As filed with the U.S. Securities and Exchange Commission on May 1, 2020
1933 Act File No. 333-230438
1940 Act File No. 811-22971
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-2
(Check appropriate box or boxes)
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REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 1
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and/or
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REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
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Amendment No. 4
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Nuveen Nasdaq
100 Dynamic Overwrite Fund
(Exact name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, Illinois 60606
(Address of Principal Executive Offices)
(Number, Street, City, State, Zip Code)
(Registrants Telephone Number, including Area Code): (800) 257-8787
Gifford R. Zimmerman
Vice President and Secretary
333 West Wacker Drive
Chicago, Illinois 60606
Name and Address (Number, Street, City, State, Zip Code) of Agent for Service
Copy to:
Thomas S. Harman
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue NW
Washington, DC 20004
Approximate Date of Proposed
Public Offering: As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this
form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box. ☒
It is proposed that this filing will become effective (check appropriate box)
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When declared effective pursuant to section 8(c)
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Immediately upon filing pursuant to no-action relief granted to Registrant on April 26, 2019.
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PROSPECTUS
Up to 11,355,021 Common
Shares
Nuveen Nasdaq 100 Dynamic Overwrite
Fund
Nuveen Nasdaq 100 Dynamic Overwrite Fund (the Fund) is a non-diversified, closed-end management investment company. The
Funds investment objective is to seek attractive total return with less volatility than the Nasdaq 100 Index. The Fund cannot assure you that it will achieve its investment objective.
Investing in the Funds common shares (Common Shares) involves certain risks that are
described in the Risk Factors section of this prospectus (the Prospectus).
Neither the U.S. Securities and Exchange Commission (the SEC) nor any state securities commission has approved or disapproved
of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
You should read this Prospectus, which contains important information about the Fund, before deciding whether to invest and retain it for
future reference. A Statement of Additional Information dated May 1, 2020 (the SAI), containing additional information about the Fund, has been filed with the SEC and is incorporated by reference in its
entirety into this Prospectus. You may request a free copy of the SAI, the table of contents of which is on the last page of this Prospectus, annual and semi-annual reports to shareholders and other information about the Fund, and make shareholder
inquiries by calling (800) 257-8787, by writing to the Fund or from the Funds website (http://www.nuveen.com). The information contained in, or that can be accessed through, the Funds website is not part of this Prospectus. You also
may obtain a copy of the SAI (and other information regarding the Fund) from the SECs website (http://www.sec.gov).
The Funds Common Shares do not represent a deposit or obligation of, and are not guaranteed or endorsed by, any bank or other
insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other governmental agency.
Portfolio Contents. The Fund
will pursue its investment objective by investing in an equity portfolio and utilizing a dynamic options strategy. Under normal circumstances, the Fund will invest at least 80% of its Assets, as defined under Investment Objectives and
Policies in the Prospectus Summary, in an equity portfolio made up of securities comprising the Nasdaq 100 Index (or securities that have economic characteristics that are similar to those securities comprising the Nasdaq 100 Index) that seeks
to substantially replicate price movements of the Nasdaq 100 Index and is designed to support the Funds options strategy (the Equity Portfolio). Under normal circumstances, the Fund expects to invest substantially all (at least
90%) of its Managed Assets (as defined under Investment Objectives and Policies in the Prospectus Summary) in the Equity Portfolio or otherwise in pursuit of its investment objective. Under normal circumstances, the Fund will sell index
call options, call options on custom baskets of securities and covered call options on individual securities. The Fund targets an overwrite level of approximately 55% over time, and the overwrite level will vary, based on market conditions, between
35% to 75% of the value of the Equity Portfolio.
No Leverage. As a non-fundamental policy, the Fund will not leverage its capital structure by issuing senior
securities such as preferred shares or debt instruments. However, the Fund may borrow for temporary or emergency purposes as permitted by the Investment Company Act of 1940, as amended, and may enter into certain derivatives transactions that have
the economic effect of leverage.
Adviser
and Sub-Adviser. Nuveen Fund Advisors, LLC, the Funds investment adviser, is responsible for determining the Funds overall investment strategies and their implementation. Nuveen Asset Management, LLC is the
Funds investment sub-adviser and oversees the day-to-day investment operations of the Fund.
The minimum price on any day at which Common Shares may be sold will not be less than
the current net asset value (NAV) per share plus the per share amount of the commission to be paid to Nuveen Securities, LLC (Nuveen Securities). The Fund and Nuveen Securities will suspend the sale of Common Shares if the
per share price of the shares is less than the minimum price. The Fund currently intends to distribute the shares offered pursuant to this Prospectus through at-the-market transactions, although from time to time it may also distribute shares
through an underwriting syndicate or a privately negotiated transaction. To the extent shares are distributed other than through at-the-market transactions, the Fund will file a supplement to this Prospectus describing such transactions. For
information on how Common Shares may be sold, see the Plan of Distribution section of this Prospectus.
As of April 24, 2020, the Fund has sold in this offering an aggregate of 432,922 Common Shares, representing net proceeds to the Fund of
$9,639,213, after payment of commissions of $ $97,368 in the aggregate.
Common Shares are listed on The Nasdaq Stock Market LLC (the Nasdaq). The trading or ticker symbol of the Fund is QQQX. The Funds closing price on the Nasdaq on
April 24, 2020 was $21.23.
Beginning on
January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Funds annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead,
the reports will be made available on the Funds website (www.nuveen.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a
broker-dealer or bank) or, if you are a direct investor, by enrolling at www.nuveen.com/client-access.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your
financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800-257-8787
(select option #2) to let the Fund know you wish to continue receiving paper copies of your shareholder reports or you can set your delivery preference by logging into your Investor Center account at www.computershare.com/investor and click
on Communication Preferences. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with
the Fund.
The date of this prospectus is May 1, 2020.
TABLE OF CONTENTS
You should rely only on the information contained or incorporated by reference in this Prospectus. The Fund has not authorized anyone
to provide you with different information. The Fund is not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this Prospectus is accurate as of any date other
than the date on the front of this Prospectus. The Funds business, financial condition, and prospects may have changed since that date. The Fund will update this Prospectus to reflect any material changes to the disclosures herein.
PROSPECTUS SUMMARY
This is only a summary. You should review the more
detailed information contained elsewhere in this Prospectus and in the Statement of Additional Information (the SAI) prior to making an investment in the Fund. See Risks.
The Fund
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Nuveen Nasdaq 100 Dynamic Overwrite Fund (the Fund) is a non-diversified, closed-end management investment company. See The Fund. The Funds common shares, $0.01 par
value (Common Shares), are traded on The Nasdaq Stock Market LLC (the Nasdaq) under the symbol QQQX. See Description of SharesCommon Shares. As of March 31, 2020, the Fund had 39,569,141
Common Shares outstanding and net assets applicable to Common Shares of $793,145,240.
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Investment Objective and Policies
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The Funds investment objective is to seek attractive total return with less volatility than the Nasdaq 100 Index. The Funds investment objective is considered fundamental and may not
be changed without shareholder approval. Unless otherwise specified, the Funds investment policies are considered non-fundamental. The Fund cannot assure you that it will attain its investment objective. See The Funds
Investments and Risks.
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Under normal circumstances, the Fund will invest at least 80% of its Assets (as defined below) in an equity portfolio made up of securities comprising the Nasdaq 100
Index (or securities that have economic characteristics that are similar to those securities comprising the Nasdaq 100 Index) that seeks to substantially replicate price movements of the Nasdaq 100 Index and is designed to support the Funds
Option Strategy (as defined below) (the Equity Portfolio). Under normal circumstances, the Fund expects to invest substantially all (at least 90%) of its Managed Assets (as defined below) in the Equity Portfolio or otherwise in pursuit
of its investment objective.
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The Nasdaq 100 Index is an index that includes 100 of the largest domestic and international nonfinancial securities listed on Nasdaq based on market capitalization.
Due to U.S. federal income tax considerations, the Fund intends to limit the overlap between the components of the Equity Portfolio (and any subset thereof) and the constituent securities of the Nasdaq 100 Index to less than 70% (generally based on
the value of such components) on an ongoing basis. As a result, the Fund will not hold all of the common stocks in the Nasdaq 100 Index, or in the same weightings as in the Nasdaq 100 Index, and returns on the Equity Portfolio are not intended to
exactly match those of the Nasdaq 100 Index. The portion of the Equity Portfolio invested in securities or other instruments other than individual securities comprising the Nasdaq 100 Index will be selected to match the characteristics of the index
with limited tracking error.
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The Fund employs a dynamic options overwrite strategy whereby the Funds sub-adviser sells (writes) call options on a varying percentage of the
market value of the Funds Equity Portfolio based on its market outlook (the Option Strategy). Pursuant to this Option Strategy, under normal market circumstances, the Fund sells (writes) index call options, call options on custom
baskets of securities, and covered call options on individual securities. The Fund targets an overwrite level (i.e., the ratio of the notional value of call options sold by the Fund to the market value of
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the Funds Equity Portfolio) of 55% of the value of its Equity Portfolio over time, and the overwrite level will vary, based on market conditions, between 35% to 75% of the value of the
Equity Portfolio. In addition to a primary emphasis on writing call options to reduce downside risk and volatility of the Equity Portfolio, the Option Strategy as a secondary emphasis seeks additional return opportunities by capitalizing on
inefficiencies in the options market through a variety of means including the use of call spreads and selling put options.
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The Equity Portfolio seeks to track the total return performance of the Nasdaq 100 Index. Combined with the Option Strategy, the Fund seeks attractive total return with
less volatility than the Nasdaq 100 Index. Volatility is measured by the annualized standard deviation of daily returns for the Nasdaq 100 Index.
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The Funds strategy of using the Nasdaq 100 Index as the relevant benchmark for the Equity Portfolio and Option Strategy is not considered fundamental and can be
changed without a vote of the common shareholders. However, any use of an alternative index must be approved by the Funds Board of Trustees (the Board) and is subject to the provision of 60 days written notice to common
shareholders.
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As a fundamental policy, the Fund may not invest more than 25% of its total assets in securities of issuers in any one industry, except that if 25% or more of the
securities in the Nasdaq 100 Index are issued by companies in one industry, the Fund would concentrate in that industry unless the Fund would need to avoid concentration in order to implement its investment strategy as it relates to avoiding the
adverse tax treatment associated with straddle positions, as described herein. See Investment Restrictions in the SAI. As of the date of this Prospectus, the Index was not concentrated in any industry. However, a substantial portion of
the securities represented in the Nasdaq 100 Index are in the technology sector. As a result, the Fund currently invests a substantial portion of its assets in technology companies.
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Assets means net assets of the Fund plus the amount of any borrowings for investment purposes. Managed Assets means the total assets of the
Fund, minus the sum of its accrued liabilities (other than Fund liabilities incurred for the express purpose of creating leverage). Total assets for this purpose shall include assets attributable to the Funds use of leverage (whether or not
those assets are reflected in the Funds financial statements for purposes of generally accepted accounting principles), and derivatives will be valued at their market value. As a non-fundamental policy, the Fund will not leverage its capital
structure by issuing senior securities such as preferred shares or debt instruments, but may enter into certain derivatives transactions that have the economic effect of leverage.
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The Fund may enter into certain derivatives instruments in pursuit of its investment objective. Such instruments include futures contracts, forward contracts and swap
agreements and other derivative instruments consistent with the Funds investment objective and policies. These types of strategies may generate taxable income. See The Funds InvestmentsPortfolio Composition and Other
InformationDerivatives.
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The Fund may, from time to time, manage its cash by investing a part of its assets in short-term, high quality fixed-income securities. Under normal circumstances, the
Fund will invest no more than 10% of its Managed Assets in such securities.
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The Fund may invest in illiquid securities without limit.
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The Fund may invest up to 20% of its Managed Assets in securities of non-U.S. issuers that are U.S. dollar denominated, which
may include securities of issuers located, or conducting their business, in emerging market countries.
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Consistent with the Funds investment objective and policies, the Fund may invest in securities of other investment companies such as, among others,
exchange-traded funds (ETFs), subject to limitations imposed by the Investment Company Act of 1940, as amended (the 1940 Act), and exemptive orders issued by the U.S. Securities and Exchange Commission (the SEC).
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During temporary defensive periods, the Fund may deviate from its investment objective and invest all or a portion of its assets in investment grade debt securities,
including obligations issued or guaranteed by the U.S. government, its agencies and instrumentalities. There can be no assurance that such investment techniques will be successful. For a more complete discussion of the Funds portfolio
composition, see The Funds Investments.
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Investment Adviser
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Nuveen Fund Advisors, LLC (Nuveen Fund Advisors or the Adviser), the Funds investment adviser, is responsible for overseeing the Funds overall investment
strategy and its implementation. Nuveen Fund Advisors offers advisory and investment management services to a broad range of investment company clients. Nuveen Fund Advisors has overall responsibility for management of the Fund, oversees the
management of the Funds portfolio, manages the Funds business affairs and provides certain clerical, bookkeeping and other administrative services. Nuveen Fund Advisors is located at 333 West Wacker Drive, Chicago, Illinois 60606. Nuveen
Fund Advisors is a subsidiary of Nuveen, LLC (Nuveen), the investment management arm of Teachers Insurance and Annuity Association of America (TIAA). TIAA is a life insurance company founded in 1918 by the Carnegie Foundation
for the Advancement of Teaching and is the companion organization of College Retirement Equities Fund. As of March 31, 2020, Nuveen managed approximately $957.3 billion in assets, of which approximately $138.1 billion was managed by Nuveen Fund
Advisors.
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Sub-Adviser
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Nuveen Asset Management, LLC (Nuveen Asset Management or the Sub-Adviser) serves as the Funds sub-adviser. Nuveen Asset Management, a registered
investment adviser, is a wholly-owned subsidiary of Nuveen Fund Advisors. Nuveen Asset Management oversees the day-to-day investment operations of the Fund.
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Nuveen Securities, LLC (Nuveen Securities), a registered broker-dealer affiliate of Nuveen Fund Advisors and Nuveen Asset Management, is involved in the
offering of the Funds Common Shares. See Plan of DistributionDistribution Through At-The-Market Transactions.
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Use of Leverage
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As a non-fundamental policy, the Fund will not leverage its capital structure by issuing senior securities such as preferred shares or debt instruments.
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However, the Fund may borrow for temporary or emergency purposes and may enter into certain derivatives transactions that have the economic effect of leverage by creating additional investment
exposure.
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Offering Methods
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The Fund may offer Common Shares using one or more of the following methods: (i) at-the-market transactions conducted through one or more broker-dealers that have entered into a
selected dealer agreement with Nuveen Securities, one of the Funds underwriters; (ii) through an underwriting syndicate; and (iii) through privately negotiated transactions between the Fund and specific investors. See Plan of
Distribution.
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Distribution Through At-The-Market Transactions. The Fund, from time to time, may issue and sell its Common Shares through Nuveen
Securities to certain broker-dealers that have entered into selected dealer agreements with Nuveen Securities. Currently, Nuveen Securities has entered into a selected dealer agreement with BB&T Capital Markets (BB&T), a division
of BB&T Securities, LLC, pursuant to which BB&T will act as Nuveen Securities sub-placement agent with respect to at-the-market offerings of Common Shares. Common Shares will only be sold on such days as shall be agreed to by the Fund,
Nuveen Securities, and BB&T. Common Shares will be sold at prevailing market prices through the National Market System, subject to a minimum price to be established each day by Nuveen Securities. The minimum price on any day will not be less
than the current net asset value (NAV) per share plus the per share amount of the commission to be paid to Nuveen Securities. The Fund and Nuveen Securities will suspend the sale of Common Shares if the per share price of the shares is
less than the minimum price.
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The Fund will compensate Nuveen Securities with respect to sales of the Common Shares at a commission rate of up to 1.0% of the gross proceeds of the sale of Common
Shares. Nuveen Securities will compensate sub-placement agents or other broker-dealers participating in the offering at a rate of up to 0.8% of the gross sales proceeds of the sale of Common Shares sold by that sub-placement agent or broker-dealer.
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Settlements of Common Share sales will occur on the second business day following the date of sale. In connection with the sale of Common Shares on behalf of the Fund,
Nuveen Securities may be deemed to be an underwriter within the meaning of the Securities Act of 1933, as amended (the 1933 Act), and the compensation of Nuveen Securities may be deemed to be underwriting commissions or discounts. Unless
otherwise indicated in a further Prospectus supplement, Nuveen Securities will act as underwriter on a reasonable efforts basis.
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The offering of Common Shares pursuant to the Distribution Agreement (defined below under Plan of DistributionDistribution Through At-The-Market
Transactions) will terminate upon the earlier of (i) the sale of all Common Shares subject thereto or (ii) termination of the Distribution Agreement. The Fund and Nuveen Securities each have the right to terminate the Distribution
Agreement in its discretion at any time. See Plan of DistributionDistribution Through At-The-Market Transactions. The Fund currently intends to distribute the shares offered pursuant to this Prospectus through at-the-market
transactions, although from time to time it may also distribute shares through an underwriting syndicate or a privately
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negotiated transaction. To the extent shares are distributed other than through at-the-market transactions, the Fund will file a supplement to this Prospectus describing such transactions.
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As of April 24, 2020, the Fund has sold in this offering an aggregate of 432,922 Common Shares, representing net proceeds to the Fund of $9,639,213, after payment of
commissions of $97,368 in the aggregate.
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The Funds closing price on the Nasdaq on April 24, 2020 was $21.23.
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Distribution Through Underwriting Syndicates. The Fund, from time to time, may issue additional Common Shares through a syndicated
secondary offering. In order to limit the impact on the market price of the Funds Common Shares, underwriters will market and price the offering on an expedited basis (e.g., overnight or similarly abbreviated offering period). The Fund
will launch a syndicated offering on a day, and upon terms, mutually agreed upon between the Fund, Nuveen Securities and the underwriting syndicate.
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The Fund will offer its shares at a price equal to a specified discount of up to 5% from the closing market price of the Funds Common Shares on the day prior to
the offering date. The applicable discount will be negotiated by the Fund and Nuveen Securities in consultation with the underwriting syndicate on a transaction-by-transaction basis. The Fund will compensate the underwriting syndicate out of the
proceeds of the offering based upon a sales load of up to 4% of the gross proceeds of the sale of Common Shares. The minimum net proceeds per share to the Fund will not be less than the greater of (i) the Funds latest NAV per Common Share
or (ii) 91% of the closing market price of the Funds Common Shares on the day prior to the offering date. See Plan of DistributionDistribution Through Underwriting Syndicates.
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Distribution Through Privately Negotiated Transactions. The Fund from time to time may sell directly to, and solicit offers from,
institutional and other sophisticated investors, who may be deemed to be underwriters as defined in the 1933 Act for any resale of Common Shares.
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The terms of such privately negotiated transactions will be subject to the discretion of the management of the Fund. In determining whether to sell Common Shares
through a privately negotiated transaction, the Fund will consider relevant factors including, but not limited to, the attractiveness of obtaining additional funds through the sale of Common Shares, the purchase price to apply to any such sale of
Common Shares and the investor seeking to purchase the Common Shares.
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Common Shares issued by the Fund through privately negotiated transactions will be issued at a price equal to the greater of (i) the NAV per Common Share or
(ii) at a discount ranging from 0% to 5% of the average daily closing market price of the Funds Common Shares at the close of business on the ten business days preceding the date upon which Common Shares are sold pursuant to the privately
negotiated transaction. The applicable discount will be determined by the Fund on a transaction-by-transaction basis. See Plan of DistributionDistribution Through Privately Negotiated Transactions.
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The principal business address of Nuveen Securities is 333 West Wacker Drive, Chicago, Illinois 60606.
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Distributions
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The Fund will pay quarterly distributions stated in terms of a fixed cents per Common Share that would be composed of net investment income and supplemental amounts generally representing
realized capital gains or, possibly, returns of capital representing unrealized capital gains. Quarterly distributions, including such supplemental amounts, are sometimes referred to as managed distributions. The Funds managed
distribution policy is pursuant to an exemptive order issued by the SEC, which permits the Fund to distribute long-term capital gains to shareholders more frequently than once per year. The Fund will seek to establish a Common Share distribution
rate that roughly corresponds to Nuveen Fund Advisors projections of the total return that could reasonably be expected to be generated by the Funds Common Shares over an extended period of time, although the distribution rate will not
be solely dependent on the amount of income earned or capital gains realized. Nuveen Fund Advisors, in making such projections, may consider long-term historical returns and a variety of other factors. Distributions can only be made after paying any
interest and required principal payments on borrowings, if any, and any accrued dividends to preferred shareholders, if any.
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If, for any quarterly distribution, net investment income and net realized capital gains were less than the amount of the distribution, the difference would be
distributed from the Funds assets. In order to raise the cash for such distributions, the Fund expects to sell portfolio securities. Such portfolio sales may occur at a time when independent investment judgment might not otherwise have
dictated such action. The Funds final distribution for each calendar year may include any remaining net investment income and net realized capital gains not distributed during the year.
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The Funds actual financial performance will likely vary significantly from month-to-month and from year-to-year, and there may be extended periods when the
distribution rate will exceed the Funds actual total returns. The Funds projected or actual distribution rate is not a prediction of what the Funds actual total returns will be over any specific future period.
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As portfolio and market conditions change, the rate of distributions on the Common Shares and the Funds distribution policy could change. To the extent that
the total return of the Funds overall strategy exceeds the distribution rate for an extended period, the Fund may be in a position either to increase the distribution rate or to distribute supplemental amounts to shareholders, or both.
Conversely, if the total return of the Funds overall strategy is less than the distribution rate for an extended period of time, the Fund will effectively be drawing upon its assets to meet payments prescribed by its distribution policy.
Similarly, for tax purposes such distributions by the Fund may consist in part of a return of capital to Common Shareholders. The exact tax characteristics of the Funds Common Share distributions will not be known until after the Funds
fiscal year-end. Common Shareholders should not confuse a return of capital distribution with dividend yield or total return. At the same time that it pays a quarterly distribution, the Fund will post on its website
(www.nuveen.com/cef), and make available in written form to holders of its Common Shares a notice of the estimated sources and tax characteristics of the Funds distributions (i.e., what percentage of the distributions is estimated to
constitute ordinary income, short-term capital gains, long-term
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capital gains, and/or a non-taxable return of capital) on a year-to-date basis, in compliance with a federal securities law requirement that any fund paying a distribution from sources other than
net investment income disclose to shareholders the respective portion attributable to such other sources. These estimates may be based on certain assumptions about the Funds expected investment returns and the realization of net gains, if any,
over the remaining course of the year. These estimates may, and likely will, vary over time based on the activities of the Fund and changes in the value of portfolio investments. The final determination of the source and tax characteristics of all
distributions will be made after December 31 in each year, and reported to Common Shareholders on Form 1099-DIV early the following year.
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As explained more fully below in Tax Matters, the Fund intends to distribute to Common Shareholders any net capital gain (which is the excess of net
long-term capital gain over net short-term capital loss) for each taxable year through its managed distributions or, alternatively, to retain all or a portion of the years net capital gain and pay federal income tax on the retained gain. Each
Common Shareholder of record as of the end of the Funds taxable year will include in income for federal income tax purposes, as long-term capital gain, his or her share of any retained gain, will be deemed to have paid his or her proportionate
share of the tax paid by the Fund on such retained gain, and will be entitled to an income tax credit or refund for that share of the tax. The Fund may treat any retained capital gain amount as a substitute for equivalent cash distributions. In
addition, the Fund may make total Common Share distributions during a given calendar year in an amount that exceeds the Funds net investment income and net realized long-term capital gains for that calendar year, in which case the excess will
generally be treated by Common Shareholders as return of capital for tax purposes. A return of capital reduces a shareholders tax basis, which could result in more taxable gain when the shareholder sells his or her shares. This may cause the
shareholder to pay taxes even if he or she sells shares for less than the original price.
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The Fund reserves the right to change its distribution policy and the basis for establishing the rate of its quarterly Common Share distributions at any time upon
notice to Common Shareholders, upon a determination by the Funds Board of Trustees that such change is in the best interests of the Fund and its Common Shareholders.
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Custodian and Transfer Agent
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State Street Bank and Trust Company serves as custodian of the Funds assets. Computershare Inc. and Computershare Trust Company N.A. (together, Computershare) serve as the
Funds transfer agent. See Custodian and Transfer Agent.
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Special Risk Considerations
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Investment in the Fund involves special risk considerations. The principal risks associated with an investment in the Fund are summarized below. The Fund is designed as a long-term investment
and not as a trading vehicle. The Fund is not intended to be a complete investment program. See Risks for a more complete discussion of the special risk considerations of an investment in the Fund.
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Call Option Risk. As the writer of a call option, the Fund foregoes, during the options life, the opportunity to profit from
increases in the market value of the instrument underlying the call option above the sum of the premium and the strike price of the option, but will retain the risk of loss should the market value of the instrument underlying the call option
decline. The purchaser of the call option has the right to any appreciation in the value of the underlying instrument over the exercise price upon the exercise of the call option or the expiration date. As the Fund increases the option overlay
percentage, its ability to benefit from capital appreciation becomes more limited and the risk of NAV erosion increases. If the Fund experiences NAV erosion, which itself may have a negative effect on the market price of the Funds shares, the
Fund will have a reduced asset base over which to write call options, which may eventually lead to reduced distributions to shareholders.
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In addition, because the exercise of index options is settled in cash, sellers of index call options, such as the Fund, cannot provide in advance for their potential
settlement obligations by acquiring and holding the underlying securities. The Fund bears a risk that the value of the securities held by the Fund will vary from the value of the Nasdaq 100 Index and relative to the written index call option
positions. Accordingly, the Fund may incur losses on the index call options that it has sold that exceed gains on the Funds equity portfolio. The value of index options written by the Fund, which will be priced daily, will be affected by
changes in the value of and dividend rates of the underlying common stocks in the index, changes in the actual or perceived volatility of the stock market and the remaining time to the options expiration. The value of the index options also
may be adversely affected if the market for the index options becomes less liquid or smaller.
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Call Spreads Risk. The Fund may enter into call spreads. A call spread involves the sale of a call option and the corresponding purchase
of a call option on the same underlying instrument with the same expiration date but with different strike prices. The Fund may not be able to enter into (or close out of) these transactions, at times or in the quantities desired by Nuveen Asset
Management. The Fund also may not be able to enter into (or close out of) these transactions because of, among other things, the lack of market participants that are willing to take contrary positions to that of the Fund.
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Put Option Risk. By writing put options, the Fund takes on the risk of declines in the value of the underlying instrument, including the
possibility of a loss up to the entire strike price of each option it sells but without the corresponding opportunity to benefit from potential increases in the value of the underlying instrument. When the Fund writes a put option, it assumes the
risk that it must purchase the underlying instrument at a strike price that may be higher than the market price of the instrument. If there is a broad market decline and the Fund is not able to close out its written put options, it may result in
substantial losses to the Fund. The Fund will receive a premium from writing options, but the premium received may not be sufficient to offset any losses sustained from exercised put options.
