain such tax-exempt status when distributed to shareholders of the Funds. Net realized capital gains and ordinary income distributions paid by the Funds are subject to federal taxation.
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all of its net investment income and net capital gains to shareholders and 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. Furthermore, each Fund intends to satisfy conditions that will enable interest from municipal securities, which is exempt from regular federal and designated state income taxes, to retain such tax-exempt status when distributed to shareholders of the Funds. Net realized capital gains and ordinary income distributions paid by the Funds are subject to federal taxation.
For all open tax years and all major taxing jurisdictions, management of the Funds has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). Furthermore, management of the Funds is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to timing differences in recognizing taxable market discount, timing differences in recognizing certain gains and losses on investment transactions and the treatment of investments in inverse floating rate securities reflected as financing transactions, if any. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts as detailed below. Temporary differences do not require reclassification. Temporary and permanent differences do not impact the NAVs of the Funds.
As of May 31, 2016, the cost and unrealized appreciation (depreciation) of investments, as determined on a federal income tax basis, were as follows:
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Cost of investments | $ | 298,235,136 | $ | 196,823,348 | |||
Gross unrealized: | |||||||
Appreciation | $ | 22,842,725 | $ | 17,644,427 | |||
Depreciation | (155 | ) | (328 | ) | |||
Net unrealized appreciation (depreciation) of investments | $ | 22,842,570 | $ | 17,644,099 |
Permanent differences, primarily due to federal taxes paid, taxable market discount, nondeductible offering costs, expiration of capital loss carryforwards and nondeductible reorganization expenses resulted in reclassifications among the Funds' components of common share net assets as of May 31, 2016, the Funds' tax year end, as follows:
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Paid-in surplus | $ | (58,349 | ) | $ | (259,442 | ) | |
Undistributed (Over-distribution of) net investment income | 87,663 | 36,864 | |||||
Accumulated net realized gain (loss) | (29,314 | ) | 222,578 |
The tax components of undistributed net tax-exempt income, net ordinary income and net long-term capital gains as of May 31, 2016, the Funds' tax year end, were as follows:
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Undistributed net tax-exempt income1 | $ | 1,206,431 | $ | 951,923 | |||
Undistributed net ordinary income2 | 7,085 | — | |||||
Undistributed net long-term capital gains | — | — |
1 | Undistributed net tax-exempt income (on a tax basis) has not been reduced for the dividend declared on May 2, 2016, paid on June 1, 2016. |
2 | Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. |
46 | NUVEEN |
The tax character of distributions paid during the Funds' tax years ended May 31, 2016 and May 31, 2015, was designated for purposes of the dividends paid deduction as follows:
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
2016 | (NTC | ) | (NMT | ) | |||
Distributions from net tax-exempt income3 | $ | 11,024,024 | $ | 7,357,278 | |||
Distributions from net ordinary income2 | 33,762 | 15,643 | |||||
Distributions from net long-term capital gains | — | — |
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
2015 | (NTC | ) | (NMT | ) | |||
Distributions from net tax-exempt income | $ | 11,016,828 | $ | 6,899,372 | |||
Distributions from net ordinary income2 | 2,907 | 329 | |||||
Distributions from net long-term capital gains | — | — |
2 | Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. |
3 | The Funds hereby designate these amounts paid during the fiscal year ended May 31, 2016, as Exempt Interest Dividends. |
As of May 31, 2016, the Funds' tax year end, the Funds had unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as shown in the following table. The losses not subject to expiration will be utilized first by a Fund.
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Expiration: | |||||||
May 31, 2017 | $ | — | $ | 24,486 | |||
May 31, 2018 | — | 62,941 | |||||
Not subject to expiration | 7,101,763 | 4,301,707 | |||||
Total | $ | 7,101,763 | $ | 4,389,134 |
As of May 31, 2016, the Fund's tax year end, $215,629 of Massachusetts Premium Income's (NMT) capital loss carryforward expired. During the Funds' tax year ended May 31, 2016, Connecticut Premium Income (NTC) utilized $492,909 of its capital loss carryforward.
7. Management Fees and Other Transactions with Affiliates
Management Fees
Each 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 Funds from the management fees paid to the Adviser.
Each 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 Funds from the management fees paid to the Adviser.
Each Fund's management fee consists of two components – a fund-level fee, based only on the amount of assets within each individual Fund, and a complex-level fee, based on the aggregate amount of all eligible fund assets managed by the Adviser. This pricing structure enables Fund shareholders to benefit from growth in the assets within their respective Fund as well as from growth in the amount of complex-wide assets managed by the Adviser.
The annual Fund-level fee, payable monthly, for each Fund is calculated according to the following schedule:
Connecticut Premium Income (NTC | ) | |||
Massachusetts Premium Income (NMT | ) | |||
Average Daily Managed Assets* | Fund-Level Fee | |||
For the first $125 million | 0.4500 | % | ||
For the next $125 million | 0.4375 | |||
For the next $250 million | 0.4250 | |||
For the next $500 million | 0.4125 | |||
For the next $1 billion | 0.4000 | |||
For the next $3 billion | 0.3875 | |||
For managed assets over $5 billion | 0.3750 |
NUVEEN | 47 |
Notes to Financial Statements (continued)
The annual complex-level fee, payable monthly, for each Fund is calculated by multiplying the current complex-wide fee rated, determined according to the following schedule by the Fund's daily managed assets:
Complex-Level Managed Asset Breakpoint Level* | Effective Rate at Breakpoint Level | |||
$55 billion | 0.2000 | % | ||
$56 billion | 0.1996 | |||
$57 billion | 0.1989 | |||
$60 billion | 0.1961 | |||
$63 billion | 0.1931 | |||
$66 billion | 0.1900 | |||
$71 billion | 0.1851 | |||
$76 billion | 0.1806 | |||
$80 billion | 0.1773 | |||
$91 billion | 0.1691 | |||
$125 billion | 0.1599 | |||
$200 billion | 0.1505 | |||
$250 billion | 0.1469 | |||
$300 billion | 0.1445 |
* | For the complex-level fees, managed assets include closed-end fund assets managed by the Adviser that are attributable to certain types of leverage. For these purposes, leverage includes the funds' use of preferred stock and borrowings and certain investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by 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 managed assets in certain circumstances. The complex-level fee is calculated based upon the aggregate daily managed assets of all Nuveen Funds that constitute "eligible assets." Eligible assets do not include assets attributable to investments in other Nuveen Funds 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. As of May 31, 2016, the complex-level fee for each Fund was 0.1621%. |
Other Transactions with Affiliates
The Funds pay no compensation directly to those of its trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen-advised funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen-advised funds.
