Frank P. Bruno, Esquire
August 10, 2017
Page 1 of 11
August 10, 2018
VIA E-MAIL
Frank P. Bruno, Esquire
Sidley Austin LLP
787 Seventh Avenue
New York, NY 10019
Re: Nuveen AMT-Free Quality Municipal Income Fund
(File Nos. 333-226125; 811-21213)
Nuveen AMT-Free Municipal Credit Income Fund
(File Nos. 333-226136; 811-09475)
Dear Mr. Bruno:
On July 11, 2018, you filed an initial registration statement on Form N-2 on
behalf of the
Nuveen AMT-Free Quality Municipal Income Fund, and on July 12, 2018, you filed
an initial
registration statement on Form N-2 on behalf of the Nuveen AMT-Free Municipal
Credit Income
Fund (together, the "Funds"). Based on our review, we have the following
comments. Unless
otherwise noted, our comments apply to both registration statements. Please
note that comments
we give regarding disclosure in one section apply to other sections in the
filings that contain the
same or similar disclosure. Page numbers refer to the registration statement
for the Nuveen
AMT-Free Quality Municipal Income Fund.
General
1. We note that portions of the registration statements are incomplete. We
may have
additional comments on such portions when you complete them in a
pre-effective
amendment, on disclosures made in response to this letter, on information
supplied
supplementally, or on exhibits added in any pre-effective amendment.
2. Please advise us if you have submitted or expect to submit an exemptive
application or no-
action request in connection with the registration statements.
3. If applicable, please confirm in your response letter that FINRA has
reviewed the proposed
underwriting terms and arrangements for the transactions described in the
registration
Frank P. Bruno, Esquire
August 10, 2017
Page 2 of 11
statements, including the amount of compensation to be allowed or paid to
the underwriters
and any other arrangements among each Fund, the underwriter, and other
broker dealers
participating in the distribution, and that FINRA has issued a statement
expressing no
objections to the compensation and other arrangements.
Registration Statement Cover Page
4. Please confirm supplementally that the "Amount Being Registered" in the
"Calculation of
Registration Fee under the Securities Act of 1933" table includes all
shares that may be
issued pursuant to the underwriters' over-allotment option.
PROSPECTUS
Cover Page
5. Please clarify in each prospectus whether the Funds' two investment
objectives are primary
and secondary, as noted on the cover page, or are of comparable
importance, as suggested
elsewhere throughout the filing.
6. When discussing the Funds' investment objectives and policies, please
include the policy
of investing at least 80% of Assets in municipal securities and other
related investments,
the income from which is exempt from the federal alternative minimum tax
applicable to
individuals at the time of purchase. Please also make corresponding
changes to the cover
page of each prospectus supplement.
7. Please bold the cross reference to the prospectus discussion regarding
the risks associated
with leverage. See Item 1.1.j of Form N-2.
8. Please disclose that because the management fee is based on a percentage
of Managed
Assets, which include the assets acquired from the Funds' use of
leverage, the Adviser and
Sub-Adviser may have a conflict of interest in determining whether to use
or increase
leverage.
9. Please clarify in the Leverage discussion and throughout the prospectus
that reverse
repurchase agreements are in effect borrowings, and revise corresponding
disclosure
appropriately. See generally Investment Company Act Release No. 10666
(Apr. 18, 1979).
Prospectus Summary Investment Objectives and Policies, pages 1-2
10. The term "Quality," when used in a fund name that also suggests fixed
income
investments, is synonymous with the term "Investment Grade" and is
subject to Rule 35d-1
under the Investment Company Act of 1940 ("1940 Act"). Accordingly, with
respect to the
Nuveen AMT-Free Quality Municipal Income Fund, please revise the
investment policy
sections of the prospectus and prospectus supplements to include a
requirement for the
Fund to invest at least 80% of its Assets in investment grade municipal
securities. Please
disclose whether this policy is fundamental or whether it may be changed
upon 60 days'
Frank P. Bruno, Esquire
August 10, 2017
Page 3 of 11
notice to shareholders. Similarly, please revise the Fund's policy of
investing up to 35% of
its Managed Assets in securities rated below the three highest grades
(Baa or BBB or
lower) so that the Fund will not invest more than 20% of its Assets in
below investment
grade municipal securities.
