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 811-22018
-----------------------
Nuveen Multi-Currency Short-Term Government Income 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: December 31
-------------------
Date of reporting period: June 30, 2007
---------------------
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 SHAREHOLDERS
Semi-Annual Report
JUNE 30, 2007
Nuveen Investments
CLOSED-END FUNDS
NUVEEN
GLOBAL GOVERNMENT
ENHANCED INCOME
FUND
JGG
NUVEEN
MULTI-CURRENCY
SHORT-TERM
GOVERNMENT INCOME
FUND
JGT
High Current Income and Gains from
an Enhanced Global Debt Strategy
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<Table>
www.investordelivery.com OR www.nuveen.com/accountaccess
If you received your Nuveen Fund If you received your Nuveen Fund
dividends and statements from your dividends and statements directly from
financial advisor or brokerage Nuveen.
account.
</Table>
NUVEEN INVESTMENTS LOGO
Chairman's
LETTER TO SHAREHOLDERS
<Table>
(TIMOTHY
SCHWERTFEGER
PHOTO) Timothy R. Schwertfeger Chairman of the Board
</Table>
Dear Shareholder:
Once again, I am pleased to report that over the six-month period covered by
this report your Fund continued to provide you with attractive income. For more
details about the management strategy and performance of your Fund, please read
the Portfolio Manager's Comments, the Dividend and Share Price Information, and
the Performance Overview sections of this report.
I also wanted to take this opportunity to report some important news about
Nuveen Investments. We have accepted a buyout offer from a private equity
investment firm. While this may affect the corporate structure of Nuveen
Investments, it will have no impact on the investment objectives of the Funds,
portfolio management strategies or their dividend policies. We will provide you
with additional information about this transaction as more details become
available.
With the recent volatility in the stock market, many have begun to wonder which
way the market is headed, and whether they need to adjust their holdings of
investments. No one knows what the future will bring, which is why we think a
well-balanced portfolio that is structured and carefully monitored with the help
of an investment professional is an important component in achieving your
long-term financial goals. A well-diversified portfolio may actually help to
reduce your overall investment risk, and we believe that investments like your
Nuveen Investments Fund can be important building blocks in a portfolio crafted
to perform well through a variety of market conditions.
We are grateful that you have chosen us as a partner as you pursue your
financial goals and we look forward to continuing to earn your trust in the
months and years ahead. At Nuveen Investments, our mission continues to be to
assist you and your financial advisor by offering investment services and
products that can help you to secure your financial objectives.
Sincerely,
(TIMOTHY SCHWERTFEGER SIG)
Timothy R. Schwertfeger
Chairman of the Board
August 15, 2007
Portfolio Manager's COMMENTS
NUVEEN INVESTMENTS CLOSED-END FUNDS JGG, JGT
These Funds are managed by Nuveen Asset Management (NAM), a wholly-owned
subsidiary of Nuveen Investments. NAM's taxable fixed-income team has worked
together since 2000, with senior professionals averaging over 17 years of
investment experience. The team is led by Andrew Stenwall, who is responsible
for developing and administering the Funds' portfolio strategies. Mr. Stenwall,
who has 18 years of industry experience, has been a Managing Director of NAM
since August 2004. Here Andy discusses the performance of the Funds.
WHAT STRATEGIES AND TACTICS DID YOU USE TO MANAGE THE FUNDS' ASSETS OVER THE
SIX-MONTH PERIOD?
Since JGG's inception in late June 2006, we have used an integrated, three-part
investment strategy: First, we invested substantially all of the Fund's assets
directly or indirectly using derivatives in government debt securities from
several different countries, each with a relatively steep government debt yield
curve. Second, we sought to enhance the returns and reduce the risk of the
Fund's portfolio through an option strategy that involved selling slightly
out-of-the-money call options on individual or baskets of global government debt
securities representing approximately 80% of the Fund's managed assets. Third,
we bought the currencies of countries with relatively high interest rates and
sold the currencies of countries with relatively low interest rates to enhance
the Fund's return.
Since JGT's inception in late April 2007, we have managed the Fund in a manner
designed to help it achieve its investment objectives. The Fund has invested
directly in short-term international non-U.S. government securities, and
indirectly in international non-U.S. government securities through the purchase
of forward currency contracts and other derivative instruments relating to such
short-term international government securities. The investments of the Fund are
denominated in or otherwise provide exposure to multiple international non-U.S.
currencies.
Discussions of specific investments are for illustration only and are not
intended as recommendations of individual investments. The views expressed
herein represent those of the portfolio manager as of the date of this report
and are subject to change at any time, based on market conditions and other
factors. The Funds disclaim any obligation to advise shareholders of such
changes.
4
HOW DID THE FUNDS PERFORM OVER THE SIX-MONTH PERIOD?
The performance of JGG and JGT (since inception), as well as the performance of
comparative indices or benchmarks, are presented in the accompanying table.
Cumulative Total Returns on Net Asset Value
For the six months ended 6-30-07
<Table>
JGG -0.10%
Citigroup-Hedged World Gov't Bond Index(1)
(Ex U.S. Hedge to U.S. Dollars) 0.20%
JGT 3.77%
Citigroup Non-U.S. World Government Bond Index(2) 0.94%
Since Inception (4-25-07 through 6-30-07)
</Table>
- --------------------------------------------------------------------------------
Past performance is not predictive of future results. Current performance may be
higher or lower than the data shown.
For additional information, see the Individual Performance Overview for your
Fund in this report.
Returns do not reflect the deduction of taxes that a shareholder may have to pay
on Fund distributions or upon the sale of Fund shares. For more information,
please see the individual Performance Overview page for your Fund in this
report.
- --------------------------------------------------------------------------------
During the period JGG underperformed its benchmark while JGT outperformed its
benchmark.
In JGG, amid a backdrop of weaker U.S. growth and stronger global growth, we
invested the portfolio in non-U.S. government bonds in countries with steep
yield curves and relatively high inflation adjusted yields that we believe
offered the best total return opportunities. To further enhance the return of
the Fund, we sold call options on our long government bond positions to capture
premium and to shift potential return from a drop in global interest rates to
the current market environment. We further enhanced the return of the portfolio
by adding non-U.S. dollar currency exposure in those countries that we believe
are most likely to appreciate verses the U.S. dollar and other currencies.
The Fund benefited from long positions in higher yielding emerging market
currencies such as Turkey and Brazil, as well as from shorting currencies in
lower yielding countries such as Switzerland and Japan. Although the portfolio
had some exposure, our defensive position in the British pound helped stem
overall portfolio volatility. European currencies performed well on the back of
a strong economic picture in Europe, the UK and Scandinavia with central banks
normalizing the rate difference with the Fed Funds rate. Our long positions in
Norwegian krona and Hungarian forint also fared well.
- --------------------------------------------------------------------------------
1 Citigroup World Gov't Bond Index is an unmanaged market-capitalization
weighted Index that tracks the performance of the 18 government bond markets of
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, Portugal, Spain, Sweden, Switzerland, the United
Kingdom and the United States.
2 The Citigroup Non-U.S. Dollar World Government Bond Index is a market-weighted
index designed to reflect the performance of the international
developed-government fixed income markets 20 countries as of January 1999.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By late February, a sudden sharp correction in the local Chinese stock markets
spilled over to global equity markets creating significant volatility in the
value of many currencies. Helped by our proprietary risk models, we closed out
our positions and repatriated all funds back to U.S. LIBOR until the markets
calmed. As volatility started to normalize and risk aversion indices eased, the
Funds were fully reinvested in various currencies. Our long positions in
Brazilian real, Turkish lira, Hungarian forint and New Zealand kiwi outperformed
strongly.
JGG's performance was constrained by its mechanical strategy; as rates rose
globally, the Fund's call options moved out of the money, which increased the
Fund's duration thereby increasing volatility. The premiums we received from our
long positions were not high enough to offset rising yields on some of our
swaps. Also dampening performance over the period
5
was our long position in Swedish Krona as interest hike expectations heightened
in that country, which depressed the value of our positions.
JGT was launched in the second quarter of 2007 amid a strong rally in the U.S.
dollar (USD). Although the USD correction coincided with JGT's inception, the
portfolio's diversification in emerging market currencies such as Turkey and
Brazil benefited the portfolio's performance. The USD appreciation also helped
the carry strategy as low yielding currencies such as the Swiss franc and
Japanese yen depreciated against high yielding currencies such as the New
Zealand dollar and South African rand. We were positioned well in high and low
yielding and emerging markets currencies to benefit from the USD appreciation
except for our position in Swedish krona as interest hike expectations
heightened in that country.
Risk aversion and momentum started to change by early June as Bear Stearns
revealed significant losses in its hedge funds. The U.S. dollar reversed course
and sold off against all major currencies and against emerging markets
currencies as U.S. Treasury yields moved down as a 'flight to quality' reaction.
As the Fund is set up to take advantage of a decline in the dollar, the dollar
appreciation was a constraint to Fund performance in mid-June.
After the semi-annual period-end, and particularly in August, concerns about the
impact of defaults of U.S. sub-prime mortgages led in several stages to a
world-wide "credit crunch", in which investors globally sold lower-quality
investments and bought higher quality ones. Among the moves was a flight to
investments denominated in U.S. dollars, generally regarded as a haven in times
of market stress, which generally caused investments denominated in currencies
other than U.S. dollars to decline in value in U.S. dollar terms. The portfolio
management team regularly monitors each Fund's portfolio and will adjust its
exposure to investments denominated in non-U.S. currencies (which often will
effectively well exceed 100% of net assets) in accordance with a proprietary
risk reduction methodology intended to reduce or eliminate exposure to non-U.S.
currency risk when it appears, in the opinion of the portfolio management team,
that market conditions or trends will cause the value of such non-U.S. dollar
investments to decline significantly in U.S. dollar terms. There is no assurance
that this "stop-loss" program will insulate the Funds from loss from declining
non-U.S. dollar currencies.
6
Distribution and Share Price
INFORMATION
We are providing you with information regarding your Fund's distributions. This
information is as of June 30, 2007, and likely will vary over time based on the
Fund's investment activities and portfolio investment value changes. On March 1,
2007, Nuveen Investments announced that JGG would be moving from a monthly to a
quarterly distribution schedule. JGG's last monthly distribution was paid on
April 2, 2007, and its first quarterly distribution was paid on July 2, 2007.
JGT declared its initial quarterly distribution of $0.4510 on June 1, 2007.
Each Fund has a managed distribution policy. The goal of a managed distribution
program is to provide shareholders relatively consistent and predictable cash
flow by systematically converting its expected long-term return potential into
regular distributions. As a result, regular distributions throughout the year
will likely include a portion of expected long-term gains (both realized and
unrealized), along with net investment income.
Important points to understand about a managed distribution program are:
- - Each Fund seeks to establish a relatively stable distribution rate that
roughly corresponds to the projected total return from its investment strategy
over an extended period of time. However, you should not draw any conclusions
about the Fund's past or future investment performance from its current
distribution rate.
- - Actual returns will differ from projected long-term returns (and therefore the
Fund's distribution rate), at least over shorter time periods. Over a specific
timeframe, the difference between actual returns and total distributions will
be reflected in an increasing (returns exceed distributions) or a decreasing
(distributions exceed returns) Fund net asset value.
- - Each distribution is expected to be paid from some or all of the following
sources:
- net investment income (regular interest and dividends),
- realized capital gains, and
- unrealized gains, or, in certain cases, a return of principal (non-taxable
distributions)
- - A non-taxable distribution is a payment of a portion of the Fund's capital.
When the Fund's returns exceed distributions, it may represent portfolio gains
generated, but not realized as a taxable capital gain. In periods when the
Fund's returns fall short of distributions, it will represent a portion of
your original principal unless the shortfall is offset during other time
periods over the life of your investment (previous or subsequent) when the
Fund's total return exceeds distributions.
- - Because distribution source estimates are updated during the year, based on
the Fund's performance and forecast for its current fiscal year (which is the
calendar year for each Fund), these estimates may differ from both the tax
information reported to you in your
7
Fund's IRS Form 1099 statement provided at year end, as well as the ultimate
economic sources of distributions over the life of your investment.
The following table provides estimated information regarding each Fund's
distributions and total return performance for the six months ended June 30,
2007. The distribution information is presented on a tax basis rather than on a
generally accepted accounting principles (GAAP) basis. This information is
intended to help you better understand whether the Fund's returns for the
specified time period was sufficient to meet the Fund's distributions.
Information regarding such distributions in the future will likely vary based on
each Fund's investment activities and portfolio investment value changes at that
time.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------
As of 6/30/2007 JGG JGT*
- ---------------------------------------------------------------------------------------
Inception date 6/27/06 4/25/07
Six months ended 6/30/07:
Per share distribution:
From net investment income $0.36 $0.12
From realized capital gains -- --
From return of capital 0.45 0.36
------- -------
Total per share distribution $0.81 $0.48
======= =======
Distribution rate on NAV 4.87% 6.76%
Cumulative six-month total return on NAV (.10)% 3.77%
Annualized one-year total return on NAV 5.67% N/A
Annualized since inception total return on NAV 5.39% N/A
*For the period 4/25/07 (commencement of operations) through
6/30/07
- ---------------------------------------------------------------------------------------
</Table>
At the end of the reporting period, the Funds' share prices were trading
relative to their NAVs as shown in the accompanying table.
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------
6/30/07 Average 6-Month Period
Discount/Premium Discount/Premium
- --------------------------------------------------------------------------------------------------------
JGG 0.16% 2.79%
JGT -0.36% 3.30%
- --------------------------------------------------------------------------------------------------------
</Table>
8
<Table>
JGG Nuveen Global
PERFORMANCE Government Enhanced
OVERVIEW Income Fund
as of 6-30-07
</Table>
2006-2007 DISTRIBUTIONS PER SHARE(2)
(MONTHLY DISTRIBUTIONS BAR CHART)
<Table>
Jul 0.135
Sep 0.135
Oct 0.135
Nov 0.135
Dec 0.135
Jan 0.135
Feb 0.135
Mar 0.135
Jun 0.405
</Table>
SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
(SHARE PRICE CHART)
<Table>
7/01/06 20.010
20.000
20.000
19.750
19.350
19.550
19.150
19.040
19.150
19.500
19.500
19.290
19.510
19.270
19.660
19.790
19.490
19.500
19.440
19.360
19.080
19.250
20.170
20.030
19.970
20.100
20.380
20.210
19.550
19.360
19.640
20.000
19.830
19.380
19.450
19.480
19.800
19.850
19.850
20.090
20.070
19.850
19.770
19.840
19.900
20.140
19.920
20.010
20.250
19.620
19.115
18.860
6/30/07 18.670
</Table>
FUND SNAPSHOT
<Table>
- -------------------------------------------------------------------------------------
Share Price $18.67
- -------------------------------------------------------------------------------------
Net Asset Value $18.64
- -------------------------------------------------------------------------------------
Premium/(Discount) to NAV 0.16%
- -------------------------------------------------------------------------------------
Current Distribution Rate(1) 8.68%
- -------------------------------------------------------------------------------------
Net Assets ($000) $173,501
- -------------------------------------------------------------------------------------
</Table>
AVERAGE ANNUAL TOTAL RETURN
(Inception 6/27/06)
<Table>
<Caption>
- -------------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
- -------------------------------------------------------------------------------------
6-Month (Cumulative) -4.51% -0.10%
- -------------------------------------------------------------------------------------
1-Year 0.77% 5.67%
- -------------------------------------------------------------------------------------
Since
Inception 0.81% 5.39%
- -------------------------------------------------------------------------------------
</Table>
PORTFOLIO COMPOSITION
(as a % of total investments)
<Table>
- -------------------------------------------------------------------------------------
Sovereign Debt 23.8%
- -------------------------------------------------------------------------------------
Short-Term Investments(3) 76.2%
- -------------------------------------------------------------------------------------
</Table>
SOVEREIGN DEBT
COUNTRY CONCENTRATION
(as a % of total investments)(4)
<Table>
- -------------------------------------------------------------------------------------
Sweden 10.2%
- -------------------------------------------------------------------------------------
Germany 8.2%
- -------------------------------------------------------------------------------------
Turkey 5.4%
- -------------------------------------------------------------------------------------
</Table>
1 Current Distribution Rate is based on the Fund's current annualized
distribution divided by the Fund's current market price. The Fund's
distributions to its shareholders may be comprised of ordinary income, net
realized capital gains and, if at the end of the calendar year the Fund's
cumulative net ordinary income and net realized gains are less than the amount
of the Fund's distributions, a return of capital for tax purposes.