The Funds pay no compensation directly to those of its trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen-advised funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen-advised funds.
Each Fund is permitted to purchase or sell securities from or to certain other funds managed by the Adviser ("inter-fund trade") under specified conditions outlined in procedures adopted by the Board. These procedures have been designed to ensure that any inter-fund trade of securities by the Fund from or to another fund that is, or could be, considered an affiliate of the Fund under certain limited circumstances by virtue of having a common investment adviser (or affiliated investment adviser), common officer and/or common trustee complies with Rule 17a-7 of the 1940 Act. Further, as defined under these procedures, each inter-fund trade is effected at the current market price as provided by an independent pricing service. Unsettled inter-fund trades as of the end of the reporting period are recognized as a component of "Receivable for investments sold" and/or "Payable for investments purchased" on the Statement of Assets and Liabilities, when applicable.
During the current fiscal period, the following Fund engaged in inter-fund trades pursuant to these procedures as follows:
Connecticut | ||||
Premium | ||||
Income | ||||
Inter-Fund Trades | (NTC | ) | ||
Purchases | $ | 100,518 | ||
Sales | — |
8. Borrowing Arrangements
Uncommitted Line of Credit
During the current fiscal period, the Funds participated in an unsecured bank line of credit ("Unsecured Credit Line") under which outstanding balances would bear interest at a variable rate. On December 31, 2015, (the only date utilized during the current fiscal period), the Funds borrowed the following amounts from the Unsecured Credit Line, each at an annualized interest rate of 1.68% on their respective outstanding balance.
During the current fiscal period, the Funds participated in an unsecured bank line of credit ("Unsecured Credit Line") under which outstanding balances would bear interest at a variable rate. On December 31, 2015, (the only date utilized during the current fiscal period), the Funds borrowed the following amounts from the Unsecured Credit Line, each at an annualized interest rate of 1.68% on their respective outstanding balance.
Connecticut | Massachusetts | ||||||
Premium | Premium | ||||||
Income | Income | ||||||
(NTC | ) | (NMT | ) | ||||
Outstanding balance at December 31, 2015 | $ | 3,095,957 | $ | 787,244 |
48 | NUVEEN |
Committed Line of Credit
During the current fiscal period, the Funds, along with certain other funds managed by the Adviser ("Participating Funds"), have 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 any of the Funds 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, along with a number of Nuveen closed-end funds, including all of the Funds covered by this shareholder report. The credit facility expires in July 2017 unless extended or renewed.
During the current fiscal period, the Funds, along with certain other funds managed by the Adviser ("Participating Funds"), have 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 any of the Funds 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, along with a number of Nuveen closed-end funds, including all of the Funds covered by this shareholder report. 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, none of the Funds utilized this facility.
9. Subsequent Events
Management Fees
Effective August 1, 2016, the annual fund-level fee for each Fund, payable monthly, will be calculated according to the following schedule:
Effective August 1, 2016, the annual fund-level fee for each Fund, payable monthly, will be calculated according to the following schedule:
Connecticut Premium Income (NTC | ) | |||
Massachusetts Premium Income (NMT | ) | |||
Average Daily Managed Assets | Fund-Level Fee | |||
For the first $125 million | 0.4500 | % | ||
For the next $125 million | 0.4375 | |||
For the next $250 million | 0.4250 | |||
For the next $500 million | 0.4125 | |||
For the next $1 billion | 0.4000 | |||
For the next $3 billion | 0.3750 | |||
For managed assets over $5 billion | 0.3625 |
NUVEEN | 49 |
Additional Fund Information (Unaudited)
Board of Trustees | ||||||||||
William Adams IV* | Margo Cook** | Jack B. Evans | William C. Hunter | David J. Kundert | Albin F. Moschner*** | |||||
John K. Nelson | William J. Schneider | Thomas S. Schreier, Jr.*** | Judith M. Stockdale | Carole E. Stone | Terence J. Toth | |||||
Margaret L Wolff |
* | Interested Board Member. |
** | Effective July 1, 2016. |
*** | Interested Board Member and retired from the Funds' Board of Trustees effective May 31, 2016. |
Fund Manager | Custodian | Legal Counsel | Independent Registered | Transfer Agent and | ||||
Nuveen Fund Advisors, LLC | State Street Bank | Chapman and Cutler LLP | Public Accounting Firm | Shareholder Services | ||||
333 West Wacker Drive | & Trust Company | Chicago, IL 60603 | KPMG LLP | State Street Bank | ||||
Chicago, IL 60606 | One Lincoln Street | 200 East Randolph Street | & Trust Company | |||||
Boston, MA 02111 | Chicago, IL 60601 | Nuveen Funds | ||||||
P.O. Box 43071 | ||||||||
Providence, RI 02940-3071 | ||||||||
(800) 257-8787 | ||||||||
Quarterly Form N-Q Portfolio of Investments Information
Each Fund is required to file its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. You may obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington, D.C. Call the SEC toll-free at (800) SEC-0330 for room hours and operation.
Each Fund is required to file its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. You may obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington, D.C. Call the SEC toll-free at (800) SEC-0330 for room hours and operation.
Nuveen Funds' Proxy Voting Information
You may obtain (i) information regarding how each fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30, without charge, upon request, by calling Nuveen 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.
You may obtain (i) information regarding how each fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30, without charge, upon request, by calling Nuveen toll-free at (800) 257-8787 or on Nuveen's website at www.nuveen.com and (ii) a description of the policies and procedures that each fund used to determine how to vote proxies relating to portfolio securities without charge, upon request, by calling Nuveen toll free at (800) 257-8787. You may also obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov.
CEO Certification Disclosure
Each Fund's Chief Executive Officer (CEO) has submitted to the New York Stock Exchange (NYSE) the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the SEC the certification of its CEO and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act.
Each Fund's Chief Executive Officer (CEO) has submitted to the New York Stock Exchange (NYSE) the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the SEC the certification of its CEO and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act.