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8
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Option Strategy Risk. In employing the Option Strategy, Nuveen Asset Management seeks to reduce downside risk and volatility of the Equity
Portfolio. This strategy may not protect against market declines and may limit the Funds participation in market gains, particularly during periods when market values are increasing. This strategy may increase the Funds portfolio
transaction costs, which could result in losses or reduce gains, and may not be successful.
|
|
Counterparty Risk. The Fund will be subject to credit risk with respect to the counterparties to the derivative transactions entered into
by the Fund. Changes in the credit quality of the companies that serve as the Funds counterparties with respect to derivatives transactions may affect the value of those instruments. Because certain derivative transactions in which the Fund
may engage may be traded between counterparties based on contractual relationships, the Fund is subject to the risk that a counterparty will not perform its obligations under the related contracts. If a counterparty becomes bankrupt or otherwise
becomes unable to perform its obligations due to financial difficulties the Fund may sustain losses (including the full amount of its investment), may be unable to liquidate a derivatives position or may experience significant delays in obtaining
any recovery in bankruptcy or other reorganization proceedings. By entering into derivatives transactions, the Fund assumes the risk that its counterparties could experience such financial hardships. Although the Fund intends to enter into
transactions only with counterparties that Nuveen Fund Advisors believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Fund will not sustain a loss on a transaction. In the event of a
counterpartys bankruptcy or insolvency, any collateral posted by the Fund in connection with a derivatives transaction may be subject to the conflicting claims of that counterpartys creditors, and the Fund may be exposed to the risk of a
court treating the Fund as a general unsecured creditor of the counterparty, rather than as the owner of the collateral.
|
|
Common Stock Risk. Common stocks generally represent an ownership interest in an issuer, without preference over any other class of
securities, including such issuers debt securities, preferred stock and other senior equity securities. Although common stocks historically have generated higher average returns than fixed-income securities, common stocks also have experienced
significantly more volatility in those returns. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common stock held by the Fund. Also, prices of common stocks are sensitive to general movements in the
stock market and a drop in the stock market may depress the prices of common stocks held by the Fund or to which it has exposure.
|
|
Technology Company Investment Risk. A substantial portion of the securities represented in the Nasdaq 100 Index are in the technology
sector. As a result, the Fund may invest a substantial portion of its assets in technology companies. The market prices of technology-related stocks tend to exhibit a greater degree of market risk and price volatility than other types of
investments. These stocks may fall in and out of favor with investors rapidly, which may cause sudden selling and dramatically lower market prices. Technology stocks also may be affected adversely by
|
9
|
changes in technology, consumer and business purchasing patterns, government regulation and/or obsolete products or services.
|
|
Dividend Income Risk. A portion of the net investment income paid by the Fund to its Common Shareholders is derived from dividends it
receives from the common stocks held in the Funds Equity Portfolio. Dividends paid on securities held by the Fund can vary significantly over the short-term and long-term. Dividends on common stocks are not fixed, but are declared at the
discretion of an issuers board of directors. There is no guarantee that the issuers of common stocks in which the Fund invests will declare dividends in the future or that if declared they will remain at current levels or increase over time.
|
|
Other Investment Companies Risk. The Fund may, subject to the limitations of the 1940 Act and exemptive orders issued by the SEC, invest
in the securities of other investment companies including open-end and closed-end funds and ETFs. Such securities may be leveraged. As a result, the Fund may be indirectly exposed to leverage through an investment in such securities, which would
magnify the Funds leverage risk. The Fund, as a holder of the securities of other investment companies, will bear its pro rata portion of the other investment companies expenses, including advisory fees. These expenses are in addition to
the direct expenses of the Funds own operations. An ETF that is based on a specific index, whether stock or otherwise, may not be able to replicate and maintain exactly the composition and relative weighting of securities in the index. An ETF
also incurs certain expenses not incurred by its applicable index. The market value of shares of ETFs and closed-end funds may differ from their NAV.
|
|
Non-U.S. Issuer Risk. Investments in securities of non-U.S. issuers involve special risks not presented by investments in securities of
U.S. issuers, including the following: (i) less publicly available information about non-U.S. issuers or markets due to less rigorous disclosure or accounting standards or regulatory practices; (ii) many non-U.S. markets are smaller, less
liquid and more volatile; (iii) potential adverse effects of fluctuations in currency exchange rates or controls on the value of the Funds investments; (iv) the economies of non-U.S. countries may grow at slower rates than expected
or may experience a downturn or recession; (v) the impact of economic, political, social or diplomatic events; (vi) possible seizure of a companys assets; (vii) restrictions imposed by non-U.S. countries limiting the ability of
non-U.S. issuers to make payments of principal and/or interest due to blockages of foreign currency exchanges or otherwise and (viii) withholding and other non-U.S. taxes may decrease the Funds return.
These risks are more pronounced to the extent that the Fund invests in securities of issuers in emerging market countries.
|
|
Illiquid Securities Risk. Illiquid securities are not readily marketable and may include some restricted securities. Illiquid securities
involve the risk that the securities will not be able to be sold at the time desired by the Fund or at prices approximating the value at which the Fund is carrying the securities on its books.
|
|
Derivatives Risk. The Funds use of derivatives involves risks different from, and possibly greater than, the risks associated
with investing directly in the investments underlying the derivatives. Whether the Funds use of derivatives is successful will depend on, among other things, if Nuveen
|
10
|
Fund Advisors and Nuveen Asset Management correctly forecast market values, interest rates and other applicable factors. If Nuveen Fund Advisors and Nuveen Asset Management incorrectly forecast
these and other factors, the investment performance of the Fund will be unfavorably affected.
|
|
The Fund may enter into various types of derivatives transactions, including futures contracts, forward contracts and swap agreements and other derivative instruments
consistent with the Funds investment objective and policies. The use of derivatives is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions.
In addition, the use of derivatives requires an understanding by Nuveen Asset Management not only of the referenced asset, rate or index, but also of the derivative contract itself and the markets in which they trade. Successful implementation of
most hedging strategies would generate taxable income. The derivatives market is subject to a changing regulatory environment. It is possible that regulatory or other developments in the derivatives market could adversely affect the Funds
ability to successfully use derivative instruments. See RisksDerivatives Risk, RisksCounterparty Risk, RisksHedging Risk, RisksTax Risk and the SAI.
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|
Investment and Market Risk. An investment in the Funds Common Shares is subject to investment risk, including the possible loss of
the entire principal amount that you invest. Your investment in Common Shares represents an indirect investment in the securities owned by the Fund. Your Common Shares at any point in time may be worth less than your original investment, even after
taking into account the reinvestment of Fund dividends and distributions. See RisksInvestment and Market Risk.
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|
Market Discount from Net Asset Value. Shares of closed-end investment companies like the Fund have during some periods traded at prices
higher than NAV and have during other periods traded at prices lower than NAV. The Fund cannot predict whether Common Shares will trade at, above or below NAV. This characteristic is a risk separate and distinct from the risk that the Funds
NAV could decrease as a result of investment activities. Investors bear a risk of loss to the extent that the price at which they sell their shares is lower in relation to the Funds NAV than at the time of purchase, assuming a stable NAV.
Proceeds from the sale of Common Shares in this offering will be reduced by shareholder transaction costs (if applicable, which vary depending on the offering method used). The NAV per Common Share will be reduced by costs associated with any future
issuances of Common Shares. Depending on the premium of Common Shares at the time of any offering of Common Shares hereunder, the Funds NAV may be reduced by an amount up to the offering costs. Common Shares are designed primarily for
long-term investors, and you should not view the Fund as a vehicle for trading purposes. See RisksMarket Discount from Net Asset Value.
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|
Tax Risk. The tax treatment and characterization of the Funds distributions may vary significantly from time to time because of
the varied nature of the Funds investments. The ultimate tax characterization of the Funds distributions made in a calendar year may not finally be determined
|
11
|
until after the end of that calendar year. In addition, there is a possibility that the Fund may make total distributions during a calendar year in an amount that exceeds the Funds net
investment income and net realized capital gains for that calendar year. For example, because of the nature of the Funds investments, the Fund may distribute net short-term capital gains early in the calendar year, but incur net short-term
capital losses later in the year, thereby offsetting the short-term net capital gains for which distributions have already been made by the Fund. In such a situation, the amount by which the Funds total distributions exceed net investment
income and net realized capital gains would generally be treated as a tax-free return of capital up to the amount of the Common Shareholders tax basis in his Common Shares, with any amounts exceeding such basis treated as gain from the sale of
his Common Shares. While a portion of the Funds income distributions may be classified as qualified dividend income, which is generally taxable to individual investors who meet holding period and other requirements at a lower rate,
there can be no assurance as to the percentage of the Funds income distributions that will be qualified dividend income. The writing of call options by the Fund may significantly reduce or eliminate its ability to make
distributions eligible to be treated as qualified dividend income. Covered call options may also be subject to federal tax rules applicable to straddles under the Internal Revenue Code of 1986, as amended (the Code). If two or more
positions constitute a straddle, recognition of a realized loss from one position must generally be deferred to the extent of unrecognized gain in an offsetting position. In addition, long-term capital gain may be recharacterized as short-term
capital gain, or short-term capital loss as long-term capital loss. Interest and other carrying charges allocable to personal property that is part of a straddle are not currently deductible but must instead be capitalized. Similarly, a wash
sales rule may apply to prevent the recognition of loss by the Fund from the disposition of stock or securities at a loss in a case in which identical or substantially identical stock or securities (or an option to acquire such property) is or
has been acquired within a prescribed period. The Fund intends to avoid being subject to the straddle rules under federal income tax law by maintaining an overlap of less than 70% between the stocks held in the Equity Portfolio and the
stocks comprising the Nasdaq 100 Index. See RisksTax Risk.
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Not an Index Fund. The Fund is not, nor is it intended to be, an index fund. As a result, the performance of the Fund will differ from the
performance of the Nasdaq 100 Index as a whole for various reasons, including the fact that the Fund will write call options on a portion of the Equity Portfolio and the weightings of the securities included in the Equity Portfolio may be different
than the weightings of the common stocks in the Nasdaq 100 Index. The Fund, by writing call options on the Equity Portfolio, will give up the opportunity to benefit from potential increases in the value of the Equity Portfolio above the exercise
prices of the options, but will continue to bear the risk of declines in the value of the Equity Portfolio. See Call Option Risk below.
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Non-Diversification Risk. Because the Fund is classified as non-diversified under the 1940 Act, it can invest a greater
portion of its assets in obligations of a single issuer than a diversified fund. As a result, the Fund will be more susceptible than a diversified fund to fluctuations in the prices of securities of a single issuer.
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12
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Anti-Takeover Provisions. The Funds Declaration of Trust (the Declaration) includes provisions that could limit the
ability of other entities or persons to acquire control of the Fund or convert the Fund to open-end status. These provisions could have the effect of depriving the Common Shareholders of opportunities to sell their Common Shares at a premium over
the then current market price of the Common Shares. See Certain Provisions in the Declaration of Trust and RisksAnti-Takeover Provisions.
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Management Risk. The Fund is subject to management risk because it is an actively managed portfolio. Nuveen Fund Advisors and Nuveen Asset
Management will apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that these will produce the desired results.
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Potential Conflicts of Interest Risk. Nuveen Fund Advisors and Nuveen Asset Management each provide a wide array of portfolio management
and other asset management services to a mix of clients and may engage in ordinary course activities in which their respective interests or those of their clients may compete or conflict with those of the Fund. For example, Nuveen Fund Advisors and
Nuveen Asset Management may provide investment management services to other funds and accounts that follow investment objectives similar to those of the Fund. In certain circumstances, and subject to its fiduciary obligations under the Investment
Advisers Act of 1940, Nuveen Asset Management may have to allocate a limited investment opportunity among its clients, which include closed-end funds, open-end funds and other commingled funds. Nuveen Fund Advisors and Nuveen Asset Management have
each adopted policies and procedures designed to address such situations and other potential conflicts of interests. For additional information about potential conflicts of interest, and the way in which Nuveen Fund Advisors and Nuveen Asset
Management address such conflicts, please see the SAI.
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Recent Market Circumstances. National and regional economies and financial markets are becoming increasingly interconnected, which
increases the possibilities that conditions in one country, region or market might adversely impact issuers in a different country, region or market. Changes in legal, political, regulatory, tax and economic conditions may cause fluctuations in
markets and securities prices around the world, which could negatively impact the value of the Funds investments. For example, the United Kingdoms referendum decision to leave the European Union resulted in the depreciation in value of
the British pound, short term declines in the stock markets and ongoing economic and political uncertainty concerning the consequences of the exit. Similar major economic or political disruptions, particularly in large economies like Chinas,
may have global negative economic and market repercussions. Additionally, events such as war, terrorism, natural and environmental disasters and the spread of infectious illnesses or other public health emergencies may adversely affect the global
economy and the markets and issuers in which the Fund invests. Recent examples of such events include the outbreak of a novel coronavirus known as COVID-19 that was first detected in China in December 2019 and heightened concerns regarding North
Koreas nuclear weapons and long-range ballistic missile programs.
|
13
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These events could reduce consumer demand or economic output, result in market closure, travel restrictions or quarantines, and generally have a significant impact on the economy. These events
could also impair the information technology and other operational systems upon which the Funds service providers, including the investment adviser and sub-adviser, rely, and could otherwise disrupt the ability of employees of the Funds
service providers to perform essential tasks on behalf of the Fund. Governmental and quasi-governmental authorities and regulators throughout the world have in the past responded to major economic disruptions with a variety of significant fiscal and
monetary policy changes, including but not limited to, direct capital infusions into companies, new monetary programs and dramatically lower interest rates. An unexpected or quick reversal of these policies, or the ineffectiveness of these policies,
could increase volatility in securities markets, which could adversely affect the Funds investments.
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|
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme and in many cases unprecedented volatility and
severe losses due to the global pandemic caused by COVID-19, a novel coronavirus. The pandemic has resulted in a wide range of social and economic disruptions, including closed borders, voluntary or compelled quarantines of large populations,
stressed healthcare systems, reduced or prohibited domestic or international travel, supply chain disruptions, and so-called stay-at-home orders throughout much of the United States and many other countries. The fall-out from these
disruptions has included the rapid closure of businesses deemed non-essential by federal, state, or local governments and rapidly increasing unemployment, as well as greatly reduced liquidity for certain instruments at times. Some
sectors of the economy and individual issuers have experienced particularly large losses. Such disruptions may continue for an extended period of time or reoccur in the future to a similar or greater extent. In response, the U.S. government and the
Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, resulting in very low interest rates and in some cases negative yields. It is unknown how long circumstances related to the pandemic will
persist, whether they will reoccur in the future, whether efforts to support the economy and financial markets will be successful, and what additional implications may follow from the pandemic. The impact of these events and other epidemics or
pandemics in the future could result in disruptions in the trading markets, increased premiums or discounts to the Funds NAV, and adverse effects on Fund performance.
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In response to the financial crisis of 2007-2009, the United States and other governments and the Federal Reserve and certain foreign central banks have taken steps
to support financial markets. Policy and legislative changes by the United States Government and the Federal Reserve to assist in the ongoing support of financial markets, both domestically and in other countries, are changing many aspects of
financial regulation. The impact of these changes on the markets, and the practical implications for market participants, may not be fully known for some time. In some countries where economic conditions are recovering, such countries are
nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are
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14
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not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by
governments or quasi-governmental organizations, including changes in tax laws and the imposition of trade barriers. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be
fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, the contentious domestic political
environment, as well as political and diplomatic events within the United States and abroad, such as the U.S. governments inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government
shutdown and threats not to increase the federal governments debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S.
government has recently reduced the federal corporate income tax rate, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the
financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the markets expectations
for changes in government policies are not borne out.
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Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the United States and
abroad but could rise. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. In addition, there is a risk that the prices of goods and services in the United
States and many foreign economies may decline over time, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a countrys economy
slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse.
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On June 23, 2016, the United Kingdom (UK) held a referendum on whether to remain a member state of the European Union (EU), in which voters
favored the UKs withdrawal from the EU, an event widely referred to as Brexit and which triggered a two-year period of negotiations on the terms of withdrawal. The formal notification to the European Council required under Article
50 of the Treaty on EU was made on March 29, 2017, following which the terms of exit were negotiated. On January 31, 2020, the UK formally withdrew from the EU, subject to a transitional period ending December 31, 2020. The longer term economic,
legal, political and social framework to be put in place between the UK and the EU are unclear at this stage, remain subject to negotiation and are likely to lead to ongoing political and economic uncertainty and periods of exacerbated volatility in
both the UK and in wider European markets for some time. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international
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15
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trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time. Additionally, a number of countries in Europe have suffered terror attacks,
and additional attacks may occur in the future. Ukraine has experienced ongoing military conflict; this conflict may expand and military attacks could occur elsewhere in Europe. Europe has also been struggling with mass migration from the Middle
East and Africa. The ultimate effects of these events and other socio-political or geographical issues are not known but could profoundly affect global economies and markets.
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The current political climate has intensified concerns about a potential trade war between China and the United States, as each country has recently imposed tariffs on
the other countrys products. These actions may trigger a significant reduction in international trade, the oversupply of certain manufactured goods, substantial price reductions of goods and possible failure of individual companies and/or
large segments of Chinas export industry, which could have a negative impact on the Funds performance. U.S. companies that source material and goods from China and those that make large amounts of sales in China would be particularly
vulnerable to an escalation of trade tensions. Uncertainty regarding the outcome of the trade tensions and the potential for a trade war could cause the U.S. dollar to decline against safe haven currencies, such as the Japanese yen and the euro.
Events such as these and their consequences are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be taken in the future.
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The impact of these developments in the near- and long-term is unknown and could have additional adverse effects on economies, financial markets and asset valuations
around the world.
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Legislation and Regulatory Risk. At any time after the date of this Prospectus, legislation or additional regulations may be enacted that
could negatively affect the assets of the Fund, securities held by the Fund or the issuers of such securities. Fund shareholders may incur increased costs resulting from such legislation or additional regulation. There can be no assurance that
future legislation, regulation or deregulation will not have a material adverse effect on the Fund or will not impair the ability of the Fund to achieve its investment objective.
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In addition, an investment in the Funds Common Shares raises other risks, which are more fully disclosed in the Risks section of this Prospectus.
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Voting Rights
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All Common Shares have equal non-cumulative voting rights.
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16
SUMMARY OF FUND EXPENSES
The purpose of the table and the examples below is to
help you understand all fees and expenses that you, as a Common Shareholder, would bear directly or indirectly. The table shows the expenses of the Fund as a percentage of the average net assets applicable to Common Shares, and not as a percentage
of total assets or Managed Assets.
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Shareholder Transaction Expenses (as a percentage of offering price)
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Maximum Sales Charge
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4.00
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%*
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Dividend Reinvestment Plan Fees(1)
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$
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2.50
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* A maximum sales charge of 4.00% applies only to offerings pursuant to a syndicated underwriting.
The maximum sales charge for offerings made at-the-market is 1.00%. There is no sales charge for offerings pursuant to a private transaction.
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As a Percentage of
Net Assets
Attributable to
Common Shares(2)
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Annual Expenses
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Management Fees
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0.84
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%
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Other Expenses(3)
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0.07
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%
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Total Annual Expenses
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0.91
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%
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(1)
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You will be charged a $2.50 service charge and pay brokerage charges if you direct Computershare as agent for the Common Shareholders (the
Plan Agent), to sell your Common Shares held in a dividend reinvestment account.
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(2)
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Stated as a percentage of average net assets attributable to Common Shares for the fiscal year ended December 31, 2019.
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(3)
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Other Expenses is based on estimated amounts for the current fiscal year. Expenses attributable to the Funds investments, if any, in
other investment companies are currently estimated not to exceed 0.01%. See Portfolio CompositionOther InvestmentsOther Investment Companies in the SAI.
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See Management of the FundInvestment Adviser,
Sub-Adviser, and Portfolio Manager.
Examples
The following
examples illustrate the expenses, including the applicable transaction fees (referred to as the Maximum Sales Charge in the fee table above), if any, that a Common Shareholder would pay on a $1,000 investment that is held for the time
periods provided in the table. Each example assumes that all dividends and other distributions are reinvested in the Fund and that the Funds Annual Expenses, as provided above, remain the same. The examples also assume a 5% annual
return.(1)
Example # 1 (At-the-Market Transaction)
The following example assumes a transaction fee of 1.00%, as a percentage of the offering price.
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1 Year
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3 Years
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5 Years
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10 Years
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$19
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$39
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$60
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$121
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17
Example # 2 (Underwriting Syndicate Transaction)
The following example assumes a transaction fee of 4.00%, as
a percentage of the offering price.
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1 Year
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3 Years
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5 Years
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10 Years
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$49
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$68
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$88
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$147
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Example # 3 (Privately Negotiated
Transaction)
The following example assumes
there is no transaction fee.
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1 Year
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3 Years
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5 Years
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10 Years
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$9
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$29
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$50
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$112
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The examples should
not be considered a representation of future expenses. Actual expenses may be greater or less than those shown above.
(1)
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The examples assume that all dividends and distributions are reinvested at Common Share NAV. Actual expenses may be greater or less than those assumed.
Moreover, the Funds actual rate of return may be greater or less than the hypothetical 5% return shown in the example.
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18
FINANCIAL HIGHLIGHTS
The following Financial Highlights table is intended to
help a prospective investor understand the Funds financial performance for the periods shown. Certain information reflects financial results for a single Common Share of the Fund. The total returns in the table represent the rate an investor
would have earned or lost on an investment in Common Shares of the Fund (assuming reinvestment of all dividends). Prior to December 22, 2014, the Fund operated as the NASDAQ Premium Income & Growth Fund Inc. Upon the completion of the
reorganization of the NASDAQ Premium Income & Growth Fund Inc. with and into the Fund on December 22, 2014, the Fund assumed the performance, financial and other historical information of the NASDAQ Premium Income & Growth
Fund Inc. The Funds annual financial statements as of and for the fiscal years ended December 31, 2019 through December 31, 2010, including the financial highlights for the fiscal years then ended, have been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm. PricewaterhouseCoopers LLP has not reviewed or examined any records, transactions or events after the date of such reports. A copy of the Annual Report may be obtained
from www.sec.gov or by visiting www.nuveen.com. The information contained in, or that can be accessed through, the Funds website is not part of this Prospectus. Past results are not indicative of future performance.
The following per share data and ratios have been derived
from information provided in the financial statements.
Selected data for a share outstanding throughout each period:
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Year Ended December 31,
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2019
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2018
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2017
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2016
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2015
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2014
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2013
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2012
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2011
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2010
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PER SHARE OPERATING PERFORMANCE
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Beginning Net Asset Value (NAV)
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|
$
|
20.27
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|
|
$
|
22.84
|
|
|
$
|
19.58
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$
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19.98
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$
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19.86
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$
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18.54
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$
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15.17
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$
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14.11
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$
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14.67
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$
|
14.08
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Investment Operations:
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Net Investment Income (Loss)(a)
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0.06
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0.06
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0.04
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0.09
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|
|
|
0.11
|
|
|
|
0.06
|
|
|
|
0.07
|
|
|
|
0.06
|
|
|
|
(0.01
|
)
|
|
|
(0.04
|
)
|
Net Realized/ Unrealized Gain (Loss)
|
|
|
5.33
|
|
|
|
(0.98
|
)
|
|
|
4.66
|
|
|
|
0.91
|
|
|
|
1.41
|
|
|
|
2.62
|
|
|
|
4.51
|
|
|
|
2.21
|
|
|
|
0.69
|
|
|
|
1.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5.39
|
|
|
|
(0.92
|
)
|
|
|
4.70
|
|
|
|
1.00
|
|
|
|
1.52
|
|
|
|
2.68
|
|
|
|
4.58
|
|
|
|
2.27
|
|
|
|
0.68
|
|
|
|
1.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Distributions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From Net Investment Income
|
|
|
(0.05
|
)
|
|
|
(0.06
|
)
|
|
|
(0.04
|
)
|
|
|
(0.09
|
)
|
|
|
(0.43
|
)
|
|
|
(0.07
|
)
|
|
|
(0.07
|
)
|
|
|
(0.06
|
)
|
|
|
(0.47
|
)
|
|
|
|
|
From Accumulated Net Realized Gains
|
|
|
|
|
|
|
(1.37
|
)
|
|
|
(0.50
|
)
|
|
|
(0.81
|
)
|
|
|
(0.97
|
)
|
|
|
(0.48
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.77
|
)
|
|
|
|
|
Return of Capital
|
|
|
(1.51
|
)
|
|
|
(0.25
|
)
|
|
|
(0.90
|
)
|
|
|
(0.50
|
)
|
|
|
|
|
|
|
(0.81
|
)
|
|
|
(1.14
|
)
|
|
|
(1.15
|
)
|
|
|
|
|
|
|
(1.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(1.56
|
)
|
|
|
(1.68
|
)
|
|
|
(1.44
|
)
|
|
|
(1.40
|
)
|
|
|
(1.40
|
)
|
|
|
(1.36
|
)
|
|
|
(1.21
|
)
|
|
|
(1.21
|
)
|
|
|
(1.24
|
)
|
|
|
(1.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shelf Offering Costs
|
|
|
|
*
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium from Shares Sold through Shelf Offering
|
|
|
0.02
|
|
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending NAV
|
|
$
|
24.12
|
|
|
$
|
20.27
|
|
|
$
|
22.84
|
|
|
$
|
19.58
|
|
|
$
|
19.98
|
|
|
$
|
19.86
|
|
|
$
|
18.54
|
|
|
$
|
15.17
|
|
|
$
|
14.11
|
|
|
$
|
14.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Share Price
|
|
$
|
24.05
|
|
|
$
|
20.00
|
|
|
$
|
24.21
|
|
|
$
|
18.56
|
|
|
$
|
19.37
|
|
|
$
|
19.25
|
|
|
$
|
17.80
|
|
|
$
|
15.08
|
|
|
$
|
13.03
|
|
|
$
|
14.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Returns:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on NAV(b)
|
|
|
27.33
|
%
|
|
|
(4.39
|
)%
|
|
|
24.63
|
%
|
|
|
5.28
|
%
|
|
|
7.97
|
%
|
|
|
14.94
|
%
|
|
|
31.30
|
%
|
|
|
15.98
|
%
|
|
|
4.82
|
%
|
|
|
14.05
|
%
|
Based on Share Price(b)
|
|
|
28.73
|
%
|
|
|
(11.15
|
)%
|
|
|
39.24
|
%
|
|
|
3.30
|
%
|
|
|
8.47
|
%
|
|
|
16.12
|
%
|
|
|
27.04
|
%
|
|
|
25.05
|
%
|
|
|
0.91
|
%
|
|
|
7.46
|
%
|
RATIOS/SUPPLEMENTAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Net Assets (000)
|
|
$
|
951,945
|
|
|
$
|
766,930
|
|
|
$
|
836,161
|
|
|
$
|
715,835
|
|
|
$
|
730,622
|
|
|
$
|
726,282
|
|
|
$
|
343,130
|
|
|
$
|
280,033
|
|
|
$
|
260,176
|
|
|
$
|
270,534
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
0.91
|
%
|
|
|
0.91
|
%
|
|
|
0.93
|
%
|
|
|
0.94
|
%
|
|
|
0.93
|
%
|
|
|
1.00
|
%
|
|
|
1.00
|
%
|
|
|
1.01
|
%
|
|
|
1.04
|
%
|
|
|
1.08
|
%
|
Net Investment Income (Loss)
|
|
|
0.25
|
%
|
|
|
0.25
|
%
|
|
|
0.17
|
%
|
|
|
0.49
|
%
|
|
|
0.54
|
%
|
|
|
0.32
|
%
|
|
|
0.44
|
%
|
|
|
0.40
|
%
|
|
|
(0.04
|
)%
|
|
|
(0.25
|
)%
|
Portfolio Turnover Rate(c)
|
|
|
11
|
%
|
|
|
23
|
%
|
|
|
17
|
%
|
|
|
17
|
%
|
|
|
15
|
%
|
|
|
17
|
%
|
|
|
9
|
%
|
|
|
1
|
%
|
|
|
51
|
%
|
|
|
33
|
%
|
19
(a)
|
Per share Net Investment Income (Loss) is calculated using the average daily shares method.
|
(b)
|
Total Return Based on NAV is the combination of changes in NAV, reinvested dividend income at NAV and reinvested capital gains distributions
at NAV, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending NAV. The actual reinvest price for the last dividend declared in the period
may often be based on the Funds market price (and not its NAV), and therefore may be different from the price used in the calculation. Total returns are not annualized.
|
|
Total Return Based on Share Price is the combination of changes in the market price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be
reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be
different from the price used in the calculation. Total returns are not annualized.
|
(c)
|
Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales divided by the average long-term market value during
the period.
|
*
|
Rounds to less than $0.01.
|
20
TRADING AND NET ASSET VALUE INFORMATION
The following table shows for the periods indicated:
(i) the high and low sales prices for the Common Shares reported as of the end of the day on the Nasdaq, (ii) the high and low NAVs of the Common Shares, and (iii) the high and low of the premium/(discount) to NAV (expressed as a
percentage) of the Common Shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Price
|
|
|
Net Asset Value
|
|
|
Premium/(Discount)
|
|
Fiscal Quarter Ended
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
March 2020
|
|
$
|
25.24
|
|
|
$
|
15.85
|
|
|
$
|
25.30
|
|
|
$
|
18.15
|
|
|
|
0.65%
|
|
|
|
(15.65)%
|
|
December 2019
|
|
$
|
24.12
|
|
|
$
|
21.85
|
|
|
$
|
24.18
|
|
|
$
|
21.90
|
|
|
|
1.22%
|
|
|
|
(1.79)%
|
|
September 2019
|
|
$
|
22.94
|
|
|
$
|
21.63
|
|
|
$
|
23.23
|
|
|
$
|
21.73
|
|
|
|
0.13%
|
|
|
|
(2.35)%
|
|
June 2019
|
|
$
|
23.91
|
|
|
$
|
20.80
|
|
|
$
|
23.20
|
|
|
$
|
20.99
|
|
|
|
1.18%
|
|
|
|
(2.47)%
|
|
March 2019
|
|
$
|
22.61
|
|
|
$
|
19.93
|
|
|
$
|
22.29
|
|
|
$
|
19.93
|
|
|
|
3.70%
|
|
|
|
(0.98)%
|
|
December 2018
|
|
$
|
24.49
|
|
|
$
|
18.52
|
|
|
$
|
24.58
|
|
|
$
|
19.11
|
|
|
|
2.26%
|
|
|
|
(4.92)%
|
|
September 2018
|
|
$
|
26.35
|
|
|
$
|
23.75
|
|
|
$
|
25.05
|
|
|
$
|
23.00
|
|
|
|
13.57%
|
|
|
|
(2.57)%
|
|
June 2018
|
|
$
|
28.00
|
|
|
$
|
24.12
|
|
|
$
|
24.11
|
|
|
$
|
21.79
|
|
|
|
18.09%
|
|
|
|
9.22%
|
|
March 2018
|
|
$
|
26.76
|
|
|
$
|
22.03
|
|
|
$
|
24.44
|
|
|
$
|
21.98
|
|
|
|
11.13%
|
|
|
|
(2.35)%
|
|
The NAV per Common
Share, the market price and percentage of premium/(discount) to NAV per Common Share on April 24, 2020 was $21.47, $21.23 and (1.12)%, respectively. As of March 31, 2020, the Fund had 39,569,141 Common Shares outstanding and net assets
applicable to Common Shares of $793,145,240. See Repurchase of Fund Shares; Conversion to Open-End Fund.