11. To ensure that each Fund's key features are provided in the summary,
please disclose that
each Fund may: (a) invest in distressed securities; (b) not invest in the
securities of an
issuer which, at the time of investment, is in default on its obligations
to pay principal or
interest thereon when due or that is involved in a bankruptcy proceeding
(i.e., rated below
C-); (c) invest up to 15% of its Managed Assets in inverse floating rate
securities; (d) invest
in the securities of open- or closed-end investment companies (including
exchange-traded
funds) that invest primarily in municipal securities of the types in
which the Fund may
invest directly; (e) invest in certain derivative instruments, including
financial futures
contracts, swap contracts (including interest rate and credit default
swaps), options on
financial futures, and options on swap contracts; and (f) invest up to
100% of its net assets,
during temporary defensive periods, in short-term investments including
high quality,
short-term debt securities that may be either tax-exempt or taxable.
12. Please disclose, where appropriate in each prospectus, that if a Fund sells
or writes credit
default swaps, then the Fund will segregate the full notional amount of the
credit default
swap to cover such obligation.
Use of Proceeds, page 4
13. The prospectus states that Fund will use the net proceeds from any sales
of Securities to
make investments in accordance with the Fund's investment objectives and
policies or to
redeem outstanding Preferred Shares. Please clarify in each prospectus
supplement the
approximate amount intended to be used for each purpose. See Item 7.1 of
Form N-2.
Risk Factors, pages 8-25
14. The introductory paragraph indicates that the risk factor discussion does
not describe all of
the risks associated with an investment in each Fund. Please revise this
statement to clarify
that the risk discussion in the prospectus and prospectus supplements
describe all of the
principal risks associated with an investment in Common Shares and MFP
Shares of the
Fund. Item 8.3.a. of Form N-2.
15. In the discussion on Inverse Floating Rate Securities Risk, please
disclose that the amount
of fees paid for investment advisory services will be higher if a Fund
uses leverage because
the fees will be calculated based on the Fund's Managed Assets. Please
state that this may
create an incentive for the Adviser and Sub-Adviser to leverage the Fund
by investing in
inverse floating rate securities, and therefore the Adviser and
Sub-Adviser may have a
conflict of interest in determining whether to increase the Fund's use of
leverage.
16. The last paragraph of Special Risks Related to Certain Municipal
Securities states that the
Fund may invest in tobacco settlement bonds, but there is no other
mention of such
Frank P. Bruno, Esquire
August 10, 2017
Page 4 of 11
instruments in the registration statement. Please remove this paragraph
or, alternatively,
please revise each prospectus to disclose the Funds' investment policies
regarding tobacco
settlement bonds.
17. Please expand the discussion on Derivatives Risk, Including the Risk of
Swaps, to address
all of the derivative instruments in which each Fund may principally
invest (e.g., financial
futures contracts, options on financial futures, and options on swap
contracts).
18. Page 37 of the prospectus states that the Fund may invest in distressed
securities, but may
not invest in the securities of an issuer which, at the time of
investment, is in default on its
obligations to pay principal or interest thereon when due or that is
involved in a bankruptcy
proceeding. Please reconcile this with the penultimate paragraph in the
Below Investment
Grade Risk discussion, which states that distressed securities are those
issued by issuers
that are involved in bankruptcy or insolvency proceedings.
19. When stating in the Interest Rate Risk discussion that a portfolio of
securities with longer
durations tend to be more sensitive to interest rate changes than a
portfolio with a shorter
duration, please disclose that a greater sensitivity to changes in
interest rates typically
corresponds to higher volatility and higher risk.