Common Share Repurchases
Each Fund intends to repurchase, through its open-market share repurchase program, shares of its own common stock at such times and in such amounts as is deemed advisable. During the period covered by this report, each Fund repurchased shares of its common stock, as shown in the accompanying table. Any future repurchases will be reported to shareholders in the next annual or semi-annual report.
Each Fund intends to repurchase, through its open-market share repurchase program, shares of its own common stock at such times and in such amounts as is deemed advisable. During the period covered by this report, each Fund repurchased shares of its common stock, as shown in the accompanying table. Any future repurchases will be reported to shareholders in the next annual or semi-annual report.
NTC | NMT | ||||||
Common shares repurchased | — | — |
FINRA BrokerCheck
The Financial Industry Regulatory Authority (FINRA) provides information regarding the disciplinary history of FINRA member firms and associated investment professionals. This information as well as an investor brochure describing FINRA BrokerCheck is available to the public by calling the FINRA BrokerCheck Hotline number at (800) 289-9999 or by visiting www.FINRA.org.
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.
50 | NUVEEN |
Glossary of Terms Used in this Report (Unaudited)
■ | Auction Rate Bond: An auction rate bond is a security whose interest payments are adjusted periodically through an auction process, which process typically also serves as a means for buying and selling the bond. Auctions that fail to attract enough buyers for all the shares offered for sale are deemed to have "failed," with current holders receiving a formula-based interest rate until the next scheduled auction. |
■ | Average Annual Total Return: This is a commonly used method to express an investment's performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment's actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered. |
■ | Duration: Duration is a measure of the expected period over which a bond's principal and interest will be paid, and consequently is a measure of the sensitivity of a bond's or bond fund's value to changes when market interest rates change. Generally, the longer a bond's or fund's duration, the more the price of the bond or fund will change as interest rates change. |
■ | Effective Leverage: Effective leverage is a fund's effective economic leverage, and includes both regulatory leverage (see leverage) and the leverage effects of certain derivative investments in the fund's portfolio. Currently, the leverage effects of Tender Option Bond (TOB) inverse floater holdings are included in effective leverage values, in addition to any regulatory leverage. |
■ | Escrowed to Maturity Bond: When proceeds of a refunding issue are deposited in an escrow account for investment in an amount sufficient to pay the principal and interest on the issue being refunded. In some cases, though, an issuer may expressly reserve its right to exercise an early call of bonds that have been escrowed to maturity. |
■ | 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. |
■ | Inverse Floating Rate Securities: Inverse floating rate securities, also known as inverse floaters or tender option bonds (TOBs), are created by depositing a municipal bond, typically with a fixed interest rate, into a special purpose trust. This trust, in turn, (a) issues floating rate certificates typically paying short-term tax-exempt interest rates to third parties in amounts equal to some fraction of the deposited bond's par amount or market value, and (b) issues an inverse floating rate certificate (sometimes referred to as an "inverse floater") to an investor (such as a Fund) interested in gaining investment exposure to a long-term municipal bond. The income received by the holder of the inverse floater varies inversely with the short-term rate paid to the floating rate certificates' holders, and in most circumstances the holder of the inverse floater bears substantially all of the underlying bond's downside investment risk. The holder of the inverse floater typically also benefits disproportionately from any potential appreciation of the underlying bond's value. Hence, an inverse floater essentially represents an investment in the underlying bond on a leveraged basis. |
■ | Leverage: Leverage is created whenever a fund has investment exposure (both reward and/or risk) equivalent to more than 100% of the investment capital. |
■ | Lipper Other States Municipal Debt Funds Classification Average: Calculated using the returns of all closed-end funds in this category. Lipper returns account for the effects of management fees and assume reinvestment of distributions, but do not reflect any applicable sales charges. |
■ | Net Asset Value (NAV) Per Share: A fund's Net Assets is equal to its total assets (securities, cash, accrued earnings and receivables) less its total liabilities. NAV per share is equal to the fund's Net Assets divided by its number of shares outstanding. |
NUVEEN | 51 |
Glossary of Terms Used in this Report (Unaudited) (continued)
■ | Pre-Refunding: Pre-Refunding, also known as advanced refundings or refinancings, is a procedure used by state and local governments to refinance municipal bonds to lower interest expenses. The issuer sells new bonds with a lower yield and uses the proceeds to buy U.S. Treasury securities, the interest from which is used to make payments on the higher-yielding bonds. Because of this collateral, pre-refunding generally raises a bond's credit rating and thus its value. |
■ | Regulatory Leverage: Regulatory Leverage consists of preferred shares issued by or borrowings of a fund. Both of these are part of a fund's capital structure. Regulatory leverage is subject to asset coverage limits set in the Investment Company Act of 1940. |
■ | S&P Municipal Bond Connecticut Index: An unleveraged, market value-weighted index designed to measure the performance of the tax-exempt, investment-grade Connecticut municipal bond market. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees. |
■ | S&P Municipal Bond Index: An unleveraged, market value-weighted index designed to measure the performance of the tax-exempt, investment-grade U.S. municipal bond market. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees. |
■ | S&P Municipal Bond Massachusetts Index: An unleveraged, market value-weighted index designed to measure the performance of the tax-exempt, investment-grade Massachusetts municipal bond market. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees. |
■ | Total Investment Exposure: Total investment exposure is a fund's assets managed by the Adviser that are attributable to financial leverage. For these purposes, financial leverage includes a fund's use of preferred stock and borrowings and investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by a TOB trust that has been effectively financed by the trust's issuance of floating rate securities. |
■ | Zero Coupon Bond: A zero coupon bond does not pay a regular interest coupon to its holders during the life of the bond. Income to the holder of the bond comes from accretion of the difference between the original purchase price of the bond at issuance and the par value of the bond at maturity and is effectively paid at maturity. The market prices of zero coupon bonds generally are more volatile than the market prices of bonds that pay interest periodically. |
52 | NUVEEN |
Reinvest Automatically, Easily and Conveniently
Nuveen makes reinvesting easy. A phone call is all it takes to set up your reinvestment account.
Nuveen Closed-End Funds Automatic Reinvestment Plan
Nuveen Closed-End Fund allows you to conveniently reinvest distributions in additional Fund shares. By choosing to reinvest, you'll be able to invest money regularly and automatically, and watch your investment grow through the power of compounding. Just like distributions in cash, there may be times when income or capital gains taxes may be payable on distributions that are reinvested. It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market.