THE FUND
The Fund is a non-diversified, closed-end management investment company registered under the 1940 Act. The Fund was organized as a
Massachusetts business trust on May 20, 2014, pursuant to the Declaration, which is governed by the laws of The Commonwealth of Massachusetts. The Funds Common Shares are listed on Nasdaq under the symbol QQQX. The Funds
principal office is located at 333 West Wacker Drive, Chicago, Illinois 60606, and its telephone number is (800) 257-8787.
The following provides information about the Funds outstanding Common Shares as of March 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
Title of Class
|
|
Amount
Authorized
|
|
|
Amount Held
by the Fund or
for its Account
|
|
|
Amount
Outstanding
|
|
Common
|
|
|
unlimited
|
|
|
|
0
|
|
|
|
39,569,141
|
|
21
5% Shareholders
As of April 1, 2020, no shareholders owned of record, or
were known by the Fund to own of record of beneficially, 5% or more of any class of shares of the Fund.
USE OF PROCEEDS
The net proceeds from the issuance of Common Shares hereunder will be invested in accordance with the Funds investment objectives
and policies as stated below. Pending investment, the timing of which may vary depending on the size of the investment but in no case is expected to exceed 30 days, it is anticipated that the proceeds will be invested in short-term or long-term
securities issued by the U.S. Government or its agencies or instrumentalities or in high-quality, short-term money market instruments.
THE FUNDS INVESTMENTS
Investment Objective and Policies
The Funds investment objective is to seek attractive
total return with less volatility than the Nasdaq 100 Index. The Fund cannot assure you that it will achieve its investment objective. The Funds investment objective is considered fundamental and may not be changed without shareholder
approval. Unless otherwise specified, the Funds investment policies are considered non-fundamental.
The Fund will pursue its investment objective by investing in an equity portfolio and utilizing a dynamic options strategy. Under normal
circumstances, the Fund will invest its Managed Assets in an equity portfolio designed to broadly track the return and risk characteristics, and thereby substantially replicate price movements, of the Nasdaq 100 Index, and apply a dynamic call
option overwrite strategy.
Equity
Portfolio. Under normal circumstances, the Fund will invest its Managed Assets in an equity portfolio made up of securities comprising the Nasdaq 100 Index (or securities that have economic characteristics that are similar
to those securities comprising the Nasdaq 100 Index) that seeks to substantially replicate price movements of the Nasdaq 100 Index and is designed to support the Funds Option Strategy (as defined below) (the Equity Portfolio).
Under normal circumstances, the Fund will invest at least 80% of its Assets in the Equity Portfolio. Under normal circumstances, the Fund expects to invest substantially all (at least 90%) of its Managed Assets in the Equity Portfolio or otherwise
in pursuit of its investment objective.
The
securities or other instruments included in the Equity Portfolio will be selected and periodically rebalanced utilizing statistical methods including, but not limited to, optimization and a variety of other quantitative modeling techniques. However,
due to U.S. federal income tax considerations, the Fund intends to limit the overlap between the components of the Equity Portfolio (and any subset thereof) and the constituent securities of the Nasdaq 100 Index to less than 70% (generally based on
the value of such components) on an ongoing basis. As a result, the Fund will not hold all of the common stocks in the Nasdaq 100 Index, or in the same weightings as in the Nasdaq 100 Index, and returns on the Equity Portfolio are not intended to
exactly match those of the Nasdaq 100 Index. The portion of the Equity Portfolio invested in securities or other instruments other than individual securities comprising the Nasdaq 100 Index will be selected to match the characteristics of the index
with limited tracking error.
The Funds
policy of investing, under normal circumstances, at least 80% of its Assets in the Equity Portfolio is not considered to be fundamental by the Fund and can be changed without a vote of the common shareholders. However, this policy may only be
changed by the Funds Board following the provision of 60 days prior written notice to common shareholders.
22
Option Strategy. The Fund employs a dynamic
overwrite option strategy consisting of writing (selling) index call options, call options on custom baskets of securities, and covered call options on individual securities (the Option Strategy). The Fund targets an
overwrite level (i.e., the ratio of the notional value of call options sold by the Fund to the market value of the Funds Equity Portfolio) of 55% of the value of its Equity Portfolio over time, and the overwrite level will vary between
35% to 75% of the value of the Equity Portfolio based on the portfolio managers assessment of market conditions. In addition to a primary emphasis on writing call options to reduce downside risk and volatility of the Equity Portfolio, the
Option Strategy as a secondary emphasis seeks additional return opportunities by capitalizing on inefficiencies in the options market through a variety of means including the use of call spreads and selling put options.
The Equity Portfolio seeks to track the total return
performance of the Nasdaq 100 Index. Combined with the Option Strategy, the Fund seeks attractive total return with less volatility than the Nasdaq 100 Index. Volatility is measured by the annualized standard deviation of daily returns for the
Nasdaq 100 Index.
In applying the Option
Strategy, Nuveen Asset Management is responsible for determining the notional value, timing, type and terms of the options strategies used by the Fund. Nuveen Asset Management actively manages the Funds options positions. In Nuveen Asset
Managements discretion, the Fund may purchase back call options or allow them to expire. To determine the options strategies used, Nuveen Asset Management considers market factors, such as current market levels and volatility, and
option-specific factors, including but not limited to premium/cost, exercise price and expiration. Nuveen Asset Management typically seeks to construct a portfolio of call options that is diversified across multiple strike prices and expiration
dates based on current market expectations.
The
Funds strategy of using the Nasdaq 100 Index as the relevant benchmark for the Equity Portfolio and Option Strategy is not considered fundamental and can be changed without a vote of the common shareholders. However, any use of an alternative
index must be approved by the Funds Board and is subject to 60 days written notice to common shareholders.
As a fundamental policy, the Fund may not invest more than 25% of its total assets in securities of issuers in any one industry, except
that if 25% or more of the securities in the Nasdaq 100 Index are issued by companies in one industry, the Fund would concentrate in that industry unless the Fund would need to avoid concentration in order to implement its investment strategy as it
relates to avoiding the adverse tax treatment associated with straddle positions, as described herein. See Investment Restrictions in the SAI. As of the date of this Prospectus, the Index was not concentrated in any industry. However, a
substantial portion of the securities represented in the Nasdaq 100 Index are in the technology sector. As a result, the Fund currently invests a substantial portion of its assets in technology companies.
The Fund may enter into certain derivatives instruments in
pursuit of its investment objective. Such instruments include futures contracts, forward contracts and swap agreements and other derivative instruments consistent with the Funds investment objective and policies. These types of strategies may
generate taxable income. See The Funds InvestmentsPortfolio Composition and Other InformationDerivatives. For purposes of determining compliance with the Funds investment policies, the Fund will value eligible
derivatives at market value or fair value instead of notional value.
The Fund may, from time to time, manage its cash by investing a part of its assets in short-term, high quality fixed-income securities. Under normal circumstances, the Fund will invest no more than 10% of
its Managed Assets in such securities.
The Fund
may invest in illiquid securities without limit.
The Fund may invest up to 20% of its Managed Assets in securities of non-U.S. issuers that are
U.S. dollar denominated, which may include securities of issuers located, or conducting their business, in emerging market countries.
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Consistent with the Funds investment objective and policies, the Fund may invest in
securities of other investment companies such as, among others, ETFs, subject to limitations imposed by the 1940 Act and exemptive orders issued by the SEC.
During temporary defensive periods, the Fund may deviate from its investment objective and invest all or a portion of its assets in
investment grade debt securities, including obligations issued or guaranteed by the U.S. government, its agencies and instrumentalities. The Fund also may borrow up to 5% of its total assets for temporary purposes.
The Fund cannot change its investment objective without
the approval of the holders of a majority of the outstanding Common Shares and, if applicable, Preferred Shares voting together as a single class, and of the holders of a majority of the outstanding Preferred Shares voting as
a separate class. When used with respect to particular shares of the Fund, a majority of the outstanding shares under the 1940 Act means (i) 67% or more of the shares present at a meeting, if the holders of more than 50% of the
shares are present or represented by proxy or (ii) more than 50% of the shares, whichever is less. See Description of SharesPreferred SharesVoting Rights and the SAI under Description of SharesPreferred
SharesVoting Rights for additional information with respect to the voting rights of holders of Preferred shares. See also Management of the Fund.
Fund Management
Nuveen Fund Advisors is the Funds investment adviser
and is responsible for the Funds overall investment strategy and its implementation.
Nuveen Fund Advisors will oversee Nuveen Asset Management in its management of the Funds portfolio. This oversight will include ongoing evaluation of Nuveen Asset Managements investment
performance, portfolio allocations, quality of investment process and personnel, compliance with Fund and regulatory guidelines, trade allocation and execution and other factors.
Nuveen Asset Management will invest the Funds Managed
Assets in the Equity Portfolio that seeks to substantially replicate price movements of the Nasdaq 100 Index. Nuveen Asset Management also will manage the Funds Option Strategy. The Funds Option Strategy will consist of selling call
options covering between 35% and 75% of the value of the Funds equity portfolio, with a long-run target of 55%, in seeking to provide attractive total return with less volatility than the Nasdaq 100 Index. By selling call options on less than
the full value of the Equity Portfolio, the Fund retains any potential capital appreciation or depreciation on the portion of the Equity Portfolio not effectively subject to the call options. In addition, as a secondary emphasis, the Funds
Option Strategy seeks additional return opportunities by capitalizing on inefficiencies in the options market through a variety of means including the use of call spreads and selling put options.
Investment Philosophy
Investment Philosophy. Nuveen
Asset Management believes an option strategy that combines selling call options and holding an equity portfolio may provide attractive total return with less volatility than holding a standalone equity portfolio. An actively managed option strategy
may be an effective risk management tool that results in an improved reward-to-risk ratio, greater return consistency and the potential for greater preservation of portfolio value in adverse markets.
Nuveen Asset Management believes index options may achieve
better tax and transactional efficiency than options on individual stocks because index options are cash-settled with known exercise dates. Additionally, markets for index options are deeper, more liquid and result in lower transaction costs.
Nuveen Asset Management further believes that its
integrated strategy of selling index call options (supported by an underlying equity portfolio) should generally provide attractive total return with less volatility
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than simply owning the underlying equity market index under three different stock market scenarios: (i) moderately rising markets; (ii) stable or flat markets; (iii) moderately down trending
markets. In strongly rising equity markets the option strategy would generally be expected to underperform the underlying index.
Investment Process.
Option Strategy. Nuveen Asset Management employs a dynamic option strategy consisting of writing
(selling) index call options, call options on custom baskets of securities, and covered call options on individual securities. The Fund targets an overwrite level of 55% of the value of its Equity Portfolio over time, and the overwrite level will
vary between 35% to 75% of the value of the Equity Portfolio based on the portfolio managers assessment of market conditions. Nuveen Asset Managements option strategy is supported by investments in a portfolio of stocks that seek to
substantially replicate the price movements of the Nasdaq 100 Index.
Nuveen Asset Management actively manages its option positions, purchasing back the Nasdaq 100 Index call options and/or selling additional contracts based on relative value and risk/return analysis. To
determine which Nasdaq 100 Index options to utilize, Nuveen Asset Management considers market factors, such as current market levels and volatility, and option-specific factors (including but not limited to premium/cost, exercise price and
expiration). Nuveen Asset Management seeks to construct a portfolio of index call options that is diversified across multiple strike prices and expiration dates.
Equity Portfolio. Nuveen Asset
Management uses a multi-factor quantitative model to construct the Equity Portfolio. The model evaluates approximately 9,000 domestic and non-U.S. stocks to construct a portfolio of 200 to 400 stocks that meets criteria and constraints established
by Nuveen Asset Management. Portfolio parameters may include, but are not limited to: tracking error of the portfolio to the Nasdaq 100 Index, overlap of holdings with the Nasdaq 100 Index and dividend yield. In addition, Nuveen Asset Management
will consider the tax consequences of certain transactions within the Equity Portfolio and intends to manage the portfolio in a tax-efficient manner by taking, for example, capital losses when possible to offset realized capital gains. Nuveen Asset
Management will rebalance and adjust the Equity Portfolio as necessary for tracking and tax management purposes.
Portfolio Composition and Other Information
The Funds portfolio will be composed principally of the following investments.
Common Stocks. The Fund expects to invest in a portfolio of individual common stocks designed to replicate
the risk and return profile, and thereby substantially replicate price movements of the Nasdaq 100 Index. The Fund may also invest in other investment companies, including ETFs, that provide similar exposure to individual common stocks consistent
with the Funds investment objective. Common stock generally represents an equity ownership interest in an issuer. Although common stocks have historically generated higher average total returns than fixed-income securities over the long term,
common stocks also have experienced significantly more volatility in those returns and may under-perform relative to fixed-income securities during certain periods. An adverse event, such as an unfavorable earnings report, may depress the value of a
particular common stock held by the Fund. Also, prices of common stocks are sensitive to general movements in the stock market and a drop in the stock market may depress the price of common stocks to which the Fund has exposure. Common stock prices
fluctuate for several reasons including changes in investors perceptions of the financial condition of an issuer or the general condition of the relevant stock market, or the occurrence of political or economic events which effect the issuers.
In addition, common stock prices may be particularly sensitive to rising interest rates, which increases borrowing costs and the costs of capital.
Option Contracts. An option contract is a contract that gives the holder of the option, in return for a
premium, the right to buy from (in the case of a call) or sell to (in the case of a put) the writer of the option the
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reference instrument underlying the option (or the cash value of the index) at a specified exercise price at any time during the term of the option. The writer of an option on a security has the
obligation upon exercise of the option to deliver the reference instrument (or the cash) upon payment of the exercise price or to pay the exercise price upon delivery of the reference instrument (or the cash). Upon exercise of an index option, the
writer of an option on an index is obligated to pay the difference between the cash value of the index and the exercise price multiplied by the specified multiplier for the index option. Options may be covered, meaning that the party
required to deliver the reference instrument if the option is exercised owns that instrument (or has set aside sufficient assets to meet its obligation to deliver the instrument). Options may be listed on an exchange or traded in the
over-the-counter (OTC) market. In general, exchange-traded options have standardized exercise prices and expiration dates and may require the parties to post margin against their obligations, and the performance of the parties
obligations in connection with such options is guaranteed by the exchange or a related clearing corporation. OTC options have more flexible terms negotiated between the buyer and the seller but are subject to counterparty risk. The ability of
the Fund to transact business with any one or any number of counterparties, the lack of any independent evaluation of the counterparties or their financial capabilities, and the absence of a regulated market to facilitate settlement, may increase
the potential for losses to the Fund. OTC options also involve greater liquidity risk. This risk may be increased in times of financial stress, if the trading market for OTC derivative contracts becomes limited.
Call Options. In carrying out
its Option Strategy, the Fund may write index call options on the Nasdaq 100 Index and other broad-based indices and may, if Nuveen Asset Management deems conditions appropriate, write call options on a variety of other equity market indices. As the
seller of an index call option, the Fund receives a premium from the purchaser. The purchaser of the index call option has the right to any appreciation in the value of the index over the exercise price upon the exercise of the call option or the
expiration date. If, at expiration, the purchaser exercises the index option sold by the Fund, the Fund will pay the purchaser the difference between the cash value of the index and the exercise price of the index option. The premium, the exercise
price and the market value of the index determine the gain or loss realized by the Fund as the seller of the index call option.
The Fund may also write call options on custom baskets of securities. A custom basket call option is an OTC option with a counterparty
whose value is linked to the market value of a portfolio of underlying securities and is collateralized by a portion of the Funds equity portfolio. In designing the custom basket call options, Nuveen Asset Management will primarily select
assets not held by the Fund. In order to minimize the difference between the returns of the underlying securities in the custom basket (commonly referred to as a tracking error), Nuveen Asset Management will use optimization calculations when
selecting the individual securities for inclusion in the custom basket.
The Fund may also write single name call options on individual stocks. With respect to call options written on individual securities, the Fund will not write naked or uncovered call options. A
call option written by the Fund on an individual security is covered if the Fund owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration. The Fund, in
effect, sells the potential appreciation in the value of the security subject to the call option in exchange for the premium. The Fund may execute a closing purchase transaction with respect to an option it has sold and sell another option (with
either a different exercise price or expiration date or both). The Funds objective in entering into such a closing transaction will be to optimize net index option premiums. The cost of a closing transaction may reduce the net option premiums
realized from the sale of the option. This reduction could be offset, at least in part, by appreciation in the value of the underlying security held in the Funds equity portfolio, and by the opportunity to realize additional premium income
from selling a new option.
Call
Spreads. A call spread involves the sale of a call option and the corresponding purchase of a call option on the same underlying instrument with the same expiration date but with different exercise prices. The call spreads
utilized by the Fund generally will generate less net option premium than writing calls, but limit the overall risk of the strategy by capping the Funds liability from the written call while simultaneously allowing for additional upside above
the strike price of the purchased call.
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Put Options. A put option gives the purchaser of the option
the right (but not the obligation) to sell, and the writer of the option the obligation to buy, the underlying instrument (or the cash value of the index) at a stated price (the exercise price) at any time before the option expires. The
purchase price for a put option is the premium paid by the purchaser for the right to sell. When the Fund sells a put option on an underlying instrument and the underlying instrument decreases in value, the purchaser of the put option
has the right to exercise the option, obligating the Fund to purchase the underlying instrument at an exercise price that is higher than the prevailing market price. The Fund collects option premium income when it sells the put option. If the
underlying instrument increases in value, the purchaser of the put option is unlikely to exercise the option since the prevailing market price will be higher than the exercise price. Accordingly, the Fund retains all put premium income collected
during market advances.
Other
Investments. The Fund may invest in other securities as non-principal investments as described below:
U.S. Government Securities. U.S. Government securities include (1) U.S. Treasury obligations, which
differ in their interest rates, maturities and times of issuance: U.S. Treasury bills (maturities of one year or less), U.S. Treasury notes (maturities of one year to ten years) and U.S. Treasury bonds (generally maturities of greater than ten
years) and (2) obligations issued or guaranteed by U.S. Government agencies and instrumentalities that are supported by any of the following: (i) the full faith and credit of the U.S. Treasury, (ii) the right of the issuer to borrow
an amount limited to a specific line of credit from the U.S. Treasury, (iii) discretionary authority of the U.S. Government to purchase certain obligations of the U.S. Government agency or instrumentality or (iv) the credit of the agency
or instrumentality. The Fund also may invest in any other security or agreement collateralized or otherwise secured by U.S. Government securities. Agencies and instrumentalities of the U.S. Government include but are not limited to: Federal Land
Banks, Federal Financing Banks, Banks for Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Government National Mortgage
Association, Student Loan Marketing Association, U.S. Postal Service, Small Business Administration, Tennessee Valley Authority and any other enterprise established or sponsored by the U.S. Government. Because the U.S. Government generally is not
obligated to provide support to its instrumentalities, the Fund will invest in obligations issued by these instrumentalities only if Nuveen Asset Management determines that the credit risk with respect to such obligations is minimal.
Commercial Paper. Commercial
paper represents short-term unsecured promissory notes issued in bearer form by corporations such as banks or bank holding companies and finance companies.
Repurchase Agreements. The Fund may enter into repurchase agreements (the purchase of a security coupled
with an agreement to resell that security at a higher price) with respect to its permitted investments. The Funds repurchase agreements will provide that the value of the collateral underlying the repurchase agreement will always be at least
equal to the repurchase price, including any accrued interest earned on the agreement, and will be marked-to-market daily.
Securities Issued by Non-U.S. Issuers. The Fund may invest up to 20% of its Managed Assets in securities of
non-U.S. issuers that are U.S. dollar-denominated, which may include securities of issuers located, or conducting their business, in emerging market countries.
Illiquid Securities. The Fund may invest in securities and other instruments that, at the time of
investment, are illiquid (i.e., securities that are not readily marketable). For this purpose, illiquid securities may include, but are not limited to, restricted securities (securities the disposition of which is restricted under the federal
securities laws), securities that may only be resold pursuant to Rule 144A under the 1933 Act, that are deemed to be illiquid, and certain repurchase agreements. The Board or its delegate has the ultimate authority to determine which securities are
liquid or illiquid. The Board has delegated to Nuveen Fund Advisors and Nuveen Asset Management the day-to-day determination of the illiquidity of any security held by the Fund, although it has retained oversight and ultimate responsibility for such
determinations. No definitive liquidity criteria are used.
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The Board has directed Nuveen Fund Advisors and Nuveen Asset Management when making liquidity determinations to look for such factors as (i) the nature of the market for a security
(including the institutional private resale market; the frequency of trades and quotes for the security; the number of dealers willing to purchase or sell the security; the amount of time normally needed to dispose of the security; and the method of
soliciting offers and the mechanics of transfer), (ii) the terms of certain securities or other instruments allowing for the disposition to a third party or the issuer thereof (e.g., certain repurchase obligations and demand
instruments), and (iii) other relevant factors.
Restricted securities may be sold only in privately negotiated transactions or in a public offering with respect to which a registration statement is in effect under the 1933 Act. Where registration is
required, the Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than that which prevailed when it decided to sell. Illiquid securities will be priced at fair value as
determined in good faith by the Board or its delegate.
When-Issued and Delayed Delivery Transactions. As a non-principal investment, the Fund may buy and sell securities on a when-issued or delayed delivery basis, making payment
or taking delivery at a later date, normally within 15 to 45 days of the trade date. This type of transaction may involve an element of risk because no interest accrues on the securities prior to settlement and, because securities are subject to
market fluctuations, the value of the securities at time of delivery may be less (or more) than their cost. A separate account of the Fund will be established with its custodian consisting of cash equivalents or liquid securities having a market
value at all times at least equal to the amount of any delayed payment commitment.
Debt Securities; Defensive Position. Under normal circumstances, the Fund may invest up to 10% of its Managed Assets in short-term high quality fixed income instruments.
During temporary defensive periods, the Fund may deviate from its investment objective and invest all or any portion of its assets in investment grade debt securities, including obligations issued or guaranteed by the U.S. government, its agencies
and instrumentalities. In such a case, the Fund may not pursue or achieve its investment objective.
Other Investment Companies. The Fund may invest in securities of other investment companies such as, among others, ETFs, subject to limitations imposed by the 1940 Act and
exemptive orders issued by the SEC. The Fund generally expects that it may invest in other investment companies during periods when it has large amounts of uninvested cash, such as during periods when there is a shortage of attractive
securities of the types in which the Fund may invest directly available in the market. As an investor in an investment company, the Fund will bear its ratable share of that investment companys expenses, and would remain subject to payment of
the Funds advisory and administrative fees with respect to assets so invested. Common Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. Nuveen Asset Management will
take expenses into account when evaluating the investment merits of an investment in the investment company relative to available securities of the types in which the Fund may invest directly. In addition, the securities of other investment
companies may be leveraged and therefore will be subject to leverage risks.
Derivatives. The Fund may invest in certain derivative instruments in pursuit of its investment objective. Such instruments include futures contracts, forward
contracts and swap agreements and other derivative instruments consistent with its investment objective and policies. Credit default swaps may require initial premium (discount) payments as well as periodic payments (receipts) related to the
interest leg of the swap or to the default of a reference obligation. If the Fund is a seller of a contract, the Fund would be required to pay the par (or other agreed upon) value of a referenced debt obligation to the counterparty in the event of a
default or other credit event by the reference issuer, such as a U.S. or foreign corporate issuer, with respect to such debt obligations. In return, the Fund would receive from the counterparty a periodic stream of payments over the term of the
contract provided that no event of default has occurred. If no default occurs, the Fund would keep the
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stream of payments and would have no payment obligations. As the seller, the Fund would be subject to investment exposure on the notional amount of the swap. If the Fund is a buyer of a contract,
the Fund would have the right to deliver a referenced debt obligation and receive the par (or other agreed-upon) value of such debt obligation from the counterparty in the event of a default or other credit event (such as a credit downgrade) by the
reference issuer, such as a U.S. or foreign corporation, with respect to its debt obligations. In return, the Fund would pay the counterparty a periodic stream of payments over the term of the contract provided that no event of default has occurred.
If no default occurs, the counterparty would keep the stream of payments and would have no further obligations to the Fund. Interest rate swaps involve the exchange by the Fund with a counterparty of their respective commitments to pay or receive
interest, such as an exchange of fixed-rate payments for floating rate payments. The Fund will usually enter into interest rate swaps on a net basis; that is, the two payment streams will be netted out in a cash settlement on the payment date or
dates specified in the instrument, with the Fund receiving or paying, as the case may be, only the net amount of the two payments.
See Hedging Strategies and Other Uses of Derivatives in the SAI and Segregation of Assets below.
The requirements for qualification as a regulated investment
company (a RIC) under the Code may also limit the extent to which the Fund may invest in futures, options on futures and swaps.
There is no assurance that these derivative strategies will be available at any time or that Nuveen Fund Advisors and Nuveen Asset
Management will determine to use them for the Fund or, if used, that the strategies will be successful.
Swap Transactions. The Fund may enter into total return, interest rate and credit default swap agreements
and interest rate caps, floors and collars. The Fund may also enter into options on the foregoing types of swap agreements (swap options).
The Fund may enter into swap transactions for any purpose consistent with its investment objective and strategies, such as for the purpose
of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, as a duration management technique, to attempt to reduce risk arising
from the ownership of a particular instrument, or to gain exposure to certain sectors or markets in the most economical way possible.
Swap agreements are two party contracts entered into primarily by institutional investors for a specified period of time. In a standard
swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on a particular predetermined asset, reference rate or index. The gross returns to be exchanged or swapped between the parties are
generally calculated with respect to a notional amount, e.g., the return on or increase in value of a particular dollar amount invested at a particular interest rate or in a basket of securities representing a particular index. The
notional amount of the swap agreement generally is only used as a basis upon which to calculate the obligations that the parties to the swap agreement have agreed to exchange. See Segregation of Assets below.
Interest Rate Swaps, Caps, Collars and
Floors. Interest rate swaps are bilateral contracts in which each party agrees to make periodic payments to the other party based on different referenced interest rates (e.g., a fixed rate and a floating rate)
applied to a specified notional amount. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount
from the party selling such interest rate floor. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index rises above a predetermined interest rate, to receive payments of interest on a notional principal
amount from the party selling such interest rate cap. Interest rate collars involve selling a cap and purchasing a floor or vice versa to protect the Fund against interest rate movements exceeding given minimum or maximum levels.
29
The use of interest rate transactions, such as interest rate swaps and caps, is a highly
specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. Depending on the state of interest rates in general, the Funds use of interest rate swaps or caps
could enhance or harm the overall performance of the Funds Common Shares. To the extent there is a decline in interest rates, the value of the interest rate swap or cap could decline, and could result in a decline in the NAV of the Common
Shares. In addition, if short-term interest rates are lower than the Funds fixed rate of payment on the interest rate swap, the swap will reduce Common Share net earnings. If, on the other hand, short-term interest rates are higher than the
fixed rate of payment on the interest rate swap, the swap will enhance Common Share net earnings. Buying interest rate caps could enhance the performance of the Common Shares by providing a maximum leverage expense. Buying interest rate caps could
also decrease the net earnings of the Common Shares in the event that the premium paid by the Fund to the counterparty exceeds the additional amount such Fund would have been required to pay had it not entered into the cap agreement.
Total Return Swaps. In a
total return swap, one party agrees to pay the other the total return of a defined underlying asset during a specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other
underlying assets. A total return swap may be applied to any underlying asset but is most commonly used with equity indices, single stocks, bonds and defined baskets of loans and mortgages. The Fund might enter into a total return swap involving an
underlying index or basket of securities to create exposure to a potentially widely diversified range of securities in a single trade. An index total return swap can be used by the portfolio managers to assume risk, without the complications of
buying the component securities from what may not always be the most liquid of markets. In connection with the Funds position in a swap contract, the Fund will segregate liquid assets or will otherwise cover its position in accordance with
applicable SEC requirements. See Segregation of Assets below.