2 Effective March 1, 2007, the Fund changed from a monthly distribution to a
quarterly distribution schedule. The Fund's last monthly distribution was
declared March 1, 2007, and paid on April 2, 2007. The Fund's first quarterly
distribution was declared June 1, 2007, and paid on July 2, 2007.
3 Substantially all of the Fund's short-term investments are used as collateral
for derivative transactions.
4 Excluding derivative transactions.
9
<Table>
JGT Nuveen Multi-Currency
PERFORMANCE Short-Term Government
OVERVIEW Income Fund
as of 6-30-07
</Table>
CREDIT QUALITY (AS A % OF TOTAL INVESTMENTS)(2)
(PORTFOLIO ALLOCATION PIE CHART)
<Table>
AAA 55.5
BBB 15.4
BB or Lower 2.2
N/R 26.5
</Table>
2007 DISTRIBUTIONS PER SHARE
(MONTHLY DISTRIBUTIONS BAR CHART)
<Table>
Jun 0.451
</Table>
SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
(SHARE PRICE CHART)
<Table>
4/27/07 20.00
20.20
20.30
20.03
20.00
20.00
20.02
19.18
19.25
6/30/07 19.30
</Table>
FUND SNAPSHOT
<Table>
- -------------------------------------------------------------------------------------
Share Price $19.30
- -------------------------------------------------------------------------------------
Net Asset Value $19.37
- -------------------------------------------------------------------------------------
Premium/(Discount) to NAV -0.36%
- -------------------------------------------------------------------------------------
Current Distribution Rate(1) 9.35%
- -------------------------------------------------------------------------------------
Net Assets ($000) $858,230
- -------------------------------------------------------------------------------------
</Table>
CUMULATIVE TOTAL RETURN
(Inception 4/25/07)
<Table>
<Caption>
- -------------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
- -------------------------------------------------------------------------------------
Since
Inception -1.25% 3.77%
- -------------------------------------------------------------------------------------
</Table>
PORTFOLIO COMPOSITION
(as a % of total investments)
<Table>
- -------------------------------------------------------------------------------------
Sovereign Debt 46.7%
- -------------------------------------------------------------------------------------
Asset-Backed Securities 15.3%
- -------------------------------------------------------------------------------------
Put Options 0.4%
- -------------------------------------------------------------------------------------
Short-Term Investments 37.6%
- -------------------------------------------------------------------------------------
</Table>
SOVEREIGN DEBT
COUNTRY CONCENTRATION
(as a % of total investments)(3)
<Table>
- -------------------------------------------------------------------------------------
United Kingdom 10.2%
- -------------------------------------------------------------------------------------
Turkey 16.3%
- -------------------------------------------------------------------------------------
Hungary 12.8%
- -------------------------------------------------------------------------------------
Mexico 3.5%
- -------------------------------------------------------------------------------------
Norway 2.6%
- -------------------------------------------------------------------------------------
Columbia 1.3%
- -------------------------------------------------------------------------------------
</Table>
1 Current Distribution Rate is based on the Fund's current annualized
distribution divided by the Fund's current market price. The Fund's
distributions to its shareholders may be comprised of ordinary income, net
realized capital gains and, if at the end of the calendar year the Fund's
cumulative net ordinary income and net realized gains are less than the amount
of the Fund's distributions, a return of capital for tax purposes.
2 Excluding put options and derivative transactions.
3 Excluding derivative transactions.
10
<Table>
SHAREHOLDER MEETING REPORT
The shareholder meeting was held in the offices of Nuveen
Investments on April 4, 2007.
</Table>
<Table>
<Caption>
- -----------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Common
Shares
- -----------------------------------------------------------------------
Robert P. Brenner
For 8,470,554
Withhold 48,527
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
Lawrence H. Brown(1)
For 8,468,754
Withhold 50,327
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
Jack B. Evans
For 8,470,554
Withhold 48,527
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
William C. Hunter
For 8,470,554
Withhold 48,527
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
David J. Kundert
For 8,470,054
Withhold 49,027
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
William J. Schneider
For 8,470,554
Withhold 48,527
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
Timothy R. Schwertfeger
For 8,470,554
Withhold 48,527
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
Judith M. Stockdale
For 8,470,554
Withhold 48,527
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
Carole E. Stone
For 8,470,054
Withhold 49,027
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
Eugene S. Sunshine(2)
For 8,470,554
Withhold 48,527
- -----------------------------------------------------------------------
Total 8,519,081
- -----------------------------------------------------------------------
</Table>
(1) Mr. Lawrence H. Brown retired from the Board of Trustees on July 1, 2007.
(2) Mr. Eugene S. Sunshine resigned from the Board of Trustees on July 31, 2007.
11
JGG
Nuveen Global Government Enhanced Income Fund
Portfolio of INVESTMENTS
as of 6-30-07 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT (000) DESCRIPTION COUPON MATURITY RATINGS (1) VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
SOVEREIGN DEBT - 23.8% (2)
GERMANY - 8.2%
11,000EUR Deutschland Republic 4.000% 7/04/16 AAA $ 14,291,128
- -----------------------------------------------------------------------------------------------------------------------------------
SWEDEN - 10.2%
135,000SEK Republic of Sweden 3.000% 7/12/16 AAA 17,616,797
- -----------------------------------------------------------------------------------------------------------------------------------
TURKEY - 5.4%
7,100TRY Republic of Turkey, Government Bond 14.000% 1/19/11 Ba3 5,350,019
5,000TRY Republic of Turkey, Government Bond 16.000% 3/07/12 Baa3 3,961,905
- -----------------------------------------------------------------------------------------------------------------------------------
12,100 Total Turkey 9,311,924
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL SOVEREIGN DEBT (COST $40,044,137) 41,219,849
=================================================================================================================
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT (000) DESCRIPTION COUPON MATURITY RATINGS (1) VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 76.1%
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 75.8%
$ 59,274 Federal National Mortgage Association 0.000% 7/11/07 Aaa $ 59,189,699
25,500 Federal National Mortgage Association 0.000% 7/25/07 Aaa 25,413,045
6,000 Federal Home Loan Banks, Discount Notes (3) 0.000% 7/27/07 Aaa 5,977,857
5,650 Federal Home Loan Banks, Discount Notes 0.000% 8/17/07 Aaa 5,612,034
8,900 Federal National Mortgage Association 0.000% 8/31/07 Aaa 8,823,089
16,035 Federal Home Loan Mortgage Corporation, Discount Notes 0.000% 9/06/07 Aaa 15,882,652
10,670 Federal Home Loan Mortgage Corporation, Discount Notes 0.000% 9/07/07 Aaa 10,567,111
- -----------------------------------------------------------------------------------------------------------------------------------
132,029 Total U.S. Government and Agency Obligations (cost $131,465,487) 131,465,487
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 0.3%
557 Repurchase Agreement with Fixed Income Clearing 4.000% 7/02/07 NA 557,107
Corporation, dated 6/29/07, repurchase price
$555,293, collateralized by $465,000 U.S.
Treasury Bonds, 7.250%, due 8/15/22, value
$570,788
- -----------------------------------------------------------------------------------------------------------------------------------
$ 132,586 TOTAL SHORT-TERM INVESTMENTS (COST $132,022,594) 132,022,594
===================================================================================================================================
</Table>
<Table>
PUT CALL
NOTIONAL NOTIONAL EXPIRATION STRIKE
TYPE AMOUNT (4) AMOUNT DATE PRICE VALUE
-------------------------------------------------------------------------------------------------------------
PUT OPTIONS - 0.0%
Morgan Stanley Currency Options 9,634,500 9,000,000 9/05/07 $ 1.0705 $ 51,714
CAD USD
-------------------------------------------------------------------------------------------------------------
TOTAL PUT OPTIONS (COST $69,840) 51,714
=============================================================================================================
</Table>
<Table>
<Caption>
PAY/RECEIVE
FLOATING EXERCISE EXPIRATION NOTIONAL
DESCRIPTION COUNTER PARTY FLOATING RATE INDEX RATE RATE DATE AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
PUT SWAPTIONS - (0.0%)
OTC - 10-Year Interest Rate Swap Bank of America 28-Day MXN TIIE Receive 9.420% 8/29/07 200,000,000 MXN
OTC - 10-Year Interest Rate Swap Citibank 6-Month NIBOR Receive 6.700% 9/07/07 109,000,000 NOK
OTC - 10-Year Interest Rate Swap Citibank 6-Month CIBOR Receive 5.935% 9/07/07 98,000,000 DKK
OTC - 10-Year Interest Rate Swap Citibank 3-Month STIBOR Receive 5.860% 9/07/07 123,000,000 SEK
OTC - 10-Year Interest Rate Swap Goldman Sachs 6-Month WIBOR Receive 6.470% 9/07/07 51,000,000 PLN
OTC - 10-Year Interest Rate Swap Goldman Sachs 6-Month PRIBOR Receive 5.410% 9/07/07 380,000,000 CZK
OTC - 10-Year Interest Rate Swap Merrill Lynch 3-Month CAD-BA-CDOR Receive 6.080% 9/07/07 20,000,000 CAD
OTC - 10-Year Interest Rate Swap Merrill Lynch 6-Month EURIBOR Receive 5.788% 9/07/07 11,000,000 EUR
- -----------------------------------------------------------------------------------------------------------------------------------
<Caption>
DESCRIPTION PREMIUM VALUE
- --------------------------------- -------------------------------
OTC - 10-Year Interest Rate Swap 20,000 MXN $ 386
OTC - 10-Year Interest Rate Swap 10,900 NOK 485
OTC - 10-Year Interest Rate Swap 9,800 DKK 316
OTC - 10-Year Interest Rate Swap 12,300 SEK 1,299
OTC - 10-Year Interest Rate Swap 5,387 USD 3,233
OTC - 10-Year Interest Rate Swap 3,605 USD 665
OTC - 10-Year Interest Rate Swap 708 USD 97
OTC - 10-Year Interest Rate Swap 1,482 USD 73
- -------------------------
</Table>
<Table>
TOTAL PUT SWAPTIONS (COST $18,323) 6,554
=================================================================================================================
TOTAL INVESTMENTS (COST $172,154,894) - 99.9% 173,300,711
=================================================================================================================
</Table>
12
<Table>
<Caption>
PAY/RECEIVE
FLOATING RATE FLOATING EXERCISE EXPIRATION NOTIONAL
DESCRIPTION COUNTER PARTY INDEX RATE RATE DATE AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
CALL SWAPTIONS WRITTEN - (0.4%)
OTC - 10-Year Interest Rate Swap Citibank 3-Month STIBOR Receive 5.028% 7/23/07 (123,000,000) SEK
OTC - 10-Year Interest Rate Swap JPMorgan 28-Day MXN TIIE Receive 7.930% 7/17/07 (200,000,000) MXN
OTC - 10-Year Interest Rate Swap Merrill Lynch 6-Month EURIBOR Receive 4.858% 7/23/07 (11,000,000) EUR
OTC - 10-Year Interest Rate Swap Merrill Lynch 3-Month CAD BA-CDOR Receive 5.140% 7/25/07 (20,500,000) CAD
OTC - 10-Year Interest Rate Swap Merrill Lynch 6-Month WIBOR Receive 5.635% 7/25/07 (51,000,000) PLN
OTC - 10-Year Interest Rate Swap Goldman Sachs 6-Month NIBOR Receive 5.740% 7/23/07 (109,000,000) NOK
OTC - 10-Year Interest Rate Swap Goldman Sachs 6-Month PRIBOR Receive 4.540% 7/25/07 (390,000,000) CZK
OTC - 10-Year Interest Rate Swap Lehman Brothers 3-Month CIBOR Receive 5.035% 7/23/07 (98,000,000) DKK
- -----------------------------------------------------------------------------------------------------------------------------------
<Caption>
DESCRIPTION PREMIUM VALUE
- -----------------------------------------------------------------------------
OTC - 10-Year Interest Rate Swap (618,075) SEK $ (117,809)
OTC - 10-Year Interest Rate Swap (1,140,000) MXN (50,325)
OTC - 10-Year Interest Rate Swap (43,450) EUR (77,745)
OTC - 10-Year Interest Rate Swap (73,800) CAD (109,487)
OTC - 10-Year Interest Rate Swap (173,400) PLN (48,569)
OTC - 10-Year Interest Rate Swap (392,400) NOK (92,976)
OTC - 10-Year Interest Rate Swap (826,800) CZK (52,858)
OTC - 10-Year Interest Rate Swap (372,400) DKK (106,436)
- -------------------------
</Table>
<Table>
TOTAL CALL SWAPTIONS WRITTEN (PREMIUMS RECEIVED $571,847) (656,205)
=================================================================================================================
OTHER ASSETS LESS LIABILITIES - 0.5% 856,049
=================================================================================================================
NET ASSETS - 100% 173,500,555
=================================================================================================================
</Table>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS OUTSTANDING AT JUNE 30, 2007:
<Table>
<Caption>
UNREALIZED
CURRENCY APPRECIATION
CONTRACTS TO AMOUNT IN EXCHANGE AMOUNT SETTLEMENT (DEPRECIATION)
DELIVER (LOCAL CURRENCY) FOR CURRENCY (LOCAL CURRENCY) DATE (U.S. DOLLARS)
--------------------------------------------------------------------------------------------------------------
Brazilian
Real 9,405,000 U.S. Dollar 4,809,974 8/14/07 $ (37,150)
Czech Koruna 826,000 U.S. Dollar 38,710 7/02/07 (170)
Danish Krone 372,000 U.S. Dollar 67,299 7/02/07 (361)
Euro 43,000 U.S. Dollar 57,895 7/02/07 (307)
Euro 11,297,300 U.S. Dollar 15,287,506 8/20/07 (29,349)
Hungarian
Forint 839,857,500 U.S. Dollar 4,543,761 9/14/07 (35,949)
New Zealand
Japanese Yen 1,458,466,400 Dollar 15,800,000 7/31/07 (260,515)
Japanese Yen 530,550,000 U.S. Dollar 4,342,812 9/25/07 (14,316)
Mexican Peso 49,500,000 U.S. Dollar 4,537,288 9/25/07 (21,776)
New Zealand
Dollar 6,100,000 U.S. Dollar 4,680,103 7/19/07 (15,427)
New Zealand
Dollar 15,800,000 Japanese Yen 1,458,466,400 7/31/07 2,899
Norwegian
Krone 390,000 U.S. Dollar 66,054 7/02/07 (85)
Polish Zloty 173,000 U.S. Dollar 61,825 7/02/07 (259)
South
African
Rand 33,039,000 U.S. Dollar 4,559,060 9/14/07 (70,516)
Swedish
Krona 618,000 U.S. Dollar 90,065 7/02/07 (305)
Swedish
Krona 130,000,000 U.S. Dollar 19,100,569 8/20/07 44,941
Swedish
Krona 32,000,000 U.S. Dollar 4,594,387 9/14/07 (101,552)
Swiss Franc 5,512,500 U.S. Dollar 4,481,634 9/14/07 (56,757)
Turkish Lira 1,695,000 U.S. Dollar 1,270,043 7/24/07 (10,224)
Turkish Lira 5,005,000 U.S. Dollar 3,680,418 7/24/07 (99,958)
Turkish Lira 5,400,000 U.S. Dollar 4,040,102 7/24/07 (38,625)
New Zealand
U.S. Dollar 4,514,366 Dollar 6,100,000 7/19/07 181,164
Brazilian
U.S. Dollar 4,584,450 Real 9,405,000 8/14/07 262,674
U.S. Dollar 4,515,593 Swiss Franc 5,512,500 9/14/07 22,799
Hungarian
U.S. Dollar 4,406,388 Forint 839,857,500 9/14/07 173,322
Swedish
U.S. Dollar 4,668,670 Krona 32,000,000 9/14/07 27,270
South
African
U.S. Dollar 4,523,226 Rand 33,039,000 9/14/07 106,350
U.S. Dollar 4,347,381 Japanese Yen 530,550,000 9/25/07 9,747
U.S. Dollar 4,539,618 Mexican Peso 49,500,000 9/25/07 19,445
--------------------------------------------------------------------------------------------------------------
$ 57,010
==============================================================================================================
</Table>
13
JGG
Nuveen Global Government Enhanced Income Fund (continued)
Portfolio of INVESTMENTS as of 6-30-07 (Unaudited)
INTEREST RATE SWAPS OUTSTANDING AT JUNE 30, 2007:
<Table>
<Caption>
UNREALIZED
FUND FIXED RATE APPRECIATION
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT TERMINATION (DEPRECIATION)
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (U.S. DOLLARS)
-----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs 110,000,000 NOK Pay 6-Month NOK LIBOR 4.810% Annual 7/10/16 $ (701,559)
Goldman Sachs 196,000,000 MXN Pay 28-Day MXN TIIE 9.150 28-Day 7/12/16 1,267,261
JPMorgan 56,000,000 PLN Pay 6-Month PLN LIBOR 5.650 Annual 7/11/16 624,876
Merrill Lynch 19,500,000 CAD Pay 3-Month CAD-BA-CDOR 4.353 Semiannual 11/21/16 (1,033,023)
Morgan Stanley 2,000,000,000 JPY Pay 6-Month JPY LIBOR 2.194 Semiannual 7/10/16 373,625
Morgan Stanley 395,000,000 CZK Pay 6-Month CZK LIBOR 4.060 Annual 7/11/16 (151,296)
Morgan Stanley 103,000,000 DKK Pay 6-Month DKK LIBOR 4.458 Annual 7/07/16 (269,771)
Morgan Stanley 40,000,000 ILS Pay 3-Month ILS-TELBOR 5.160 Annual 4/19/17 (303,442)
Morgan Stanley 40,000,000 ILS Pay 3-Month ILS-TELBOR 5.410 Annual 6/18/17 (128,577)
-----------------------------------------------------------------------------------------------------------------------------------
$ (321,906)
-----------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
(1) Ratings: Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by
Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be
below investment grade.