Easy and convenient
To make recordkeeping easy and convenient, each month you'll receive a statement showing your total distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own.
How shares are purchased
The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the greater of the net asset value or 95% of the then-current market price. If the shares are trading at less than net as -set value, shares for your account will be purchased on the open market. If the Plan Agent begins purchasing Fund shares on the open market while shares are trading below net asset value, but the Fund's shares subsequently trade at or above their net asset value before the Plan Agent is able to complete its purchases, the Plan Agent may cease open-market purchases and may invest the uninvested portion of the distribution in newly-issued Fund shares at a price equal to the greater of the shares' net asset value or 95% of the shares' market value on the last business day immediately prior to the purchase date. Distributions received to purchase shares in the open market will normally be invested shortly after the distribution payment date. No interest will be paid on distributions awaiting reinvestment. Because the market price of the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions.
Flexible
You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change. You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your investment advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan. The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time.
Call today to start reinvesting distributions
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787.
NUVEEN | 53 |
Annual Investment Management Agreement Approval Process (Unaudited)
The Board of Trustees of each Fund (the "Board," and each Trustee a "Board Member"), including the Board Members who are not parties to the Funds' 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 respective Fund and determining whether to continue such 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 an initial term with respect to each Fund upon its commencement of operations, the Board reviews each Investment Management Agreement and Sub-Advisory Agreement on behalf of each Fund 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 Funds.
During the year, the Board and its Committees met regularly to receive materials and discuss a variety of topics impacting the Funds including, among other things, overall market conditions and market performance, Fund investment performance, brokerage execution, valuation of securities, compliance matters, securities lending, leverage matters, 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 Funds. 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 ratios of the Funds, including information comparing such fees and expenses to that of peer groups; an assessment of shareholder services for the Funds and of the performance of certain service providers; a review of initiatives instituted or continued during the past year; and a review of premium/discount trends and leverage management 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 Funds' 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
54 | NUVEEN |
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 respective 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, maintaining and enhancing shareholder communications and reporting to the Board); (b) investment services (such as overseeing the Sub-Adviser 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 for Board meetings); (e) compliance (such as helping to devise and maintain the funds' compliance program and related testing); (f) legal support (such as helping to prepare registration statements and proxy statements, interpreting regulations and policies and overseeing fund activities); and (g) providing leverage management. | |
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, closed-end fund/structured products, fund governance, compliance, fund administration, product management, 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) expanded efforts to support leverage management with a goal of seeking the most effective structure for fund shareholders given appropriate risk levels and regulatory constraints; (c) increased support for dividend management; (d) 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; (e) 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; (f) continued efforts to develop new lines of business designed to enhance the Nuveen product line and meet investor demands; and (g) 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 programs, 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 closed-end fund product line. The Board noted the Adviser's continued efforts during |
NUVEEN | 55 |
Annual Investment Management Agreement Approval Process (Unaudited) (continued)
2015 (a) to rationalize the product line through mergers designed to help reduce product overlap, offer shareholders the potential for lower fees and enhanced investor acceptance, and address persistent discounts in the secondary market; (b) to oversee and manage leverage as the Adviser facilitated the rollover of existing facilities and conducted negotiations for improved terms and pricing to reduce leverage costs; (c) to conduct capital management services including share repurchases and/or share issuances throughout the year and monitoring market conditions to capitalize on such opportunities for the closed-end funds; and (d) to implement data-driven market analytics which, among other things, provided a better analysis of the shareholder base, enhanced the ability to monitor the closed-end funds versus peers and helped to understand trading discounts. The Board also considered the quality and breadth of Nuveen's investment relations program through which Nuveen seeks to build awareness of, and educate investors and financial advisers with respect to, Nuveen closed-end funds which may help to build an active secondary market for the closed-end fund product line. | |
As noted, the Adviser also oversees the Sub-Adviser who primarily provides the portfolio advisory services to the Funds. 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 each Sub-Advisory Agreement. | |
Based on their review, the Independent Board Members found that, overall, the nature, extent and quality of services provided to the respective Funds under each applicable Advisory Agreement were satisfactory. | |
B. | The Investment Performance of the Funds and Fund Advisers |
The Board considered the long-term and short-term performance history of each Fund. 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, each Fund's investment performance both on an absolute basis and in comparison to peer funds (the "Performance Peer Group") and to recognized and/or customized benchmarks (i.e., generally benchmarks derived from multiple recognized benchmarks) for the quarter, one-, three- and five-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. | |
• The Board recognized the difficulty in establishing appropriate peer groups and benchmarks for certain funds. 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 |
56 | NUVEEN |
performance results. Further, for funds that utilized leverage, the Board understood that leverage during different periods could provide both benefits and risks to a portfolio as compared to an unlevered benchmark. | |
In addition to the foregoing, the Independent Board Members continued to recognize the importance of secondary market trading for the shares of closed-end funds. At the quarterly meetings as well as the May Meeting, the Independent Board Members (either at the Board level or through the Closed-end Fund Committee) reviewed, among other things, the premium or discount to net asset value of the Nuveen closed-end funds as of a specified date and over various periods as well as in comparison to the premium/discount average in their respective Lipper peer category. At the May Meeting and/or prior meetings, the Independent Board Members (either at the Board level or through the Closed-end Fund Committee) reviewed, among other things, an analysis by the Adviser of the key economic, market and competitive trends that affected the closed-end fund market and Nuveen closed-end funds and considered any actions proposed periodically by the Adviser to address trading discounts of certain closed-end funds, including, among other things, share repurchases, fund reorganizations, adjusting fund investment mandates and strategies, and increasing fund awareness to investors. The Independent Board Members considered the evaluation of the premium and discount levels of the closed-end funds to be a continuing priority in their oversight of the closed-end funds. | |