Credit Default Swaps. A credit default swap is a bilateral contract that enables an investor to buy or sell protection against a defined-issuer credit event. The Fund may
enter into credit default swap agreements either as a buyer or a seller. The Fund may buy protection to attempt to mitigate the risk of default or credit quality deterioration in an individual security or a segment of the fixed income securities
market to which it has exposure, or to take a short position in individual bonds or market segments which it does not own. The Fund may sell protection in an attempt to gain exposure to the credit quality characteristics of particular
bonds or market segments without investing directly in those bonds or market segments. As the buyer of protection in a credit default swap, the Fund would pay a premium (by means of an upfront payment or a periodic stream of payments over the term
of the agreement) in return for the right to deliver a referenced bond or group of bonds to the protection seller and receive the full notional or par value (or other agreed upon value) upon a default (or similar event) by the issuer(s) of the
underlying referenced obligation(s). If no default occurs, the protection seller would keep the stream of payments and would have no further obligation to the Fund. Thus, the cost to the Fund would be the premium paid with respect to the agreement.
If a credit event occurs, however, the Fund may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity that may have little or no value. The Fund bears the risk
that the protection seller may fail to satisfy its payment obligations.
If the Fund is a seller of protection in a credit default swap and no credit event occurs, the Fund would generally receive an up-front payment or a periodic stream of payments over the term of
the swap. If a credit event occurs, however, generally the Fund would have to pay the buyer the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity that may have little or no value.
As the protection seller, the Fund effectively adds the economic effect of leverage to its portfolio because, in addition to being subject to investment exposure on its total net assets, the Fund is subject to investment exposure on the notional
amount of the swap. Thus, the Fund bears the same risk as it would by buying the reference obligations directly, plus the additional risks related to obtaining investment exposure through a derivative instrument discussed below under
Risks Associated with Swap Transactions.
30
Swap Options. A swap option is a contract that gives a
counterparty the right (but not the obligation), in return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement at some designated future time on specified terms.
A cash-settled option on a swap gives the purchaser the right, in return for the premium paid, to receive an amount of cash equal to the value of the underlying swap as of the exercise date. The Fund may write (sell) and purchase put and call swap
options. Depending on the terms of the particular option agreement, the Fund generally would incur a greater degree of risk when it writes a swap option than when it purchases a swap option. When the Fund purchases a swap option, it risks losing
only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when the Fund writes a swap option, upon exercise of the option the Fund would become obligated according to the terms of the underlying
agreement.
Risks Associated with Swap
Transactions. The use of swap transactions is a highly specialized activity which involves strategies and risks different from those associated with ordinary portfolio security transactions. If Nuveen Fund Advisors and/or
Nuveen Asset Management is incorrect in its forecasts of default risks, market spreads or other applicable factors or events, the investment performance of the Fund would diminish compared with what it would have been if these techniques were not
used. As the protection seller in a credit default swap, the Fund effectively adds economic leverage to its portfolio because, in addition to being subject to investment exposure on its total net assets, the Fund is subject to investment exposure on
the notional amount of the swap. The Fund generally may only close out a swap, cap, floor, collar or other two-party contract with its particular counterparty, and generally may only transfer a position with the consent of that
counterparty. In addition, the price at which the Fund may close out such a two party contract may not correlate with the price change in the underlying reference asset. If the counterparty defaults, the Fund will have contractual remedies, but
there can be no assurance that the counterparty will be able to meet its contractual obligations or that the Fund will succeed in enforcing its rights. It also is possible that developments in the derivatives market, including potential government
regulation, could adversely affect the Funds ability to terminate existing swap or other agreements or to realize amounts to be received under such agreements.
Futures and Options on Futures
Generally. A futures contract is an agreement between two parties to buy and sell a security, index or interest rate (each a financial instrument) for a set price on a future date. Certain futures contracts,
such as futures contracts relating to individual securities, call for making or taking delivery of the underlying financial instrument. However, these contracts generally are closed out before delivery by entering into an offsetting purchase or sale
of a matching futures contract (same exchange, underlying financial instrument, and delivery month). Other futures contracts, such as futures contracts on interest rates and indices, do not call for making or taking delivery of the underlying
financial instrument, but rather are agreements pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the financial instrument at the close of the last trading day of the
contract and the price at which the contract was originally written. These contracts also may be settled by entering into an offsetting futures contract. Unlike when the Fund purchases or sells a security, no price is paid or received by the Fund
upon the purchase or sale of a futures contract. Initially, the Fund will be required to deposit with the futures broker, known as a FCM, an amount of cash or securities equal to a varying specified percentage of the contract amount. This amount is
known as initial margin. The margin deposit is intended to ensure completion of the contract. Minimum initial margin requirements are established by the futures exchanges and may be revised. In addition, FCMs may establish margin deposit
requirements that are higher than the exchange minimums. Cash held in the margin account generally is not income producing. However, coupon bearing securities, such as Treasury securities, held in margin accounts generally will earn income.
Subsequent payments to and from the FCM, called variation margin, will be made on a daily basis as the price of the underlying financial instrument fluctuates, making the futures contract more or less valuable, a process known as marking the
contract to market. Changes in variation margin are recorded by the Fund as unrealized gains or losses. At any time prior to expiration of the futures contract, the Fund may elect to close the position by taking an opposite position that will
operate to terminate its position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund, and the Fund realizes a gain or loss. In the event of the
bankruptcy or insolvency of an FCM that holds margin on behalf of the Fund, the Fund may be entitled to the return of margin owed to it only in
31
proportion to the amount received by the FCMs other customers, potentially resulting in losses to the Fund. Futures transactions also involve brokerage costs and the Fund may have to
segregate additional liquid assets in accordance with applicable SEC requirements. See Segregation of Assets below.
A futures option gives the purchaser of such option the right, in return for the premium paid, to assume a long position (call) or short
position (put) in a futures contract at a specified exercise price at any time during the period of the option. Upon exercise of a call option, the purchaser acquires a long position in the futures contract and the writer is assigned the opposite
short position. Upon the exercise of a put option, the opposite is true.
Limitations on the Use of Futures, Futures Options and Swaps. If futures are used for hedging purposes, there can be no guarantee that there will be a correlation between
price movements in the futures contract and in the underlying financial instruments that are being hedged. This could result from differences between the financial instruments being hedged and the financial instruments underlying the standard
contracts available for trading (e.g., differences in interest rate levels, maturities and the creditworthiness of issuers) among other factors. In addition, price movements of futures contracts may not correlate perfectly with price
movements of the financial instruments underlying the futures contracts due to certain market distortions.
Successful use of futures by the Fund also is subject to Nuveen Asset Managements ability to predict correctly movements in the
direction of the relevant market. For example, if the Fund uses futures to hedge against the possibility of a decline in the market value of securities held in its portfolio and the prices of such securities increase instead, the Fund will lose part
or all of the benefit of the increased value of the securities which it has hedged because it will have offsetting losses in its futures positions. Furthermore, if in such circumstances the Fund has insufficient cash, it may have to sell securities
to meet daily variation margin requirements. The Fund may have to sell such securities at a time when it may be disadvantageous to do so.
There can be no assurance that a liquid market will exist at a time when the Fund seeks to close out a derivatives or futures or a futures
option position, and the Fund would remain obligated to meet margin requirements until the position is closed. Futures exchanges may limit the amount of fluctuation permitted in certain futures contract prices during a single trading day. The daily
limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous days settlement price at the end of the current trading session. Once the daily limit has been reached in a futures contract
subject to the limit, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses because the limit may work to
prevent the liquidation of unfavorable positions. For example, futures prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses.
Segregation of Assets. As a closed-end investment company registered with the SEC, the Fund is subject to the federal securities laws, including the 1940 Act, the rules
thereunder, and various interpretive positions of the SEC and its staff. In accordance with these laws, rules and positions, the Fund must maintain liquid assets (often referred to as asset segregation), or engage in other SEC
staff-approved measures, to cover open positions with respect to certain kinds of derivative instruments and financial agreements (such as reverse repurchase agreements). Generally, the Fund will maintain an amount of liquid assets with
its custodian in an amount at least equal to the current amount of its obligations, including the value of unpaid past and future payment obligations, under derivative instruments and financial agreements, in accordance with SEC guidance. However,
the Fund also may cover certain obligations by other means such as through ownership of the underlying security or financial instrument. The Fund also may enter into offsetting transactions with respect to certain obligations consistent
with existing guidance from the SEC and its staff so that its combined position, coupled with any liquid assets maintained by its custodian, equals its net outstanding obligation in related derivatives or financial agreements. In the case of long
positions in financial futures contracts that are not contractually required to cash settle, the Fund may set aside or earmark liquid assets or enter into offsetting positions equal to such contracts full notional value, less any margin on
deposit for liquid assets, while the positions are open. In the case of short positions in financial
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futures contracts that are not contractually required to cash settle, the Fund may set aside or earmark liquid assets or enter into offsetting positions equal to such contracts current
market value, less any margin on deposit for liquid assets, while the positions are open. With respect to financial futures contracts that are contractually required to cash settle, however, the Fund is permitted to set aside liquid assets or enter
into an offsetting position in an amount equal to the Funds daily marked-to-market net obligations (i.e., the Funds daily net liability) under the contracts, if any, rather than such contracts full notional value. If the Fund
writes credit default swaps, it will segregate the full notional amount of the payment obligation under the credit default swap that must be paid upon the occurrence of a credit event.
The Fund reserves the right to modify its policies in the future to comply with any changes in the positions
from time to time articulated by the SEC or its staff, such as the SECs proposed rules governing the use of derivatives by registered investment companies, regarding asset segregation.
To the extent the Fund uses its assets to cover its obligations as required by the 1940 Act, the rules
thereunder, and applicable positions of the SEC and its staff, such assets may not be used for other operational purposes. Nuveen Fund Advisors and/or Nuveen Asset Management will monitor the Funds use of derivatives and will take action as
necessary for the purpose of complying with the asset segregation policy stated above. Such actions may include the sale of the Funds portfolio investments.
Inter-Fund Borrowing and
Lending. The SEC has granted an exemptive order permitting registered open-end and closed-end Nuveen funds, including the Fund, to participate in an inter-fund lending facility whereby the Nuveen funds may directly lend to
and borrow money from each other for temporary purposes (e.g., to satisfy redemption requests or when a sale of securities fails, resulting in an unanticipated cash shortfall) (the Inter-Fund Program). The Fund will
participate only as a lender, and not as a borrower, in the Inter-Fund Program. The Inter-Fund Program is subject to a number of conditions, including, among other things, the requirements that (1) no fund may borrow or lend money through the
Inter-Fund Program unless it receives a more favorable interest rate than is typically available from a bank or other financial institution for a comparable transaction; (2) no fund may borrow on an unsecured basis through the Inter-Fund
Program unless the funds outstanding borrowings from all sources immediately after the inter-fund borrowing total 10% or less of its total assets; provided that if the borrowing fund has a secured borrowing outstanding from any other lender,
including but not limited to another fund, the inter-fund loan must be secured on at least an equal priority basis with at least an equivalent percentage of collateral to loan value; (3) if a funds total outstanding borrowings immediately
after an inter-fund borrowing would be greater than 10% of its total assets, the fund may borrow through the inter-fund loan on a secured basis only; (4) no fund may lend money if the loan would cause its aggregate outstanding loans through the
Inter-Fund Program to exceed 15% of its net assets at the time of the loan; (5) a funds inter-fund loans to any one fund shall not exceed 5% of the lending funds net assets; (6) the duration of inter-fund loans will be limited to the
time required to receive payment for securities sold, but in no event more than seven days; and (7) each inter-fund loan may be called on one business days notice by a lending fund and may be repaid on any day by a borrowing fund. In addition,
a Nuveen fund may participate in the Inter-Fund Program only if and to the extent that such participation is consistent with the funds investment objective and investment policies. The Board is responsible for overseeing the Inter-Fund
Program.
The limitations detailed above and the
other conditions of the SEC exemptive order permitting the Inter-Fund Program are designed to minimize the risks associated with Inter-Fund Program for both the lending fund and the borrowing fund. However, no borrowing or lending activity is
without risk. When a fund borrows money from another fund, there is a risk that the loan could be called on one days notice or not renewed, in which case the borrowing fund may have to borrow from a bank at a higher rate or take other actions
to payoff such loan if an inter-fund loan is not available from another fund. When a fund lends money to another fund, any delay in repayment to the lending fund could result in a lost investment opportunity or additional borrowing costs.
During the fiscal year ended December 31,
2019, the Fund did not enter into any inter-fund loan activity.
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Portfolio Turnover. The Fund may engage in portfolio
trading when considered appropriate, but short-term trading in the Funds Equity Portfolio will not be used as the primary means of achieving the Funds investment objective. Although the Fund cannot accurately predict its annual portfolio
turnover rate, it is not expected to exceed 50% under normal circumstances. For the fiscal year ended December 31, 2019, the Funds portfolio turnover rate was 11%. However, there are no limits on the rate of portfolio turnover, and investments
may be sold without regard to length of time held when, in Nuveen Asset Managements opinion, investment considerations warrant such action. A higher portfolio turnover rate would result in correspondingly greater brokerage commissions and
other transactional expenses that are borne by the Fund. Although these commissions and expenses are not reflected in the Funds Total Annual Expenses disclosed in this Prospectus, they will be reflected in the Funds total
return. In addition, high portfolio turnover may result in the realization of net short-term capital gains by the Fund, which, when distributed to shareholders, will be taxable as ordinary income. See Tax Matters.
USE OF LEVERAGE
As a non-fundamental policy, the Fund will not leverage its
capital structure by issuing senior securities such as preferred shares or debt instruments. However, the Fund may borrow for temporary or emergency purposes and may enter into certain derivatives transactions that have the economic effect of
leverage by creating additional investment exposure.
RISKS
The Fund is a non-diversified, closed-end management investment company designed primarily as a long-term investment and not as a trading
vehicle. The Fund is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance that the Fund will achieve its investment objective. Your Common Shares at any point in time may
be worth less than your original investment, even after taking into account the reinvestment of Fund dividends and distributions.
The following risks are principal risks associated with an investment in the Fund.
Portfolio Holdings Risks
Option Strategy Risks
Call Option Risk. As the
writer of a call option, the Fund foregoes, during the options life, the opportunity to profit from increases in the market value of the instrument underlying the call option above the sum of the premium and the strike price of the option, but
will retain the risk of loss should the market value of the instrument underlying the call option decline. The purchaser of the call option has the right to any appreciation in the value of the underlying instrument over the exercise price upon the
exercise of the call option or the expiration date. As the Fund increases the option overlay percentage, its ability to benefit from capital appreciation becomes more limited and the risk of NAV erosion increases. If the Fund experiences NAV
erosion, which itself may have a negative effect on the market price of the Funds shares, the Fund will have a reduced asset base over which to write call options, which may eventually lead to reduced distributions to shareholders.
In addition, because the exercise of index options is settled
in cash, sellers of index call options, such as the Fund, cannot provide in advance for their potential settlement obligations by acquiring and holding the underlying securities. The Fund bears a risk that the value of the securities held by the
Fund will vary from the value of the Nasdaq 100 Index and relative to the written index call option positions. Accordingly, the Fund may incur losses on the index call options that it has sold that exceed gains on the Funds equity
portfolio. The value of index options written by the Fund, which will be priced daily, will be affected by changes in the value of and dividend rates of the underlying common stocks in the index, changes in the actual or perceived volatility of the
stock market and the remaining time to the options expiration. The value of the index options also may be adversely affected if the market for the index options becomes less liquid or smaller.
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Options may be listed on an exchange or traded in the OTC market. In general, exchange
traded options have standardized exercise prices and expiration dates and may require the parties to post margin against their obligations, and the performance of the parties obligations in connection with such options is guaranteed by the
exchange or a related clearing corporation. OTC options have more flexible terms negotiated between the buyer and the seller but are subject to counterparty risk. The ability of the Fund to transact business with any one or any number of
counterparties, the lack of any independent evaluation of the counterparties or their financial capabilities, and the absence of a regulated market to facilitate settlement, may increase the potential for losses to the Fund. OTC options also involve
greater liquidity risk. This risk may be increased in times of financial stress, if the trading market for OTC derivative contracts becomes limited.
Call Spreads Risk. The Fund may enter into call spreads. A call spread involves the sale of a call option
and the corresponding purchase of a call option on the same underlying instrument with the same expiration date but with different strike prices. The Fund may not be able to enter into (or close out of) these transactions, at times or in the
quantities desired by Nuveen Fund Advisors. The Fund also may not be able to enter into (or close out of) these transactions because of, among other things, the lack of market participants that are willing to take contrary positions to that of the
Fund.
Put Option
Risk. By writing put options, the Fund takes on the risk of declines in the value of the underlying instrument, including the possibility of a loss up to the entire strike price of each option it sells but without the
corresponding opportunity to benefit from potential increases in the value of the underlying instrument. When the Fund writes a put option, it assumes the risk that it must purchase the underlying instrument at a strike price that may be higher than
the market price of the instrument. If there is a broad market decline and the Fund is not able to close out its written put options, it may result in substantial losses to the Fund. The Fund will receive a premium from writing options, but the
premium received may not be sufficient to offset any losses sustained from exercised put options.
Option Strategy Risk. In employing the Option Strategy, Nuveen Asset Management seeks to reduce downside risk and volatility of the Equity Portfolio. The strategy may not
work as intended and may result in losses or periods of underperformance, particularly during periods when market values are increasing. The success of the Option Strategy will be subject to Nuveen Asset Managements ability to correctly assess
the degree of correlation between the performance of the Nasdaq 100 Index and the metrics used by Nuveen Asset Management to measure market volatility. Because the characteristics of many securities change as markets change or time passes, the
success of the Option Strategy also will be subject to Nuveen Asset Managements ability to continually recalculate, readjust, and execute volatility management techniques in an efficient manner. In addition, market conditions change, sometimes
rapidly and unpredictably, and Nuveen Asset Management may be unable to execute the volatility management strategy in a timely manner or at all. Moreover, volatility management strategies may increase portfolio transaction costs, which could cause
or increase losses or reduce gains. For a variety of reasons, Nuveen Asset Management may not seek to establish a perfect correlation between the relevant market index and the metrics that Nuveen Asset Management uses to measure market volatility.
In addition, it is not possible to manage volatility fully or perfectly. Any one or more of these factors may prevent the Fund from achieving the intended volatility management or could cause the Fund to underperform or experience losses (some of
which may be sudden) or volatility for any particular period that may be higher or lower. In addition, the use of volatility management techniques may not protect against market declines and may limit the Funds participation in market gains,
even during periods when the market is rising. Volatility management techniques, when implemented effectively to reduce the overall risk of investing in the Fund, may result in underperformance by the Fund. The Funds performance may be lower
than the performance of similar funds where volatility management techniques are not used.
Counterparty Risk. The Fund will be subject to credit risk with respect to the counterparties to the derivative transactions entered into by the Fund. Changes in the credit
quality of the companies that serve as the Funds counterparties with respect to derivatives transactions may affect the value of those instruments. Because certain derivative transactions in which the Fund may engage may be traded between
counterparties based on
35
contractual relationships, the Fund is subject to the risk that a counterparty will not perform its obligations under the related contracts. If a counterparty becomes bankrupt or otherwise
becomes unable to perform its obligations due to financial difficulties the Fund may sustain losses (including the full amount of its investment), may be unable to liquidate a derivatives position or may experience significant delays in obtaining
any recovery in bankruptcy or other reorganization proceedings. By entering into derivatives transactions, the Fund assumes the risk that its counterparties could experience such financial hardships. Although the Fund intends to enter into
transactions only with counterparties that Nuveen Fund Advisors believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Fund will not sustain a loss on a transaction. In the event of a
counterpartys bankruptcy or insolvency, any collateral posted by the Fund in connection with a derivatives transaction may be subject to the conflicting claims of that counterpartys creditors, and the Fund may be exposed to the risk of a
court treating the Fund as a general unsecured creditor of the counterparty, rather than as the owner of the collateral.
The counterparty risk for cleared derivatives is generally lower than for uncleared OTC derivative transactions. In a cleared derivative
transaction, generally, a clearing organization becomes substituted for each counterparty to a cleared derivative contract and each party to a trade looks only to the clearing organization for performance of financial obligations under the
derivative contract. In effect, the clearing organization guarantees a partys performance under the contract. However, there can be no assurance that a clearing organization, or its members, will satisfy its obligations to the Fund, or that
the Fund would be able to recover the full amount of assets deposited on its behalf with the clearing organization in the event of the default by the clearing organization or the Funds clearing broker. In addition, cleared derivative
transactions benefit from daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Uncleared OTC derivative
transactions generally do not benefit from such protections. As a result, for uncleared OTC derivative transactions, there is the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute
over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing the Fund to suffer a loss. This risk is heightened for contracts with longer maturities where events may intervene to prevent
settlement, or where the Fund has concentrated its transactions with a single or small group of counterparties.
Equity Portfolio Risks
Common Stock Risk. Common stock generally represents an equity ownership interest in an issuer. Although
common stocks have historically generated higher average total returns than fixed-income securities over the long term, common stocks also have experienced significantly more volatility in those returns and may under-perform relative to fixed-income
securities during certain periods. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common stock held by the Fund. Also, prices of common stocks are sensitive to general movements in the stock market
and a drop in the stock market may depress the price of common stocks to which the Fund has exposure. Common stock prices fluctuate for several reasons including changes in investors perceptions of the financial condition of an issuer or the
general condition of the relevant stock market, or the occurrence of political or economic events which effect the issuers. In addition, common stock prices may be particularly sensitive to rising interest rates, which increases borrowing costs and
the costs of capital.
Technology Company
Investment Risk. A substantial portion of the securities represented in the Nasdaq 100 Index are in the technology sector. As a result, the Fund may invest a substantial portion of its assets in technology companies. The
market prices of technology-related stocks tend to exhibit a greater degree of market risk and price volatility than other types of investments. These stocks may fall in and out of favor with investors rapidly, which may cause sudden selling and
dramatically lower market prices. Technology stocks also may be affected adversely by changes in technology, consumer and business purchasing patterns, government regulation and/or obsolete products or services. In addition, a rising interest rate
environment tends to negatively affect technology companies. Those technology companies seeking to finance their expansion would have increased borrowing costs, which may negatively impact their earnings. As a result, these factors may negatively
affect the performance of the Nasdaq 100 Index and the performance of the Fund.
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Dividend Income Risk. A portion of the Funds net
investment income paid by the Fund to its Common Shareholders is derived from dividends it receives from common stocks held in the Funds Equity Portfolio. Dividends paid on the securities held by the Fund can vary significantly over the
short-term and long-term. Dividends on common stocks are not fixed but are declared at the discretion of an issuers board of directors. There is no guarantee that the issuers of common stocks in which the Fund invests will declare dividends in
the future or that if declared they will remain at current levels or increase over time.
Other Investment Companies Risk
The Fund may invest in the securities of other investment companies. Such securities may be leveraged. As a result, the Fund may be indirectly exposed to leverage through an investment in such securities
and therefore magnify the Funds leverage risk. Utilization of leverage is a speculative investment technique and involves certain risks. An investment in securities of other investment companies that are leveraged may expose the Fund to higher
volatility in the market value of such securities and the possibility that the Funds long-term returns on such securities (and, indirectly, the long-term returns of the Common Shares) will be diminished.
Non-U.S. Issuer Risk
The Fund may invest in securities of non-U.S. issuers that
are U.S. dollar-denominated, which may include securities of issuers located, or conducting their business, in emerging market countries. Investments in securities of non-U.S. issuers involve special risks not presented by investments in securities
of U.S. issuers, including the following: (i) less publicly available information about non-U.S. issuers or markets due to less rigorous disclosure or accounting standards or regulatory practices; (ii) many non-U.S. markets are smaller,
less liquid and more volatile, meaning that, in a changing market, the Fund may not be able to sell its portfolio securities at times, in amounts or at prices it considers reasonable; (iii) potential adverse effects of fluctuations in currency
exchange rates or controls on the value of the Funds investments; (iv) the economies of non-U.S. countries may grow at slower rates than expected or may experience a downturn or recession; (v) the impact of economic, political,
social or diplomatic events; (vi) possible seizure, expropriation or nationalization of the company or its assets; (vii) certain non-U.S. countries may impose restrictions on the ability of non-U.S. issuers to make payments of
principal and/or interest to investors located outside the U.S., due to blockage of foreign currency exchange or otherwise; and (viii) withholding and other non-U.S. taxes may decrease the Funds return. These risks are more pronounced to
the extent that the Fund invests in securities of issuers in emerging market countries.
Economies and social and political climates in individual countries may differ unfavorably from the U.S. Non-U.S. economies may have less favorable rates of growth of gross domestic product, rates of
inflation, currency valuation, capital reinvestment, resource self-sufficiency and balance of payments positions. Many countries have experienced substantial, and in some cases extremely high, rates of inflation for many years. Unanticipated
economic, political and social developments may also affect the values of the Funds investments and the availability to the Fund of additional investments in such countries.
Illiquid Securities Risk
The Fund may invest in securities and other instruments
that, at the time of investment, are illiquid. Illiquid securities are securities that are not readily marketable and may include some restricted securities, which are securities that may not be resold to the public without an effective registration
statement under the 1933 Act or, if they are unregistered, may be sold only in a privately negotiated transaction or pursuant to an exemption from registration. Illiquid securities involve the risk that the securities will not be able to be sold at
the time desired by the Fund or at prices approximating the value at which the Fund is carrying the securities on its books.
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Derivatives Risk
The Funds use of derivatives involves risks different from, and possibly greater than, the risks
associated with investing directly in the investments underlying the derivatives. Whether the Funds use of derivatives is successful will depend on, among other things, if Nuveen Fund Advisors and Nuveen Asset Management correctly forecast
market values, interest rates and other applicable factors. If Nuveen Fund Advisors and Nuveen Asset Management incorrectly forecast these and other factors, the investment performance of the Fund will be unfavorably affected.
The Fund may enter into debt-related derivatives instruments
including credit default swap contracts and interest rate swaps. Like most derivative instruments, the use of swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary
portfolio securities transactions. In addition, the use of swaps requires an understanding by Nuveen Asset Management not only of the referenced asset, rate or index, but also of the swap itself. Because they are
two-party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, the Fund bears the risk of loss of the amount expected to be received
under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Funds ability to
terminate existing swap agreements or to realize amounts to be received under such agreements. The derivatives market is subject to a changing regulatory environment.
It is possible that regulatory or other developments in the
derivatives market could adversely affect the Funds ability to successfully use derivative instruments. See also, Counterparty Risk.
Fund Level Risks
Investment and Market Risk
An investment in the Funds Common Shares is subject to investment risk, including the possible loss of the entire principal amount
that you invest. Your investment in Common Shares represents an indirect investment in the securities owned by the Fund. Your Common Shares at any point in time may be worth less than your original investment, even after taking into account the
reinvestment of Fund dividends and distributions.
Market Discount from Net Asset Value
Shares of closed-end investment companies like the Fund have during some periods traded at prices higher than NAV and have during other
periods traded at prices lower than NAV. The Fund cannot predict whether Common Shares will trade at, above or below NAV. This characteristic is a risk separate and distinct from the risk that the Funds NAV could decrease as a result of
investment activities. Investors bear a risk of loss to the extent that the price at which they sell their shares is lower in relation to the Funds NAV than at the time of purchase, assuming a stable NAV. Proceeds from the sale of Common
Shares in this offering will be reduced by transaction costs (if applicable, which vary depending on the offering method used). The NAV per Common Share will be reduced by an amount up to the offering costs. The NAV per Common Share will be reduced
by costs associated with any future offerings of Common Shares. Depending on the premium of Common Shares at the time of any offering of Common Shares hereunder, the Funds NAV may be reduced by an amount up to the offering costs. Common Shares
are designed primarily for long-term investors, and you should not view the Fund as a vehicle for trading purposes.
Tax Risk
The tax treatment and characterization of the Funds distributions may vary significantly from time to time because of the varied
nature of the Funds investments. The ultimate tax characterization of the Funds distributions made in a calendar year may not finally be determined until after the end of that calendar year. In addition, there is a possibility that the
Fund may make total distributions during a calendar year in an amount that
38
exceeds the Funds net investment income and net realized capital gains for that calendar year. For example, because of the nature of the Funds investments, the Fund may distribute net
short-term capital gains early in the calendar year, but incur net short-term capital losses later in the year, thereby offsetting the short-term net capital gains for which distributions have already been made by the Fund. In such a situation, the
amount by which the Funds total distributions exceed net investment income and net realized capital gains would generally be treated as a tax-free return of capital up to the amount of the Common Shareholders tax basis in his Common
Shares, with any amounts exceeding such basis treated as gain from the sale of his Common Shares. While a portion of the Funds income distributions may be classified as qualified dividend income, which is generally taxable to
individual investors who meet certain holding period and other requirements at a lower rate, there can be no assurance as to the percentage of the Funds income distributions that will be qualified dividend income. The writing of
call options by the Fund may significantly reduce or eliminate its ability to make distributions eligible to be treated as qualified dividend income. Covered call options may also be subject to the federal tax rules applicable to straddles under the
Code. If positions held by the Fund were treated as straddles for federal income tax purposes, or the Funds risk of loss with respect to a position was otherwise diminished as set forth in Treasury regulations, dividends on stocks
that are a part of such positions would not constitute qualified dividend income subject to such favorable income tax treatment. In addition, generally, straddles are subject to certain rules that may affect the amount, character and timing of the
Funds gains and losses with respect to straddle positions by requiring, among other things, that: (1) any loss realized on disposition of one position of a straddle may not be recognized to the extent that the Fund has unrealized gains with
respect to the other position in such straddle; (2) the Funds holding period in straddle positions be suspended while the straddle exists (possibly resulting in a gain being treated as short-term capital gain rather than long-term capital
gain); (3) the losses recognized with respect to certain straddle positions that are part of a mixed straddle and that are not Section 1256 Contracts (defined below) be treated as 60% long-term and 40% short-term capital loss; (4) losses recognized
with respect to certain straddle positions that would otherwise constitute short-term capital losses be treated as long-term capital losses; and (5) the deduction of interest and carrying charges attributable to certain straddle positions may be
deferred. The Fund currently intends to manage the Equity Portfolio generally in order to avoid being subject to the straddle rules under federal income tax law. The Fund expects that positions held under this strategy will not be
considered straddles because the Equity Portfolio will not have substantial overlap with the stocks comprising the Nasdaq 100 Index. Accordingly, based on current law, the Fund intends to maintain an overlap of less than 70% between the stocks
held in the Equity Portfolio and the stocks comprising the Nasdaq 100 Index. Under certain circumstances, however, the Fund may enter into option transactions or certain other investments that may constitute positions in a straddle.