(2) Additional Sovereign Debt exposure is obtained from the Interest Rate Swap transactions.
(3) Portion of the investment, with an aggregate market value of $1,703,689, has been pledged
to collateralize the net payment obligations under interest rate swap contracts.
(4) Put Notional Amount is calculated by multiplying the Call Notional Amount by Strike Price.
CAD Canadian Dollar
CZK Czech Koruna
DKK Danish Krone
EUR Euro
ILS Israeli Shekel
JPY Japanese Yen
MXN Mexican Peso
NOK Norwegian Krone
PLN Polish Zloty
SEK Swedish Krona
TRY New Turkish Lira
USD U.S. Dollar
BA-CDOR Bankers Acceptances Offered Rate
CIBOR Copenhagen Inter-Bank Offered Rate
EURIBOR Europe Inter-Bank Offered Rate
LIBOR London Inter-Bank Offered Rate
NIBOR Norwegian Inter-Bank Offered Rate
PRIBOR Prague Inter-Bank Offered Rate
STIBOR Stockholm Inter-Bank Offered Rate
TELBOR Tel Aviv Inter-Bank Offered Rate
TIIE Mexican Peso-Inter-Bank Equilibrium Interest Rate
WIBOR Warsaw Inter-Bank Offered Rate
NA Not applicable
</Table>
See accompanying notes to financial statements.
14
JGT
Nuveen Multi-Currency Short-Term Government Income Fund
Portfolio of INVESTMENTS
as of 6-30-07 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT (000) DESCRIPTION COUPON MATURITY RATINGS (1) VALUE
- --------------------------------------------------------------------------------------------- -------------------------------------
ASSET-BACKED SECURITIES - 15.0%
$ 5,000 Advanta Business Card Master Trust, Asset Backed Notes, Series 2001A 5.620% 10/20/10 AAA $115,015,991
2,750 Advanta Business Card Master Trust, Asset Backed Notes, Series 2005-A4 4.750% 1/20/11 AAA 2,740,993
7,200 American Express Cresit Care Account Master Trust, 2005-3 Class A 5.320% 1/18/11 AAA 7,196,002
1,500 Bank One Issuance Trust 02-A5 5.440% 6/15/10 AAA 1,501,556
1,250 Bank One Issuance Trust 03-A6 A6 5.430% 2/15/11 AAA 1,252,324
2,136 Capital Auto Receivable Asset Trust, Class A1B, Series 2006 5.370% 1/20/09 AAA 2,137,178
4,375 Capital One Master Trust, Series 1998-1, Class A 6.310% 6/15/11 AAA 4,410,842
4,000 Capital One Master Trust, Series 2001-1, Class A 5.520% 12/15/10 AAA 4,009,534
3,000 Chase Credit Card Master Trust, Class A, Series 2003-2 5.430% 7/15/10 AAA 3,004,639
1,897 Chase Issuance Trust 05-A1 CL A1 5.330% 12/15/10 AAA 1,898,627
837 Chase Manhattan Auto Owners Trust Asset Backed 3.870% 6/15/09 AAA 831,261
Notes and Certificates, Series 2005A-A
3,888 Chase Manhattan Auto Owners Trust Asset Backed 4.840% 7/15/09 AAA 3,882,456
Notes and Certificates, Series 2005B-A3
5,000 Citibank Creditcard Issuance Trust, Series 2001-A1 5.530% 2/7/10 AAA 5,008,711
1,800 Citibank Creditcard Issuance Trust, Series 2004-A4 3.200% 8/24/09 AAA 1,796,153
7,000 Discover Card Master Trust I, Class A, Series 2001-1 5.540% 1/15/08 AAA 7,013,523
50,000 Federal Farm Credit Banks, Consolidated Systemwide Notes 0.000% 9/26/07 AAA 49,393,800
3,205 Ford Credit Auto Owner Trust, Asset Backed 5.290% 12/15/09 AAA 3,205,591
Notes, Class A2A, Series 2006C
5,600 General Electric Credit Card Master Trust, Series 2004-2A 5.360% 9/15/10 AAA 5,603,993
4,000 Harley-Davidson Motorcycle Trust, Series 2007-2A2 5.260% 12/15/10 AAA 4,000,553
1,600 Honda Auto Receivables Owner Trust, Class A2, Series 2006-3 5.250% 3/15/09 AAA 1,600,477
1,165 Honda Auto Receivables Owner Trust, Class A3, Series 2005-5 4.610% 8/17/09 AAA 1,161,352
3,335 Household Affinity Credit Card Trust, Asset Backed Notes, Series 2003-1A 5.440% 2/15/10 AAA 3,340,009
2,000 MBNA Credit Card Master Note Trust, Class A, Series 1998E 5.500% 9/15/10 AAA 2,003,803
2,000 MBNA Credit Card Master Note Trust, Class A1, Series 2002 5.450% 5/17/10 AAA 2,002,645
1,310 MBNA Credit Card Master Note Trust, Class A3, Series 2003 5.440% 8/16/10 AAA 1,312,119
1,729 Nissan Auto Receivables Owner Trust, Class A3, Series 2005C 4.190% 7/15/09 AAA 1,719,689
2,010 Triad Auto Receivable Owner Trust, Class A3, Series 2005A 4.050% 3/12/10 AAA 2,001,301
- -----------------------------------------------------------------------------------------------------------------------------------
$ 129,587 TOTAL ASSET-BACKED SECURITIES (COST $128,999,412) 129,045,122
===================================================================================================================================
</Table>
<Table>
PRINCIPAL
AMOUNT
(000) DESCRIPTION COUPON MATURITY RATINGS (1) VALUE
- ------------------------------------------------------------------------------------------------------------------------------
SOVEREIGN DEBT - 45.9%
COLOMBIA - 1.2%
20,000,000 COP Republic of Colombia 11.750% 3/01/10 BB $ 10,733,297
- ------------------------------------------------------------------------------------------------------------------------------
HUNGARY - 12.6%
9,000,000 HUF Republic of Hungary, Treasury Bill 0.000% 8/08/07 NA 48,934,283
11,000,000 HUF Republic of Hungary, Treasury Bill 0.000% 10/24/07 NA 58,880,369
- ------------------------------------------------------------------------------------------------------------------------------
$20,000,000 Total Hungary 107,814,652
- ------------------------------------------------------------------------------------------------------------------------------
MEXICO - 3.4%
110,000 MXN Mexican Treasury Bills 0.000% 11/22/07 NA 9,877,877
110,000 MXN Mexican Treasury Bills 0.000% 1/17/08 NA 9,765,912
110,000 MXN Mexican Treasury Bills 0.000% 3/13/08 NA 9,656,864
- ------------------------------------------------------------------------------------------------------------------------------
330,000 Total Mexico 29,300,653
- ------------------------------------------------------------------------------------------------------------------------------
NORWAY - 2.6%
130,000 NOK Norwegian Government Bond 5.500% 5/15/09 AAA 22,108,675
- ------------------------------------------------------------------------------------------------------------------------------
TURKEY - 16.0%
10,000 TRY Republic of Turkey, Government Bond 14.000% 1/19/11 Ba3 7,535,238
164,000 TRY Republic of Turkey, Government Bond 16.000% 3/07/12 Baa3 129,950,476
- ------------------------------------------------------------------------------------------------------------------------------
174,000 Total Turkey 137,485,714
- ------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM - 10.1%
43,800 GBP United Kingdom, Treasury Bill 0.000% 10/22/07 NA 86,415,601
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL SOVEREIGN DEBT (COST $382,578,023) 393,858,592
===============================================================================================================
</Table>
15
JGT
Nuveen Multi-Currency Short-Term Government Income Fund (continued)
Portfolio of INVESTMENTS as of 6-30-07 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT (000) DESCRIPTION COUPON MATURITY RATINGS (1) VALUE
- ------------------------------------------------------------------------------------------- ---------------------- ----------------
SHORT-TERM INVESTMENTS - 37.0%
$ 14,800 Federal Home Loan Banks, Discount Notes 0.000% 7/13/07 Aaa $ 14,774,593
5,175 Federal Farm Credit Banks, Consolidated Systemwide Notes 0.000% 7/18/07 Aaa 5,162,586
35,000 Federal Home Loan Mortgage Corporation, Discount Notes 0.000% 7/23/07 Aaa 34,890,596
46,800 Federal Home Loan Banks, Discount Notes 0.000% 7/25/07 Aaa 46,639,788
107,163 Federal Home Loan Banks, Discount Notes 0.000% 7/27/07 Aaa 106,767,122
35,000 Federal National Mortgage Association 0.000% 8/08/07 Aaa 34,811,399
50,000 Federal Farm Credit Banks, Consolidated Systemwide Notes 0.000% 8/24/07 Aaa 49,619,750
,000 Federal Home Loan Banks, Discount Notes 0.000% 8/31/07 Aaa 24,783,111
- -----------------------------------------------------------------------------------------------------------------------------------
$ 318,938 TOTAL SHORT-TERM INVESTMENTS (COST $317,448,945) 317,448,945
===================================================================================================================================
</Table>
<Table>
PUT CALL
NOTIONAL NOTIONAL EXPIRATION STRIKE
TYPE AMOUNT (2) AMOUNT DATE PRICE VALUE
-------------------------------------------------------------------------------------------------------------
PUT OPTIONS - 0.4%
Goldman Sachs Currency Options 200,000,00 24,400,000,00 9/26/07 $ 122.000 $ 1,275,200
USD JPY
JPMorgan Chase Currency Options 200,000,00 244,200, 9/26/07 1.221 929,000
USD CHF
UBS Currency Options 200,000,00 24,300,000,00 9/26/07 121.500 1,390,600
USD JPY
-------------------------------------------------------------------------------------------------------------
TOTAL PUT OPTIONS (COST $4,068,000) 3,594,800
=============================================================================================================
TOTAL INVESTMENTS (COST $833,094,380) - 98.3% 843,947,459
=============================================================================================================
OTHER ASSETS LESS 14,282,867
LIABILITIES - 1.7%
=============================================================================================================
NET ASSETS - 100% $ 858,230,326
=============================================================================================================
</Table>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS OUTSTANDING AT JUNE 30, 2007:
<Table>
<Caption>
UNREALIZED
CURRENCY APPRECIATION
CONTRACTS TO AMOUNT IN EXCHANGE FOR AMOUNT SETTLEMENT (DEPRECIATION)
DELIVER (LOCAL CURRENCY) CURRENCY (LOCAL CURRENCY) DATE (U.S. DOLLARS)
------------------------------------------------------------------------------------------------------------------
Australian Dollar 60,000,000 U.S. Dollar 50,886,300 8/02/07 $ 61,462
Australian Dollar 30,000,000 U.S. Dollar 25,427,700 8/08/07 19,754
Brazilian Real 102,867,000 U.S. Dollar 52,708,735 8/03/07 (371,627)
Brazilian Real 30,735,000 U.S. Dollar 15,721,228 8/07/07 (131,256)
Hungarian Forint 6,574,983,900 U.S. Dollar 35,648,169 8/08/07 (284,997)
Hungarian Forint 2,425,016,100 U.S. Dollar 13,149,599 8/08/07 (103,438)
Hungarian Forint 2,290,334,000 U.S. Dollar 12,395,762 9/07/07 (98,028)
Hungarian Forint 955,850,000 U.S. Dollar 5,170,558 9/13/07 (41,934)
Iceland Krona 196,470,000 U.S. Dollar 3,094,844 8/07/07 (33,858)
Iceland Krona 650,770,000 U.S. Dollar 10,248,346 8/08/07 (112,418)
Iceland Krona 648,150,000 U.S. Dollar 10,204,676 8/09/07 (111,913)
Iceland Krona 450,870,000 U.S. Dollar 7,077,189 8/22/07 (77,093)
Indian Rupe 2,059,000,000 U.S. Dollar 50,000,000 7/30/07 (496,428)
Indian Rupe 823,400,000 U.S. Dollar 20,260,827 8/10/07 80,292
Mexican Peso 597,440,000 U.S. Dollar 54,867,891 9/06/07 (220,532)
New Turkish Lira 64,000,000 U.S. Dollar 47,829,011 7/27/07 (459,285)
New Turkish Lira 30,300,000 U.S. Dollar 22,567,470 7/27/07 (294,020)
New Zealand Dollar 10,000,000 U.S. Dollar 7,646,140 8/03/07 (42,350)
New Zealand Dollar 27,165,425 U.S. Dollar 20,830,720 8/03/07 (55,390)
New Zealand Dollar 40,000,000 U.S. Dollar 30,652,800 8/03/07 (101,159)
New Zealand Dollar 30,000,000 U.S. Dollar 22,993,500 8/09/07 (60,513)
New Zealand Dollar 7,000,000 U.S. Dollar 5,346,600 9/13/07 (17,514)
Norwegian Krone 130,380,200 U.S. Dollar 21,727,860 8/03/07 (396,020)
South African Rand 449,233,920 U.S. Dollar 62,084,237 9/06/07 (945,142)
U.S. Dollar 60,000,000 Japanese Yen 7,318,410,000 7/31/07 (321,259)
U.S. Dollar 49,657,800 Australian Dollar 60,000,000 8/02/07 1,167,037
U.S. Dollar 32,935,880 Australian Dollar 40,000,000 8/02/07 947,345
U.S. Dollar 20,000,000 New Zealand Dollar 27,084,490 8/02/07 825,607
U.S. Dollar 10,000,000 New Zealand Dollar 13,541,328 8/02/07 412,099
U.S. Dollar 30,000,000 Brazilian Real 61,830,000 8/03/07 1,904,874
U.S. Dollar 20,000,000 Brazilian Real 41,037,000 8/03/07 1,175,487
U.S. Dollar 10,000,000 Norwegian Krone 59,261,000 8/03/07 55,846
U.S. Dollar 12,000,000 Norwegian Krone 71,119,200 8/03/07 68,034
U.S. Dollar 10,000,000 New Zealand Dollar 13,585,480 8/03/07 445,182
U.S. Dollar 10,000,000 New Zealand Dollar 13,579,645 8/03/07 440,927
U.S. Dollar 14,682,400 New Zealand Dollar 20,000,000 8/03/07 694,580
U.S. Dollar 14,670,400 New Zealand Dollar 20,000,000 8/03/07 706,580
U.S. Dollar 7,332,300 New Zealand Dollar 10,000,000 8/03/07 356,190
</Table>
16
<Table>
<Caption>
UNREALIZED
CURRENCY APPRECIATION
CONTRACTS TO AMOUNT IN EXCHANGE FOR AMOUNT SETTLEMENT (DEPRECIATION)
DELIVER (LOCAL CURRENCY) CURRENCY (LOCAL CURRENCY) DATE (U.S. DOLLARS)
------------------------------------------------------------------------------------------------------------------
U.S. Dollar 29,461,000 New Zealand Dollar 40,000,000 8/06/07 $ 1,285,319
U.S. Dollar 15,000,000 Brazilian Real 30,735,000 8/07/07 852,484
U.S. Dollar 30,000,000 Indian Rupe 1,243,500,000 8/07/07 482,098
U.S. Dollar 3,000,000 Iceland Krona 196,470,000 8/07/07 128,702
U.S. Dollar 24,526,500 Australian Dollar 30,000,000 8/08/07 881,445
U.S. Dollar 30,000,000 Indian Rupe 1,237,800,000 8/08/07 340,574
U.S. Dollar 10,000,000 Iceland Krona 650,770,000 8/08/07 360,765
U.S. Dollar 32,831,300 Australian Dollar 40,000,000 8/09/07 1,044,966
U.S. Dollar 5,000,000 Columbian Peso 10,365,000,000 8/09/07 231,665
U.S. Dollar 10,000,000 Iceland Krona 648,150,000 8/09/07 316,589
U.S. Dollar 5,000,000 Iceland Krona 325,350,000 8/09/07 178,588
U.S. Dollar 22,005,150 New Zealand Dollar 30,000,000 8/09/07 1,048,863
U.S. Dollar 26,634,867 Iceland Krona 1,731,000,000 8/10/07 910,844
U.S. Dollar 20,000,000 Indian Rupe 823,400,000 8/10/07 180,535
U.S. Dollar 7,339,700 New Zealand Dollar 10,000,000 8/13/07 342,427
U.S. Dollar 266,788 New Turkish Lira 365,500 8/20/07 6,559