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. | |
For Nuveen Connecticut Premium Income Municipal Fund (the "Connecticut Fund"), the Board noted that, although the Fund ranked in its Performance Peer Group in the fourth quartile for the three- and five-year periods, the Fund ranked in the third quartile in the one-year period. The Fund also outperformed its benchmark in the one-, three- and five-year periods. The Board also recognized the Fund's positive absolute performance for the one-, three- and five-year periods. The Board determined that the Fund's performance had been satisfactory. | |
For Nuveen Massachusetts Premium Income Municipal Fund (the "Massachusetts Fund"), the Board noted that, although the Fund ranked in its Performance Peer Group in the fourth quartile in the three-year period, the Fund ranked in the third quartile in the five-year period and the second quartile in the one-year period. The Fund also outperformed its benchmark in the one-, three- and five-year periods. The Board also recognized the Fund's positive absolute performance for the one-, three- and five-year periods. The Board determined that the Fund's performance had been satisfactory. | |
C. | Fees, Expenses and Profitability |
1. Fees and Expenses | |
The Board evaluated the management fees and other fees and expenses of each Fund. The Board reviewed, among other things, the gross and net management fees and net total expenses of each 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") 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. | |
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. In this regard, the Board considered that management recently reviewed the breakpoint schedules for the closed-end funds which resulted in reduced breakpoints and/or new breakpoints at certain asset thresholds for numerous closed-end funds, including the Funds. |
NUVEEN | 57 |
Annual Investment Management Agreement Approval Process (Unaudited) (continued)
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 (including the inclusion of other Nuveen funds in the peer set); expense anomalies; changes in the funds comprising the Peer Universe from year to year; levels of reimbursement or fee waivers; the timing of information used; the differences in the type and use of leverage; differences in services provided; and differences in the states reflected in the Peer Universe 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 (excluding leverage costs and leveraged assets), the Board generally considered a 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 Universe. 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 Independent Board Members noted that the Massachusetts Fund had a net management fee in line with its peer average and a net expense ratio below the peer average; and the Connecticut Fund had a net management fee slightly higher than its 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 each Fund's management fees (as applicable) to a Fund Adviser were reasonable in light of the nature, extent and quality of services provided to the Fund. | |
2. Comparisons with the Fees of Other Clients | |
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 the Sub-Adviser, such other clients may include municipal separately managed accounts and passively managed exchange traded funds (ETFs). | |
The Board recognized that each Fund had an affiliated sub-adviser. With respect to affiliated sub-advisers, 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 Funds compared to that provided to these 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, 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 Funds had a sub-adviser, each 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 Funds 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 Funds, the Independent Board Members concluded such facts justify the different levels of fees. |
58 | NUVEEN |
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 fees for the Funds are 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 Funds as well as indirect benefits (such as soft dollar arrangements), if any, the Fund Adviser and its affiliates received or were expected to receive that were directly attributable to the management of a Fund. See Section E below for additional information on indirect benefits a Fund Adviser may receive as a result of its relationship with the Funds. | |
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. |
NUVEEN | 59 |
Annual Investment Management Agreement Approval Process (Unaudited) (continued)
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 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. With respect to closed-end funds, the Independent Board Members noted that, although such funds may from time-to-time make additional share offerings, the growth of their assets would occur primarily through the appreciation of such funds' investment portfolios. 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 the material savings achieved from fund-level breakpoints and complex-wide fee reductions for the 2015 calendar year. | |
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 closed-end funds/structured products, fund administration, operations, fund governance, investment services, compliance, product management, 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 Funds, 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 noted any revenues received by affiliates of the Adviser for serving as co-manager in initial public offerings of new closed-end funds and as underwriter on shelf offerings for certain existing funds. | |
In addition to the above, the Independent Board Members considered that the Funds' 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 Funds to the extent it enhances the ability of the Sub-Adviser to manage the Funds. | |
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 Funds were reasonable and within acceptable parameters. |
60 | NUVEEN |
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 each Fund and that the Advisory Agreements be renewed. |
NUVEEN | 61 |
Board Members & Officers (Unaudited)
The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board of Trustees of the Funds. The number of trustees of the Funds is 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.
Name, | Position(s) Held | Year First | Principal | Number | |||||
Year of Birth | with the Funds | Elected or | Occupation(s) | of Portfolios | |||||
& Address | Appointed | Including other | in Fund Complex | ||||||
and Term(1) | Directorships | Overseen by | |||||||
During Past 5 Years | Board Member | ||||||||
Independent Board Members: | |||||||||
■ | WILLIAM J. SCHNEIDER 1944 333 W. Wacker Drive Chicago, IL 6o6o6 | Chairman and Board Member | 1996 Class III | 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. | 184 | ||||
■ | JACK B. EVANS 1948 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 1999 Class III | 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. | 184 | ||||
■ | WILLIAM C. HUNTER 1948 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 2004 Class I | 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. | 184 | ||||