Not an Index Fund
The Fund is not, nor is it intended to be, an index fund. As
a result, the performance of the Fund will differ from the performance of the Nasdaq 100 Index as a whole for various reasons, including the fact that the Fund will write call options on a portion of the Equity Portfolio and the weightings of the
securities included in the Equity Portfolio may be different than the weightings of the common stocks in the Nasdaq 100 Index. The Fund, by writing call options on the Equity Portfolio, will give up the opportunity to benefit from potential
increases in the value of the Equity Portfolio above the exercise prices of the options, but will continue to bear the risk of declines in the value of the Equity Portfolio. See Call Option Risk below.
Non-Diversification Risk
Because the Fund is classified as
non-diversified under the 1940 Act, it can invest a greater portion of its assets in obligations of a single issuer than a diversified fund. As a result, the Fund will be more susceptible than a diversified fund to
fluctuations in the prices of securities of a single issuer.
Anti-Takeover Provisions
The Funds Declaration includes provisions that could limit the ability of other entities or persons to acquire control of the Fund or convert the Fund to open-end status. These provisions could have
the effect of depriving
39
the Common Shareholders of opportunities to sell their Common Shares at a premium over the then current market price of the Common Shares. See Certain Provisions in the Declaration of
Trust.
General Risks
Management Risk
The Fund is subject to management risk because it is an
actively managed portfolio. Nuveen Asset Management and Nuveen Fund Advisors will apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that these will produce the desired results.
Nuveen Asset Management and Nuveen Fund Advisors may err, for example, in the methodologies and strategies they choose to employ in seeking to replicate price movements of the Nasdaq 100 Index.
Potential Conflicts of Interest Risk
Nuveen Fund Advisors and Nuveen Asset Management each
provide a wide array of portfolio management and other asset management services to a mix of clients and may engage in ordinary course activities in which their respective interests or those of their clients may compete or conflict with those of the
Fund. For example, Nuveen Fund Advisors and Nuveen Asset Management may provide investment management services to other funds and accounts that follow investment objectives similar to those of the Fund. In certain circumstances, and subject to its
fiduciary obligations under the Investment Advisers Act of 1940, Nuveen Asset Management may have to allocate a limited investment opportunity among its clients, which include closed-end funds, open-end funds and other commingled funds. Nuveen Fund Advisors and Nuveen Asset Management have each adopted policies and procedures designed to address such situations and other potential conflicts of interests.
Recent Market Circumstances
National and regional economies and financial markets
are becoming increasingly interconnected, which increases the possibilities that conditions in one country, region or market might adversely impact issuers in a different country, region or market. Changes in legal, political, regulatory, tax and
economic conditions may cause fluctuations in markets and securities prices around the world, which could negatively impact the value of the Funds investments. For example, the United Kingdoms referendum decision to leave the European
Union resulted in the depreciation in value of the British pound, short term declines in the stock markets and ongoing economic and political uncertainty concerning the consequences of the exit. Similar major economic or political disruptions,
particularly in large economies like Chinas, may have global negative economic and market repercussions. Additionally, events such as war, terrorism, natural and environmental disasters and the spread of infectious illnesses or other public
health emergencies may adversely affect the global economy and the markets and issuers in which the Fund invests. Recent examples of such events include the outbreak of a novel coronavirus known as COVID-19 that was first detected in China in
December 2019 and heightened concerns regarding North Koreas nuclear weapons and long-range ballistic missile programs. These events could reduce consumer demand or economic output, result in market closure, travel restrictions or quarantines,
and generally have a significant impact on the economy. These events could also impair the information technology and other operational systems upon which the Funds service providers, including the investment adviser and sub-adviser, rely, and
could otherwise disrupt the ability of employees of the Funds service providers to perform essential tasks on behalf of the Fund. Governmental and quasi-governmental authorities and regulators throughout the world have in the past responded to
major economic disruptions with a variety of significant fiscal and monetary policy changes, including but not limited to, direct capital infusions into companies, new monetary programs and dramatically lower interest rates. An unexpected or quick
reversal of these policies, or the ineffectiveness of these policies, could increase volatility in securities markets, which could adversely affect the Funds investments.
Beginning in the first quarter of 2020, financial markets in
the United States and around the world experienced extreme and in many cases unprecedented volatility and severe losses due to the global pandemic
40
caused by COVID-19, a novel coronavirus. The pandemic has resulted in a wide range of social and economic disruptions, including closed borders, voluntary or compelled quarantines of large
populations, stressed healthcare systems, reduced or prohibited domestic or international travel, supply chain disruptions, and so-called stay-at-home orders throughout much of the United States and many other countries. The fall-out
from these disruptions has included the rapid closure of businesses deemed non-essential by federal, state, or local governments and rapidly increasing unemployment, as well as greatly reduced liquidity for certain instruments at times.
Some sectors of the economy and individual issuers have experienced particularly large losses. Such disruptions may continue for an extended period of time or reoccur in the future to a similar or greater extent. In response, the U.S. government and
the Federal Reserve have taken extraordinary actions to support the domestic economy and financial markets, resulting in very low interest rates and in some cases negative yields. It is unknown how long circumstances related to the pandemic will
persist, whether they will reoccur in the future, whether efforts to support the economy and financial markets will be successful, and what additional implications may follow from the pandemic. The impact of these events and other epidemics or
pandemics in the future could result in disruptions in the trading markets, increased premiums or discounts to the Funds NAV, and adverse effects on Fund performance.
In response to the financial crisis of 2007-2009, the United
States and other governments and the Federal Reserve and certain foreign central banks have taken steps to support financial markets. Policy and legislative changes by the United States Government and the Federal Reserve to assist in the ongoing
support of financial markets, both domestically and in other countries, are changing many aspects of financial regulation. The impact of these changes on the markets, and the practical implications for market participants, may not be fully known for
some time. In some countries where economic conditions are recovering, such countries are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such
efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations,
including changes in tax laws and the imposition of trade barriers. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are
causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, the contentious domestic political environment, as well as political and diplomatic events
within the United States and abroad, such as the U.S. governments inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal
governments debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced the federal
corporate income tax rate, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new
investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the markets expectations for changes in government policies
are not borne out.
Changes in market conditions
will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the United States and abroad but could rise. Because there is little precedent for this situation, it is difficult to predict the
impact of a significant rate increase on various markets. In addition, there is a risk that the prices of goods and services in the United States and many foreign economies may decline over time, known as deflation (the opposite of
inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a countrys economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult
to reverse.
On June 23, 2016, the United
Kingdom (UK) held a referendum on whether to remain a member state of the European Union (EU), in which voters favored the UKs withdrawal from the EU, an event widely referred
41
to as Brexit and which triggered a two-year period of negotiations on the terms of withdrawal. The formal notification to the European Council required under Article 50 of the Treaty
on EU was made on March 29, 2017, following which the terms of exit were negotiated. On January 31, 2020, the UK formally withdrew from the EU, subject to a transitional period ending December 31, 2020. The longer term economic, legal, political and
social framework to be put in place between the UK and the EU are unclear at this stage, remain subject to negotiation and are likely to lead to ongoing political and economic uncertainty and periods of exacerbated volatility in both the UK and in
wider European markets for some time. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the
broader global economy for some time. Additionally, a number of countries in Europe have suffered terror attacks, and additional attacks may occur in the future. Ukraine has experienced ongoing military conflict; this conflict may expand and
military attacks could occur elsewhere in Europe. Europe has also been struggling with mass migration from the Middle East and Africa. The ultimate effects of these events and other socio-political or geographical issues are not known but could
profoundly affect global economies and markets.
The current political climate has intensified concerns about a potential trade war between China and the United States, as each country
has recently imposed tariffs on the other countrys products. These actions may trigger a significant reduction in international trade, the oversupply of certain manufactured goods, substantial price reductions of goods and possible failure of
individual companies and/or large segments of Chinas export industry, which could have a negative impact on the Funds performance. U.S. companies that source material and goods from China and those that make large amounts of sales in
China would be particularly vulnerable to an escalation of trade tensions. Uncertainty regarding the outcome of the trade tensions and the potential for a trade war could cause the U.S. dollar to decline against safe haven currencies, such as the
Japanese yen and the euro. Events such as these and their consequences are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be taken in the future.
The impact of these developments in the near- and long-term
is unknown and could have additional adverse effects on economies, financial markets and asset valuations around the world.
Legislation and Regulatory Risk
At any time after the date of this Prospectus, legislation or additional regulations may be enacted that could negatively affect the
assets of the Fund, securities held by the Fund or the issuers of such securities. Changing approaches to regulation may have a negative impact on the entities and/or securities in which the Fund invests. Legislation or regulation may also change
the way in which the Fund itself is regulated. Fund shareholders may incur increased costs resulting from such legislation or additional regulation. There can be no assurance that future legislation, regulation or deregulation will not have a
material adverse effect on the Fund or will not impair the ability of the Fund to achieve its investment objective.
For example, the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) is designed to impose
stringent regulation on the over-the-counter (OTC) derivatives market in an attempt to increase transparency and accountability and provides for, among other things, new clearing, execution, margin, reporting, recordkeeping, business
conduct, disclosure, position limit, minimum net capital and registration requirements. Although the Commodity Futures Trading Commission (CFTC) has released final rules under the Dodd-Frank Act, many of the provisions are subject to
further final rulemaking, and thus the Dodd-Frank Acts ultimate impact remains unclear.
The SEC has proposed rules governing the use of derivatives by registered investment companies, which could affect the nature and extent of derivatives use by the Fund. The proposed rules have not yet
been adopted and therefore the full impact of such rules is uncertain at this time. It is possible that such rules, if adopted, could limit the implementation of the Funds use of derivatives, which could have an adverse effect on the Fund.
42
Additionally, the Fund is operated by persons who have claimed an exclusion, granted to
operators of registered investment companies like the Fund, from registration as a commodity pool operator under Rule 4.5 promulgated by the CFTC pursuant to its authority under the Commodity Exchange Act and, therefore, is not subject
to registration or regulation as a commodity pool operator. As a result, the Fund is limited in its ability to use commodity futures (which include futures on broad-based securities indexes and interest rate futures) or options on
commodity futures, engage in swaps transactions or make certain other investments (whether directly or indirectly through investments in other investment vehicles) for purposes other than bona fide hedging. With respect to transactions other than
for bona fide hedging purposes, either: (1) the aggregate initial margin and premiums required to establish the Funds positions in such investments may not exceed 5% of the liquidation value of the Funds portfolio (after accounting
for unrealized profits and unrealized losses on any such investments); or (2) the aggregate net notional value of such instruments, determined at the time the most recent position was established, may not exceed 100% of the liquidation value of
the Funds portfolio (after accounting for unrealized profits and unrealized losses on any such positions). In addition to meeting one of the foregoing trading limitations, the Fund may not market itself as a commodity pool or otherwise as a
vehicle for trading in the futures, options or swaps markets. If the Fund does not continue to claim the exclusion, it would likely become subject to registration and regulation as a commodity pool operator. The Fund may incur additional expenses as
a result of the CFTCs registration and regulatory requirements.
Other Risks
In addition to the principal risks described above, an investment in the Fund is subject to the following other risks.
Market Disruption and Geopolitical Risk
The occurrence of events similar to those in recent years,
such as the aftermath of the war in Iraq, instability in Afghanistan, Pakistan, Egypt, Libya, Syria, Russia, Ukraine and other parts of the Middle East, the outbreak of infectious diseases such as Ebola or the Zika Virus, terrorist attacks in the
U.S. and around the world, social and political discord, debt crises (such as the recent Greek crisis), sovereign debt downgrades, or the exit or potential exit of one or more countries from the EU, among others, may result in market volatility, may
have long-term effects on the U.S. and worldwide financial markets, and may cause further economic uncertainties in the U.S. and worldwide. The Fund does not know how long the securities markets may be affected by these events and cannot predict the
effects of these and similar events in the future on the U.S. economy and securities markets. The Fund may be adversely affected by abrogation of international agreements and national laws which have created the market instruments in which the Fund
may invest, failure of the designated national and international authorities to enforce compliance with the same laws and agreements, failure of local, national and international organization to carry out the duties prescribed to them under the
relevant agreements, revisions of these laws and agreements which dilute their effectiveness or conflicting interpretation of provisions of the same laws and agreements. The Fund may be adversely affected by uncertainties such as terrorism,
international political developments, and changes in government policies, taxation, restrictions on foreign investment and currency repatriation, currency fluctuations and other developments in the laws and regulations of the countries in which it
is invested.
Impact of Offering Methods Risk
The issuance of Common Shares through the
various methods described in the Prospectus may have an adverse effect on prices in the secondary market for the Funds Common Shares by increasing the number of Common Shares available for sale. In addition, the Common Shares may be issued at
a discount to the market price for such shares, which may put downward pressure on the market price for Common Shares of the Fund.
43
Debt Securities Risk
The Funds investments in debt securities are generally subject to issuer credit risk and interest rate
risks. Issuers of debt instruments in which the Fund may invest may default on their obligations to pay principal or interest when due. This non-payment would result in a reduction of income to the Fund, a
reduction in the value of a debt instrument experiencing non-payment and, potentially, a decrease in the NAV of the Fund. To the extent that the credit rating assigned to a security in the Funds
portfolio is downgraded, the market price and liquidity of such security may be adversely affected. Interest rate risk is the risk that fixed-rate debt instruments will decline in value because of changes in market interest rates. When market
interest rates rise, the market value of such instruments generally will fall.
Repurchase Agreement Risk
With respect to repurchase agreements, if the party agreeing to repurchase specific securities should default, the Fund may seek to sell the securities that it holds. This could involve transaction costs
or delays in addition to a loss on the securities if their value should fall below their repurchase price. Repurchase agreements maturing in more than seven days are considered to be illiquid securities.
Inflation Risk
Inflation risk is the risk that the value of assets or
income from investment will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Common Shares and distributions thereon can decline.
Deflation Risk
Deflation risk is the risk that prices throughout the
economy decline over time, which may have an adverse effect on the market valuation of companies, their assets and revenues. In addition, deflation may have an adverse effect on the creditworthiness of issuers and may make issuer default more
likely, which may result in a decline in the value of the Funds portfolio.
Certain Affiliations
Certain broker-dealers may be considered to be affiliated persons of the Fund, Nuveen Fund Advisors, TIAA, and/or Nuveen Investments. Absent an exemption from the SEC or other regulatory relief, the Fund
is generally precluded from effecting certain principal transactions with affiliated brokers, and its ability to purchase securities being underwritten by an affiliated broker or a syndicate including an affiliated broker, or to utilize affiliated
brokers for agency transactions, is subject to restrictions. This could limit the Funds ability to engage in securities transactions and take advantage of market opportunities. See also Management of the FundInvestment Adviser, Sub-Adviser, and Portfolio Manager.
Cybersecurity Risk
Technology, such as the internet, has become more prevalent in the course of business, and as such, the Fund and its service providers are susceptible to operational and information security risk
resulting from cyber incidents. Cyber incidents refer to both intentional attacks and unintentional events including: processing errors, human errors, technical errors including computer glitches and system malfunctions, inadequate or failed
internal or external processes, market-wide technical-related disruptions, unauthorized access to digital systems (through hacking or malicious software coding), computer viruses, and cyber-attacks which shut down, disable, slow or
otherwise disrupt operations, business processes or website access or functionality (including denial of service attacks). Cyber incidents could adversely impact the Fund and cause the Fund to incur financial loss and expense, as well as face
exposure to regulatory penalties, reputational damage, and additional compliance costs associated with corrective measures. Cyber incidents may cause the Fund or its service providers to lose proprietary information, suffer data corruption, lose
operational capacity or fail to comply with applicable privacy and other
44
laws. Among other potentially harmful effects, cyber incidents also may result in theft, unauthorized monitoring and failures in the physical infrastructure or operating systems that support the
Fund and its service providers. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the Funds service providers have established business continuity plans in the event of, and risk
management systems to prevent, such cyber incidents, there are inherent limitations in such plans and systems including the possibility that certain risks have not been identified. Furthermore, the Fund cannot control the cybersecurity plans and
systems put in place by its service providers or any other third parties whose operations may affect the Fund.
MANAGEMENT OF THE FUND
Trustees and Officers
The Board is responsible for the management of the Fund,
including supervision of the duties performed by Nuveen Fund Advisors. The names and business addresses of the trustees and officers of the Fund and their principal occupations and other affiliations during the past five years are set forth under
Management of the Fund in the SAI.
Investment
Adviser, Sub-Adviser, and Portfolio Manager
Investment Adviser. Nuveen Fund Advisors, LLC, the Funds investment adviser, is responsible for overseeing the Funds overall investment strategy and its
implementation. Nuveen Fund Advisors offers advisory and investment management services to a broad range of investment company clients. Nuveen Fund Advisors has overall responsibility for management of the Fund, oversees the management of the
Funds portfolio, manages the Funds business affairs and provides certain clerical, bookkeeping and other administrative services. Nuveen Fund Advisors is located at 333 West Wacker Drive, Chicago, Illinois 60606. Nuveen Fund Advisors is
a subsidiary of Nuveen, the investment management arm of TIAA. TIAA is a life insurance company founded in 1918 by the Carnegie Foundation for the Advancement of Teaching and is the companion organization of College Retirement Equities Fund. As of
March 31, 2020, Nuveen managed approximately $957.3 billion in assets, of which approximately $138.1 billion was managed by Nuveen Fund Advisors.
Sub-Adviser. Nuveen Asset Management, LLC, 333 West Wacker Drive,
Chicago, Illinois 60606, serves as the Funds sub-adviser pursuant to a sub-advisory agreement between Nuveen Fund Advisors and Nuveen Asset Management (the Sub-Advisory Agreement). Nuveen Asset Management, a registered investment adviser, is a wholly-owned subsidiary of Nuveen Fund Advisors. Nuveen Asset Management oversees day-to-day investment operations of the Fund. Pursuant to the Sub-Advisory Agreement, Nuveen Asset Management is compensated for the services it provides to the Fund
with a portion of the management fee Nuveen Fund Advisors receives from the Fund. Nuveen Fund Advisors and Nuveen Asset Management retain the right to reallocate investment advisory responsibilities and fees between themselves in the future.
Portfolio
Management. Nuveen Asset Management is responsible for the execution of specific investment strategies and day-to-day investment operations of
the Fund. Nuveen Asset Management manages the Nuveen funds using a team of analysts and portfolio managers that focuses on a specific group of funds. The day-to-day
operation of the Fund and the execution of its specific investment strategies is the primary responsibility of David Friar, the designated portfolio manager of the Fund since 2014.
David Friar, Managing Director and Portfolio Manager (since
2011) of Nuveen Asset Management, entered the financial services industry in 1998. He is the lead manager of the equity index, mid cap index, small cap index and enhanced equity index strategies and related institutional portfolios. He joined the
team managing the Equity, mid cap and small cap index strategies in 2000 and became part of the enhanced equity index team in 2007. He joined the firm in 1999 as a member of the performance measurement group.
Additional information about the portfolio managers
compensation, other accounts managed by the portfolio manager and the portfolio managers ownership of securities in the Fund is provided in the SAI. The
45
SAI is available free of charge by calling (800) 257-8787 or by visiting the Funds website at www.nuveen.com. The information contained in, or
that can be accessed through, the Funds website is not part of this Prospectus or the SAI.
Investment Management and Sub-Advisory Agreements
Investment Management Agreement. Pursuant to an investment management agreement between Nuveen Fund
Advisors and the Fund (the Investment Management Agreement), the Fund has agreed to pay an annual management fee for the services and facilities provided by Nuveen Fund Advisors, payable on a monthly basis, based on the sum of a
fund-level fee and a complex-level fee, as described below.
Fund-Level Fee. The annual fund-level fee for the Fund, payable monthly, is calculated according to the following schedule:
|
|
|
|
|
Average Daily Managed Assets*
|
|
Fund-Level
Fee Rate
|
|
For the first $500 million
|
|
|
0.6900
|
%
|
For the next $500 million
|
|
|
0.6650
|
%
|
For the next $500 million
|
|
|
0.6400
|
%
|
For the next $500 million
|
|
|
0.6150
|
%
|
For managed assets over $2 billion
|
|
|
0.5900
|
%
|
Complex-Level
Fee. The annual complex-level fee for the Fund, payable monthly, is calculated by multiplying the current complex-wide fee rate, determined according to the following schedule, by the Funds daily Managed Assets:
|
|
|
|
|
Complex-Level Eligible Asset Breakpoint
Level*
|
|
Effective
Complex-Level
Fee
Rate at
Breakpoint Level
|
|
$55 billion
|
|
|
0.2000
|
%
|
$56 billion
|
|
|
0.1996
|
%
|
$57 billion
|
|
|
0.1989
|
%
|
$60 billion
|
|
|
0.1961
|
%
|
$63 billion
|
|
|
0.1931
|
%
|
$66 billion
|
|
|
0.1900
|
%
|
$71 billion
|
|
|
0.1851
|
%
|
$76 billion
|
|
|
0.1806
|
%
|
$80 billion
|
|
|
0.1773
|
%
|
$91 billion
|
|
|
0.1691
|
%
|
$125 billion
|
|
|
0.1599
|
%
|
$200 billion
|
|
|
0.1505
|
%
|
$250 billion
|
|
|
0.1469
|
%
|
$300 billion
|
|
|
0.1445
|
%
|
*
|
The complex-level fee is calculated based upon the aggregate daily eligible assets of all Nuveen open-end and closed-end funds.
Eligible assets do not include assets attributable to investments in other Nuveen funds or assets in excess of a determined amount (originally $2 billion) added to the Nuveen fund complex in connection with Nuveen Fund Advisors assumption of
the management of the former First American Funds effective January 1, 2011, but do include certain assets of certain Nuveen funds that were reorganized into funds advised by an affiliate of Nuveen Fund Advisors during the 2019 calendar year.
Eligible assets include closed-end fund assets managed by Nuveen Fund Advisors that are attributable to certain types of leverage. For these purposes, leverage includes the closed-end funds use of preferred stock and borrowings
|
46
|
and certain investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by the TOB
trust that has been effectively financed by the trusts issuance of floating rate securities, subject to an agreement by Nuveen Fund Advisors as to certain funds to limit the amount of such assets for determining eligible assets in certain
circumstances. As of December 31, 2019, the complex-level fee rate for the Fund was 0.1562%.
|
In addition to the fee of Nuveen Fund Advisors, the Fund pays all other costs and expenses of its operations, including compensation of
its Trustees (other than those affiliated with Nuveen Fund Advisors and Nuveen Asset Management), custodian, transfer agency and dividend disbursing expenses, legal fees, expenses of independent auditors, expenses of repurchasing shares, expenses
associated with any borrowings, expenses of issuing any preferred shares, expenses of preparing, printing and distributing shareholder reports, notices, proxy statements and reports to governmental agencies, and taxes, if any. All fees and expenses
are accrued daily and deducted before payment of dividends to investors.
A discussion regarding the basis for the Boards most recent approval of the Investment Management Agreement for the Fund may be found in the Funds semi-annual report to shareholders dated
June 30 of each year.
Sub-Advisory Agreement. Pursuant to the Sub-Advisory Agreement, Nuveen Asset Management receives from Nuveen Fund Advisors a management fee equal to
0.3900% of the Funds average daily Managed Assets payable on a monthly basis. Nuveen Fund Advisors and Nuveen Asset Management retain the right to reallocate investment advisory responsibilities and fees between themselves in the future.
A discussion regarding the basis for the
Boards most recent approval of the Sub-Advisory Agreement for the Fund may be found in the Funds semi-annual report to shareholders dated June 30 of each year.
NET ASSET VALUE
The Funds NAV per Common Share is determined as of
the close of regular session trading (normally 4:00 p.m., Eastern Time) on each day the NYSE is open for business. NAV is computed by dividing the value of all assets of the Fund (including accrued interest and dividends), less all liabilities
(including accrued expenses and dividends declared but unpaid), by the total number of Common Shares outstanding. In determining NAV, expenses are accrued and applied daily and securities and other assets for which market quotations are available
are valued at market value. Exchange-traded equity securities are generally valued at the last sales price on the securities exchange on which such securities are primarily traded. Exchange-traded equity securities traded on a securities exchange
for which there are no transactions on a given day or securities not listed on a securities exchange are valued at closing mid or bid prices. Securities reported on Nasdaq are valued at the Nasdaq Official Closing Price. Exchange-listed option
contracts are valued using the prices reported on the exchanges where such instruments are primarily traded as of 4:00 p.m. Eastern Time. Investors should note that the listed options markets generally close at 4:15 p.m. Eastern Time. Changes in the
value of the Funds options portfolio after 4:00 p.m. generally would not be reflected in that days NAV. Exchange-traded futures contracts and options on futures contracts are generally valued at the final settlement price or official
closing price on the exchange on which such futures contracts and options on futures contracts are primarily traded. OTC derivatives, including OTC options, are valued based on prices from a third party evaluation service. Temporary investments in
securities that have variable rate and demand features qualifying them as short-term investments are valued at amortized cost, which approximates market value.
The Funds securities are valued in accordance with
procedures approved by the Board. Where a security is traded on more than one exchange, the security is generally valued at the price on the exchange considered to be the primary exchange. In the case of securities not traded on an exchange, or if
exchange prices are not otherwise available, the prices are typically determined by independent third party pricing services that use a variety of techniques and methodologies.
47
The valuations for fixed income securities and certain derivative instruments are typically
the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of fair valuation techniques and methodologies. Any independent pricing service determining fair value will do so
pursuant to procedures adopted by, or under the supervision of, the Board. If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed to be unreliable, the market price
may be determined by using quotations from one or more broker/dealers. When such prices or quotations are not available, or when believed to be unreliable, securities may be priced using fair value procedures approved by the Board. These procedures
permit, among other things, the use of a matrix, formula or other method that takes into consideration market indexes, yield curves and other specific adjustments to determine fair value. The Fund may also use fair value procedures if it is
determined that a significant event has occurred between the time at which a market price is determined and the time at which the funds NAV is calculated. The effect of using fair value pricing is that the Common Share NAV will be subject to
the judgment of the Board or its designee instead of being determined by the market.
DISTRIBUTIONS
The Fund will pay quarterly distributions stated in terms of a fixed cents per Common Share that would be composed of net investment income and supplemental amounts generally representing realized capital
gains or, possibly, returns of capital representing unrealized capital gains. Quarterly distributions, including such supplemental amounts, are sometimes referred to as managed distributions. The Funds managed distribution policy
is pursuant to an exemptive order issued by the SEC, which permits the Fund to distribute long-term capital gains to shareholders more frequently than once per year. The Fund will seek to establish a Common Share distribution rate that roughly
corresponds to Nuveen Fund Advisors projections of the total return that could reasonably be expected to be generated by the Funds Common Shares over an extended period of time, although the distribution rate will not be solely dependent
on the amount of income earned or capital gains realized. Nuveen Fund Advisors, in making such projections, may consider long-term historical returns and a variety of other factors. Distributions can only be made after paying any interest and
required principal payments on borrowings, if any, and any accrued dividends to preferred shareholders, if any.
If, for any quarterly distribution, net investment income and net realized capital gains were less than the amount of the distribution,
the difference would be distributed from the Funds assets. In order to raise the cash for such distributions, the Fund expects to sell portfolio securities. Such portfolio sales may occur at a time when independent investment judgment might
not otherwise have dictated such action. The Funds final distribution for each calendar year may include any remaining net investment income and net realized capital gains not distributed during the year.