U.S. Dollar 7,000,000 Iceland Krona 450,870,000 8/22/07 154,282
U.S. Dollar 5,000,000 South African Rand 35,458,500 8/22/07 (16,290)
U.S. Dollar 2,000,000 South African Rand 14,199,400 8/22/07 (4,267)
U.S. Dollar 4,090,175 Australian Dollar 5,000,000 8/23/07 142,620
U.S. Dollar 8,699,040 New Zealand Dollar 12,000,000 8/23/07 511,890
U.S. Dollar 10,000,000 Israeli Shekel 39,844,000 8/28/07 (608,211)
U.S. Dollar 10,000,000 Israeli Shekel 40,170,000 8/29/07 (531,011)
U.S. Dollar 7,000,000 Brazilian Real 13,786,500 8/30/07 92,610
U.S. Dollar 3,608,200 New Zealand Dollar 5,000,000 9/04/07 225,968
U.S. Dollar 51,601,315 Brazilian Real 101,990,000 9/05/07 829,862
U.S. Dollar 50,450,567 Mexican Peso 545,300,000 9/06/07 (169,842)
U.S. Dollar 6,365,655 Mexican Peso 68,800,000 9/06/07 (21,782)
U.S. Dollar 53,810,299 South African Rand 388,413,500 9/06/07 673,595
U.S. Dollar 53,132,538 South African Rand 383,570,700 9/06/07 672,042
U.S. Dollar 4,799,967 South African Rand 34,640,500 9/06/07 59,157
U.S. Dollar 12,283,905 Hungarian Forint 2,290,334,000 9/07/07 209,886
U.S. Dollar 22,131,312 Pound Sterling 11,200,000 9/10/07 336,380
U.S. Dollar 7,570,980 Australian Dollar 9,000,000 9/13/07 43,415
U.S. Dollar 5,000,000 Hungarian Forint 955,850,000 9/13/07 212,492
U.S. Dollar 5,195,400 New Zealand Dollar 7,000,000 9/13/07 168,714
U.S. Dollar 5,000,000 South African Rand 36,721,000 9/13/07 146,195
U.S. Dollar 5,000,000 Brazilian Real 9,622,500 9/20/07 (62,515)
U.S. Dollar 5,000,000 Israeli Shekel 20,690,000 9/20/07 (118,998)
U.S. Dollar 5,000,000 Mexican Peso 54,162,500 9/20/07 (10,011)
------------------------------------------------------------------------------------------------------------------
$ 16,113,726
==================================================================================================================
</Table>
<Table>
(1) Ratings: Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by
Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be
below investment grade.
(2) Put Notional Amount is calculated by dividing the Call Notional Amount by the Strike
Price.
CHF Swiss Franc
COP Columbian Peso
GBP United Kingdom Pound Sterling
HUF Hungarian Forint
JPY Japanese Yen
MXN Mexican Peso
NOK Norwegian Krone
TRY New Turkish Lira
USD U.S. Dollar
NA Not applicable.
</Table>
See accompanying notes to financial statements.
17
Statement of
ASSETS & LIABILITIES June 30, 2007 (Unaudited)
<Table>
<Caption>
GLOBAL MULTI-CURRENCY
GOVERNMENT SHORT-TERM
ENHANCED GOVERNMENT
INCOME (JGG) INCOME (JGT)
- -------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $40,132,300 and $515,645,435, respectively) $41,278,117 $526,498,514
Short-term investments (at cost, which approximates value) 132,022,594 317,448,945
Cash -- 17,805
Cash denominated in foreign currencies (cost $401,617 and $3,862, respectively) 404,414 3,916
Unrealized appreciation on forward foreign currency exchange contracts 850,611 22,432,827
Unrealized appreciation on interest rate swaps 1,190,578 --
Interest receivable 1,254,489 802,802
Other assets 4,968 --
- -------------------------------------------------------------------------------------------------------------------------
Total assets 177,005,771 867,204,809
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Call swaptions written, at value (premiums received $571,847) 656,205 --
Unrealized depreciation on forward foreign currency exchange contracts 793,601 6,319,101
Unrealized depreciation on interest rate swaps 1,512,484 --
Payables:
Call swaptions exercised 14,810 --
Distributions -- 811,800
Accrued expenses:
Management fees 127,502 602,073
Offering costs 308,303 1,117,302
Other 92,311 124,207
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,505,216 8,974,483
- -------------------------------------------------------------------------------------------------------------------------
Net assets $173,500,555 $858,230,326
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 9,306,102 44,305,240
- -------------------------------------------------------------------------------------------------------------------------
Net asset value per share outstanding $ 18.64 $ 19.37
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------------------------------
Shares, $.01 par value per share $ 93,061 $ 443,052
Paid-in surplus 177,296,396 844,669,731
Undistributed (Over-distribution of) net investment income (4,691,162) (14,526,573)
Accumulated net realized gain (loss) from investments and derivative transactions (45,693) 653,248
Net unrealized appreciation (depreciation) of investments and derivative transactions 847,953 26,990,868
- -------------------------------------------------------------------------------------------------------------------------
Net assets $173,500,555 $858,230,326
- -------------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements.
18
Statement of
OPERATIONS (Unaudited)
<Table>
<Caption>
GLOBAL MULTI-CURRENCY
GOVERNMENT SHORT-TERM
ENHANCED GOVERNMENT
INCOME (JGG) INCOME (JGT)
------------ ---------------
FOR THE PERIOD
4/25/07
SIX MONTHS (COMMENCEMENT
ENDED OF OPERATIONS)
6/30/07 THROUGH 6/30/07
- ----------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 4,192,554 $ 6,791,862
- ----------------------------------------------------------------------------------------------
EXPENSES
Management fees 781,413 1,197,461
Shareholders' servicing agent fees and expenses 57 284
Custodian's fees and expenses 49,828 30,359
Trustees' fees and expenses 379 6,557
Professional fees 923 16,301
Shareholders' reports - printing and mailing expenses 17,052 52,313
Stock exchange listing fees 4,803 --
Investor relations expense 15,778 30,297
Other expenses 2,899 4,159
- ----------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 873,132 1,337,731
Custodian fee credit (2,888) (959)
- ----------------------------------------------------------------------------------------------
Net expenses 870,244 1,336,772
- ----------------------------------------------------------------------------------------------
Net investment income 3,322,310 5,455,090
- ----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (166,928) (14,410)
Foreign currencies 824,070 245,783
Forwards 166,168 421,875
Swaps (673,889) --
Call swaptions written 1,721,323 --
Change in net unrealized appreciation (depreciation) of:
Investments (246,979) 10,853,079
Foreign currencies 26,043 24,064
Forwards 62,500 16,113,726
Swaps (4,973,317) --
Call swaptions written (323,035) --
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (3,584,044) 27,644,117
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $ (261,734) $ 33,099,207
- ----------------------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements.
19
Statement of
CHANGES in NET ASSETS (Unaudited)
<Table>
<Caption>
MULTI-CURRENCY
SHORT-TERM
GLOBAL GOVERNMENT GOVERNMENT
ENHANCED INCOME (JGG) INCOME (JGT)
---------------------------------------- --------------------
FOR THE PERIOD FOR THE PERIOD
6/27/06 4/25/07
SIX MONTHS (COMMENCEMENT (COMMENCEMENT
ENDED OF OPERATIONS) OF OPERATIONS)
6/30/07 THROUGH 12/31/06 THROUGH 6/30/07
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,322,310 $ 3,491,725 $ 5,455,090
Net realized gain (loss) from:
Investments (166,928) (1,262) (14,410)
Foreign currencies 824,070 206,698 245,783
Forwards 166,168 117,750 421,875
Swaps (673,889) 708,315 --
Call swaptions written 1,721,323 (670,616) --
Change in net unrealized appreciation (depreciation) of:
Investments (246,979) 1,392,796 10,853,079
Foreign currencies 26,043 25,347 24,064
Forwards 62,500 (5,490) 16,113,726
Swaps (4,973,317) 4,651,411 --
Call swaptions written (323,035) 238,677 --
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (261,734) 10,155,351 33,099,207
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From and in excess of net investment income (7,530,766) -- (19,981,663)
From net investment income -- (6,251,758) --
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from distributions to
shareholders (7,530,766) (6,251,758) (19,981,663)
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares, net of offering costs -- 176,305,000 845,012,698
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 699,912 284,466 --
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital share
transactions 699,912 176,589,466 845,012,698
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (7,092,588) 180,493,059 858,130,242
Net assets at the beginning of period 180,593,143 100,084 100,084
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $ 173,500,555 $ 180,593,143 $ 858,230,326
=================================================================================================================================
Undistributed (Over-distribution of) net investment income
at the end of period $ (4,691,162) $ (482,706) $ (14,526,573)
=================================================================================================================================
</Table>
See accompanying notes to financial statements.
20
Notes to
FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The funds (the "Funds") covered in this report and their corresponding New York
Stock Exchange symbols are Nuveen Global Government Enhanced Income Fund (JGG)
and Nuveen Multi-Currency Short-Term Government Income Fund (JGT). The Funds are
registered under the Investment Company Act of 1940, as amended, as
non-diversified, closed-end management investment companies. Global Government
Enhanced Income (JGG) and Multi-Currency Short-Term Government Income (JGT) were
organized as Massachusetts business trusts on April 13, 2006 and February 14,
2007, respectively.
Prior to the commencement of operations, each Fund had no operations other than
those related to organizational matters, the initial capital contribution of
$100,084 per Fund by Nuveen Asset Management (the "Adviser"), a wholly owned
subsidiary of Nuveen Investments, Inc. ("Nuveen"), the recording of the
organization expenses ($10,000 for Global Government Enhanced Income (JGG) and
$11,000 for Multi-Currency Short-Term Government Income (JGT)) and their
reimbursement by Nuveen Investments, LLC, also a wholly owned subsidiary of
Nuveen.
Global Government Enhanced Income's (JGG) primary investment objective is to
provide a high level of current income and gains. The Fund's secondary
investment objective is to seek capital preservation. The Fund intends to pursue
its investment objectives primarily by investing in global government debt
securities directly, or indirectly by investing in debt related derivative
instruments. In addition, the Fund will employ an option strategy and a currency
strategy.
Multi-Currency Short-Term Government Income's (JGT) primary investment objective
is to provide an attractive level of current income and total return. The Fund
seeks to achieve its investment objective by investing directly in short-term
international (non-U.S.) government securities and indirectly in short-term
international (non-U.S.) government securities through the purchase of forward
currency contracts and other derivative instruments relating to such short-term
international government securities.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Investment Valuation
The prices of fixed-income securities and derivative instruments are generally
provided by an independent pricing service approved by each Fund's Board of
Trustees. When price quotes are not readily available, the pricing service or,
in the absence of a pricing service for a particular investment, the Board of
Trustees of the Funds, or its designee, may establish fair value using a wide
variety of market data including 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 by
the pricing service or the Board of Trustees' designee. If the pricing service
is unable to supply a price for a fixed-income or derivative investment the
Funds may use a market quote provided by a major broker/dealer in such
investments. If it is determined that the market price for an investment or
derivative instrument is unavailable or inappropriate, the Board of Trustees of
the Funds, or its designee, may establish fair value in accordance with
procedures established in good faith by the Board of Trustees. Short-term
investments are valued at amortized cost, which approximates market value.
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. 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 instructed the
custodian to segregate assets with a current value at least equal to the amount
of the when-issued/delayed delivery purchase commitments. At June 30, 2007, the
Funds had no such outstanding purchase commitments.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
Federal Income Taxes
Each Fund is a separate tax payer for Federal income tax purposes. Each Fund
intends to comply with the requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. Each Fund intends to
distribute substantially all of its investment company taxable income to
shareholders. In any year when the Funds realize net capital gains, the Funds
may choose to distribute all or a portion of their net capital gains to
shareholders, or alternatively, to retain all or a portion of their net capital
gains and pay Federal corporate income taxes on such retained gains.
21
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
Dividends and Distributions to Shareholders
Distributions to shareholders are recorded on the ex-dividend date. The amount
and timing of distributions are determined in accordance with federal income tax
regulations, which may differ from accounting principles generally accepted in
the United States.