20. The Other Investment Companies Risk discussion explains that the Funds
may be
indirectly exposed to leverage when investing in other investment
companies. Please also
disclose other risks relating to investing in other investment companies,
including
exchange-traded funds ("ETFs") (e.g., the Fund bears a pro rata portion
of the expenses of
underlying funds, including advisory fees, which are in addition to the
Fund's direct
expenses; an ETF that is based on a specific index may not be able to
replicate and
maintain the index composition; ETFs incur certain expenses not incurred
by the index; the
market value of ETFs and closed-end funds may differ from their net asset
value; etc.).
21. Please state in the discussion on Anti-Takeover Provisions that such
provisions could have
the effect of depriving Common Shareholders of the opportunity to sell
their shares at a
premium over the then current market price of the Common Shares.
Description of Securities, pages 30-35
22. The introductory paragraph states that the information therein is a brief
description of the
terms of the Securities, and a complete description may be found in the
Declaration of
Trust. Please clarify here as well as elsewhere in the filings that all
material terms of the
Securities are described in the prospectus and prospectus supplements
(e.g., the first
paragraph on page S-19 and the first and last paragraphs under Book-Entry
Procedures and
Settlement beginning on page S-41 of the VRRM-MFP Shares prospectus
supplement; the
first paragraph on page S-22 and the first and last paragraphs under
Book-Entry Procedures
and Settlement beginning on page S-46 of the VRM-MFP Shares prospectus
supplement).
Similarly, a prospectus should be accurate and complete, and the
statements therein may
not be qualified with reference to any other document. Accordingly,
please remove the
Frank P. Bruno, Esquire
August 10, 2017
Page 5 of 11
disclosure on page 35 of the prospectus stating that the description of
MFP Shares are not
complete, and are qualified in their entirety by reference to the
Declaration of Trust and the
Statement and the Statement Supplement relating to that series. Please
remove similar
disclosure elsewhere in the filings (e.g., the second paragraph on page
60 of the prospectus;
the third paragraph on page S-20 of the Common Shares prospectus
supplement; the
penultimate paragraph on page S-44 of the VRRM-MFP Shares prospectus
supplement; the
third paragraph on page S-49 of the VRM-MFP Shares prospectus
supplement).
The Fund's Investments Investment Objectives and Policies, pages 36-39
23. Please describe the Funds' investment policies relating to inverse
floating rate securities,
including the 15% limitation on the amount the Fund may invest in such
instruments.
24. Please remove the first paragraph on page 39 of the prospectus, which
discusses municipal
securities that are additionally secured by insurance, bank credit
agreements, or escrow
accounts, as it is redundant with the third paragraph on page 38 of the
prospectus.
25. Please describe any criteria as to duration that each Fund might use with
respect to its
investments in municipal securities.
The Fund's Investments Portfolio Composition, pages 39-44
26. As this section is intended to describe the principal investments
comprising each Fund's
portfolio, please describe the Fund's investments in other open- or
closed-end investment
companies, including those that are affiliated with the Fund. Further,
please add disclosure
indicating that the Funds will consider the investments of underlying
investment companies
when determining compliance with each of its Rule 35d-1 investment
policies.
27. When discussing derivatives at the end of this section:
a. This discussion is very general, listing the types of derivatives
in which the Funds may
invest with no explanation as to the nature of each instrument.
Please consider the
staff observations concerning derivatives disclosure set forth in
the letter from Barry
D. Miller, Associate Director, Office of Legal and Disclosure, to
Karrie McMillan,
General Counsel, Investment Company Institute, dated July 30,
2010, and revise the
disclosures in this section accordingly. See
http://www.sec.gov/divisions/
investment/guidance/ici073010.pdf.
b. Please reconcile the first and third sentences in the paragraph,
which are virtually
identical.
c. Please more clearly disclose that all derivative instruments
included within the Funds'
Rule 35d-1 investment policies will be valued based on their
market or fair value
rather than their notional value for purposes of calculating
compliance with each
policy.