The Funds actual financial performance will likely vary
significantly from month-to-month and from year-to-year, and there may be extended periods when the distribution rate will exceed the Funds actual total returns. The Funds projected or actual distribution rate is not a prediction of what
the Funds actual total returns will be over any specific future period.
As portfolio and market conditions change, the rate of distributions on the Common Shares and the Funds distribution policy could change. To the extent that the total return of the Funds
overall strategy exceeds the distribution rate for an extended period, the Fund may be in a position either to increase the distribution rate or to distribute supplemental amounts to shareholders, or both. Conversely, if the total return of the
Funds overall strategy is less than the distribution rate for an extended period of time, the Fund will effectively be drawing upon its assets to meet payments prescribed by its distribution policy. Similarly, for tax purposes such
distributions by the Fund may consist in part of a return of capital to Common Shareholders. The exact tax characteristics of the Funds Common Share distributions will not be known until after the Funds fiscal year-end. Common
Shareholders should not confuse a return of capital distribution with dividend yield or total return. At the same time that it pays a quarterly distribution, the Fund will post on its website
48
(www.nuveen.com/cef), and make available in written form to holders of its Common Shares a notice of the estimated sources and tax characteristics of the Funds distributions (i.e., what
percentage of the distributions is estimated to constitute ordinary income, short-term capital gains, long-term capital gains, and/or a non-taxable return of capital) on a year-to-date basis, in compliance with a federal securities law requirement
that any fund paying a distribution from sources other than net investment income disclose to shareholders the respective portion attributable to such other sources. These estimates may be based on certain assumptions about the Funds expected
investment returns and the realization of net gains, if any, over the remaining course of the year. These estimates may, and likely will, vary over time based on the activities of the Fund and changes in the value of portfolio investments. The final
determination of the source and tax characteristics of all distributions will be made after December 31 in each year, and reported to Common Shareholders on Form 1099-DIV early the following year.
As explained more fully below in Tax Matters, the
Fund intends to distribute to Common Shareholders any net capital gain (which is the excess of net long-term capital gain over net short-term capital loss) for each taxable year through its managed distributions or, alternatively, to retain all or a
portion of the years net capital gain and pay federal income tax on the retained gain. Each Common Shareholder of record as of the end of the Funds taxable year will include in income for federal income tax purposes, as long-term capital
gain, his or her share of any retained gain, will be deemed to have paid his or her proportionate share of the tax paid by the Fund on such retained gain, and will be entitled to an income tax credit or refund for that share of the tax. The Fund may
treat any retained capital gain amount as a substitute for equivalent cash distributions. In addition, the Fund may make total Common Share distributions during a given calendar year in an amount that exceeds the Funds net investment income
and net realized long-term capital gains for that calendar year, in which case the excess will generally be treated by Common Shareholders as return of capital for tax purposes. A return of capital reduces a shareholders tax basis, which could
result in more taxable gain when the shareholder sells his or her shares. This may cause the shareholder to pay taxes even if he or she sells shares for less than the original price.
The Fund reserves the right to change its distribution policy and the basis for establishing the rate of its
quarterly Common Share distributions at any time upon notice to Common Shareholders, upon a determination by the Funds Board of Trustees that such change is in the best interests of the Fund and its Common Shareholders.
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly
with the Fund or if you hold your Common Shares with a brokerage firm that participates in the Funds Dividend Reinvestment Plan (the Plan) your distributions, including any capital gain distributions, will automatically be
reinvested in additional Common Shares under the Plan unless you request otherwise. If you elect not to participate in the Plan, or are not eligible to participate because your brokerage firm does not participate in the Plan, you will receive all
distributions in cash paid by check mailed directly to you or your brokerage firm by Computershare as dividend paying agent (the Plan Agent). The tax consequences of a distribution are the same regardless of whether such distribution is
reinvested or received in cash. See Tax Matters.
Under the Plan, the number of Common Shares you will receive will be determined as follows:
(1) If the Common Shares are trading at or above NAV at the time of valuation, the Fund will issue new shares at a
price equal to the greater of (i) NAV per Common Share on that date or (ii) 95% of the market price on that date.
(2) If Common Shares are trading below NAV at the time of valuation, the Plan Agent will receive the dividend or
distribution in cash and will purchase Common Shares in the open market, on the Nasdaq or elsewhere, for the participants accounts. It is possible that the market price for the Common Shares may increase before the Plan Agent has completed its
purchases. Therefore, the average purchase price per share paid by the Plan Agent may exceed the market price at the time of valuation, resulting in the purchase of
49
fewer shares than if the dividend or distribution had been paid in Common Shares issued by the Fund. The Plan Agent will use all dividends and distributions received in cash to purchase Common
Shares in the open market within 30 days of the valuation date. Interest will not be paid on any uninvested cash payments. The Plan provides that if the Common Shares start trading at or above NAV before the Plan Agent has completed its purchases,
the Plan Agent may cease purchasing Common Shares in the open market, and may invest the uninvested portion in new shares at a price equal to the greater of (i) NAV per Common Share on the last purchase date or (ii) 95% of the market price
on that date.
You may withdraw from the Plan at
any time by giving written notice to the Plan Agent. If you withdraw or the Plan is terminated, you will receive whole shares in your account under the Plan and you will receive a cash payment for any fraction of a share in your account. If you
wish, the Plan Agent will sell your shares and send you the proceeds, minus brokerage commissions and a $2.50 service fee.
The Plan Agent maintains all shareholders accounts in the Plan and gives written confirmation of all transactions in the accounts,
including information you may need for tax records. Common Shares in your account will be held by the Plan Agent in non-certificated form. Any proxy you receive will include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your
dividends or distributions in Common Shares. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases.
Automatically reinvesting dividends and distributions does not mean that you do not have to pay income taxes
due upon receiving dividends and distributions.
As noted above, if you hold your Common Shares with a brokerage firm that does not participate in the Plan, you will not be able to
participate in the Plan and any dividend reinvestment may be effected on different terms than those described above. Consult your financial adviser for more information.
The Fund reserves the right to amend or terminate the Plan if
in the judgment of the Board the change is warranted. There is no direct service charge to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained from Computershare, P.O. Box 505000, Louisville, Kentucky, 40233-5000, (800) 257-8787.
PLAN OF DISTRIBUTION
The Fund may sell the Common Shares offered
under this Prospectus through
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at-the-market transactions;
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underwriting syndicates; and
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privately negotiated transactions.
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The Fund will bear the expenses of the offering, including but not limited to, the expenses of preparation of the Prospectus and SAI for
the offering and the expense of counsel and auditors in connection with the offering.
Distribution Through At-The-Market Transactions
The Fund has entered into a distribution agreement with
Nuveen Securities (the Distribution Agreement), which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. Subject to the terms and conditions of the Distribution Agreement, the Fund may from
time to time issue and sell its Common
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Shares through Nuveen Securities to certain broker-dealers which have entered into selected dealer agreements with Nuveen Securities. Currently, Nuveen Securities has entered into a selected
dealer agreement (the Selected Dealer Agreement) with BB&T Capital Markets, a division of BB&T Securities, LLC, pursuant to which BB&T will be acting as Nuveen Securities
sub-placement agent with respect to at-the-market offerings of Common Shares. The Selected Dealer Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Common Shares will only be sold on such days as shall be agreed to by the Fund and Nuveen Securities. Common Shares will be sold at prevailing market prices through the National Market System, subject to
a minimum price to be established each day by Nuveen Securities. The minimum price on any day will not be less than the current NAV per Common Share plus the per share amount of the commission to be paid to Nuveen Securities. The Fund and Nuveen
Securities will suspend the sale of Common Shares if the per share price of the shares is less than the minimum price.
The Fund will compensate Nuveen Securities with respect to sales of the Common Shares at a commission rate of up to 1.0% of the gross
proceeds of the sale of Common Shares. Nuveen Securities will compensate sub-placement agents or other broker-dealers participating in the offering at a rate of up to 0.8% of the gross proceeds of the sale of
Common Shares sold by that sub-placement agent or broker-dealer. Settlements of sales of Common Shares will occur on the second business day following the date on which any such sales are made. In connection
with the sale of the Common Shares on behalf of the Fund, Nuveen Securities may be deemed to be an underwriter within the meaning of the 1933 Act, and the compensation of Nuveen Securities may be deemed to be underwriting commissions or discounts.
Unless otherwise indicated in a further Prospectus supplement, Nuveen Securities will act as underwriter on a reasonable efforts basis.
The offering of Common Shares pursuant to the Distribution Agreement will terminate upon the earlier of (i) the sale of all Common
Shares subject thereto or (ii) termination of the Distribution Agreement. The Fund and Nuveen Securities each have the right to terminate the Distribution Agreement in its discretion at any time. The Fund currently intends to distribute the
shares offered pursuant to this Prospectus through at-the-market transactions, although from time to time it may also distribute shares through an underwriting syndicate
or a privately negotiated transaction. To the extent shares are distributed other than through at-the-market transactions, the Fund will file a supplement to this
Prospectus describing such transactions.
As
of April 24, 2020, the Fund has sold in this offering an aggregate of 432,922 Common Shares, representing net proceeds to the Fund of $9,639,213, after payment of commissions of $97,368 in the aggregate.
The Funds closing price on the Nasdaq on April 24,
2020 was $21.23.
Distribution Through Underwriting
Syndicates
The Fund from time to time may
issue additional Common Shares through a syndicated secondary offering. In order to limit the impact on the market price of the Funds Common Shares, underwriters will market and price the offering on an expedited basis (e.g., overnight
or similarly abbreviated offering period). The Fund will launch a syndicated offering on a day, and upon terms, mutually agreed upon between the Fund, Nuveen Securities, one of the Funds underwriters, and the underwriting syndicate.
The Fund will offer its shares at a price
equal to a specified discount of up to 5% from the closing market price of the Funds Common Shares on the day prior to the offering date. The applicable discount will be negotiated by the Fund and Nuveen Securities in consultation with the
underwriting syndicate on a transaction-by-transaction basis. The Fund will compensate the underwriting syndicate out of the proceeds of the offering based upon a sales
load of up to 4% of the gross proceeds of the sale of Common Shares. The minimum net proceeds per share to the Fund will not be less than the greater of (i) the Funds latest NAV per Common Share or (ii) 91% of the closing market price of
the Funds Common Shares on the day prior to the offering date.
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Distribution Through Privately Negotiated Transactions
The Fund from time to time may sell directly to, and solicit
offers from, institutional and other sophisticated investors, who may be deemed to be underwriters as defined in the 1933 Act for any resale of Common Shares.
The terms of such privately negotiated transactions will be subject to the discretion of the management of the Fund. In determining
whether to sell Common Shares through a privately negotiated transaction, the Fund will consider relevant factors including, but not limited to, the attractiveness of obtaining additional funds through the sale of Common Shares, the purchase price
to apply to any such sale of Common Shares and the person seeking to purchase the Common Shares.
Common Shares issued by the Fund through privately negotiated transactions will be issued at a price equal to the greater of (i) the NAV per share of the Funds Common Shares or (ii) at a
discount ranging from 0% to 5% of the average daily closing market price of the Funds Common Shares at the close of business on the ten business days preceding the date upon which Common Shares are sold pursuant to the privately negotiated
transaction. The applicable discount will be determined by the Fund on a transaction-by-transaction basis.
The principal business address of Nuveen Securities is 333 West Wacker Drive, Chicago, Illinois 60606.
DESCRIPTION OF
SHARES
Common Shares
The Declaration authorizes the issuance of an unlimited
number of Common Shares. The Common Shares being offered have a par value of $0.01 per share and, subject to the rights of holders of Preferred Shares, if issued, have equal rights to the payment of dividends and the distribution of assets upon
liquidation. The Common Shares being offered will, when issued, be fully paid and, subject to matters discussed in Certain Provisions in the Declaration of Trust, non-assessable, and will have no preemptive or conversion rights or rights
to cumulative voting. The Fund has no current intention of issuing Preferred Shares or incurring borrowings. However, if at some future time the Fund issues Preferred Shares and/or incurs borrowings, the Common Shareholders will not be entitled to
receive any cash distributions from the Fund unless all accrued dividends on Preferred Shares and interest on borrowings have been paid, and (i) unless asset coverage (as defined in the 1940 Act) with respect to Preferred Shares would be at
least 200% after giving effect to the distributions and (ii) unless asset coverage (again, as defined in the 1940 Act) with respect to any borrowings would be at least 300% after giving effect to the distributions. See Preferred
Shares below.
The Common Shares are listed
on Nasdaq and trade under the ticker symbol QQQX. The Fund intends to hold annual meetings of shareholders so long as the Common Shares are listed on a national securities exchange and such meetings are required as a condition to such
listing. The Fund will not issue share certificates.
Unlike open-end funds, closed-end funds like the Fund do not provide daily redemptions. Rather, if a shareholder determines to buy additional Common Shares or sell shares already held, the shareholder may
conveniently do so by trading on the exchange through a broker or otherwise. Shares of closed-end investment companies may frequently trade on an exchange at prices lower than NAV. Shares of closed-end investment companies like the Fund have, during
some periods, traded at prices higher than NAV and, during other periods, have traded at prices lower than NAV. Because the market value of the Common Shares may be influenced by such factors as distribution levels (which are in turn affected by
expenses), distribution stability, NAV, relative demand for and supply of such shares in the market, general market and economic conditions, and other factors beyond the control of the Fund, the Fund cannot guarantee you that Common Shares will
trade at a price equal to or higher than NAV in the future. The Common Shares are designed primarily for long-term investors, and investors in the Common Shares should not view the Fund as a vehicle for trading purposes. See the SAI under
Repurchase of Fund Shares; Conversion to Open-End Fund.
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Preferred Shares
As a non-fundamental policy, the Fund will not leverage its
capital structure by issuing senior securities such as preferred shares or debt instruments. However, the Declaration authorizes the issuance of an unlimited number of Preferred Shares in one or more classes or series, with rights as determined by
the Board, by action of the Board without the approval of the Common Shareholders. The terms of any Preferred Shares that may be issued by the Fund may be the same as, or different from, the terms described below, subject to applicable law and the
Declaration.
Limited Issuance of Preferred
Shares. Under the 1940 Act, the Fund can issue Preferred Shares with an aggregate liquidation value of up to one-half of the value of the Funds total net assets, measured immediately after issuance of the Preferred
Shares. Liquidation value means the original purchase price of the shares being liquidated plus any accrued and unpaid dividends. In addition, the Fund is not permitted to declare any cash dividend or other distribution on its Common
Shares unless the liquidation value of the Preferred Shares is less than one-half of the value of the Funds total net assets (determined after deducting the amount of such dividend or distribution) immediately after the distribution.
Distribution
Preference. The Preferred Shares would have complete priority over the Common Shares as to distribution of assets.
Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Fund, holders of Preferred Shares would be entitled to receive a preferential liquidating distribution (expected to equal the original purchase price per share plus accumulated and unpaid dividends thereon, whether or not
earned or declared) before any distribution of assets is made to holders of Common Shares.
Voting Rights. Preferred Shares are required to be voting shares and to have equal voting rights with Common Shares. Except as otherwise indicated in this Prospectus or the
SAI and except as otherwise required by applicable law, holders of Preferred Shares would vote together with Common Shareholders as a single class.
Holders of Preferred Shares, voting as a separate class, would be entitled to elect two of the Funds trustees (following the
establishment of the Fund by an initial trustee, the Declaration provides for a total of no less than two and no more than fifteen trustees). The remaining trustees would be elected by Common Shareholders and holders of Preferred Shares, voting
together as a single class. In the unlikely event that two full years of accrued dividends are unpaid on the Preferred Shares, the holders of all outstanding Preferred Shares, voting as a separate class, would be entitled to elect a majority of the
Funds trustees until all dividends in arrears have been paid or declared and set apart for payment. In order for the Fund to take certain actions or enter into certain transactions, a separate class vote of holders of Preferred Shares would be
required, in addition to the single class vote of the holders of Preferred Shares and Common Shares. See Certain Provisions in the Declaration of Trust and the SAI under Description of SharesPreferred SharesVoting
Rights.
Redemption, Purchase and Sale of
Preferred Shares. The terms of the Preferred Shares may provide that they may be redeemed by the issuer at certain times, in whole or in part, at the original purchase price per share plus accumulated dividends. Any
redemption or purchase of Preferred Shares by the Fund would reduce the leverage applicable to Common Shares, while any issuance of such shares by the Fund would increase such leverage.
In the event of any future issuance of Preferred Shares, the Fund likely would apply for ratings from an
nationally recognized statistical rating organization (NRSRO). In such event, as long as Preferred Shares are outstanding, the composition of the Funds portfolio would reflect guidelines established by such NRSRO. Based on previous
guidelines established by such NRSROs for the securities of other issuers, the Fund anticipates that the guidelines may impose asset coverage or portfolio composition requirements that are more stringent than those imposed on the Fund by the 1940
Act. However, at this time, no assurance can be given as to the nature or extent of the guidelines that may be imposed in connection with obtaining a rating of any Preferred Shares.
53
Borrowings
As a non-fundamental policy, the Fund will not leverage its capital structure by issuing senior securities such as preferred shares or
debt instruments. However, the Declaration authorizes the Fund, without approval of the Common Shareholders, to borrow money. In this connection, the Fund may issue notes or other evidence of indebtedness (including bank borrowings or commercial
paper) and may secure any such borrowings by mortgaging, pledging or otherwise subjecting as security the Funds assets. In connection with such borrowing, the Fund may be required to maintain minimum average balances with the lender or to pay
a commitment or other fee to maintain a line of credit. Any such requirements would increase the cost of borrowing over the stated interest rate. Under the requirements of the 1940 Act, the Fund, immediately after any such borrowings, must have an
asset coverage of at least 300%. With respect to any such borrowings, asset coverage means the ratio that the value of the total assets of the Fund, less all liabilities and indebtedness not represented by senior securities (as defined
in the 1940 Act), bears to the aggregate amount of such borrowing represented by senior securities issued by the Fund. As with the issuance of Preferred Shares, certain types of borrowing may result in the Fund being subject to certain restrictions
imposed by guidelines of one or more rating agencies that may issue ratings for commercial paper or notes issued by the Fund. Such restrictions may be more stringent than those imposed by the 1940 Act.
The rights of lenders to the Fund to receive interest on and
repayment of principal of any such borrowings would be senior to those of the Common Shareholders, and the terms of any such borrowings may contain provisions that limit certain activities of the Fund, including the payment of dividends to Common
Shareholders in certain circumstances. Further, the 1940 Act would (in certain circumstances) grant to the lenders to the Fund certain voting rights in the event of default in the payment of interest on or repayment of principal. In the event that
such provisions would impair the Funds status as a RIC under the Code, the Fund would repay the borrowings. Any borrowing will likely be ranked senior or equal to all other existing and future borrowings of the Fund. The Fund also may borrow
up to an additional 5% of its total assets for temporary purposes. See Investment Restrictions in the SAI.
CERTAIN PROVISIONS IN THE DECLARATION OF TRUST
Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the
obligations of the Fund. However, the Declaration contains an express disclaimer of shareholder liability for debts or obligations of the Fund and requires that notice of such limited liability be given in each agreement, obligation or instrument
entered into or executed by the Fund or the trustees. The Declaration further provides for indemnification out of the assets and property of the Fund for all loss and expense of any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund would be unable to meet its obligations. The Fund believes that the likelihood of such circumstances is
remote.
The Declaration includes provisions that
could limit the ability of other entities or persons to acquire control of the Fund or to convert the Fund to open-end status. Specifically, the Declaration requires a vote by holders of at least two-thirds of the Common Shares and, if issued,
Preferred Shares, voting together as a single class, except as described below, to authorize (1) a conversion of the Fund from a closed-end to an open-end investment company, (2) a merger or consolidation of the Fund, or a series or class
of the Fund, with any corporation, association, trust or other organization or a reorganization of the Fund, or a series or class of the Fund, (3) a sale, lease or transfer of all or substantially all of the Funds assets (other than in
the regular course of the Funds investment activities), (4) in certain circumstances, a termination of the Fund, or a series or class of the Fund or (5) a removal of trustees by shareholders, and then only for cause, unless, with
respect to (1) through (4), such transaction has already been authorized by the affirmative vote of two-thirds of the total number of trustees fixed in accordance with the Declaration or the By-laws, in which case the affirmative vote of the
holders of at least a majority of the Funds Common Shares and, if issued, Preferred Shares outstanding at the
54
time, voting together as a single class, would be required; provided, however, that where only a particular class or series is affected (or, in the case of removing a trustee, when the trustee
has been elected by only one class), only the required vote by the applicable class or series would be required. Approval of shareholders would not be required, however, for any transaction, whether deemed a merger, consolidation, reorganization or
otherwise whereby the Fund issues shares in connection with the acquisition of assets (including those subject to liabilities) from any other investment company or similar entity. In the case of the conversion of the Fund to an open-end investment
company, or in the case of any of the foregoing transactions constituting a plan of reorganization that adversely affects the holders of any outstanding Preferred Shares, the action in question would also require the affirmative vote of the holders
of at least two-thirds of the Preferred Shares outstanding at the time, voting as a separate class, or, if such action has been authorized by the affirmative vote of two-thirds of the total number of trustees fixed in accordance with the Declaration
or the By-laws, the affirmative vote of the holders of at least a majority of the Preferred Shares outstanding at the time, voting as a separate class. None of the foregoing provisions may be amended except by the vote of at least two-thirds of the
Common Shares and, if issued, Preferred Shares, voting together as a single class. The votes required to approve the conversion of the Fund from a closed-end to an open-end investment company or to approve transactions constituting a plan of
reorganization that adversely affects the holders of any outstanding Preferred Shares are higher than those required by the 1940 Act. The Board believes that the provisions of the Declaration relating to such higher votes are in the best interest of
the Fund and its shareholders. The Board is divided into three classes, with each class serving a different term. This staggered Board structure could delay for up to two years the replacement of a majority of the Board. See the SAI under
Certain Provisions in the Declaration of Trust.
The Declaration provides that the obligations of the Fund are not binding upon the trustees of the Fund individually, but only upon the assets and property of the Fund, and that the trustees shall not be
liable for errors of judgment or mistakes of fact or law. Nothing in the Declaration, however, protects a trustee against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
The provisions of the Declaration described above could have the effect of depriving the Common Shareholders of opportunities to sell their Common Shares at a premium over the then current market price of
the Common Shares by discouraging a third party from seeking to obtain control of the Fund in a tender offer or similar transaction. The overall effect of these provisions is to render more difficult the accomplishment of a merger or the assumption
of control by a third party. They provide, however, the advantage of potentially requiring persons seeking control of the Fund to negotiate with its management regarding the price to be paid and facilitating the continuity of the Funds
investment objective and policies. The Board of the Fund has considered the foregoing anti-takeover provisions and concluded that they are in the best interests of the Fund and its Common Shareholders.
Reference should be made to the Declaration on file with the
SEC for the full text of these provisions.
REPURCHASE OF FUND SHARES; CONVERSION TO OPEN-END FUND
The Fund is a closed-end investment company and as such its
shareholders will not have the right to cause the Fund to redeem their shares. Instead, the Common Shares will trade in the open market at a price that will be a function of several factors, including distribution levels (which are in turn affected
by expenses), NAV, distribution stability, relative demand for and supply of such shares in the market, general market and economic conditions and other factors. Because shares of closed-end investment companies may frequently trade at prices lower
than NAV, the Funds Board has currently determined that, at least annually, it will consider action that might be taken to reduce or eliminate any material discount from NAV in respect of Common Shares, which may include the repurchase of such
shares in the open market or in private transactions, the making of a tender offer for such shares at NAV, or the conversion of the Fund to an open-end investment company. The Fund cannot assure you that its Board will decide to take any of these
actions, or that share repurchases or tender offers will
55
actually reduce market discount. On August 9, 2019, the Funds Board renewed the Funds open market share repurchase program under which the Fund may repurchase up to 10% of its
Common Shares. Since the inception of the Funds share repurchase program through April 24, 2020, the Fund has not repurchased any Common Shares under the program.
If the Fund converted to an open-end investment company, it
would be required to redeem all Preferred Shares then outstanding (requiring in turn that it liquidate a portion of its investment portfolio), and the Common Shares would no longer be listed on Nasdaq or elsewhere. In contrast to a closed-end
investment company, shareholders of an open-end investment company may require the company to redeem their shares at any time (except in certain circumstances as authorized by the 1940 Act or the rules thereunder) at their NAV, less any redemption
charge that is in effect at the time of redemption. As a result, conversion to open-end status may require changes in the management of the Funds portfolio in order to meet the liquidity requirements applicable to open-end funds. Because
portfolio securities may have to be liquidated to meet redemptions, conversion could affect the Funds ability to meet its investment objective or to use certain investment policies and techniques described above. If converted to an open-end
fund, the Fund expects to pay all redemptions in cash, but intends to reserve the right to pay redemption requests in a combination of cash or securities. If such partial payment in securities were made, investors may incur brokerage costs in
converting such securities to cash. If the Fund were converted to an open-end fund, it is likely that new Common Shares would be sold at NAV plus a sales load. See the SAI under Certain Provisions in the Declaration of Trust for a
discussion of the voting requirements applicable to the conversion of the Fund to an open-end investment company.
Before deciding whether to take any action if the Common Shares trade below NAV, the Board would consider all relevant factors, including
the extent and duration of the discount, the liquidity of the Funds portfolio, the impact of any action that might be taken on the Fund or its shareholders, and market considerations. Based on these considerations, even if the Funds
shares should trade at a discount, the Board may determine that, in the interest of the Fund and its shareholders, no action should be taken. See the SAI under Repurchase of Fund Shares; Conversion to Open-End Fund for a further
discussion of possible action to reduce or eliminate such discount to NAV.
TAX MATTERS
The following is a general summary of certain U.S. federal income tax consequences that may be relevant to a shareholder that acquires, holds and/or disposes of shares of the Fund. This discussion only
addresses U.S. federal income tax consequences to U.S. shareholders who hold their shares as capital assets and does not address all of the U.S. federal income tax consequences that may be relevant to particular shareholders in light of their
individual circumstances. This discussion also does not address the tax consequences to shareholders who are subject to special rules, including, without limitation, shareholders with large positions in the Fund, financial institutions, insurance
companies, dealers in securities or foreign currencies, foreign holders, persons who hold their shares as or in a hedge against currency risk, a constructive sale, or conversion transaction, holders who are subject to the federal alternative minimum
tax, or tax-exempt or tax-deferred plans, accounts, or entities. In addition, the discussion does not address any state, local, or foreign tax consequences. The discussion reflects applicable tax laws of the United States as of the date of this
Prospectus, which tax laws may be changed or subject to new interpretations by the courts or the Internal Revenue Service (IRS) retroactively or prospectively. No attempt is made to present a detailed explanation of all U.S. federal
income tax concerns affecting the Fund and its shareholders, and the discussion set forth herein does not constitute tax advice. Investors are urged to consult their own tax advisers to determine the specific tax consequences to them of
investing in the Fund, including the applicable federal, state, local and foreign tax consequences to them and the effect of possible changes in tax laws.
The Fund has elected to be treated, and intends to qualify
each year as a RIC under Subchapter M of the Code. In order to qualify as a RIC, the Fund must satisfy certain requirements regarding the sources of its
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income, the diversification of its assets and the distribution of its income. As a RIC, the Fund is not expected to be subject to federal income tax on the income and gains it timely distributes
to its shareholders.
The Fund invests
primarily in equity securities. The Fund may distribute to its shareholders amounts that are treated as long-term capital gain or ordinary income (which may include short-term capital gains). These distributions may be subject to federal, state and
local taxation, depending on a shareholders situation. If so, they are taxable whether or not such distributions are reinvested. Net capital gain distributions (the excess of net long-term capital gain over net short-term capital loss) are
generally taxable at rates applicable to long-term capital gains regardless of how long a shareholder has held its shares. Long-term capital gains are currently taxable to non-corporate shareholders at a maximum federal income tax rate of 20%. In
addition, certain individuals, estates and trusts are subject to a 3.8% Medicare tax on net investment income, including net capital gains and other taxable dividends. Corporate shareholders are taxed on capital gain at the same 21% rate applicable
to ordinary income. The Fund expects that a portion of its distributions to shareholders from its investments may qualify for the dividends-received deduction available to corporate shareholders and as qualified dividend income to
non-corporate shareholders; provided certain holding period and other requirements are satisfied. Distributions in excess of the Funds current and accumulated earnings and profits will represent a return of capital for federal income tax
purposes to the extent of the shareholders basis in the shares and thus will generally not be taxable to the shareholder. To the extent such distributions exceed the shareholders basis in the shares, they will be treated as gain from the
sale of such shares and will be treated as capital gain (assuming the shares are held as a capital asset).