Each Fund intends to make quarterly cash distributions to shareholders of a
stated dollar amount per share. Subject to approval and oversight by each Fund's
Board of Trustees, each Fund seeks to maintain a stable distribution level
designed to deliver the long-term return potential of each Fund's investment
strategy through regular quarterly distributions (a "Managed Distribution
Policy"). Total distributions during a calendar year generally will be made from
each Fund's net investment income, net realized capital gains and net unrealized
capital gains in the Fund's portfolio, if any. The portion of distributions paid
from net unrealized gains, if any, would be distributed from the Fund's assets
and would be treated by shareholders as a non-taxable distribution for tax
purposes. If a Fund's total return on net asset value exceeds total
distributions during a calendar year, the excess will be reflected as an
increase in net asset value per share. In the event that total distributions
during a calendar year exceed a Fund's total return on net asset value, the
difference will be treated as a return of capital for tax purposes and will
reduce net asset value per share. The final determination of the source and
character of all distributions for the fiscal year are made after the end of the
fiscal year and reflected in the financial statements contained in the annual
report as of December 31 each year.
The actual character of distributions made by Global Government Enhanced Income
(JGG) during the fiscal year ended December 31, 2006, is reflected in the
accompanying financial statements.
The distributions made by the Funds during the six months ended June 30, 2007,
are provisionally classified as being "From and in excess of net investment
income", and those distributions will be classified as being from net investment
income, net realized capital gains and/or a return of capital for tax purposes
after the fiscal year end. For purposes of calculating "Undistributed
(Over-distribution of) net investment income" as of June 30, 2007, the
distribution amounts provisionally classified as "From and in excess of net
investment income" were treated as being entirely from net investment income.
Consequently, the financial statements at June 30, 2007, reflect an
over-distribution of net investment income.
Organization and Offering Costs
Nuveen Investments, LLC has agreed to reimburse all organization expenses
(approximately $10,000 for Global Government Enhanced Income (JGG) and $11,000
for Multi-Currency Short-Term Government Income (JGT)) and pay all offering
costs (other than the sales load) that exceed $.04 per share for each of the
Funds. Global Government Enhanced Income's (JGG) and Multi-Currency Short-Term
Government Income's (JGT) share of offering costs ($370,000 and $1,117,302,
respectively) were recorded as reductions of the proceeds from the sales of
shares.
Repurchase Agreements
In connection with transactions in repurchase agreements, it is the Funds'
policy that its custodian take possession of the underlying collateral
securities, the fair value of which exceeds the principal amount of the
repurchase transaction, including accrued interest, at all times. If the seller
defaults, and the fair value of the collateral declines, realization of the
collateral may be delayed or limited.
Foreign Currency Transactions
The Funds are authorized to engage in foreign currency exchange transactions,
including foreign currency forward, options and futures contracts. To the extent
that a Fund invests in securities and/or contracts that are denominated in a
currency other than U.S. dollars, the Funds will be subject to currency risk,
which is the risk that an increase in the U.S. dollar relative to the foreign
currency will reduce returns or portfolio value. Generally, when the U.S. dollar
rises in value against a foreign currency, the Funds' investments denominated in
that currency will lose value because its currency is worth fewer U.S. dollars;
the opposite effect occurs if the U.S. dollar falls in relative value.
Investments and other assets and liabilities denominated in foreign currencies
are converted into U.S. dollars on a spot (i.e. cash) basis at the spot rate
prevailing in the foreign currency exchange market at the time of valuation.
Purchases and sales of investments and dividend income denominated in foreign
currencies are translated into U.S. dollars on the respective dates of such
transactions. The gains or losses resulting from changes in foreign exchange
rates are included with net realized and unrealized gain (loss) in the Statement
of Operations.
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at 4:00 p.m. Eastern time. Investments and income and expenses are
translated on the respective dates of such transactions. Net realized foreign
currency gains and losses resulting from changes in exchange rates include
foreign currency gains and losses between trade date and settlement date of the
transactions, foreign currency transactions, and the difference between the
amounts of interest and dividends recorded on the books of a Fund and the
amounts actually received.
22
Interest Rate Swap Contracts
The Funds are authorized to enter into interest rate swap contracts consistent
with their investment objectives and policies to obtain a desired return at a
lower cost than if the Funds had invested directly in the asset that yielded the
desired return. In connection with these contracts, securities in the Funds'
portfolio may be identified as collateral in accordance with the terms of the
respective swap contract. Interest rate swap contracts involve the exchange by a
Fund with another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating rate payments for fixed rate payments
with respect to a specified notional amount of principal.
Interest rate swap contracts are valued daily. Unrealized gains are reported as
an asset and unrealized losses are reported as a liability on the Statement of
Assets and Liabilities. Income received or paid by the Funds on a interest rate
swap contract is reported as a realized gain or loss on the Statement of
Operations. Additionally, realized gains or losses are recorded upon the
termination of a interest rate swap contract and are equal to the difference
between the Funds' basis in the interest rate swap and the proceeds from (or
cost of) the closing transaction. Notional principal amounts are used to express
the extent of involvement in these transactions, reducing the amounts
potentially subject to counterparty credit risk.
Entering into interest rate swap contracts involves, to varying degrees,
elements of credit, market and documentation risk in excess of the amounts
recognized on the Statements of Assets and Liabilities. Such risks involve the
possibility that there will be no liquid market for these contracts, that there
may be unfavorable changes in interest rates, and default by the counterparty on
its obligation to perform or disagree as to the meaning of the contractual terms
in the contracts. If there is a default by the counterparty to an interest rate
swap contract, the Fund will be limited to contractual remedies pursuant to the
contracts related to the transaction. There is no assurance that the
counterparty to an interest rate swap will be able to meet their obligations
pursuant to the swap contracts or that, in the event of default, the Fund will
succeed in pursuing contractual remedies. A Fund thus assumes the risk that it
may be delayed in, or prevented from, obtaining payments owed to it pursuant to
the interest rate swap contracts. The creditworthiness of the counterparty to an
interest rate swap is closely monitored in order to minimize this risk.
Multi-Currency Short-Term Government Income (JGT) did not enter into any
interest rate swap contracts during the period April 25, 2007 (commencement of
operations) through June 30, 2007.
Options Transactions
Each Fund is authorized to purchase put options and write (sell) call options on
securities, swaps or currencies. The purchase of put options involves the risk
of loss of all or a part of the cash paid for the options. Put options purchased
are accounted for in the same manner as portfolio securities. When a Fund writes
a call option, an amount equal to the net premium received (the premium less
commission) is recorded as a liability and is subsequently adjusted to the
current value of the written option until the option expires or a Fund enters
into a closing purchase transaction. When a call option expires or a Fund enters
into a closing purchase transaction, the difference between the net premium
received and any amount paid at expiration or on effecting a closing purchase
transaction, including commission, is treated as a net realized gain on option
contracts written or, if the net premium received is less than the amount paid,
as a net realized loss on option contracts written. The Fund, as a writer of a
call option, bears the risk of an unfavorable change in the market value of the
security, swap or currency underlying the written option. Multi-Currency
Short-Term Government Income (JGT) did not enter into any option transactions
during the period April 25, 2007 (commencement of operations) through June 30,
2007.
Forward Foreign Currency Exchange Contracts
Each Fund is authorized to enter into forward foreign currency exchange
contracts under two circumstances: (i) when a Fund enters into a contract for
the purchase or sale of a security denominated in a foreign currency to "lock
in" the U.S. exchange rate of the transaction, with such period being a
short-dated contract covering the period between transaction date and settlement
date; or (ii) when the Adviser believes that the currency of a particular
foreign country may experience a substantial movement against the U.S. dollar or
against another foreign currency. Forward foreign currency contracts are valued
daily at the forward rate. The change in market value is recorded as an
unrealized gain or loss by a Fund. When the contract is closed or offset with
the same counterparty, a Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed or offset.
Forward foreign currency contracts will generally not be entered into for terms
greater than three months. The use of forward foreign currency contracts does
not eliminate fluctuations in the underlying prices of a Fund's investment
securities; however, it does establish a rate of exchange that can be achieved
in the future. The use of forward foreign currency contracts involves the risk
that anticipated currency movements will not be accurately predicted. A forward
foreign currency contract would limit the risk of loss due to a decline in the
value of a particular currency; however, it also would limit any potential gain
that might result should the value of the currency increase instead of decrease.
These contracts may involve market risk in excess of the unrealized gain or loss
23
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
reflected in the Statements of Assets and Liabilities. In addition, the Funds
could be exposed to risks if counterparties to the contracts are unable to meet
the terms of their contracts. The counterparty risk exposure is, therefore,
closely monitored and contracts are only executed with high credit quality
financial institutions.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on the Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments. Credits for cash balances may be offset by changers for any days on
which the Funds overdraw their account at the custodian bank.
Indemnifications
Under the Funds' organizational documents, its 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 expects the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results may differ from those estimates.
2. FUND SHARES
Transactions in Fund shares were as follows:
<Table>
<Caption>
MULTI-CURRENCY
SHORT-TERM
GOVERNMENT
GLOBAL GOVERNMENT ENHANCED INCOME
INCOME (JGG) (JGT)
-------------------------------------- ----------------
FOR THE PERIOD FOR THE PERIOD
6/27/06 4/25/07
(COMMENCEMENT (COMMENCEMENT
SIX MONTHS OF OPERATIONS) OF OPERATIONS)
ENDED 6/30/07 THROUGH 12/31/06 THROUGH 6/30/07
- -----------------------------------------------------------------------------------------------------------------------------
Shares sold -- 9,250,000 44,300,000
Shares issued to shareholders due to reinvestment of distributions 36,300 14,562 --
- -----------------------------------------------------------------------------------------------------------------------------
36,300 9,264,562 44,300,000
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
3. INVESTMENT TRANSACTIONS
Purchases and sales (excluding put options and put swaptions, call swaptions
written, short-term investments and derivative transactions) for the six months
ended June 30, 2007, were as follows:
<Table>
<Caption>
GLOBAL MULTI-CURRENCY
GOVERNMENT SHORT-TERM
ENHANCED GOVERNMENT
INCOME INCOME
(JGG) (JGT)*
- --------------------------------------------------------------------------------------------------------
Purchases $ 8,126,598 $ 615,041,916
Sales 5,317,881 20,178,267
- --------------------------------------------------------------------------------------------------------
</Table>
* For the period April 25, 2007 (commencement of operations) through June 30,
2007.
24
Transactions in call swaptions written for Global Government Enhanced Income
(JGG) for the six months ended June 30, 2007, were as follows:
<Table>
<Caption>
GLOBAL GOVERNMENT ENHANCED
INCOME (JGG)
--------------------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- --------------------------------------------------------------------------------------------------------
Outstanding, beginning of period 2,656,000,000 $ 440,905
Call swaptions written 4,395,000,000 2,853,543
Call swaptions terminated in closing purchase transactions (1,097,000,000) (762,103)
Call swaptions expired (4,951,500,000) (1,960,498)
- --------------------------------------------------------------------------------------------------------
Outstanding, end of period 1,002,500,000 $ 571,847
- --------------------------------------------------------------------------------------------------------
</Table>
4. INCOME TAX INFORMATION
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 amortization of premium and timing differences in recognizing
certain gains and losses on investment transactions. To the extent that
differences arise that are permanent in nature, such amounts are reclassified
within the capital accounts on the Statement of Assets and Liabilities presented
in the annual report, based on their federal tax basis treatment; temporary
differences do not require reclassification. Temporary and permanent differences
do not impact the net asset values of the Funds.
At June 30, 2007, the cost of investments (excluding call swaptions written) was
as follows:
<Table>
<Caption>
GLOBAL MULTI-CURRENCY
GOVERNMENT SHORT-TERM
ENHANCED GOVERNMENT
INCOME INCOME
(JGG) (JGT)
- --------------------------------------------------------------------------------------------------------
Cost of investments $172,581,011 $833,149,481
- --------------------------------------------------------------------------------------------------------
</Table>
Gross unrealized appreciation and gross unrealized depreciation of investments
(excluding call swaptions written) at June 30, 2007, were as follows:
<Table>
<Caption>
GLOBAL MULTI-CURRENCY
GOVERNMENT SHORT-TERM
ENHANCED GOVERNMENT
INCOME INCOME
(JGG) (JGT)
- --------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $1,198,856 $11,634,146
Depreciation (479,156) (836,168)
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $719,700 $10,797,978
- --------------------------------------------------------------------------------------------------------
</Table>
The tax components of Global Government Enhanced Income's (JGG) undistributed
net ordinary income and net long-term capital gains at December 31, 2006, the
Fund's last tax year end, were as follows:
<Table>
<Caption>
GLOBAL
GOVERNMENT
ENHANCED
INCOME
(JGG)
- ----------------------------------------------------------------------------------
Undistributed net ordinary income * $296,450
Undistributed net long-term capital gains --
- ----------------------------------------------------------------------------------
</Table>
* Net ordinary income consists of net taxable income derived from dividends,
interest, and net short-term capital gains, if any.
25
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
The tax character of Global Government Enhanced Income's (JGG) distributions
paid during the period June 27, 2006 (commencement of operations) through
December 31, 2006, Fund's last tax year end, was designated for purposes of the
dividends paid deduction as follows:
<Table>
<Caption>
GLOBAL
GOVERNMENT
ENHANCED
INCOME
(JGG)
- ----------------------------------------------------------------------------------
Distributions from net ordinary income * $6,251,758
Distributions from net long-term capital gains --
- ----------------------------------------------------------------------------------
</Table>
* Net ordinary income consists of net taxable income derived from dividends,
interest, and net short-term capital gains, if any.
At December 31, 2006, the Fund's last tax year end, Global Government Enhanced
Income (JGG) had an unused capital loss carryforward of $1,262 available for
federal income tax purposes to be applied against future capital gains, if any.
If not applied the carryforwards will expire in 2014.
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by the
Adviser, and a specific fund-level component, based only on the amount of assets
within each individual fund. This pricing structure enables Nuveen fund
shareholders to benefit from growth in the assets within each individual 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 based upon the
average daily Managed Assets of each Fund as follows:
<Table>
<Caption>
AVERAGE DAILY MANAGED ASSETS FUND-LEVEL FEE RATE
- -----------------------------------------------------------------------------------------------------------------
For the first $500 million .7000%
For the next $500 million .6750
For the next $500 million .6500
For the next $500 million .6250
For Managed Assets over $2 billion .6000
- -----------------------------------------------------------------------------------------------------------------
</Table>
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the tables below. As
of June 30, 2007, the complex level fee rate was .1828%.
Effective August 20, 2007, the complex-level fee schedule is as follows:
<Table>
<Caption>
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL(1) EFFECTIVE RATE AT BREAKPOINT LEVEL
- ------------------------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1691
$125 billion .1599
$200 billion .1505
$250 billion .1469
$300 billion .1445
- ------------------------------------------------------------------------------------------------
</Table>
26
Prior to August 20, 2007, the complex-level fee schedule was as follows:
<Table>
<Caption>
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL(1) EFFECTIVE RATE AT BREAKPOINT LEVEL
- ------------------------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1698
$125 billion .1617
$200 billion .1536
$250 billion .1509
$300 billion .1490
- ------------------------------------------------------------------------------------------------
</Table>
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
preferred stock issued by or borrowings by the Nuveen funds) of
Nuveen-sponsored funds in the U.S.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Fund pays 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 of Trustees 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.