Frank P. Bruno, Esquire
August 10, 2017
Page 6 of 11
Use of Leverage, pages 44-47
28. Please define "effective leverage."
Management of the Fund Investment Management and Sub-Advisory Agreements,
pages 48-50
29. The prospectus states that the Sub-Adviser will receive a "management
fee, which is equal
to the portion percentage allocation of the fees (net of applicable
breakpoints, waivers and
reimbursements) paid by the Fund to the Investment Adviser under the
Investment
Management Agreement for the Fund." Please revise this statement in
accordance with
plain English principles to more clearly state the amount of the advisory
fee received by the
Sub-Adviser (e.g., [xx]% of Nuveen Fund Advisor's management fee (net of
applicable
breakpoints, waivers and reimbursements).
Repurchase of Fund Shares; Conversion to Open-End Fund, pages 53-55
30. Each prospectus states that the Fund's Board of Directors will consider,
on an annual basis,
action that may be taken to reduce or eliminate any material discount
from net asset value,
including the conversion of the Fund to an open-end investment company.
Accordingly,
please disclose in the prospectus: (a) the risks relating to conversion
to an open-end fund,
such as (i) changes in the Fund's portfolio management to meet liquidity
requirements
applicable to open-end funds; and (ii) the ability of the Fund to meet
its investment
objective or use investment policies and techniques that are more
appropriate for a fixed
portfolio than one subject to constant demands for redemption and inflows
of cash; (b)
whether the Fund may charge sales or redemption fees upon conversion; (c)
whether
redemptions will be made in cash or with portfolio securities; and (d) if
the Fund, after
conversion, intends to retain the ability to make in-kind redemptions,
the costs and risks to
shareholders relating to such redemptions. See Guidelines to Form N-2,
Guide 4.
PROSPECTUS SUPPLEMENT (Common Shares)
Distributions, pages S-12 - S-13
31. The last paragraph states that the Fund reserves the right to change its
distribution policy
and the basis for establishing the rate of its monthly distributions at
any time. Please
disclose that any such change would be made subject to a finding by the
Fund's Board of
Trustees that such change is in the best interests of the shareholders.
Effects of Leverage, page S-18
32. Please provide a narrative accompanying the total return table explaining
that the purpose of
the table is to assist the investor in understanding the effects of
leverage. See Item 8.3.b.4. of
Form N-2.
Frank P. Bruno, Esquire
August 10, 2017
Page 7 of 11
PROSPECTUS SUPPLEMENT (VRRM-MFP Shares)
General
33. Please provide supplementally the Term Redemption Date for this offering.
We may have
further comments after reviewing your response.
Summary - Variable Rate Remarketed Mode, pages S-3 S-4
34. "Mode" is defined as the "Variable Rate Remarketed Mode, or any
subsequent Mode,
including any extension thereof, for which terms and conditions of the
MFP Shares are
designated pursuant to the Statement and the Statement Supplement."
Please more clearly
explain in accordance with plain English principles the terms and
conditions of the MFP
Shares that may change upon change to a new Mode. Please make similar
disclosure
changes to the prospectus supplement for the VRM-MFP Shares.
Summary - Dividend Provisions, pages S-4 S-6
35. The Summary sets forth the dividend rates that may apply under the
offering. With each
takedown of a preferred stock offering, please describe in the Summary
the other material
terms of the dividends payments (e.g., dividend period, dividend payment
dates, the
amount of dividends per share, etc.).
36. Please define the Securities Industry and Financial Markets Association
("SIFMA")
Municipal Swap Index, as is provided in the prospectus supplement for the
VRM-MFP
Shares.