■ | DAVID J. KUNDERT 1942 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 2005 Class II | Formerly, Director, Northwestern Mutual Wealth Management Company (2006-2013), retired (since 2004) as Chairman, JPMorgan Fleming Asset Management, President and CEO, Banc One Investment Advisors Corporation, and President, One Group Mutual Funds; prior thereto, Executive Vice President, Banc One Corporation and Chairman and CEO, Banc One Investment Management Group; Regent Emeritus, Member of Investment Committee, Luther College; member of the Wisconsin Bar Association; member of Board of Directors 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). | 184 |
62 | NUVEEN |
Name, | Position(s) Held | Year First | Principal | Number | |||||
Year of Birth | with the Funds | Elected or | Occupation(s) | of Portfolios | |||||
& Address | Appointed | Including other | in Fund Complex | ||||||
and Term(1) | Directorships | Overseen by | |||||||
During Past 5 Years | Board Member | ||||||||
Independent Board Members (continued): | |||||||||
■ | ALBIN F. MOSCHNER(2) 1952 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 2016 Class III | 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). | 184 | ||||
■ | JOHN K. NELSON 1962 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 2013 Class II | 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. | 184 | ||||
■ | JUDITH M. STOCKDALE 1947 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 1997 Class I | 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). | 184 | ||||
■ | CAROLE E. STONE 1947 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 2007 Class I | Director, Chicago Board Options Exchange, Inc. (since 2006); Director, C2 Options Exchange, Incorporated (since 2009); Director, CBOE Holdings, Inc. (since 2010); formerly, Commissioner, New York State Commission on Public Authority Reform (2005-2010). | 184 | ||||
■ | TERENCE J. TOTH 1959 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 2008 Class II | Managing Partner, Promus Capital (since 2008); Director, Fulcrum IT Service LLC (since 2010), Quality Control Corporation (since 2012) and LogicMark LLC (since 2012); member: Chicago Fellowship Board (since 2005), 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). | 184 |
NUVEEN | 63 |
Board Members & Officers (Unaudited) (continued)
Name, | Position(s) Held | Year First | Principal | Number | |||||
Year of Birth | with the Funds | Elected or | Occupation(s) | of Portfolios | |||||
& Address | Appointed | Including other | in Fund Complex | ||||||
and Term(1) | Directorships | Overseen by | |||||||
During Past 5 Years | Board Member | ||||||||
Independent Board Members (continued): | |||||||||
■ | MARGARET L. WOLFF 1955 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 2016 Class I | 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. | 184 | ||||
Interested Board Members: | |||||||||
■ | WILLIAM ADAMS IV(3) 1955 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 2013 Class II | 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. | 184 | ||||
■ | MARGO L. COOK(2)(3) 1964 333 W. Wacker Drive Chicago, IL 6o6o6 | Board Member | 2016 Class III | 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; Senior Executive Vice President (since 2015) of Nuveen Fund Advisors, LLC (Executive Vice President 2011-2015); formerly, Managing Director of Nuveen Commodities Asset Management, LLC (2011-2016); Chartered Financial Analyst. | 184 |
Name, | Position(s) Held | Year First | Principal | Number | |||||
Year of Birth | with the Funds | Elected or | Occupation(s) | of Portfolios | |||||
& Address | Appointed(4) | During Past 5 Years | in Fund Complex | ||||||
Overseen | |||||||||
by Officer | |||||||||
Officers of the Funds: | |||||||||
■ | GIFFORD R. ZIMMERMAN 1956 333 W. Wacker Drive Chicago, IL 6o6o6 | Chief Administrative Officer | 1988 | Managing Director (since 2002), and Assistant Secretary of Nuveen Securities, LLC; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Managing Director (since 2002), Assistant Secretary (since 1997) and Co-General Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel of Nuveen Asset Management, LLC (since 2011); Managing Director and Assistant Secretary of Nuveen Investments Advisers, LLC (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. | 185 |
64 | NUVEEN |
Name, | Position(s) Held | Year First | Principal | Number | |||||
Year of Birth | with the Funds | Elected or | Occupation(s) | of Portfolios | |||||
& Address | Appointed(4) | During Past 5 Years | in Fund Complex | ||||||
Overseen | |||||||||
by Officer | |||||||||
Officers of the Funds (continued): | |||||||||
■ | CEDRIC H. ANTOSIEWICZ 1962 333 W. Wacker Drive Chicago, IL 6o6o6 | Vice President | 2007 | Managing Director of Nuveen Securities, LLC. (since 2004); Managing Director of Nuveen Fund Advisors, LLC (since 2014). | 83 | ||||
■ | LORNA C. FERGUSON 1945 333 W. Wacker Drive Chicago, IL 6o6o6 | Vice President | 1998 | Managing Director (since 2004) of Nuveen Investments Holdings, Inc. | 185 | ||||
■ | STEPHEN D. FOY 1954 333 W. Wacker Drive Chicago, IL 6o6o6 | 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. | 185 | ||||
■ | NATHANIEL T. JONES 1979 333 W. Wacker Drive Chicago, IL 6o6o6 | Vice President and Treasurer | 2016 | Senior Vice President (since 2016), formerly, Vice President (2011-2016) of Nuveen Investments Holdings, Inc.; Chartered Financial Analyst. | 184 | ||||
■ | WALTER M. KELLY 1970 333 W. Wacker Drive Chicago, IL 6o6o6 | Chief Compliance Officer and Vice President | 2003 | Senior Vice President (since 2008) of Nuveen Investment Holdings, Inc. | 185 | ||||
■ | DAVID J. LAMB 1963 333 W. Wacker Drive Chicago, IL 6o6o6 | Vice President | 2015 | Senior Vice President of Nuveen Investments Holdings, Inc. (since 2006), Vice President prior to 2006. | 83 | ||||
■ | TINA M. LAZAR 1961 333 W. Wacker Drive Chicago, IL 6o6o6 | Vice President | 2002 | Senior Vice President of Nuveen Investments Holdings, Inc. and Nuveen Securities, LLC. | 185 | ||||
■ | KEVIN J. MCCARTHY 1966 333 W. Wacker Drive Chicago, IL 6o6o6 | Vice President and 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. | 185 |
NUVEEN | 65 |
Board Members & Officers (Unaudited) (continued)
Name, | Position(s) Held | Year First | Principal | Number | |||||
Year of Birth | with the Funds | Elected or | Occupation(s) | of Portfolios | |||||
& Address | Appointed(4) | During Past 5 Years | in Fund Complex | ||||||
Overseen | |||||||||
by Officer | |||||||||
Officers of the Funds (continued): | |||||||||
■ | KATHLEEN L. PRUDHOMME 1953 9o1 Marquette Avenue Minneapolis, MN 554o2 | Vice President and Assistant Secretary | 2011 | Managing Director, Assistant Secretary and Co-General Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Managing Director and Assistant Secretary (since 2011) of Nuveen Securities, LLC; formerly, Deputy General Counsel, FAF Advisors, Inc. (2004-2010). | 185 | ||||
■ | JOEL T. SLAGER 1978 333 W. Wacker Drive Chicago, IL 6o6o6 | 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). | 185 |
(1) | The Board of Trustees is divided into three classes, Class I, Class II, and Class III, with each being elected to serve until the third succeeding annual shareholders' meeting subsequent to its election or thereafter in each case when its respective successors are duly elected or appointed, except two board members are elected by the holders of Preferred Shares, when applicable, to serve until the next annual shareholders' meeting subsequent to its election or thereafter in each case when its respective successors are duly elected or appointed. The year first elected or appointed represents the year in which the board member was first elected or appointed to any fund in the Nuveen Complex. |
(2) | On June 22, 2016, Ms. Cook and Mr. Moschner were appointed as Board members, effective July 1, 2016. |
(3) | "Interested person" as defined in the 1940 Act, by reason of his position with Nuveen Investments, Inc. and certain of its subsidiaries, which are affiliates of the Nuveen Funds. |
(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 Complex. |
66 | NUVEEN |
Notes
NUVEEN | 67 |
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 more than $239 billion in assets as of June 30, 2016.
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 more than $239 billion in assets as of June 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.