Agreement and Plan of Merger
On June 20, 2007, Nuveen Investments announced that it had entered into a
definitive Agreement and Plan of Merger ("Merger Agreement") with an investor
group majority-led by Madison Dearborn Partners, LLC. Madison Dearborn Partners,
LLC is a private equity investment firm based in Chicago, Illinois. The investor
group includes affiliates of Merrill Lynch, Wachovia, Citigroup, Deutsche Bank
and Morgan Stanley. It is anticipated that Merrill Lynch and its affiliates will
be indirect "affiliated persons" (as that term is defined in the Investment
Company Act of 1940) of the Funds. One important implication of this is that the
Funds will not be able to buy or sell securities to or from Merrill Lynch, but
the portfolio management teams and Fund management do not expect that this will
significantly impact the ability of the Funds to pursue their investment
objectives and policies. Under the terms of the merger, each outstanding share
of Nuveen Investments' common stock (other than dissenting shares) will be
converted into the right to receive a specified amount of cash, without
interest. The merger is expected to be completed by the end of the year, subject
to customary conditions, including obtaining the approval of Nuveen Investments
shareholders, obtaining necessary fund and client consents sufficient to satisfy
the terms of the Merger Agreement, and expiration of certain regulatory waiting
periods. The obligations of Madison Dearborn Partners, LLC to consummate the
merger are not conditioned on its obtaining financing.
The consummation of the merger will be deemed to be an "assignment" (as defined
in the 1940 Act) of the investment management agreement between each Fund and
the Adviser, and will result in the automatic termination of each Fund's
agreement. Prior to the consummation of the merger, it is anticipated that the
Board of Trustees of each Fund will consider a new investment management
agreement with the Adviser. If approved by the Board, the new agreement would be
presented to the Fund's shareholders for approval, and, if so approved by
shareholders, would take effect upon consummation of the merger. There can be no
assurance that the merger described above will be consummated as contemplated or
that necessary shareholder approvals will be obtained.
27
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
6. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Interpretation No. 48
Effective June 29, 2007, the Funds adopted Financial Accounting Standards Board
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48).
FIN 48 provides guidance regarding how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Funds' tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Management of
the Funds has concluded that there are no significant uncertain tax positions
that require recognition in the Funds' financial statements. Consequently, the
adoption of FIN 48 had no impact on the net assets or results of operations of
the Funds.
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 157
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. The changes to current generally accepted accounting principles from the
application of this standard relate to the definition of fair value, the methods
used to measure fair value, and the expanded disclosures about fair value
measurements. As of June 30, 2007, the Funds do not believe the adoption of SFAS
No. 157 will impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements included within the Statement of
Operations for the period.
28
Financial
HIGHLIGHTS
29
Financial
HIGHLIGHTS (Unaudited)
Selected data for a share outstanding throughout each period:
<Table>
<Caption>
Investment Operations Less Distributions
--------------------------------- ------------------------------
Net
Beginning Net Realized/ Net
Net Asset Investment Unrealized Investment Capital Offering
Value Income(a) Gain (Loss) Total Income Gains Total Costs
- -------------------------------------------------------------------------------------------------------------------------------
GLOBAL GOVERNMENT ENHANCED INCOME (JGG)
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended:
2007(d) $19.48 $.36 $ (.39) $ (.03) $ (.81)*** $ -- $ (.81) $ --
2006(b) 19.10 .38 .72 1.10 (.68) -- (.68) (.04)
MULTI-CURRENCY SHORT-TERM GOVERNMENT INCOME
(JGT)
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended:
2007(c) 19.10 .13 .65 .78 (.48)*** -- (.48) (.03)
- -------------------------------------------------------------------------------------------------------------------------------
<Caption>
Ending Ending
Net Asset Market
Value Value
- -------------------------------------------------------------------------------------------------------
GLOBAL GOVERNMENT ENHANCED INCOME (
- -----------------------------------------------------------------------------------------------------------------
Year Ended:
2007(d) $18.64 $18.67
2006(b) 19.48 20.40
MULTI-CURRENCY SHORT-TERM GOVERNMEN
(JGT)
- ---------------------------------------------------------------------------------------------------------------------------
Year Ended:
2007(c) 19.37 19.30
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
* Annualized.
** Total Return on Market Value 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 takes 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.
Total Return on Net Asset Value is the combination of changes in net asset
value, reinvested dividend income at net asset value and reinvested capital
gains distributions at net asset value, 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 net asset value.
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 net asset value),
and therefore may be different from the price used in the calculation.
Total returns are not annualized.
*** Represents distributions paid "From and in excess of net investment
income" for the six months ended June 30, 2007.
(a) Per share Net Investment Income is calculated using the average daily
shares method.
(b) For the period June 27, 2006 (commencement of operations) through December
31, 2006.
(c) For the period April 25, 2007 (commencement of operations) through June
30, 2007.
(d) For the six months ended June 30, 2007.
30
<Table>
<Caption>
Ratios/Supplemental Data
----------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Total Returns Before Credit After Credit
------------------- ----------------------------- -----------------------------
Based
on Based on Net Net Portfolio
Market Net Asset Ending Net Investment Investment Turnover
Value** Value** Assets (000) Expenses Income Expenses Income Rate
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
(4.51)% (.10)% $173,501 .99%* 3.75%* .98%* 3.76%* 13%
5.55 5.56 180,593 1.07* 3.79* 1.06* 3.79* --
- -------------------------------------------------------------------------------------------------------------------
(1.25) 3.77 858,230 .92* 3.74* .92* 3.74* 4
- -------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements.
31
Annual Investment
Management Agreement
APPROVAL PROCESS
The Board Members are responsible for overseeing the performance of the
investment adviser to the Funds and determining whether to approve or continue
the advisory arrangements. At a meeting held on May 11, 2006 (the "May 2006
Meeting"), the Board Members of the Nuveen Global Government Enhanced Income
Fund, including the Independent Board Members, unanimously approved the
Investment Management Agreement (the "Nuveen Global Investment Management
Agreement") between such Fund and Nuveen Asset Management ("NAM"), and at the
annual review meeting held on May 21, 2007 (the "May Meeting"), the Board
Members, including the Independent Board Members, unanimously approved the
continuance of the Nuveen Global Investment Management Agreement.
At a meeting held on February 25, 2007 (the "February 2007 Meeting"), the Board
Members of the Nuveen Multi-Currency Short-Term Government Income Fund,
including the Independent Board Members, unanimously approved the Investment
Management Agreement between such Fund and NAM. With respect to each of the
Funds, NAM is the "Fund Adviser." The May 2006 Meeting and the February 2007
Meeting are each an "Initial Approval Meeting." Each Fund is sometimes referred
to herein as a "New Fund." The foregoing Investment Management Agreements with
NAM are hereafter referred to as the "Original Investment Management
Agreements."
Subsequent to the Initial Approval Meetings and the May Meeting, Nuveen
Investments, Inc. ("Nuveen"), the parent company of NAM, entered into a merger
agreement providing for the acquisition of Nuveen by Windy City Investments,
Inc., a corporation formed by investors led by Madison Dearborn Partners, LLC
("MDP"), a private equity investment firm (the "Transaction"). Each Original
Investment Management Agreement, as required by Section 15 of the Investment
Company Act of 1940 (the "1940 Act") provides for its automatic termination in
the event of its "assignment" (as defined in the 1940 Act). Any change in
control of the adviser is deemed to be an assignment. The consummation of the
Transaction will result in a change of control of NAM as well as its affiliated
sub-advisers and therefore cause the automatic termination of each Original
Investment Management Agreement, as required by the 1940 Act. Accordingly, in
anticipation of the Transaction, at a meeting held on July 31, 2007 (the "July
Meeting"), the Board Members, including the Independent Board Members,
unanimously approved new Investment Management Agreements (the "New Investment
Management Agreements") with NAM, on behalf of each Fund, to take effect
immediately after the Transaction or shareholder approval of the new advisory
contracts, whichever is later. The 1940 Act also requires that each New
Investment Management Agreement be approved by the respective Fund's
shareholders in order for it to become effective. Accordingly, to ensure
continuity of advisory services, the Board Members, including the Independent
Board Members, unanimously approved Interim Investment Management Agreements to
take effect upon the closing of the Transaction if shareholders have not yet
approved the New Investment Management Agreements.
As NAM serves as adviser to other Nuveen funds, the Board Members already have a
good understanding of the organization, operations and personnel of NAM. At the
May Meeting, many of the investment management contracts with other Nuveen funds
advised by NAM ("Existing Funds"), in addition to the Nuveen Global Investment
Management Agreement, were subject to their annual review. Although the Original
Investment Management Agreement with the Nuveen Multi-Currency Short-Term
Government Income Fund was recently initially approved and therefore not subject
to the annual review at the May Meeting, the information provided and
considerations made regarding NAM at the annual review as well as the initial
approval continue to be relevant with respect to the evaluation of the New
Investment Management Agreements. The Board therefore considered the foregoing
as part of its deliberations of the New Investment Management Agreements.
Accordingly, as indicated, the discussions immediately below outline the
materials and information presented to the Board in connection with the Board's
prior annual review of NAM (to the extent applicable) and the initial review,
and the analysis undertaken and the conclusions reached by Board Members when
determining to approve or continue the Original Investment Management
Agreements.
32
I. APPROVAL OF THE ORIGINAL INVESTMENT MANAGEMENT AGREEMENTS
During the course of the year, the Board received a wide variety of materials
relating to the services provided by NAM and the performance of the Nuveen funds
(as applicable). At each of its quarterly meetings, the Board reviewed
investment performance (as applicable) and various matters relating to the
operations of the Funds and other Nuveen funds, including the compliance
program, shareholder services, valuation, custody, distribution and other
information relating to the nature, extent and quality of services provided by
NAM. Between the regularly scheduled quarterly meetings, the Board Members
received information on particular matters as the need arose. In addition, as
noted, because NAM already serves as adviser for other Nuveen funds, the
information provided regarding the Fund Adviser at the annual review at the May
Meeting supplemented the information received at the initial approvals.
In preparation for their consideration of NAM at the May Meeting, the
Independent Board Members received extensive materials, well in advance of the
meeting, which outlined or are related to, among other things:
- - the nature, extent and quality of services provided by the Fund Adviser;
- - the organization and business operations of the Fund Adviser, including the
responsibilities of various departments and key personnel;
- - each Existing Fund's past performance as well as the Existing Fund's
performance compared to funds with similar investment objectives based on data
and information provided by an independent third party and to recognized
and/or customized benchmarks (as appropriate);
- - the profitability of the Fund Adviser and certain industry profitability
analyses for unaffiliated advisers;
- - the expenses of the Fund Adviser in providing the various services;
- - the advisory fees and total expense ratios of each Existing Fund, including
comparisons of such fees and expenses with those of comparable, unaffiliated
funds based on information and data provided by an independent third party
(the "Peer Universe") as well as compared to a subset of funds within the Peer
Universe (the "Peer Group") of the respective Existing Fund (as applicable);
- - the advisory fees the Fund Adviser assesses to other types of investment
products or clients;
- - the soft dollar practices of the Fund Adviser, if any; and
- - from independent legal counsel, a legal memorandum describing among other
things, applicable laws, regulations and duties in reviewing and approving
advisory contracts.
At the Initial Approval Meetings, the Board Members received in advance of such
meeting or at prior meetings similar materials, including the nature, extent and
quality of services expected to be provided; the organization and operations of
the Fund Adviser (including the responsibilities of various departments and key
personnel); the expertise and background of the Fund Adviser; the profitability
of Nuveen (which includes its wholly-owned advisory subsidiaries); the proposed
management fees, including comparisons with peers; the expected expenses of the
respective New Fund, including comparisons of the expense ratios with peers; and
the soft dollar practices of the Fund Adviser. However, unlike Existing Funds,
the New Funds did not have actual past performance at the time of approval.
At the May Meeting, NAM made a presentation to, and responded to questions from,
the Board. At the May Meeting and applicable Initial Approval Meeting, the
Independent Board Members met privately with their legal counsel to review the
Board's duties in reviewing advisory contracts and considering the approval or
renewal of the advisory contracts. The Independent Board Members, in
consultation with independent counsel, reviewed the factors set out in judicial
decisions and Securities and Exchange Commission ("SEC") directives relating to
the approval or renewal of advisory contracts. As outlined in more detail below,
the Board Members considered all factors they believed relevant with respect to
each New Fund, including, but not limited to, the following: (a) the nature,
extent and quality of the services to be provided by the Fund Adviser; (b) the
investment performance of the Fund and the Fund Adviser (as applicable); (c) the
costs of the services to be provided and profits to be realized by the Fund
Adviser and its affiliates; (d) the extent to which economies of scale would be
realized; and (e) whether fee levels reflect those
33
Annual Investment
Management Agreement
APPROVAL PROCESS (continued)
economies of scale for the benefit of the Fund's investors. In addition, as
noted, the Board Members met regularly throughout the year to oversee the Nuveen
funds. In evaluating the advisory contracts, the Board Members also relied upon
their knowledge of NAM, its services and the Nuveen funds resulting from their
meetings and other interactions throughout the year. It is with this background
that the Board Members considered each advisory contract.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In considering the approval of the Original Investment Management Agreements,
the Board Members considered the nature, extent and quality of the Fund
Adviser's services. The Board Members reviewed materials outlining, among other
things, the Fund Adviser's organization and business; the types of services that
the Fund Adviser or its affiliates provide or are expected to provide to the
Funds; and at the annual review, any initiatives Nuveen had taken for the
applicable fund product line. As noted, the Board Members were already familiar
with the organization, operations and personnel of NAM due to the Board Members'
experience in governing the other Nuveen funds and working with NAM on matters
relating to the Nuveen funds.
At the May Meeting, the Board Members also recognized NAM's investment in
additional qualified personnel throughout the various groups in the organization
and recommended to NAM that it continue to review staffing needs as necessary.
The Board Members recognized NAM's investment of resources and efforts to
continue to enhance and refine its investment processes. With respect to the
taxable fixed income funds advised by NAM (e.g., the Funds), the Board Members
also considered the depth of experience of NAM personnel managing this type of
fund and their respective investment strategies.
In addition to advisory services, the Independent Board Members considered the
quality of administrative and non-advisory services provided by NAM and noted
that NAM and its affiliates provide the Funds with a wide variety of services
and officers and other personnel as are necessary for the operations of the
Funds, including:
- - product management;
- - fund administration;
- - oversight by shareholder services and other fund service providers;
- - administration of Board relations;
- - regulatory and portfolio compliance; and
- - legal support.
As the Funds operate in a highly regulated industry and given the importance of
compliance, the Board Members considered, in particular, NAM's compliance
activities for the Funds and enhancements thereto. In this regard, the Board
Members recognized the quality of NAM's compliance team. The Board Members
further noted NAM's negotiations with other service providers and the
corresponding reduction in certain service providers' fees at the May Meeting.
In addition to the foregoing services, the Board Members also noted the
additional services that NAM or its affiliates provide to Nuveen's closed-end
funds, including, in particular, its secondary market support activities. The
Board Members recognized Nuveen's continued commitment to supporting the
secondary market for the common shares of its closed-end funds through a variety
of programs designed to raise investor and analyst awareness and understanding
of closed-end funds. These efforts include:
- - maintaining shareholder communications;
- - providing advertising for the Nuveen closed-end funds;
- - maintaining its closed-end fund website;
- - maintaining continual contact with financial advisers;
- - providing educational symposia;
34
- - conducting research with investors and financial analysis regarding closed-end
funds; and
- - evaluating secondary market performance.
With respect to the Nuveen closed-end funds that utilize leverage through the
issuance of preferred shares ("Preferred Shares"), the Board Members noted
Nuveen's continued support for the holders of Preferred Shares by, among other
things:
- - maintaining an in-house trading desk;
- - maintaining a product manager for the Preferred Shares;
- - developing distribution for Preferred Shares with new market participants;
- - maintaining an orderly auction process;
- - managing leverage and risk management of leverage; and
- - maintaining systems necessary to test compliance with rating agency criteria.