In order for some portion of the dividends received by a Fund shareholder to be qualified dividend income, the Fund must meet certain
holding period and other requirements with respect to some portion of the dividend-paying stocks in its portfolio and the shareholder must meet the same holding period and other requirements with respect to the shareholders Fund shares. A
dividend will not be treated as qualified dividend income (at either the Fund or shareholder level) (i) if the dividend is received with respect to any share of stock held (or treated as held) for fewer than 61 days during the 121-day
period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain preferred stock, 91 days during the 181-day period beginning 90 days before such
date), (ii) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property, (iii) if the recipient
elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest, or (iv) if the dividend is received from a foreign corporation that is (a) not eligible for the
benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign corporation that is readily tradable on an established securities market in the United States) or (b) treated
as a passive foreign investment company.
In
general, dividends of net investment income received by corporate shareholders of the Fund will qualify for the 50% dividends-received deduction generally available to corporations to the extent of the amount of eligible dividends received by the
Fund from domestic corporations for the taxable year. A dividend received by the Fund will not be treated as a qualifying dividend (i) if it has been received with respect to any share of stock that the Fund has held (or is treated as holding)
for less than 46 days (91 days in the case of certain preferred stock) during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend (during the 181-day period beginning 90 days before such date in the case of certain preferred stock) or (ii) to the extent that the Fund is under an obligation (pursuant to a short sale or otherwise) to make related
payments with respect to positions in substantially similar or related property. Moreover, the dividends-received deduction may be disallowed or reduced (i) if a corporate shareholder fails to satisfy the foregoing requirements with respect to
its shares of the Fund or (ii) by application of various provisions of the Code (for instance, the dividends-received deduction is reduced in the case of a dividend received on debt-financed portfolio stock (generally, stock acquired with
borrowed funds)). For purposes of determining the holding period for stock on which a dividend is received, such holding period is reduced for any period the recipient has an option to sell, is under a contractual obligation to sell or has made (and
not closed) a short sale of substantially identical stock or securities, and in certain other circumstances.
57
The straddle rules discussed below could cause distributions that would otherwise qualify
for the dividends-received deduction or constitute qualified dividend income to fail to satisfy the applicable holding period requirements.
As a RIC, the Fund will not be subject to federal income tax in any taxable year provided that it meets certain distribution requirements.
The Fund may retain for investment some (or all) of its net capital gain. If the Fund retains any net capital gain or investment company taxable income, it will be subject to tax at the regular corporate rate on the amount retained. If the Fund
retains any net capital gain, it may designate the retained amount as undistributed capital gains in a notice to its shareholders who, if subject to federal income tax on long-term capital gains, (i) will be required to include in income for
federal income tax purposes, as long-term capital gain, their share of such undistributed amount; (ii) will be entitled to credit their proportionate shares of the federal income tax paid by the Fund on such undistributed amount against their
federal income tax liabilities, if any; and (iii) may claim refunds to the extent the credit exceeds such liabilities. For federal income tax purposes, the basis of shares owned by a shareholder of the Fund will be increased by an amount equal
to the difference between the amount of undistributed capital gains included in the shareholders gross income and the tax deemed paid by the shareholder under clause (ii) of the preceding sentence.
Distributions declared by the Fund to shareholders of record
in October, November or December and paid during the following January will be treated as having been paid by the Fund and received by shareholders in the year the distributions were declared.
Amounts not distributed on a timely basis in accordance with
a calendar year distribution requirement are subject to a nondeductible 4% federal excise tax. To prevent imposition of the excise tax, the Fund must distribute during each calendar year an amount at least equal to the sum of (i) 98% of its
ordinary income (not taking into account any capital gains or losses) for the calendar year, (ii) 98.2% of its capital gains in excess of its capital losses (adjusted for certain ordinary losses) for the one-year period ending October 31
of the calendar year, and (iii) any ordinary taxable income and capital gains for previous years that were not distributed during those years and on which the Fund paid no U.S. federal income tax. To prevent application of the excise tax, the
Fund intends to make distributions in accordance with the calendar year distribution requirement.
Each shareholder will receive an annual statement summarizing the shareholders distributions.
The Funds investments may be subject to special provisions of the Code that may, among other things, (i) disallow, suspend or
otherwise limit the allowance of certain losses or deductions, (ii) convert lower taxed long-term capital gains into higher taxed short-term capital gains or ordinary income, (iii) convert an ordinary loss or a deduction into a capital
loss, (iv) cause the Fund to recognize income or gain without a corresponding receipt of cash, (v) adversely alter the characterization of certain Fund investments or distributions, and/or (vi) affect the Funds ability to
qualify as a RIC.
The Fund may invest in, or
write, certain futures and options contracts subject to section 1256 of the Code (Section 1256 Contracts). Some of the Funds index call options may be Section 1256 Contracts. In general, any gain or loss arising from the lapse,
closing out or exercise of a Section 1256 Contract is treated as 60% long-term and 40 % short-term capital gain or loss. In addition, the Fund generally will be required to mark to market (i.e., treat as sold for fair market
value) each outstanding index option position that is a Section 1256 Contract as the close of each taxable year (and on October 31 of each year for excise tax purposes). If a Section 1256 Contract held by the Fund at the end of a taxable year is
sold in the following year, the amount of any gain or loss realized on such sale will be adjusted to reflect the gain or loss previously taken into account under the mark to market rules.
The Funds index call options that do not qualify as
Section 1256 Contracts under the Code generally will be treated as equity options governed by Code section 1234. Pursuant to Code section 1234, if a written option
58
expires unexercised, the premium received is short-term capital gain to the Fund. If the Fund enters into a closing transaction, the difference between the premium received for writing the
option, and the amount paid to close out its position generally is short-term capital gain or loss.
Offsetting positions held by the Fund involving certain derivative instruments, such as options, forward, and futures, as well as its long
and short positions in portfolio securities, may be considered, for U.S. federal income tax purposes, to constitute straddles. Straddles are defined to include offsetting positions in actively traded personal property. For
instance, a straddle can arise if the Fund writes a certain covered call option on a stock (i.e., a call on a stock owned by the Fund), or writes a call option on a stock index to the extent the Funds stock holdings (and any subset
thereof) and the index on which it has written a call overlap sufficiently to constitute a straddle under applicable Treasury Regulations. The tax treatment of straddles is governed by section 1092 of the Code which, in certain
circumstances, overrides or modifies the rules applicable to Section 1256 Contracts described above. If the Fund is treated as entering into a straddle and at least one (but not all) of the Funds positions in derivative
contracts comprising a part of such straddle is a Section 1256 Contracts, described above, then such straddle could be characterized as a mixed straddle. The Fund may make one or more elections with respect to mixed
straddles. Depending upon which election is made, if any, the results with respect to the Fund may differ. Generally, to the extent the straddle rules apply to positions established by the Fund, losses realized by the Fund may be deferred to
the extent of unrealized gain in any offsetting positions. Moreover, as a result of the straddle rules, short-term capital loss on straddle positions may be recharacterized as long-term capital loss, and long-term capital gain may be characterized
as short-term capital gain. In addition, the existence of a straddle can cause the holding periods to be tolled on the offsetting positions. As a result, the straddle rules could cause distributions that would otherwise constitute qualified
dividend income or qualify for the dividends-received deduction to fail to satisfy the applicable holding period requirements described above. Furthermore, the Fund may be required to capitalize, rather than deduct currently, any interest
expense and carrying charges applicable to a position that is part of a straddle, including any interest on indebtedness incurred or continued to purchase or carry any positions that are part of a straddle. The application of the straddle rules to
certain offsetting Fund positions can therefore affect the amount, timing and/or character of distributions to shareholders, and may result in significant differences from the amount, timing and/or character of distributions that would have been
made by the Fund if it had not entered into offsetting positions in respect of certain of its portfolio securities.
If the Fund enters into a constructive sale of any appreciated financial position in its portfolio, the Fund will be treated
as if it had sold and immediately repurchased the property and must recognize gain (but not loss) with respect to that position. A constructive sale of an appreciated financial position occurs when the Fund enters into certain offsetting
transactions with respect to the same or substantially identical property, including, but not limited to: (i) a short sale; (ii) an offsetting notional principal contract; (iii) a futures or forward contract; or (iv) other
transactions identified in future Treasury Regulations. The character of the gain from constructive sales will depend upon the Funds holding period in the appreciated financial position. Losses realized from a sale of a position that was
previously the subject of a constructive sale will be recognized when the position is subsequently disposed of. The character of such losses will depend upon the Funds holding period in the position beginning with the date the constructive
sale was deemed to have occurred and the application of various loss deferral provisions in the Code. Constructive sale treatment does not apply to certain closed transactions, including if such a transaction is closed on or before the 30th day
after the close of the Funds taxable year and the Fund holds the appreciated financial position unhedged throughout the 60-day period beginning with the day such transaction was closed.
The redemption, sale or exchange of shares normally will result in capital gain or loss to shareholders who
hold their shares as capital assets. Generally, a shareholders gain or loss will be long-term capital gain or loss if the shares have been held for more than one year. The gain or loss on shares held for one year or less will generally be
treated as short-term capital gain or loss. Present law taxes both long-term and short-term capital gains of corporations at the same rates applicable to ordinary income. For non-corporate taxpayers, however, long-term capital gains are currently
taxed at a maximum federal income tax rate of 20%, while short-term capital gains and other ordinary income are currently taxed at ordinary income rates. An additional 3.8% Medicare tax may also apply to certain individual, estate or trust
shareholders capital gain from the sale or other
59
disposition of their shares. Any loss on the sale or disposition of shares held for six months or less will be treated as a long-term capital loss to the extent of any net capital gain
distributions received by the shareholder on such shares. Any loss realized on a sale or exchange of shares of the Fund will be disallowed to the extent those shares of the Fund are replaced by other substantially identical shares of the Fund or
other substantially identical stock or securities (including through reinvestment of dividends) within a period of 61 days beginning 30 days before and ending 30 days after the date of disposition of the original shares. In that event, the basis of
the replacement shares will be adjusted to reflect the disallowed loss. The deductibility of capital losses is subject to limitations.
The Fund may be required to withhold U.S. federal income tax at a rate of 24% from all distributions and redemption proceeds payable to a
shareholder if the shareholder fails to provide the Fund with his, her or its correct taxpayer identification number or to make required certifications, or if the shareholder has been notified by the IRS (or the IRS notifies the Fund) that he, she
or it is subject to backup withholding. Backup withholding is not an additional tax; rather, it is a way in which the IRS ensures it will collect taxes otherwise due. Any amounts withheld may be credited against a shareholders U.S. federal
income tax liability.
CUSTODIAN AND TRANSFER AGENT
The custodian of the Funds assets is State Street
Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111 (the Custodian). The Custodian performs custodial, fund accounting and portfolio accounting services. The Funds transfer, shareholder services and dividend
paying agent is Computershare Inc. and Computershare Trust Company, N.A. Computershare is located at 250 Royall Street, Canton, Massachusetts 02021.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP, an independent registered public accounting firm, provides auditing services to the
Fund. The principal business address of PricewaterhouseCoopers LLP is located at 1 North Wacker Drive, Chicago, Illinois, 60606.
LEGAL OPINION
Certain legal matters in connection with the Common Shares will be passed upon for the Fund by Morgan, Lewis & Bockius LLP,
Washington, DC.
OTHER MATTERS
The Fund is not sponsored, endorsed, sold or promoted by The Nasdaq Stock Market, Inc. or its affiliates (Nasdaq,
with its affiliates, are referred to as the Corporations). The Corporations have not passed on the legality or suitability of, or the accuracy or adequacy of descriptions and disclosures relating to, the Fund. The Corporations make no
representation or warranty, express or implied to the owners of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly, or the ability of the Nasdaq 100 Index® to track general stock market performance. The Corporations only relationship to the Fund is in the licensing
of the Nasdaq®, Nasdaq 100®, and Nasdaq 100 Index®
trademarks, and certain trade names of the Corporations and the use of the Nasdaq 100 Index® which is
determined, composed and calculated by Nasdaq without regard to the Fund. Nasdaq has no obligation to take the needs of the Fund or the owners of the Fund into consideration in determining, composing or calculating the Nasdaq 100 Index®. The Corporations are not responsible for and have not participated in the determination of the timing of, prices
at, or quantities of the Fund to
60
be issued or in the determination or calculation of the equation by which the Fund is to be converted into cash. The Corporations have no liability in connection with the administration,
marketing or trading of the Fund.
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE NASDAQ 100 INDEX® OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT(S), OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE NASDAQ 100 INDEX® OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ 100 INDEX® OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL,
INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
AVAILABLE INFORMATION
The Fund is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the Exchange Act) and the 1940 Act and is required to file reports, proxy statements and other information with the SEC. Reports, proxy statements, and other information about the
Fund can be inspected at the offices of Nasdaq.
This Prospectus does not contain all of the information in the Funds Registration Statement, including amendments, exhibits, and
schedules.
Additional information about the Fund
and the Common Shares can be found in the Funds Registration Statement (including amendments, exhibits, and schedules) on Form N-2 filed with the SEC. The SEC maintains a web site (http://www.sec.gov) that contains the Funds
Registration Statement, other documents incorporated by reference, and other information the Fund has filed electronically with the SEC, including proxy statements and reports filed under the Exchange Act.
61
TABLE OF CONTENTS FOR THE
STATEMENT OF ADDITIONAL INFORMATION
62
Up to 11,355,021 Common Shares
Nuveen Nasdaq 100 Dynamic
Overwrite Fund
PROSPECTUS
May 1, 2020
EPR-QQQX-0520D
UP TO 11,355,021 COMMON SHARES
NUVEEN NASDAQ 100 DYNAMIC OVERWRITE FUND
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2020
Nuveen Nasdaq 100 Dynamic Overwrite Fund (the Fund) is a non-diversified, closed-end
management investment company.
The Fund was created from the reorganization of the NASDAQ Premium Income & Growth
Fund Inc. and the Nuveen Equity Premium Advantage Fund into the Fund. The NASDAQ Premium Income & Growth Fund Inc. is treated as the survivor of the reorganization for accounting and performance reporting purposes. Accordingly, all
performance information shown for the Fund for periods prior to December 22, 2014 is that of NASDAQ Premium Income & Growth Fund Inc. The reorganization became effective prior to the opening of business on December 22, 2014.
This Statement of Additional Information (the SAI) relating to common shares of the Fund (Common
Shares) does not constitute a prospectus, but should be read in conjunction with the Funds Prospectus relating thereto dated May 1, 2020 (the Prospectus). This SAI does not include all information that a prospective investor
should consider before purchasing Common Shares. Investors should obtain and read the Funds Prospectus prior to purchasing such shares. In addition, the Funds financial statements, and the independent registered public accounting
firms report therein, included in the Funds annual report dated December 31, 2019 are incorporated herein by reference.
A copy of the Funds Prospectus and Annual Report to shareholders and other information about the Fund may be obtained without charge by calling (800) 257-8787, by writing to the Fund or from the
Funds website (http://www.nuveen.com). You may also obtain a copy of the Funds Prospectus on the U.S. Securities and Exchange Commissions (the SEC) website (http://www.sec.gov). Capitalized terms used but not defined in
this SAI have the meanings ascribed to them in the Prospectus.
TABLE OF CONTENTS
-i-
USE OF PROCEEDS
The net proceeds from the issuance of Common Shares hereunder will be invested in accordance with the Funds investment objective
and policies as stated below. Pending investment, the timing of which may vary depending on the size of the investment but in no case is expected to exceed 30 days, it is anticipated that the proceeds will be invested in short-term or long-term
securities issued by the U.S. Government or its agencies or instrumentalities or in high-quality, short-term money market instruments.
INVESTMENT OBJECTIVES AND POLICIES
The
Funds investment objective is to seek attractive total return with less volatility than the Nasdaq 100 Index. There can be no assurance that the Fund will achieve its investment objective. The Funds investment objective is fundamental
and may not be changed without the approval of the holders of a majority of the outstanding Common Shares and, if applicable, Preferred Shares, if any, voting together as a single class, and of the holders of a majority of the outstanding Preferred
Shares, if any, voting as a separate class. When used with respect to particular shares of the Fund, a majority of the outstanding shares means (i) 67% or more of the shares present at a meeting, if the holders of more than 50% of the
shares are present or represented by proxy or (ii) more than 50% of the shares, whichever is less.
Under normal market
circumstances, the Fund will invest its Managed Assets (as defined below) in an equity portfolio made up of securities comprising the Nasdaq 100 Index (or securities that have economic characteristics that are similar to those securities comprising
the Nasdaq 100 Index) that seeks to substantially replicate price movements of the Nasdaq 100 Index and is designed to support the Funds Option Strategy (as defined below) (the Equity Portflio). The Fund does not intend that the
Equity Portfolio will contain exactly the same stocks as the Nasdaq 100 Index. The Fund intends to maintain an overlap of less than 70% between the stocks held in the Equity Portfolio and the stocks comprising the Nasdaq 100 Index. Under normal
circumstances, the Fund will invest at least 80% of Assets (as defined below) in the Equity Portfolio. This policy is not considered to be fundamental by the Fund and can be changed without a vote of the common shareholders. However, this policy may
only be changed by the Funds Board of Trustees (the Board) following the provision of 60 days prior written notice to common shareholders. Under normal circumstances, the Fund expects to invest substantially all (at least
90%) of its Managed Assets in its equity strategy or otherwise in pursuit of its investment objective.
The Funds
Options Strategy will consist of selling index call options, call options on custom baskets of securities and covered call options on individual securities. In addition to a primary emphasis on writing call options to reduce downside risk and
volatility of the Equity Portfolio, the Option Strategy as a secondary emphasis seeks additional return opportunities by capitalizing on inefficiencies in the options market through a variety of means including the use of call spreads and selling
put options. A call spread involves the sale and corresponding purchase of call options on the same underlying security, index or instrument. The Funds strategy of using the Nasdaq 100 Index as the relevant benchmark for its equity portfolio
and options strategy is not considered fundamental and can be changed without a vote of the common shareholders. However, any use of an alternative index must be approved by the Funds Board and is subject to the provision of 60 days
written notice to common shareholders.
Nuveen Fund Advisors, LLC (Nuveen Fund Advisors or the
Adviser) is the Funds investment adviser and is responsible for the Funds overall investment strategy and its implementation. The Adviser oversees Nuveen Asset Management, LLC (Nuveen Asset Management or the
Sub-Adviser), the Funds sub-adviser, in its management of the Funds portfolio. This oversight includes ongoing evaluation of the Sub-Advisers investment performance, portfolio allocations, quality of investment process
and personnel, compliance with Fund and regulatory guidelines, trade allocation and execution and other factors.
1
The securities or other instruments included in the Funds equity portfolio will be
selected and periodically rebalanced utilizing statistical methods including, but not limited to, optimization and a variety of other quantitative modeling techniques. However, due to U.S. federal income tax considerations, the Fund intends to limit
the overlap between the components of its equity portfolio (and any subset thereof) and the constituent securities of the Nasdaq 100 Index to less than 70% (generally based on the value of such components) on an ongoing basis. As a result, the Fund
will not hold all of the common stocks in the Nasdaq 100 Index, or in the same weightings as in the Nasdaq 100 Index, and returns on the Funds equity portfolio are not intended to exactly match those of the Nasdaq 100 Index. The 30% or greater
of the Funds equity portfolio invested in securities outside the Nasdaq 100 Index will be selected to match the characteristics of the index with limited tracking error.
Under normal market circumstances, the Fund will sell index call options, call options on custom baskets of securities and covered call options on individual securities. The Fund targets an overwrite
level of approximately 55% over time, and the overwrite level will vary, based on market conditions, between 35% and 75% of the value of the Funds equity portfolio. In applying the dynamic call option strategy, the Sub-Adviser is responsible
for determining the notional value, timing, type and terms of the options strategies used by the Fund. The Sub-Adviser actively manages the Funds options positions. In the Sub-Advisers discretion, the Fund may purchase back call options
or allow them to expire. To determine the options strategies used, the Sub-Adviser considers market factors, such as current market levels and volatility, and option-specific factors, including but not limited to premium/cost, exercise price and
expiration. The Sub-Adviser typically seeks to construct a portfolio of call options that is diversified across multiple strike prices and expiration dates based on current market expectations.
Under normal circumstances, the Fund may invest up to 20% of its Managed Assets in securities of non-U.S. issuers that are U.S.
dollar-denominated, which may include securities of issuers located, or conducting their business, in emerging market countries.
Assets means net assets of the Fund plus the amount of any borrowings for investment purposes. Managed Assets means the total assets of the Fund, minus the sum of its accrued
liabilities (other than Fund liabilities incurred for the express purpose of creating leverage). Total assets for this purpose shall include assets attributable to the Funds use of leverage (whether or not those assets are reflected in the
Funds financial statements for purposes of generally accepted accounting principles), and derivatives will be valued at their market value. As a non-fundamental policy, the Fund will not leverage its capital structure by issuing senior
securities such as preferred shares or debt instruments, but may enter into certain derivatives transactions that have the economic effect of leverage.
The Fund may enter into certain derivatives instruments in pursuit of its investment objective. Such instruments include futures contracts, forward contracts and swap agreements and other derivative
instruments consistent with the Funds investment objective and policies. These types of strategies may generate taxable income.
The Fund may, from time to time, manage its cash by investing a part of its assets in short-term, high quality fixed-income securities. Under normal circumstances, the Fund will invest no more than 10% of
its Managed Assets in such securities.
The Fund may invest in illiquid securities without limit.
Consistent with the Funds investment objective and policies, the Fund may invest in securities of other investment companies such
as, among others, exchange-traded funds (ETFs), subject to limitations imposed by the Investment Company Act of 1940 (the 1940 Act) and exemptive orders issued by the SEC.
There is no assurance that the Fund will achieve its investment objective.
2
INVESTMENT RESTRICTIONS
Except as described below, the Fund, as a fundamental policy, may not, without the approval of the holders of a majority of the
outstanding Common Shares and, if applicable, Preferred Shares voting together as a single class, and of the holders of a majority of the outstanding Preferred Shares voting as a separate class, if applicable:
(1) Issue senior securities, as defined in the 1940 Act, other than (i) preferred shares that immediately after
issuance will have asset coverage of at least 200%, (ii) indebtedness that immediately after issuance will have asset coverage of at least 300%, or (iii) the borrowings permitted by investment restriction (2) set forth below;
(2) Borrow money, except as permitted by the 1940 Act and exemptive orders granted under the 1940 Act;
(3) Act as underwriter of another issuers securities, except to the extent that the Fund may be deemed to be an
underwriter within the meaning of the Securities Act of 1933, as amended (the 1933 Act), in connection with the purchase and sale of portfolio securities or acting as an agent or one of a group of
co-agents in originating adjustable rate senior loans;
(4) Invest more
than 25% of its total assets in securities of issuers in any one industry, except that if 25% or more of the securities in the Index are issued by companies in one industry the Fund will concentrate in that industry unless the Fund would need to
avoid concentration in order to implement its investment strategy as it relates to avoiding the adverse tax treatment associated with straddle positions as described in the Funds prospectus;
(5) Purchase or sell real estate, commodities or commodity contracts, except that, to the extent permitted by applicable
law, the Fund may invest in securities or other investments directly or indirectly secured by real estate or interests therein or issued by entities that invest in real estate or interests therein, and the Fund may purchase and sell financial
futures contracts and options thereon; and
(6) Make loans, except as permitted by the 1940 Act and exemptive
orders granted under the 1940 Act.
For purposes of the industry concentration policy referred to in investment restriction
number 4 above, the term industry refers to the separate industries that comprise the ten S&P 500 economic sectors included in Standard & Poors and Morgan Stanley Capital International Global Industry Classification
Standard.
Notwithstanding the limitation set forth in subparagraph (4) above, both the institution selling the loan and
the ultimate borrower would be considered issuers for purposes of this concentration policy unless the participation shifts to the Fund the direct debtor-creditor relationship with the borrower.
Under the 1940 Act, the Fund may invest only up to 10% of its total assets in the aggregate in shares of other investment companies and
only up to 5% of its total assets in any one investment company, provided the investment does not represent more than 3% of the voting stock of the acquired investment company at the time such shares are purchased. As a stockholder in any investment
company, the Fund will bear its ratable share of that investment companys expenses, and will remain subject to payment of the Funds management, advisory and administrative fees with respect to assets so invested. Holders of Common Shares
would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. In addition, the securities of other investment companies may be leveraged and therefore will be subject to the same leverage risks
described herein. The Fund will consider the investments of underlying investment companies when determining compliance with Rule 35d-1 under the 1940 Act and when determining compliance with its own
concentration policy, in each case to the extent the Fund has sufficient information about such investments after making a reasonable effort to obtain current information about the investments of underlying companies.
3
In addition to the foregoing fundamental investment policies, the Fund is also subject to
the following non-fundamental restrictions and policies, which may be changed by the Board. The Fund may not:
(1) sell securities short, except that the Fund may make short sales of securities if, at all times when a short position is open, the Fund owns at least an equal amount of such securities or securities
convertible into or exchangeable for, without payment of any further consideration, securities of the same issuer as, and equal in amount to, the securities sold short, and provided that transactions in options, futures contracts, options on futures
contracts, or other derivative instruments are not deemed to constitute selling securities short.
(2) purchase
securities of open-end or closed-end investment companies except in compliance with the 1940 Act or any exemptive relief obtained thereunder.
(3) purchase securities of companies for the purpose of exercising control, except to the extent that exercise by the Fund
of its rights under loan agreements would be deemed to constitute exercising control.
(4) make investments for
the purpose of exercising control or management.
(5) leverage its capital structure by issuing senior
securities such as preferred shares or debt instruments. However, the Fund may borrow for temporary or emergency purposes and may enter into certain derivatives transactions that have the economic effect of leverage by creating additional investment
exposure.
The restrictions and other limitations set forth above will apply only at the time of purchase of securities and
will not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of an acquisition of securities.
Although the Fund has no current intention to issue Preferred Shares or incur borrowings, the Fund may be subject to certain restrictions imposed by either guidelines of one or more nationally recognized
statistical rating organizations (NRSROs) that may issue ratings for Preferred Shares, if any, commercial paper or notes, or, if the Fund borrows from a lender, by the lender. These guidelines may impose asset coverage or portfolio
composition requirements that are more stringent than those imposed on the Fund by the 1940 Act. If these restrictions were to apply, it is not anticipated that these covenants or guidelines would impede Nuveen Fund Advisors or Nuveen Asset
Management from managing the Funds portfolio in accordance with the Funds investment objective and policies.
OVERALL FUND MANAGEMENT
Nuveen Fund Advisors is the Funds investment adviser and is responsible for the
Funds overall investment strategy and implementation.
Nuveen Fund Advisors will oversee Nuveen Asset Management in its
management of the Funds portfolio. This oversight will include ongoing evaluation of Nuveen Asset Managements investment performance, portfolio allocations, quality of investment process and personnel, compliance with Fund and regulatory
guidelines, trade allocation and execution and other factors.
Nuveen Asset Management will invest the Funds Managed
Assets in the Equity Portfolio that seeks to substantially replicate price movements of the Nasdaq 100 Index. Nuveen Asset Management also will manage the Funds Option Strategy. The Funds Option Strategy will consist of selling call
options covering between 35% and 75% of the value of the Funds equity portfolio, with a long-run target of 55%, in seeking to provide attractive total return with less volatility than the Nasdaq 100
Index. By selling call options on less than the full value of the Equity Portfolio, the Fund retains any potential capital appreciation or depreciation on the portion of the Equity Portfolio not effectively subject to the call options. In addition,
as a secondary emphasis, the Funds Option Strategy seeks additional return opportunities by capitalizing on inefficiencies in the options market through a variety of means including the use of call spreads and selling put options.
4
Investment Philosophy
Investment Philosophy. Nuveen Asset Management believes an option strategy that combines selling call options and holding an equity portfolio may provide attractive total
return with less volatility than holding a standalone equity portfolio. An actively managed option strategy may be an effective risk management tool that results in an improved
reward-to-risk ratio, greater return consistency and the potential for greater preservation of portfolio value in adverse markets.
Nuveen Asset Management believes index options may achieve better tax and transactional efficiency than options on individual stocks
because index options are cash-settled with known exercise dates. Additionally, markets for index options are deeper, more liquid and result in lower transaction costs.
Nuveen Asset Management further believes that its integrated strategy of selling index call options (supported by an underlying equity portfolio) should generally provide attractive total return with less
volatility than simply owning the underlying equity market index under three different stock market scenarios: (i) moderately rising markets; (ii) stable or flat markets; (iii) moderately down trending markets. In strongly rising
equity markets the option strategy would generally be expected to underperform the underlying index.
INVESTMENT PHILOSOPHY AND PROCESS
Investment Process.
Option Strategy. Nuveen Asset Management employs a dynamic option overwrite strategy consisting of writing (selling)
index call options, call options on custom baskets of securities, and covered call options on individual securities. The Fund targets an overwrite level (i.e., the ratio of the notional value of call options sold by the Fund to the market
value of the Funds Equity Portfolio) of 55% of the value of its Equity Portfolio over time, and the overwrite level will vary between 35% to 75% of the value of the Equity Portfolio based on the portfolio managers assessment of market
conditions. Nuveen Asset Managements option strategy is supported by investments in a portfolio of stocks that seek to substantially replicate the price movements of the Nasdaq 100 Index.