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/cef
Distributed by Nuveen Investments, LLC | 333 West Wacker Drive | Chicago, IL 60606 | www.nuveen.com |
EAN-B-0516D 17347-INV-Y-07/17
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/CEF/Shareholder/FundGovernance.aspx. (To view the code, click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant’s Board of Directors or Trustees (“Board”) determined that the registrant has at least one “audit committee financial expert” (as defined in Item 3 of Form N-CSR) serving on its Audit Committee. The registrant’s audit committee financial 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.
Nuveen Massachusetts Premium Income Municipal Fund
The following tables show the amount of fees that KPMG 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 KPMG 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).
SERVICES THAT THE FUND’S AUDITOR BILLED TO THE FUND
Audit Fees Billed | Audit-Related Fees | Tax Fees | All Other Fees | |||||||||||||
Fiscal Year Ended | to Fund 1 | Billed to Fund 2 | Billed to Fund 3 | Billed to Fund 4 | ||||||||||||
May 31, 2016 | $ | 23,270 | $ | 0 | $ | 0 | $ | 79 | ||||||||
Percentage approved | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
pursuant to | ||||||||||||||||
pre-approval | ||||||||||||||||
exception | ||||||||||||||||
May 31, 2015 | $ | 22,500 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Percentage approved | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
pursuant to | ||||||||||||||||
pre-approval | ||||||||||||||||
exception | ||||||||||||||||
1 "Audit Fees" are the aggregate fees billed for professional services for the audit of the Fund's annual financial statements and services provided in | ||||||||||||||||
connection with statutory and regulatory filings or engagements. | ||||||||||||||||
2 "Audit Related Fees" are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of | ||||||||||||||||
financial statements that are not reported under "Audit Fees". These fees include offerings related to the Fund's common shares and leverage. | ||||||||||||||||
3 "Tax Fees" are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. These fees include: all global | ||||||||||||||||
withholding tax services; excise and state tax reviews; capital gain, tax equalization and taxable basis calculation performed by the principal accountant. | ||||||||||||||||
4 "All Other Fees" are the aggregate fees billed for products and services other than "Audit Fees", "Audit-Related Fees" and "Tax Fees". These fees | ||||||||||||||||
represent all engagements pertaining to the Fund's use of leverage. |
SERVICES THAT THE FUND’S AUDITOR BILLED TO THE ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by KPMG LLP to Nuveen Fund Advisors, LLC (formerly Nuveen Fund Advisors, Inc.) (the “Adviser”), and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund (“Affiliated Fund Service Provider”), for engagements directly related to the Fund’s operations and financial reporting, during the Fund’s last two full fiscal years.
The tables also show the percentage of fees subject to the pre-approval exception. The pre-approval exception for services provided to the Adviser and any Affiliated Fund Service Provider (other than audit, review or attest services) waives the pre-approval requirement if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid to KPMG LLP by the Fund, the Adviser and Affiliated Fund Service Providers during the fiscal year in which the services are provided that would have to be pre-approved by the Audit Committee; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee’s attention, and the Committee (or its delegate) approves the services before the Fund’s audit is completed.
Audit-Related Fees | Tax Fees Billed to | All Other Fees | |
Billed to Adviser and | Adviser and | Billed to Adviser | |
Affiliated Fund | Affiliated Fund | and Affiliated Fund | |
Fiscal Year Ended | Service Providers | Service Providers | Service Providers |
May 31, 2016 | $ 0 | $ 0 | $ 0 |
Percentage approved | 0% | 0% | 0% |
pursuant to | |||
pre-approval | |||
exception | |||
May 31, 2015 | $ 0 | $ 0 | $ 0 |
Percentage approved | 0% | 0% | 0% |
pursuant to | |||
pre-approval | |||
exception |
NON-AUDIT SERVICES
The following table shows the amount of fees that KPMG LLP billed during the Fund’s last two full fiscal years for non-audit services. The Audit Committee is required to pre-approve non- audit services that KPMG LLP provides to the Adviser and any Affiliated Fund Services Provider, if the engagement related directly to the Fund’s operations and financial reporting (except for those subject to the pre-approval exception described above). The Audit Committee requested and received information from KPMG LLP about any non-audit services that KPMG LLP rendered during the Fund’s last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating KPMG LLP’s independence.
Total Non-Audit Fees | ||||
billed to Adviser and | ||||
Affiliated Fund Service | Total Non-Audit Fees | |||
Providers (engagements | billed to Adviser and | |||
related directly to the | Affiliated Fund Service | |||
Total Non-Audit Fees | operations and financial | Providers (all other | ||
Fiscal Year Ended | Billed to Fund | reporting of the Fund) | engagements) | Total |
May 31, 2016 | $ 79 | $ 0 | $ 0 | $ 79 |
May 31, 2015 | $ 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. |
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit Committee must approve (i) all non-audit services to be performed for the Fund by the Fund’s independent accountants and (ii) all audit and non-audit services to be performed by the Fund’s independent accountants for the Affiliated Fund Service Providers with respect to operations and financial reporting of the Fund. Regarding tax and research projects conducted by the independent accountants for the Fund and Affiliated Fund Service Providers (with respect to operations and financial reports of the Fund) such engagements will be (i) pre-approved by the Audit Committee if they are expected to be for amounts greater than $10,000; (ii) reported to the Audit Committee chairman for his verbal approval prior to engagement if they are expected to be for amounts under $10,000 but greater than $5,000; and (iii) reported to the Audit Committee at the next Audit Committee meeting if they are expected to be for an amount under $5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant’s Board has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The members of the audit committee are Jack B. Evans, David J. Kundert, John K. Nelson, Carole E. Stone and Terence J. Toth.