Based on their review, the Board Members found that, overall, the nature, extent
and quality of services provided (and expected to be provided) to the Funds
under the respective Original Investment Management Agreement, as applicable,
were satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE NEW FUNDS AND THE FUND ADVISER
The New Funds did not have their own performance history at their Initial
Approval Meetings. However, the Board Members received certain simulated
performance information regarding the proposed investment strategies for the New
Funds (if available). In addition, the Board Members were familiar with NAM's
performance record on the Existing Funds. Subsequent to the Initial Approval
Meetings, the Board received updated performance information at each of its
quarterly meetings. At the May Meeting, the Board noted that the Nuveen Global
Government Enhanced Income Fund is a relatively new Fund with a performance
history that is too short for a meaningful assessment of performance.
C. FEES, EXPENSES AND PROFITABILITY
1. Fees and Expenses
With respect to the New Funds, at the Initial Approval Meetings, the Board
considered each New Fund's proposed management fee structure, its sub-advisory
fee arrangements and expected expense ratios in absolute terms as well as
compared with the fees and expense ratios of comparable, unaffiliated funds
and comparable, affiliated funds (if any). The Board Members also considered
the applicable fund-level breakpoint schedule and complex-wide breakpoint
schedule. In addition, the Board received information regarding the New Funds'
expense ratios at each of its quarterly meetings. Based on their review of the
overall fee arrangements of the New Funds, the Board Members determined that
the advisory fees and expenses of the New Funds were reasonable.
2. Comparisons with the Fees of Other Clients
Due to their experience with other Nuveen funds, the Board Members are
familiar with fees assessed to other clients of Nuveen or its affiliates. At
the annual review, the Board Members further reviewed data comparing the
advisory fees of NAM with fees NAM charges to other clients. Such clients
include NAM's separately managed accounts and funds that are not offered by
Nuveen but are sub-advised by one of Nuveen's investment management teams. In
general, the advisory fees charged for separate accounts are somewhat lower
than the advisory fees assessed to the Nuveen funds (including the New Funds).
The Board Members considered the differences in the product types, including,
but not limited to, the services provided, the structure and operations,
product distribution and costs thereof, portfolio investment policies,
investor profiles, account sizes and regulatory requirements. The Board
Members noted, in particular, that the range of services provided to the
Nuveen funds (as discussed above) is much more extensive than that provided to
separately managed accounts. As described in further detail above, such
additional services include, but are not limited to: product management, fund
administration, oversight of third party service providers, administration of
Board relations, and legal support. The Board Members noted that the Nuveen
funds operate in a highly regulated industry requiring extensive compliance
functions compared to other investment products. Given the inherent
differences
35
Annual Investment
Management Agreement
APPROVAL PROCESS (continued)
in the products, particularly the extensive services provided to the Nuveen
funds, the Board Members believe such facts justify the different levels of
fees.
3. Profitability of the Fund Adviser
In conjunction with its review of fees at the May Meeting, the Board Members
also considered the profitability of Nuveen for its advisory activities (which
incorporated Nuveen's wholly-owned affiliated sub-advisers) and its financial
condition. At the annual review, the Board Members reviewed the revenues and
expenses of Nuveen's advisory activities for the last three years, the
allocation methodology used in preparing the profitability data as well as the
2006 Annual Report for Nuveen. The Board Members noted this information
supplemented the profitability information requested and received during the
year to help keep them apprised of developments affecting profitability (such
as changes in fee waivers and expense reimbursement commitments). In this
regard, the Board Members noted the enhanced dialogue and information
regarding profitability with NAM during the year, including more frequent
meetings and updates from Nuveen's corporate finance group. The Board Members
considered Nuveen's profitability compared with other fund sponsors prepared
by three independent third party service providers as well as comparisons of
the revenues, expenses and profit margins of various unaffiliated management
firms with similar amounts of assets under management prepared by Nuveen.
In reviewing profitability, the Board Members recognized the subjective nature
of determining profitability which may be affected by numerous factors
including the allocation of expenses. Further, the Board Members recognized
the difficulties in making comparisons as the profitability of other advisers
generally is not publicly available and the profitability information that is
available for certain advisers or management firms may not be representative
of the industry and may be affected by, among other things, the adviser's
particular business mix, capital costs, types of funds managed and expense
allocations.
Notwithstanding the foregoing, the Board Members reviewed Nuveen's methodology
at the annual review and assumptions for allocating expenses across product
lines to determine profitability. Last year, the Board Members also designated
an Independent Board Member as a point person for the Board to review the
methodology determinations during the year and any refinements thereto, which
relevant information produced from such process was reported to the full Board.
In reviewing profitability, the Board Members recognized Nuveen's increased
investment in its fund business. Based on its review, the Board Members
concluded that Nuveen's level of profitability for its advisory activities was
reasonable in light of the services provided.
In evaluating the reasonableness of the compensation, the Board Members also
considered other amounts paid to the Fund Adviser by the Funds as well as any
indirect benefits (such as soft dollar arrangements, if any) the Fund Adviser
and its affiliates receive, or are expected to receive, that are directly
attributable to the management of the Funds, if any. See Section E below for
additional information on indirect benefits the Fund Adviser may receive as a
result of its relationship with the Funds.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Board Members recognized the potential
benefits resulting from the costs of a Fund being spread over a larger asset
base. To help ensure the shareholders share in these benefits, the Board Members
reviewed and considered the breakpoints in the advisory fee schedules that
reduce advisory fees. In addition to advisory fee breakpoints, the Board also
approved a complex-wide fee arrangement in 2004. Pursuant to the complex-wide
fee arrangement, the fees of the funds in the Nuveen complex, including the New
Funds, are reduced as the assets in the fund complex reach certain levels. In
evaluating the complex-wide fee arrangement at the annual review, the Board
Members noted that the last complex-wide asset level breakpoint for the
complex-wide fee schedule was at $91 billion and that the Board Members
anticipated further review and/or negotiations prior to the assets of the Nuveen
complex reaching such threshold. Based on their review, the Board Members
concluded that the breakpoint schedule and complex-wide fee arrangement were
acceptable and desirable in providing benefits from economies of scale to
shareholders, subject to further evaluation of the complex-wide fee schedule as
36
assets in the complex increase. See Section II, Paragraph D -- "Approval of the
New Investment Management Agreements -- Economies of Scale and Whether Fee
Levels Reflect These Economies of Scale" for information regarding subsequent
modifications to the complex-wide fee.
E. INDIRECT BENEFITS
In evaluating fees, the Board Members also considered any indirect benefits or
profits the Fund Adviser or its affiliates may receive as a result of its
relationship with a Fund. In this regard, the Board Members considered the
revenues received by affiliates of NAM for serving as agent at Nuveen's
preferred trading desk and for serving as a co-manager in the initial public
offering of new closed-end exchange traded funds.
In addition to the above, the Board Members considered whether the Fund Adviser
received any benefits from soft dollar arrangements whereby a portion of the
commissions paid by a Fund for brokerage may be used to acquire research that
may be useful to the Fund Adviser in managing the assets of the Funds and other
clients. With respect to NAM, the Board Members noted that NAM does not
currently have any soft dollar arrangements; however, to the extent certain bona
fide agency transactions that occur on markets that traditionally trade on a
principal basis and riskless principal transactions are considered as generating
"commissions," NAM intends to comply with the applicable safe harbor provisions.
Based on their review, the Board Members concluded that any indirect benefits
received by the Fund Adviser as a result of its relationship with the Funds were
reasonable and within acceptable parameters.
F. OTHER CONSIDERATIONS
The Board Members did not identify any single factor discussed previously as
all-important or controlling in their considerations to initially approve or
continue an advisory contract. The Board Members, including the Independent
Board Members, unanimously concluded that the terms of the Original Investment
Management are fair and reasonable, that the Fund Adviser's fees are reasonable
in light of the services provided to each Fund and that the Original Investment
Management Agreements be approved or renewed (as applicable).
II. APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENTS
Following the May Meeting, the Board Members were advised of the potential
Transaction. As noted above, the completion of the Transaction would terminate
each of the Original Investment Management Agreements. Accordingly, at the July
Meeting, the Board of each Fund, including the Independent Board Members,
unanimously approved the New Investment Management Agreements on behalf of the
respective Funds. Leading up to the July Meeting, the Board Members had several
meetings and deliberations with and without Nuveen management present, and with
the advice of legal counsel, regarding the proposed Transaction as outlined
below.
On June 8, 2007, the Board Members held a special telephonic meeting to discuss
the proposed Transaction. At that meeting, the Board Members established a
special ad hoc committee comprised solely of Independent Board Members to focus
on the Transaction and to keep the Independent Board Members updated with
developments regarding the Transaction. On June 15, 2007, the ad hoc committee
discussed with representatives of NAM the Transaction and modifications to the
complex-wide fee schedule that would generate additional fee savings at
specified levels of complex-wide asset growth. Following the foregoing meetings
and several subsequent telephonic conferences among Independent Board Members
and independent counsel, and between Independent Board Members and
representatives of Nuveen, the Board met on June 18, 2007 to further discuss the
proposed Transaction. Immediately prior to and then again during the June 18,
2007 meeting, the Independent Board Members met privately with their independent
legal counsel. At that meeting, the Board met with representatives of MDP, of
Goldman Sachs, Nuveen's financial adviser in the Transaction, and of the Nuveen
Board to discuss, among other things, the history and structure of MDP, the
terms of the proposed Transaction (including the financing terms), and MDP's
general plans and intentions with respect to Nuveen (including with respect to
management, employees, and future growth prospects). On July 9, 2007, the Board
also met to be updated on the Transaction as part of a special telephonic Board
meeting. The Board Members were further updated at a special in-person Board
meeting held on July 19, 2007 (one Independent Board Member participated
telephonically). Subsequently, on July 27, 2007, the ad hoc committee held a
telephonic conference with representatives of Nuveen and MDP to further
37
Annual Investment
Management Agreement
APPROVAL PROCESS (continued)
discuss, among other things, the Transaction, the financing of the Transaction,
retention and incentive plans for key employees, the effect of regulatory
restrictions on transactions with affiliates after the Transaction, and current
volatile market conditions and their impact on the Transaction.
In connection with their review of the New Investment Management Agreements, the
Independent Board Members, through their independent legal counsel, also
requested in writing and received additional information regarding the proposed
Transaction and its impact on the provision of services by NAM and its
affiliates.
The Independent Board Members received, well in advance of the July Meeting,
materials which outlined, among other things:
- - the structure and terms of the Transaction, including MDP's co-investor
entities and their expected ownership interests, and the financing
arrangements that will exist for Nuveen following the closing of the
Transaction;
- - the strategic plan for Nuveen following the Transaction;
- - the governance structure for Nuveen following the Transaction;
- - any anticipated changes in the operations of the Nuveen funds following the
Transaction, including changes to NAM's and Nuveen's day-to-day management,
infrastructure and ability to provide advisory, distribution or other
applicable services to the Funds;
- - any changes to senior management or key personnel who work on Fund related
matters (including portfolio management, investment oversight, and
legal/compliance) and any retention or incentive arrangements for such
persons;
- - any anticipated effect on each Fund's expense ratio (including advisory fees)
following the Transaction;
- - any benefits or undue burdens imposed on the Funds as a result of the
Transaction;
- - any legal issues for the Funds as a result of the Transaction;
- - the nature, quality and extent of services expected to be provided to the
Funds following the Transaction, changes to any existing services and policies
affecting the Funds, and cost-cutting efforts, if any, that may impact such
services or policies;
- - any conflicts of interest that may arise for Nuveen or MDP with respect to the
Funds;
- - the costs associated with obtaining necessary shareholder approvals and who
would bear those costs; and
- - from legal counsel, a memorandum describing the applicable laws, regulations
and duties in approving advisory contracts, including, in particular, with
respect to a change of control.
Immediately preceding the July Meeting, representatives of MDP met with the
Board to further respond to questions regarding the Transaction. After the
meeting with MDP, the Independent Board Members met with independent legal
counsel in executive session. At the July Meeting, Nuveen also made a
presentation and responded to questions. Following the presentations and
discussions of the materials presented to the Board, the Independent Board
Members met again in executive session with their counsel. As outlined in more
detail below, the Independent Board Members considered all factors they believed
relevant with respect to each Fund, including the impact that the Transaction
could be expected to have on the following: (a) the nature, extent and quality
of services to be provided; (b) the investment performance of the Funds; (c) the
costs of the services and profits to be realized by Nuveen and its affiliates;
(d) the extent to which economies of scale would be realized; and (e) whether
fee levels reflect those economies of scale for the benefit of investors. As
noted above, during the past year, the Board Members had initially approved the
Original Investment Management Agreements for the New Funds and approved the
continuance of the Nuveen Global Investment Management Agreement and many of the
factors considered at such reviews were applicable to their evaluation of the
New Investment Management Agreements. Accordingly, in evaluating such
agreements, the Board Members relied upon their knowledge and experience with
the Fund Adviser and considered the information received and their evaluations
and conclusions drawn at the reviews. While the
38
Board reviewed many Nuveen funds at the July Meeting, the Independent Board
Members evaluated all information available to them on a fund-by-fund basis, and
their determinations were made separately in respect of each Fund.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In evaluating the nature, quality and extent of the services expected to be
provided by the Fund Adviser under the applicable New Investment Management
Agreement, the Independent Board Members considered, among other things, the
expected impact, if any, of the Transaction on the operations, facilities,
organization and personnel of NAM; the potential implications of regulatory
restrictions on the Funds following the Transaction; the ability of NAM and its
affiliates to perform their duties after the Transaction; and any anticipated
changes to the current investment and other practices of the Funds.
The Board noted that the terms of each New Investment Management Agreement,
including the fees payable thereunder, are substantially identical to those of
the Original Investment Management Agreement relating to the same Fund (with
both reflecting reductions to fee levels in the complex-wide fee schedule for
complex-wide assets in excess of $80 billion that have an effective date of
August 20, 2007). The Board considered that the services to be provided and the
standard of care under the New Investment Advisory Agreements are the same as
the corresponding original agreements. The Board Members further noted that key
personnel of the Fund Adviser who have responsibility for the Funds in each
area, including portfolio management, investment oversight, fund management,
fund operations, product management, legal/compliance and board support
functions, are expected to be the same following the Transaction. The Board
Members considered and are familiar with the qualifications, skills and
experience of such personnel. The Board also considered certain information
regarding any anticipated retention or incentive plans designed to retain key
personnel. Further, the Board Members noted that no changes to Nuveen's
infrastructure (including at the affiliated sub-adviser level) or operations as
a result of the Transaction were anticipated other than potential enhancements
as a result of an expected increase in the level of investment in such
infrastructure and personnel. The Board noted MDP's representations that it does
not plan to have a direct role in the management of Nuveen, appointing new
management personnel, or directly impacting individual staffing decisions. The
Board Members also noted that there were not any planned "cost cutting" measures
that could be expected to reduce the nature, extent or quality of services.
After consideration of the foregoing, the Board Members concluded that no
diminution in the nature, quality and extent of services provided to the Funds
and their shareholders by the Fund Adviser is expected.