Summary - Redemption Provisions, pages S-10 S-11
37. The prospectus supplement describes a redemption procedure whereby
VRRM-MFP
Shares may be redeemed on any Business Day, at the option of the Fund (in
whole or from
time to time, in part). Further, the prospectus supplement states that if
the Fund fails to
have Asset Coverage of at least 225%, or if the Effective Leverage Ratio
of the Fund
exceeds 45%, then the Fund may redeem a number of Preferred Shares as
determined by
the Fund (which may include at the sole option of the Fund any number or
proportion of
VRM-MFP Shares). Please explain to us how the Fund's ability to redeem
shares at its
discretion under these scenarios is consistent with Rule 23c-2 under the
1940 Act, which
requires, among other things, that a closed-end fund redeem shares in a
"manner as will not
discriminate unfairly against any holder of the securities of such class
or series." Please
revise this disclosure to clearly state that all optional and mandatory
redemptions by the
Fund will be conducted consistent with Rule 23c-2. Please make similar
disclosure
changes to the prospectus supplement for the VRM-MFP Shares.
Frank P. Bruno, Esquire
August 10, 2017
Page 8 of 11
Risk Factors, pages S-14 S-18
38. The dividend rate applicable to the VRRM-MFP Shares will be equal to the
sum of a
specified annual rate plus the SIFMA Municipal Swap Index. Accordingly,
please include
in the Risk Factors discussion "Risks Related to SIFMA Municipal Swap
Index" and
"Discontinuation or Modification of the SIFMA Municipal Swap Index,"
which are
described in the prospectus supplement for the VRM-MFP Shares.
Ratings, pages S-32 S-33
39. The prospectus supplement discloses the expected long-term rating and
long-term credit
rating for VRRM-MFP Shares. Please briefly discuss the significance of
these ratings, the
basis upon which ratings are issued, and whether or not the Funds intend,
or have any
contractual obligation, to comply with the conditions and guidelines
imposed by the
nationally recognized statistical rating organization ("NRSRO"). In
addition, please
disclose the material terms of any agreement between the Funds or any of
their affiliates
and the NRSRO under which the NRSRO provides such ratings. See Item 10.6.
of Form
N-2.
Further, please describe the effects on VRRM-MFP Shareholders if such
ratings are
lowered or withdrawn and the relationship of these ratings to the
investment quality of the
securities in which the Fund will invest. See Guide 6 to Form N-2.
Please make similar disclosure changes to the prospectus supplement for
the VRM-MFP
Shares.
PROSPECTUS SUPPLEMENT (VRM-MFP Shares)
Summary - Dividend Rate, pages S-5 S-6
40. To avoid investor confusion, please define "Failed Adjustment Event" and
"Failed
Transition Event" the first time such terms are used.
Description of VRM-MFP Shares - Mode [Extension or] Change - [Extension of the
Variable
Rate Mode or] Transition to a New Mode, page S-40
41. The prospectus supplement explains that upon extension of the Variable
Rate Mode or
transition to a new Mode, all outstanding VRM-MFP Shares will be
automatically subject
to mandatory tender for transition remarketing, unless Required
Beneficial Owners have
agreed to such extension or transition. Please briefly describe this
provision in the
prospectus supplement Summary.
Frank P. Bruno, Esquire
August 10, 2017
Page 9 of 11
STATEMENT OF ADDITIONAL INFORMATION
Investment Restrictions, pages 1-4
42. When describing each Fund's fundamental policies, please include its
fundamental policy
of investing at least 80% of its Assets in municipal securities and other
related investments,
the income from which is exempt from regular federal income taxes, and,
with respect to
the Nuveen AMT-Free Quality Municipal Income Fund, its fundamental policy
of
investing at least 80% of its Assets in municipal securities and other
related investments,
the income from which is exempt from the federal alternative minimum tax
applicable to
individuals at the time of purchase.
43. Investment restriction number five states that the Fund may not "[i]nvest
more than 25% of
its total assets in securities of issuers in any one industry; provided,
however, that such
limitation shall not apply to municipal bonds other than those municipal
bonds backed only
by the assets and revenues of non-governmental users" (emphasis added).
Please clarify in
adjacent disclosure that municipal bonds will be counted for
concentration purposes where
such bonds are backed principally by the assets and revenues of
non-governmental users.