ITEM 6. SCHEDULE OF INVESTMENTS.
a) See Portfolio of Investments in Item 1.
b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Nuveen Fund Advisors, LLC is the registrant’s investment adviser (also referred to as the “Adviser”). The Adviser is responsible for the on-going monitoring of the Fund’s investment portfolio, managing the Fund’s business affairs and providing certain clerical, bookkeeping and administrative services. The Adviser has engaged Nuveen Asset Management, LLC (“Sub-Adviser”) as Sub-Adviser to provide discretionary investment advisory services. As part of these services, the Adviser has delegated to the Sub-Adviser the full responsibility for proxy voting on securities held in the registrant’s portfolio and related duties in accordance with the Sub-Adviser’s policies and procedures. The Adviser periodically monitors the Sub-Adviser’s voting to ensure that it is carrying out its duties. The Sub-Adviser’s proxy voting policies and procedures are attached to this filing as an exhibit and incorporated herein by reference.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Nuveen Fund Advisors, LLC is the registrant’s investment adviser (also referred to as the “Adviser”). The Adviser is responsible for the selection and on-going monitoring of the Fund’s investment portfolio, managing the Fund’s business affairs and providing certain clerical, bookkeeping and administrative services. The Adviser has engaged Nuveen Asset Management, LLC (“Nuveen Asset Management” or “Sub-Adviser”) as Sub-Adviser to provide discretionary investment advisory services. The following section provides information on the portfolio manager at the Sub-Adviser:
Item 8(a)(1). PORTFOLIO MANAGER BIOGRAPHY
Michael Hamilton, Senior Vice President of Nuveen Asset Management, manages several municipal funds. He joined Nuveen Asset Management on January 1, 2011 in connection with Nuveen Fund Advisors acquiring a portion of the asset management business of FAF Advisors. He began working in the financial industry when he joined FAF Advisors in 1989, as a fixed-income fund manager and trader. He became a portfolio manager in 1992. He received a B.A. from Albertson’s College of Idaho and an M.B.A. from Western Washington University. He is a member of the Portland Society of Financial Analysts. Currently, he manages investments for 8 Nuveen-sponsored investment companies.
Item 8(a)(2). OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGER
Other Accounts Managed. In addition to managing the registrant, the portfolio manager is also primarily responsible for the day-to-day portfolio management of the following accounts:
Portfolio Manager | Type of Account Managed | Number of Accounts | Assets* |
Michael Hamilton | Registered Investment Company | 10 | $2.327 billion |
Other Pooled Investment Vehicles | 0 | $0 | |
Other Accounts | 2 | $142 million |
* | Assets are as of May 31, 2016. None of the assets in these accounts are subject to an advisory fee based on performance. |
POTENTIAL MATERIAL CONFLICTS OF INTEREST
Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one account. More specifically, portfolio managers who manage multiple accounts are presented a number of potential conflicts, including, among others, those discussed below.
The management of multiple accounts may result in a portfolio manager devoting unequal time and attention to the management of each account. Nuveen Asset Management seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most accounts managed by a portfolio manager in a particular investment strategy are managed using the same investment models.
If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one account, an account may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible accounts. To deal with these situations, Nuveen Asset Management has adopted procedures for allocating limited opportunities across multiple accounts.
With respect to many of its clients’ accounts, Nuveen Asset Management determines which broker to use to execute transaction orders, consistent with its duty to seek best execution of the transaction. However, with respect to certain other accounts, Nuveen Asset Management may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, Nuveen Asset Management may place separate, non-simultaneous, transactions for a Fund and other accounts which may temporarily affect the market price of the security or the execution of the transaction, or both, to the detriment of the Fund or the other accounts.
Some clients are subject to different regulations. As a consequence of this difference in regulatory requirements, some clients may not be permitted to engage in all the investment techniques or transactions or to engage in these transactions to the same extent as the other accounts managed by the portfolio manager. Finally, the appearance of a conflict of interest may arise where Nuveen Asset Management has an incentive, such as a performance-based management fee, which relates to the management of some accounts, with respect to which a portfolio manager has day-to-day management responsibilities.
Nuveen Asset Management has adopted certain compliance procedures which are designed to address these types of conflicts common among investment managers. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
Item 8(a)(3). FUND MANAGER COMPENSATION
Portfolio manager compensation consists primarily of base pay, an annual cash bonus and long term incentive payments.
Base pay. Base pay is determined based upon an analysis of the portfolio manager’s general performance, experience, and market levels of base pay for such position.
Annual cash bonus. The Fund’s portfolio managers are eligible for an annual cash bonus based on investment performance, qualitative evaluation and financial performance of Nuveen Asset Management.
A portion of each portfolio manager’s annual cash bonus is based on the Fund’s investment performance, generally measured over the past one- and three or five-year periods unless the portfolio manager’s tenure is shorter. Investment performance for the Fund generally is determined by evaluating the Fund’s performance relative to its benchmark(s) and/or Lipper industry peer group.
A portion of the cash bonus is based on a qualitative evaluation made by each portfolio manager’s supervisor taking into consideration a number of factors, including the portfolio manager’s team collaboration, expense management, support of personnel responsible for asset growth, and his or her compliance with Nuveen Asset Management’s policies and procedures.
The final factor influencing a portfolio manager’s cash bonus is the financial performance of Nuveen Asset Management based on its operating earnings.
Long-term incentive compensation. Certain key employees of Nuveen Investments and its affiliates, including certain portfolio managers, participate in a Long-Term Performance Plan designed to provide compensation opportunities that links a portion of each participant’s compensation to Nuveen Investments’ financial and operational performance. In addition, certain key employees of Nuveen Asset Management, including certain portfolio managers, have received profits interests in Nuveen Asset Management which entitle their holders to participate in the firm’s growth over time.
There are generally no differences between the methods used to determine compensation with respect to the Fund and the Other Accounts shown in the table above.
Item 8(a)(4). OWNERSHIP OF NMT AS OF MAY 31, 2016
Name of Portfolio Manager | None | $1 - $10,000 | $10,001-$50,000 | $50,001-$100,000 | $100,001-$500,000 | $500,001-$1,000,000 | Over $1,000,000 |
Michael Hamilton | X |
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board implemented after the registrant last provided disclosure in response to this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form.
(a)(1) | Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable because the code is posted on registrant’s website at www.nuveen.com/CEF/Shareholder/FundGovernance.aspx and there were no amendments during the period covered by this report. (To view the code, click on Code of Conduct.) |
(a)(2) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT Attached hereto. |
(a)(3) | Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. |
(b) | If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Ex-99.906 CERT attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Massachusetts Premium Income Municipal Fund
By (Signature and Title) /s/ Kevin J. McCarthy
Kevin J. McCarthy
Vice President and Secretary
Date: August 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/ Gifford R. Zimmerman
Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: August 8, 2016
By (Signature and Title) /s/ Stephen D. Foy
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: August 8, 2016