In addition to the above, the Board Members considered potential changes in the
operations of each Fund. In this regard, the Board Members considered the
potential effect of regulatory restrictions on the Funds' transactions with
future affiliated persons. During their deliberations, it was noted that, after
the Transaction, a subsidiary of Merrill Lynch is expected to have an ownership
interest in Nuveen at a level that will make Merrill Lynch an affiliated person
of Nuveen. The Board Members recognized that applicable law would generally
prohibit the Funds from engaging in securities transactions with Merrill Lynch
as principal, and would also impose restrictions on using Merrill Lynch for
agency transactions. They recognized that having MDP and Merrill Lynch as
affiliates may restrict the Nuveen funds' ability to invest in securities of
issuers controlled by MDP or issued by Merrill Lynch and its affiliates even if
not bought directly from MDP or Merrill Lynch as principal. They also recognized
that various regulations may require the Nuveen funds to apply investment
limitations on a combined basis with affiliates of Merrill Lynch. The Board
Members considered information provided by NAM regarding the potential impact on
the Nuveen funds' operations as a result of these regulatory restrictions. The
Board Members considered, in particular, the Nuveen funds that may be impacted
most by the restricted access to Merrill Lynch, including: municipal funds
(particularly certain state-specific funds), senior loan funds, taxable fixed
income funds, preferred security funds and funds that heavily use derivatives.
The Board Members considered such funds' historic use of Merrill Lynch as
principal in their transactions and information provided by NAM regarding the
expected impact resulting from Merrill Lynch's affiliation with Nuveen and
available measures that could be taken to minimize such impact. NAM informed the
Board Members that, although difficult to determine with certainty, its
management did not believe that MDP's or Merrill Lynch's status as an affiliate
of Nuveen would have a material adverse effect on any Nuveen fund's ability to
pursue its investment objectives and policies.
39
Annual Investment
Management Agreement
APPROVAL PROCESS (continued)
In addition to the regulatory restrictions considered by the Board, the Board
Members also considered potential conflicts of interest that could arise between
the Nuveen funds and various parties to the Transaction and discussed possible
ways of addressing such conflicts.
Based on its review along with its considerations regarding services at the
annual and/or initial review, the Board concluded that the Transaction was not
expected to adversely affect the nature, quality or extent of services provided
by the Fund Adviser and that the expected nature, quality and extent of such
services supported approval of the New Investment Management Agreements.
B. PERFORMANCE OF THE FUNDS
With respect to the performance of the Funds, the Board considered that the
portfolio management personnel responsible for the management of the Funds'
portfolios were expected to continue to manage the portfolios following the
completion of the Transaction.
As New Funds, the Funds did not have their own performance history at their
respective Initial Approval Meetings. However, in certain cases, the Board
Members received simulated performance information regarding the proposed
investment strategies for the New Funds (if available). The Board Members noted
that the New Funds have only been operating for a short period since their
inception. In this regard, with respect to the annual review at the May Meeting
for the Nuveen Global Government Enhanced Income Fund, the Board Members noted
such Fund had a performance history that is too short for a meaningful
assessment of performance. The Board Members further noted that the investment
policies and strategies were not expected to change as a result of the
Transaction.
In light of the foregoing factors, the Board concluded that its findings with
respect to performance supported approval of the New Investment Management
Agreements.
C. FEES, EXPENSES AND PROFITABILITY
As described in more detail above, during the prior reviews, the Board Members
considered, among other things, the management fees and expenses of the Funds,
the breakpoint schedules, and comparisons of such fees and expenses with peers.
At the prior reviews, the Board Members determined that the respective Fund's
advisory fees and expenses were reasonable. In evaluating the profitability of
the Fund Adviser under the New Investment Management Agreements, the Board
Members considered their conclusions at their prior reviews and whether the
management fees or other expenses would change as a result of the Transaction.
As described above, the investment management fee for NAM is composed of two
components -- a fund-level component and complex-wide level component. The fee
schedule under the New Investment Management Agreements to be paid to NAM is
identical to that under the Original Investment Management Agreements, including
the modified complex-wide fee schedule. As noted above, the Board recently
approved a modified complex-wide fee schedule that would generate additional fee
savings on complex-wide assets above $80 billion. The modifications have an
effective date of August 20, 2007 and are part of the Original Investment
Management Agreements. Accordingly, the terms of the complex-wide component
under the New Investment Management Agreements are the same as under the
Original Investment Management Agreements. The Board Members also noted that
Nuveen has committed for a period of two years from the date of closing of the
Transaction that it will not increase gross management fees for any Nuveen fund
and will not reduce voluntary expense reimbursement levels for any Nuveen fund
from their currently scheduled prospective levels. Based on the information
provided, the Board Members did not expect that overall Fund expenses would
increase as a result of the Transaction.
In addition, the Board Members considered that additional fund launches were
anticipated after the Transaction which would result in an increase in total
assets under management in the complex and a corresponding decrease in overall
management fees under the complex-wide fee schedule. Taking into consideration
the Board's prior evaluation of fees and expenses, and the modification to the
complex-wide fee schedule, the Board determined that the management fees and
expenses were reasonable.
40
While it is difficult to predict with any degree of certainty the impact of the
Transaction on Nuveen's profitability for its advisory activities (which
includes its affiliated sub-advisers), at the recent annual review, the Board
Members were satisfied that Nuveen's level of profitability for its advisory
activities was reasonable. During the year, the Board Members had noted the
enhanced dialogue regarding profitability and the appointment of an Independent
Board Member as a point person to review methodology determinations and
refinements in calculating profitability. Given their considerations at the
annual or initial review and the modifications to the complex-wide fee schedule,
the Board Members were satisfied that Nuveen's level of profitability for its
advisory activities continues to be reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
The Board Members have been cognizant of economies of scale and the potential
benefits resulting from the costs of a Fund being spread over a larger asset
base. To help ensure that shareholders share in the benefits derived from
economies of scale, the Board adopted the complex-wide fee arrangement in 2004.
At the May Meeting, the Board Members reviewed the complex-wide fee arrangements
and noted that additional negotiations may be necessary or appropriate as the
assets in the complex approached the $91 billion threshold. In light of this
assessment coupled with the upcoming Transaction, at the June 15, 2007 meeting,
the ad hoc committee met with representatives of Nuveen to further discuss
modifications to the complex-wide fee schedule that would generate additional
savings for shareholders as the assets of the complex grow. The proposed terms
for the complex-wide fee schedule are expressed in terms of targeted cumulative
savings at specified levels of complex-wide assets, rather than in terms of
targeted marginal complex-wide fee rates. Under the modified schedule, the
schedule would generate additional fee savings beginning at complex-wide assets
of $80 billion in order to achieve targeted cumulative annual savings at $91
billion of $28 million on a complex-wide level (approximately $0.6 million
higher than those generated under the then current schedule) and generate
additional fee savings for asset growth above complex-wide assets of $91 billion
in order to achieve targeted annual savings at $125 billion of assets of
approximately $50 million on a complex-wide level (approximately $2.2 million
higher annually than that generated under the then current schedule). At the
July Meeting, the Board approved the modified complex-wide fee schedule for the
Original Investment Management Agreements and these same terms will apply to the
New Investment Management Agreements. Accordingly, the Board Members believe
that the breakpoint schedules and revised complex-wide fee schedule are
appropriate and desirable in ensuring that shareholders participate in the
benefits derived from economies of scale.
E. INDIRECT BENEFITS
During their recent annual or initial review, the Board Members considered any
indirect benefits that the Fund Adviser may receive as a result of its
relationship with the Funds, as described above. As the policies and operations
of the Fund Adviser are not anticipated to change significantly after the
Transaction, such indirect benefits should remain after the Transaction. The
Board Members further considered any additional indirect benefits to be received
by the Fund Adviser or its affiliates after the Transaction. The Board Members
noted that other than benefits from its ownership interest in Nuveen and
indirect benefits from fee revenues paid by the Funds under the management
agreements and other Board-approved relationships, it was currently not expected
that MDP or its affiliates would derive any benefit from the Funds as a result
of the Transaction or transact any business with or on behalf of the Funds
(other than perhaps potential Fund acquisitions, in secondary market
transactions, of securities issued by MDP portfolio companies); or that Merrill
Lynch or its affiliates would derive any benefits from the Funds as a result of
the Transaction (noting that, indeed, Merrill Lynch would stand to experience
the discontinuation of principal transaction activity with the Nuveen funds and
likely would experience a noticeable reduction in the volume of agency
transactions with the Nuveen funds).
F. OTHER CONSIDERATIONS
In addition to the factors above, the Board Members also considered the
following with respect to the Funds:
- - Nuveen would rely on the provisions of Section 15(f) of the 1940 Act. Section
15(f) provides, in substance, that when a sale of a controlling interest in an
investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection with the sale so long
as (i) during the three-year period following the consummation of a
transaction, at least 75% of the investment company's board of directors must
not be "interested persons" (as defined in the 1940 Act) of the investment
adviser or predecessor adviser and
41
Annual Investment
Management Agreement
APPROVAL PROCESS (continued)
(ii) an "unfair burden" (as defined in the 1940 Act, including any
interpretations or no-action letters of the SEC) must not be imposed on the
investment company as a result of the transaction relating to the sale of such
interest, or any express or implied terms, conditions or understanding
applicable thereto. In this regard, to help ensure that an unfair burden is
not imposed on the Nuveen funds, Nuveen has committed for a period of two
years from the date of the closing of the Transaction (i) not to increase
gross management fees for any Nuveen fund; (ii) not to reduce voluntary
expense reimbursement levels for any Nuveen fund from their currently
scheduled prospective levels during that period; (iii) that no Nuveen fund
whose portfolio is managed by a Nuveen affiliate shall use Merrill Lynch as a
broker with respect to portfolio transactions done on an agency basis, except
as may be approved in the future by the Compliance Committee of the Board; and
(iv) that each adviser/portfolio team affiliated with Nuveen shall not cause
the Funds (or sleeves thereof) and other Nuveen funds that the team manages,
as a whole, to enter into portfolio transactions with or through the other
minority owners of Nuveen, on either a principal or an agency basis, to a
significantly greater extent than both what one would expect an investment
team to use such firm in the normal course of business, and what such team has
historically done, without prior Board or Compliance Committee approval
(excluding the impact of proportionally increasing the use of such other
"minority owners" to fill the void necessitated by not being able to use
Merrill Lynch).
- - The Funds would not incur any costs in seeking the necessary shareholder
approvals for the New Investment Management Agreements (except for any costs
attributed to seeking shareholder approvals of Fund specific matters unrelated
to the Transaction, such as approval of Board Members or changes to investment
policies, in which case a portion of such costs will be borne by the
applicable Funds).
- - The reputation, financial strength and resources of MDP.
- - The long-term investment philosophy of MDP and anticipated plans to grow
Nuveen's business to the benefit of the Nuveen funds.
- - The benefits to the Nuveen funds as a result of the Transaction including: (i)
as a private company, Nuveen may have more flexibility in making additional
investments in its business; (ii) as a private company, Nuveen may be better
able to structure compensation packages to attract and retain talented
personnel; (iii) as certain of Nuveen's distribution partners are expected to
be equity or debt investors in Nuveen, Nuveen may be able to take advantage of
new or enhanced distribution arrangements with such partners; and (iv) MDP's
experience, capabilities and resources that may help Nuveen identify and
acquire investment teams or firms and finance such acquisitions.
- - The historic premium and discount levels at which the shares of the Nuveen
funds have traded at specified dates with particular focus on the premiums and
discounts after the announcement of the Transaction, taking into consideration
recent volatile market conditions and steps or initiatives considered or
undertaken by NAM to address discount levels.
G. CONCLUSION
The Board Members did not identify any single factor discussed previously as
all-important or controlling. The Board Members, including the Independent Board
Members, unanimously concluded that the terms of the New Investment Management
Agreements are fair and reasonable, that the fees therein are reasonable in
light of the services to be provided to each Fund and that the New Investment
Management Agreements should be approved and recommended to shareholders.
III. APPROVAL OF INTERIM CONTRACTS
As noted above, at the July Meeting, the Board Members, including the
Independent Board Members, unanimously approved the Interim Investment
Management Agreements. If necessary to assure continuity of advisory services,
the Interim Investment Management Agreements will take effect upon the closing
of the Transaction if shareholders have not yet approved the New Investment
Management Agreements. The terms of each Interim Investment Management Agreement
are substantially identical to those of the corresponding Original Investment
Management Agreement and New Investment Management Agreement except for certain
term and escrow provisions. In light of
42
the foregoing, the Board Members, including the Independent Board Members,
unanimously determined that the scope and quality of services to be provided to
the Funds under the respective Interim Investment Management Agreement are at
least equivalent to the scope and quality of services provided under the
applicable Original Investment Management Agreement.
43
Glossary of
TERMS USED in this REPORT
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.
Market Yield (also known as Dividend Yield or Current Yield): Market yield is
based on the Fund's current annualized monthly distribution divided by the
Fund's current market price. The Fund's monthly distributions to its
shareholders may be comprised of ordinary income, net realized capital gains
and, if at the end of the calendar year the Fund's cumulative net ordinary
income and net realized gains are less than the amount of the Fund's
distributions, a tax return of capital.
Net Asset Value (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund from its total assets and then dividing
the remainder by the number of shares outstanding. Fund NAVs are calculated at
the end of each business day.
44
NOTES
45
NOTES
46
OTHER USEFUL INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
Each Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
most recent 12-month period ended June 30, 2006, and (iii) a description of the
policies and procedures that the Funds used to determine how to vote proxies
relating to portfolio securities are available without charge, upon request, by
calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at
www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. 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 at 1-202-942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
Reference Section at 450 Fifth Street NW, Washington, D.C. 20549.
CEO Certification Disclosure
Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange
the annual CEO certification as required by Section 303A.12(a) of the NYSE
Listed Company Manual.
Each Fund has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
Board of Trustees
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Carol E. Stone
Fund Manager
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
Custodian
State Street Bank & Trust Company
Boston, MA
Transfer Agent and
Shareholder Services
State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
Legal Counsel
Chapman and Cutler LLP
Chicago, IL
Independent Registered
Public Accounting Firm
PriceWaterhouseCoopers LLP
Chicago, IL
Each Fund intends to repurchase shares of its own common stock in the
future at such times and in such amounts as is deemed advisable. No
shares were repurchased during the period covered by this report. Any
future repurchases will be reported to shareholders in the next
annual or semi-annual report.
47
Nuveen Investments:
- -----------------------------------------------------------------------
SERVING INVESTORS FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
We offer many different investing solutions for our clients' different needs.
Managing $172 billion in assets, as of June 30, 2007, Nuveen Investments offers
access to a number of different asset classes and investing solutions through a
variety of products. Nuveen Investments markets its capabilities under six
distinct brands: Nuveen, a leader in fixed-income investments; NWQ, a leader in
value-style equities; Rittenhouse, a leader in growth-style equities; Symphony,
a leading institutional manager of market-neutral alternative investment
portfolios; Santa Barbara, a leader in growth equities; and Tradewinds, a leader
in global equities.
Find out how we can help you reach your financial goals.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest.
Be sure to obtain a prospectus, where applicable. Investors should consider the
investment objective and policies, risk considerations, charges and expenses of
the Fund carefully before investing. The prospectus contains this and other
information relevant to an investment in the Fund. For a prospectus, please
contact your securities representative or Nuveen Investments, 333 W. Wacker Dr.,
Chicago, IL 60606. Please read the prospectus carefully before you invest or
send money.
ESA-G-0607D
Learn more about Nuveen Funds at: WWW.NUVEEN.COM/CEF
Share prices
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ITEM 2. CODE OF ETHICS.
Not applicable to this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to this filing.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this filing.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this filing.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board implemented after the registrant
last provided disclosure in response to this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded
that the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of
a date within 90 days of the filing date of this report that
includes the disclosure required by this paragraph, based on their
evaluation of the controls and procedures required by Rule 30a-3(b)
under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or
15d-15(b) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable to
this filing.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: 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 Multi-Currency Short-Term Government Income Fund
By (Signature and Title)* /s/ Kevin J. McCarthy
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Kevin J. McCarthy
Vice President and Secretary
Date: September 6, 2007
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
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Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: September 6, 2007
By (Signature and Title)* /s/ Stephen D. Foy
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Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: September 6, 2007
* Print the name and title of each signing officer under his or her signature.