44. A fund (and its adviser) may not ignore the investments of open-end and
closed-end
investment companies (including ETFs) in which it invests when
determining whether the
fund is in compliance with its own concentration policies. Please add
disclosure indicating
that the Fund will consider the investments of underlying investment
companies when
determining compliance with its own concentration policy.
45. Please clarify in the disclosure what the 1940 Act permits with respect
to issuing senior
securities and making loans.
The Fund's Investments Derivatives and Hedging Strategies Swap
Transactions, page 12
46. The SAI states that the Fund's obligation under a swap agreement will be
accrued daily
(offset against amounts owed to the Fund) and any accrued but unpaid net
amounts owed to
a swap counterparty will be covered by segregating cash and/or other
appropriate liquid
assets. As the Fund is not permitted to offset for credit default swaps,
please revise the
disclosure accordingly. Further, please explain what is meant by
"accrued," as the
coverage amount should be the full amount of unpaid past and future
payment obligations.
See Investment Company Act Release No. 10666 (Apr. 18, 1979).
The Fund's Investments Segregation of Assets, pages 19-20
47. In the first paragraph, please revise the second sentence to provide an
asset segregation
example of a derivative instrument in which the Funds actually invest
(e.g., financial
futures contracts, interest rate swaps, credit default swaps).
48. In the last paragraph, please clarify that the Funds may invest in
inverse floating rate
securities.
Frank P. Bruno, Esquire
August 10, 2017
Page 10 of 11
Proxy Voting Policies, pages 49-50
49. Please more fully describe the proxy voting policies of the Sub-Adviser.
See, e.g.,
"Disclosure of Proxy Voting Policies and Proxy Voting Records by
Registered
Management Investment Companies," SEC Rel. No. IC-25922 (Apr. 14, 2003).
Beneficial Owners, page 52
50. Please state the name, address, and percentage of ownership of each
person who owns 5%
or more of each class of each Fund's outstanding securities. Item 19.2.
of Form N-2.
Appendix A
51. Please provide a cross-reference in the SAI to Appendix A.
PART C
52. Before the registration statements are effective, please file an
unqualified legality opinion
consistent with Staff Legal Bulletin No. 19 dated October 4, 2011 (the
"Legal Bulletin") or,
alternatively, please undertake to file an unqualified legality opinion
consistent with the
Legal Bulletin in connection with each future takedown offering the Funds
conduct
pursuant to the registration statements.
53. Please clarify the type of opinion to be provided as Exhibit l.2, and
indicate whether this
opinion will be filed before the registration statement is effective or
whether the Funds will
undertake to file such an opinion in connection with each future takedown
offering.
54. Please confirm supplementally that the Funds will include as exhibits to
a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act of 1933
(the "Securities
Act") the final versions of the agreements filed as "form of" exhibits to
the registration
statement.
* * *
Responses to this letter should be made in a letter to me filed on
Edgar and in the form of
a pre-effective amendment filed pursuant to Rule 472 under the Securities Act.
Where no
change will be made in the filings in response to a comment, please indicate
this fact in the letter
to us and briefly state the basis for your position.
You should review and comply with all applicable requirements of the
federal securities
laws in connection with the preparation and distribution of preliminary
prospectuses.
Although we have completed our initial review of the registration
statements, the filings
will be reviewed further after we receive your response. Therefore, we reserve
the right to
comment further on the registration statements and any amendments. After we
have resolved all
Frank P. Bruno, Esquire
August 10, 2017
Page 11 of 11
issues, the Fund and its underwriter must request acceleration of the effective
date of the
registration statements.
In closing, we remind you that the Fund and its management are
responsible for the
accuracy and adequacy of their disclosures in the registration statements,
notwithstanding any
review, comments, action, or absence of action by the staff.
Should you have any questions prior to filing a pre-effective
amendment, please feel free
to contact me at 202-551-8045 or bentzingere@sec.gov.
Sincerely,
/s/
Elisabeth Bentzinger
Elisabeth
Bentzinger
Senior
Counsel