Nuveen Asset Management actively manages its option positions, purchasing back the Nasdaq 100 Index call options and/or selling
additional contracts based on relative value and risk/return analysis. To determine which Nasdaq 100 Index options to utilize, Nuveen Asset Management considers market factors, such as current market levels and volatility, and option-specific
factors (including but not limited to premium/cost, exercise price and expiration). Nuveen Asset Management seeks to construct a portfolio of index call options that is diversified across multiple strike prices and expiration dates.
Equity Portfolio. Nuveen Asset Management uses a multi-factor quantitative model to construct the Equity Portfolio. The model
evaluates approximately 9,000 domestic and non-U.S. stocks to construct a portfolio of 200 to 400 stocks that meets criteria and constraints established by Nuveen Asset Management. Portfolio parameters may
include, but are not limited to: tracking error of the portfolio to the Nasdaq 100 Index, overlap of holdings with the Nasdaq 100 Index and dividend yield. In addition, Nuveen Asset Management will consider the tax consequences of certain
transactions within the Equity Portfolio and intends to manage the portfolio in a tax-efficient manner by taking, for example, capital losses when possible to offset realized capital gains. Nuveen Asset
Management will rebalance and adjust the Equity Portfolio as necessary for tracking and tax management purposes.
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PORTFOLIO COMPOSITION
In addition to and supplementing the Funds Prospectus, the Funds portfolio will be composed of the investments described
below.
Common Stocks
The Fund expects to invest in a portfolio of individual common stocks designed to replicate the risk and return profile, and thereby substantially replicate price movements, of the Nasdaq 100 Index. The
Fund may also invest in other investment companies, including ETFs, that provide similar exposure to individual common stocks consistent with the Funds investment objective. Common stocks generally represent an ownership interest in an issuer,
without preference over any other class of securities, including such issuers debt securities, preferred stock and other senior equity securities. Common stocks are entitled to the income and increase in the value of the assets and business of
the issuer after all its debt obligations and obligations to preferred stockholders are satisfied. Common stocks generally have voting rights. Common stocks fluctuate in price in response to many factors, including historical and prospective
earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
An investment in the Fund should be made with an understanding of the risks that an investment in common stocks entails, including the risk that the financial condition of the issuers of the equity
securities or the general condition of the common stock market may worsen and the value of the equity securities and therefore the value of the Fund may decline. The Fund may not be an appropriate investment for those who are unable or unwilling to
assume the risks involved generally with an equity investment. The past market and earnings performance of any of the equity securities included in the Fund is not predictive of their future performance. Common stocks are especially susceptible to
general stock market movements and to volatile increases and decreases in value as market confidence in and perceptions of the issuers change. These perceptions are based on unpredictable factors, including expectations regarding government,
economic, monetary and fiscal policies, inflation and interest rates, economic expansion or contraction, and global or regional political, economic or banking crises.
Shareholders of common stocks have rights to receive payments from the issuers of those common stocks that are generally subordinate to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. Shareholders of common stocks of the type held by the Fund have a right to receive dividends only when and if, and in the amounts, declared by the issuers board of directors and have a right to participate in amounts
available for distribution by the issuer only after all other claims on the issuer have been paid or provided for. Common stocks do not represent an obligation of the issuer and, therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of additional debt securities or preferred stock will create prior claims for payment of principal, interest and dividends that could adversely affect the ability and inclination of
the issuer to declare or pay dividends on its common stock or the rights of holders of common stock with respect to assets of the issuer upon liquidation or bankruptcy. The value of common stocks is subject to market fluctuations for as long as the
common stocks remain outstanding, and thus the value of the equity securities in the Fund will fluctuate over the life of the Fund and may be more or less than the price at which they were purchased by the Fund. The equity securities held in the
Fund may appreciate or depreciate in value (or pay dividends) depending on the full range of economic and market influences affecting these securities, including the impact of the Funds purchase and sale of the equity securities and other
factors.
Option Strategy
An option contract is a contract that gives the holder of the option, in return for a premium, the right to buy from (in the case of a call) or sell to (in the case of a put) the writer of the option the
reference instrument underlying the option (or the cash value of the index) at a specified exercise price at any time during the term of the option. The writer of an option on a security has the obligation upon exercise of the option to deliver the
6
reference instrument (or the cash) upon payment of the exercise price or to pay the exercise price upon delivery of the reference instrument (or the cash). Upon exercise of an index option, the
writer of an option on an index is obligated to pay the difference between the cash value of the index and the exercise price multiplied by the specified multiplier for the index option. Options may be covered, meaning that the party
required to deliver the reference instrument if the option is exercised owns that instrument (or has set aside sufficient assets to meet its obligation to deliver the instrument). Options may be listed on an exchange or traded in the
over-the-counter (OTC) market. In general, exchange-traded options have standardized exercise prices and expiration dates and may require the parties to post margin against their obligations, and the performance of the parties
obligations in connection with such options is guaranteed by the exchange or a related clearing corporation. OTC options have more flexible terms negotiated between the buyer and the seller but are subject to counterparty risk. The ability of the
Fund to transact business with any one or any number of counterparties, the lack of any independent evaluation of the counterparties or their financial capabilities, and the absence of a regulated market to facilitate settlement, may increase the
potential for losses to the Fund. OTC options also involve greater liquidity risk. This risk may be increased in times of financial stress, if the trading market for OTC derivative contracts becomes limited.
In carrying out its Option Strategy, the Fund may write index call options on the Nasdaq 100 Index and other broad-based indices and may,
if the Sub-Adviser deems conditions appropriate, write call options on a variety of other equity market indices. As the seller of an index call option, the Fund receives a premium from the purchaser. The purchaser of the index call option has the
right to any appreciation in the value of the index over the exercise price upon the exercise of the call option or the expiration date. If, at expiration, the purchaser exercises the index option sold by the Fund, the Fund will pay the purchaser
the difference between the cash value of the index and the exercise price of the index option. The premium, the exercise price and the market value of the index determine the gain or loss realized by the Fund as the seller of the index call option.
The Fund may also write call options on custom baskets of securities. A custom basket call option is an OTC option with a
counterparty whose value is linked to the market value of a portfolio of underlying securities and is collateralized by a portion of the Funds equity portfolio. In designing the custom basket call options, the Sub-Adviser will primarily select
assets not held by the Fund. In order to minimize the difference between the returns of the underlying securities in the custom basket (commonly referred to as a tracking error), the Sub-Adviser will use optimization calculations when selecting the
individual securities for inclusion in the custom basket.
The Fund may also write single name call options on individual
stocks. With respect to call options written on individual securities, the Fund will not write naked or uncovered call options. A call option written by the Fund on an individual security is covered if the Fund owns the
security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration. The Fund, in effect, sells the potential appreciation in the value of the security subject to the call option in
exchange for the premium. The Fund may execute a closing purchase transaction with respect to an option it has sold and sell another option (with either a different exercise price or expiration date or both). The Funds objective in entering
into such a closing transaction will be to optimize net index option premiums. The cost of a closing transaction may reduce the net option premiums realized from the sale of the option. This reduction could be offset, at least in part, by
appreciation in the value of the underlying security held in the Funds equity portfolio, and by the opportunity to realize additional premium income from selling a new option.
The Fund may purchase put options. As the holder of a put option, the Fund has the right to sell the underlying instrument (or the cash
value of the index) at the exercise price at any time during the option period. The Fund may enter into closing sale transactions with respect to such options, exercise them or permit them to expire.
The Funds purchases and sales of put options result in put spreads. A put spread is when a fund sells one put
option and simultaneously buys an offsetting position in another put option. The maximum upside is the net premium collected and the maximum downside is equal to the difference in the respective strike prices, less the premium collected.
7
The Fund may purchase index put options if deemed strategically advisable by Nuveen Asset
Management based on the relative cost of index put options compared to the protection afforded the Equity Portfolio by such index put options. Index put options will give the Fund, as holder of the options, the right to receive a cash payment from
the seller of the options to the extent that the value of the Nasdaq 100 Index is lower than the options exercise price upon its expiration. If a put option purchased by the Fund is not sold or expires when it has remaining value, or if the
Nasdaq 100 Index remains above the exercise price of the options at expiration, the Fund will lose its entire investment in the index put option. Also, when an Nasdaq 100 Index put option is purchased to hedge all or part of the Funds Equity
Portfolio, the price of the index put option may move more or less than the value of the Equity Portfolio.
Risks of
Trading Options. The ability to successfully implement the Funds primary options strategy depends on the Sub-Advisers ability to react appropriately to pertinent market movements, which cannot be assured, and
is subject to various additional risks. There is no assurance that a liquid secondary market on an options exchange will exist for any particular exchange-traded option, or at any particular time. If the Fund is unable to effect a closing purchase
transaction with respect to covered options it has written, the Fund will not be able to sell the underlying securities or dispose of its segregated assets until the options expire or are exercised. Similarly, if the Fund is unable to effect a
closing sale transaction with respect to options it has purchased, it will have to exercise the options to realize any profit and will incur transaction costs upon the purchase or sale of underlying securities.
The value of the call options written by the Fund, which will be marked-to-market on a daily basis, will be affected by an increase in
interest rates, changes in the actual or perceived volatility of the Nasdaq 100 Index and the underlying common and the remaining time to the options expiration. The value of the options may also be adversely affected if the market for the
options becomes less liquid or smaller.
Reasons for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain options; (ii) restrictions may be imposed by an exchange on opening or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be
imposed with respect to particular classes or series of options; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or the Options Clearing Corporation (the
OCC) may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options on that exchange, if any, that had been issued by the OCC as a
result of trades on that exchange would continue to be exercisable in accordance with their terms.
Transactions by the Fund
in options on securities and indices will be subject to limitations established by each of the exchanges, boards of trade or other trading facilities governing the maximum number of options in each class that may be written or purchased by a single
investor or group of investors acting in concert. Thus, the number of options that the Fund may write may be affected by options written or purchased by other investment advisory clients of the Sub-Adviser. An exchange, board of trade or other
trading facility may order the liquidations of positions found to be in excess of these limits, and it may impose certain other sanctions.
The writing of options is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The successful use of
protective puts for hedging purposes depends in part on the Sub-Advisers ability to predict future price fluctuations and the degree of correlation between the options and securities markets.
The hours of trading for options may not conform to the hours during which the underlying securities are traded. To the extent that the
options markets close before the markets for the underlying securities, significant price movements can take place in the underlying markets that cannot be reflected in the options markets.
8
In addition to the risks of imperfect correlation between the Funds portfolio and the
index underlying the option, the purchase of securities index options involves the risk that the premium and transaction costs paid by the Fund in purchasing an option will be lost. This could occur as a result of unanticipated movements in the
price of the securities comprising the securities index on which the option is based.
Other Investments
The Fund may invest in other securities as described below:
U.S. Government Securities. U.S. government securities include (1) U.S. Treasury obligations, which differ in their interest rates, maturities and times of issuance:
U.S. Treasury bills (maturities of one year or less), U.S. Treasury notes (maturities of one year to ten years) and U.S. Treasury bonds (generally maturities of greater than ten years) and (2) obligations issued or guaranteed by U.S. government
agencies and instrumentalities that are supported by any of the following: (i) the full faith and credit of the U.S. Treasury, (ii) the right of the issuer to borrow an amount limited to a specific line of credit from the U.S. Treasury,
(iii) discretionary authority of the U.S. government to purchase certain obligations of the U.S. government agency or instrumentality or (iv) the credit of the agency or instrumentality. The Fund also may invest in any other security or
agreement collateralized or otherwise secured by U.S. government securities. Agencies and instrumentalities of the U.S. government include but are not limited to: Federal Land Banks, Federal Financing Banks, Banks for Cooperatives, Federal
Intermediate Credit Banks, Farm Credit Banks, Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association, the Student Loan Marketing Association, the
United States Postal Service, the Small Business Administration, the Tennessee Valley Authority and any other enterprise established or sponsored by the U.S. government. Because the U.S. government generally is not obligated to provide support to
its instrumentalities, the Fund will invest in obligations issued by these instrumentalities only if the Adviser determines that the credit risk with respect to such obligations is minimal.
Commercial Paper. Commercial paper represents short-term unsecured promissory notes issued in bearer form
by corporations such as banks or bank holding companies and finance companies.
Repurchase
Agreements. A repurchase agreement is a contractual agreement whereby the seller of securities (U.S. government securities or municipal bonds) agrees to repurchase the same security at a specified price on a future date
agreed upon by the parties. The agreed-upon repurchase price determines the yield during the Funds holding period. Repurchase agreements are considered to be loans collateralized by the underlying security that is the subject of the repurchase
contract. The Fund will enter into repurchase agreements only with registered securities dealers or domestic banks that, in the opinion of the Adviser, present minimal credit risk. The risk to the Fund is limited to the ability of the issuer to pay
the agreed-upon repurchase price on the delivery date; however, although the value of the underlying collateral at the time the transaction is entered into always equals or exceeds the agreed-upon repurchase price, if the value of the collateral
declines there is a risk of loss of both principal and interest. In the event of default, the collateral may be sold but the Fund might incur a loss if the value of the collateral declines, and might incur disposition costs or experience delays in
connection with liquidating the collateral. In addition, if bankruptcy proceedings are commenced with respect to the seller of the security, realization upon the collateral by the Fund may be delayed or limited. The Adviser will monitor the value of
the collateral at the time the transaction is entered into and at all times subsequent during the term of the repurchase agreement in an effort to determine that such value always equals or exceeds the agreed-upon repurchase price. In the event the
value of the collateral declines below the repurchase price, the Adviser will demand additional collateral from the issuer to increase the collateral to at least that of the repurchase price, including interest.
Securities Issued by Non-U.S. Issuers. The Fund may invest up to 20% of its Managed Assets in securities of
non-U.S. issuers that are U.S. dollar-denominated, which may include securities of issuers located, or conducting their business, in emerging market countries.
9
Securities of non-U.S. issuers include American Depositary Receipts (ADRs),
Global Depositary Receipts (GDRs) or other securities representing underlying shares of non-U.S. issuers. Positions in those securities are not necessarily denominated in the same currency as the common stocks into which they may be
converted. ADRs are receipts typically issued by an American bank or trust company evidencing ownership of the underlying securities. GDRs are U.S. dollar-denominated receipts evidencing ownership of non-U.S. securities. Generally, ADRs, in
registered form, are designed for the U.S. securities markets and GDRs, in bearer form, are designed for use in non-U.S. securities markets. The Fund may invest in sponsored or unsponsored ADRs. In the case of an unsponsored ADR, the Fund is likely
to bear its proportionate share of the expenses of the depository and it may have greater difficulty in receiving shareholder communications than it would have with a sponsored ADR.
Investors should understand and consider carefully the risks involved in investing in securities of non-U.S. issuers. Investing in
securities of non-U.S. issuers involves certain considerations comprising both risks and opportunities not typically associated with investing in securities of U.S. issuers. These considerations include: (i) less publicly available information
about non-U.S. issuers or markets due to less rigorous disclosure or accounting standards or regulatory practices; (ii) many non-U.S. markets are smaller, less liquid and more volatile, meaning that, in a changing market, the Adviser may not be
able to sell the Funds portfolio securities at times, in amounts or at prices they consider reasonable; (iii) potential adverse effects of fluctuations in currency exchange rates or controls on the value of the Funds investments;
(iv) the economies of non-U.S. countries may grow at slower rates than expected or may experience a downturn or recession; (v) the impact of economic, political, social or diplomatic developments may adversely affect the securities
markets; (vi) withholding and other non-U.S. taxes may decrease the Funds return; (vii) certain non-U.S. countries may impose restrictions on the ability of non-U.S. issuers to make payments of principal and/or interest to investors
located outside the U.S. due to blockage of foreign currency exchanges or otherwise; and (viii) possible seizure, expropriation or nationalization of the company or its assets. These risks are more pronounced to the extent that the Fund invests
a significant amount of its investments in issuers located in one region and to the extent that the Fund invests in securities of issuers in emerging markets. Although the Fund may hedge its exposure to certain of these risks, including the foreign
currency exchange rate risk, there can be no assurance that the Fund will enter into hedging transactions at any time or at times or under circumstances in which it might be advisable to do so.
When-Issued and Delayed Delivery Transactions. The Fund may purchase and sell securities on a when-issued
or delayed delivery basis, making payment or taking delivery at a later date, normally within 15 to 45 days of the trade date. On such transactions the payment obligation and the interest rate are fixed at the time the purchaser enters into the
commitment. Beginning on the date the Fund enters into a commitment to purchase securities on a when-issued or delayed delivery basis, the Fund is required under rules of the SEC to maintain in a separate account liquid assets, consisting of cash,
cash equivalents or liquid securities having a market value at all times of at least equal to the amount of any delayed payment commitment. Income generated by any such assets that provide taxable income for federal income tax purposes is includable
in the taxable income of the Fund. The Fund may enter into contracts to purchase securities on a forward basis (i.e., where settlement will occur more than 60 days from the date of the transaction) only to the extent that the Fund
specifically collateralizes such obligations with a security that is expected to be called or mature within 60 days before or after the settlement date of the forward transaction. The commitment to purchase securities on a when-issued, delayed
delivery or forward basis may involve an element of risk because no interest accrues on the bonds prior to settlement and at the time of delivery the market value may be less than their cost.
Options on Securities. The Fund may purchase call options on stock or other securities. In addition, the
Fund may seek to hedge a portion of its portfolio investments through writing (selling) covered call options.
The Fund will
receive a premium when it writes call options, which increases the Funds return on the underlying security in the event the option expires unexercised or is closed out at a profit. By writing a call, the Fund will limit its opportunity to
profit from an increase in the market value of the underlying security above the exercise price of the option for as long as the Funds obligation as the seller of the option continues. Upon the exercise of a call option written by the Fund,
the Fund may suffer an economic loss equal to an amount not less
10
than the excess of the securitys market value at the time of the option exercise over the Funds acquisition cost of the security, less the sum of the premium received for writing the
option and the difference, if any, between the call price paid to the Fund and the Funds acquisition cost of the security. Thus, in some periods the Fund might receive less total return and in other periods greater total return from its hedged
positions than it would have received from its underlying securities unhedged.
Options on Stock
Indices. The Fund may purchase call options on stock indices (in addition to the Nasdaq 100 Index) to enhance portfolio returns or to hedge against risks of market-wide price movements affecting its assets. In
addition, the Fund may write covered call options on stock indices. The advisability of using stock index options to hedge against the risk of market-wide movements will depend on the extent of diversification of the Funds investments and the
sensitivity of its investments to factors influencing the underlying index. The effectiveness of purchasing or writing stock index options as a hedging technique will depend upon the extent to which price movements in the Funds investments
correlate with price movements in the stock index selected. In addition, successful use by the Fund of options on stock indices will be subject to the ability of the Adviser to predict correctly changes in the relationship of the underlying index to
the Funds portfolio holdings. No assurance can be given that the Advisers judgment in this respect will be correct.
When the Fund writes an option on a stock index, it will establish a segregated account with its custodian or broker in which the Fund
will deposit liquid securities in an amount equal to the market value of the option, and will maintain the account while the option is open.
Stock Index Futures Contracts. The Fund may purchase and sell stock index futures to enhance portfolio returns or as a hedge against movements in the equity markets. Stock
index futures contracts are agreements in which one party agrees to deliver to the other an amount of cash equal to a specific dollar amount times the difference between the value of a specific stock index at the close of the last trading day of the
contract and the price at which the agreement is made. No physical delivery of securities is made.
Under regulations of the
Commodity Futures Trading Commission (CFTC) currently in effect, which may change from time to time, with respect to futures contracts purchased by the Fund, the Fund will set aside in a segregated account liquid securities with a value
at least equal to the value of instruments underlying such futures contracts less the amount of initial margin on deposit for such contracts. The current view of the staff of the SEC is that the Funds long and short positions in futures
contracts must be collateralized with cash or certain liquid assets held in a segregated account or covered in order to counter the impact of any potential leveraging.
Parties to a futures contract must make initial margin deposits to secure performance of the contract. There are also
requirements to make variation margin deposits from time to time as the value of the futures contract fluctuates.
The Fund and the Adviser have claimed, respectively, an exclusion from registration as a commodity pool operator and as a commodity trading advisor under the Commodity Exchange Act (the CEA)
and, therefore, none of the Fund, the Adviser, or their officers and directors, are subject to the registration requirements of the CEA or regulation as a commodity pool operator or a commodity trading adviser under the CEA. The Fund reserves the
right to engage in transactions involving futures and options thereon to the extent allowed by CFTC regulations in effect from time to time and in accordance with the Funds policies. In addition, certain provisions of the Internal Revenue Code
of 1986, as amended (the Code) may limit the extent to which the Fund may enter into futures contracts or engage in options transactions. See Tax MattersFederal Income Tax Matters.
The potential loss related to the purchase of an option on a futures contract is limited to the premium paid for the option (plus
transaction costs).
With respect to options purchased by the Fund, there are no daily cash payments made by the Fund to
reflect changes in the value of the underlying contract; however, the value of the option does change daily and that change would be reflected in the net asset value (NAV) of the Fund.
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Other Futures Contracts and Options on Futures Contracts. The
Funds use of derivative instruments also may include (i) U.S. Treasury security or U.S. government agency security futures contracts and (ii) options on U.S. Treasury security or U.S. government Agency security futures contracts. All
such futures contracts and options thereon must be traded and listed on an exchange. U.S. Treasury and U.S. government agency futures contracts are standardized contracts for the future delivery of a U.S. Treasury bond or U.S. Treasury note or a
U.S. government agency security or their equivalent at a future date at a price set at the time of the contract. An option on a U.S. Treasury or U.S. government agency futures contract, as contrasted with the direct investment in such a contract,
gives the purchaser of the option the right, in return for the premium paid, to assume a position in a U.S. Treasury or U.S. government agency futures contract at a specified exercise price at any time on or before the expiration date of the option.
Upon exercise of an option, the delivery of the futures position by the seller of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the sellers future margin account, which represents the
amount by which the market price of the futures contract exceeds the exercise price of the option on the futures contract.
Risks Associated with Futures Contracts and Options on Futures Contracts. Futures prices are affected by
many factors, such as current and anticipated short-term interest rates, changes in volatility of the underlying instrument and the time remaining until expiration of the contract. A purchase or sale of a futures contract may result in losses in
excess of the amount invested in the futures contract. While the Fund may enter into futures contracts and options on futures contracts for hedging purposes, the use of futures contracts and options on futures contracts might result in a poorer
overall performance for the Fund than if it had not engaged in any such transactions. If, for example, the Fund had insufficient cash, it might have to sell a portion of its underlying portfolio of securities in order to meet daily variation margin
requirements on its futures contracts or options on futures contracts at a time when it might be disadvantageous to do so. There may be an imperfect correlation between the Funds portfolio holdings and futures contracts or options on futures
contracts entered into by the Fund, which may prevent the Fund from achieving the intended hedge or expose the Fund to risk of loss. The degree of imperfection of correlation depends on circumstances such as: variations in speculative market demand
for futures, futures options and the related securities, including technical influences in futures and futures options trading and differences between the securities markets and the securities underlying the standard contracts available for trading.
Futures prices are affected by many factors, such as current and anticipated short-term interest rates, changes in volatility of the underlying instrument and the time remaining until the expiration of the contract. Further, the Funds use of
futures contracts and options on futures contracts to reduce risk involves costs and will be subject to the Sub-Advisers ability to predict correctly changes in interest rate relationships or other factors. A decision as to whether, when and
how to use futures contracts involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected stock price or interest rate trends. No assurance can be
given that the Advisers judgment in this respect will be correct.
There is no limit on the amount of the Funds
assets that can be put at risk through the use of futures contracts and options thereon and the value of the Funds futures contracts and options thereon may equal or exceed 100% of the Funds total assets.
Futures exchanges may limit the amount of fluctuation permitted in certain futures contract prices during a single trading day. The daily
limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous days settlement price at the end of the current trading session. Once the daily limit has been reached in a futures contract
subject to the limit, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses because the limit may work to
prevent the liquidation of unfavorable positions. For example, futures prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses. Stock index futures contracts are not normally subject to such daily price change limitations.
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An option is an instrument that gives the holder of the instrument the right, but not the
obligation, to purchase or sell a predetermined number of specific securities (i.e., preferred stocks, common stocks or bonds) at a stated price within the expiration period of the instrument, which is generally less than 12 months from its
issuance. If the right is not exercised after a specified period but prior to the expiration, the option expires.
Illiquid
Securities. The Fund may invest without limit in securities and other instruments that, at the time of investment, are illiquid (i.e., securities that are not readily marketable). For this purpose, illiquid
securities may include, but are not limited to, restricted securities (securities the disposition of which is restricted under the federal securities laws), securities that may be resold only pursuant to Rule 144A under the 1933 Act, that are deemed
to be illiquid, and certain repurchase agreements.
Restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a registration statement is in effect under the Securities Act. Where registration is required, the Fund may be obligated to pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might
obtain a less favorable price than that which prevailed when it decided to sell. Illiquid securities will be priced at fair value as determined in good faith by the Board or its delegate.
Short-Term Debt Securities. Under normal circumstances, the Fund will invest no more than 10% of its
Managed Assets in short-term high quality fixed income instruments. During temporary defensive periods, the Fund may deviate from its investment objective and invest all or any portion of its assets in investment grade debt securities, including
obligations issued or guaranteed by the U.S. government, its agencies and instrumentalities. In such a case, the Fund may not pursue or achieve its investment objective. In addition, upon the Sub-Advisers recommendations that a change would be
in the best interests of the Fund and upon concurrence by the Adviser, and subject to approval of the Board, the Sub-Adviser may deviate from its investment guidelines. These investments are defined to include, without limitation, the following:
(1) U.S. government securities, including bills, notes and bonds differing as to maturity and rates of
interest that are either issued or guaranteed by the U.S. Treasury or by U.S. government agencies or instrumentalities. U.S. government agency securities include securities issued by (a) the Federal Housing Administration, the Farmers Home
Administration, the Export-Import Bank of the United States, the Small Business Administration, and the Government National Mortgage Association, whose securities are supported by the full faith and credit of the United States; (b) Federal Home
Loan Banks, Federal Intermediate Credit Banks, and the Tennessee Valley Authority, whose securities are supported by the right of the agency to borrow from the U.S. Treasury; (c) the Federal National Mortgage Association, whose securities are
supported by the discretionary authority of the U.S. government to purchase certain obligations of the agency or instrumentality; and (d) the Student Loan Marketing Association, whose securities are supported only by its credit. While the U.S.
government provides financial support to such U.S. government-sponsored agencies or instrumentalities, no assurance can be given that it always will do so since it is not so obligated by law. The U.S. government, its agencies, and instrumentalities
do not guarantee the market value of their securities. Consequently, the value of such securities may fluctuate.
(2) Certificates of deposit issued against funds deposited in a bank or a savings and loan association. Such certificates are for a definite period of time, earn a specified rate of return, and are
normally negotiable. The issuer of a certificate of deposit agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Under current Federal Deposit Insurance Corporation regulations, the maximum
insurance payable as to any one certificate of deposit is $250,000; therefore, certificates of deposit purchased by the Fund may not be fully insured.
(3) Repurchase agreements, which involve purchases of debt securities. At the time the Fund purchases securities pursuant to a repurchase agreement, it simultaneously agrees to resell and redeliver such
securities
13
to the seller, who also simultaneously agrees to purchase back the securities at a fixed price and time. This assures a predetermined yield for the Fund during its holding period, since the
resale price is always greater than the purchase price and reflects an agreed-upon market rate. Such actions afford an opportunity for the Fund to invest temporarily available cash. The Fund may enter into repurchase agreements only with respect to
obligations of the U.S. government, its agencies or instrumentalities; certificates of deposit; or bankers acceptances in which the Fund may invest. Repurchase agreements may be considered loans to the seller, collateralized by the underlying
securities. The risk to the Fund is limited to the ability of the seller to pay the agreed-upon sum on the repurchase date; in the event of default, the repurchase agreement provides that the Fund is entitled to sell the underlying collateral.
If the seller defaults under a repurchase agreement when the value of the underlying collateral is less than the repurchase
price, the Fund could incur a loss of both principal and interest. The Adviser monitors the value of the collateral at the time the action is entered into and at all times during the term of the repurchase agreement. The Adviser does so in an effort
to determine that the value of the collateral always equals or exceeds the agreed-upon repurchase price to be paid to the Fund. If the seller were to be subject to a federal bankruptcy proceeding, the ability of the Fund to liquidate the collateral
could be delayed or impaired because of certain provisions of the U.S. Bankruptcy Code.
(4) Commercial paper,
which consists of short-term unsecured promissory notes, including variable rate master demand notes issued by corporations to finance their current operations. Master demand notes are direct lending arrangements between the Fund and a corporation.
There is no secondary market for such notes. However, they are redeemable by the Fund at any time. The Sub-Adviser will consider the financial condition of the corporation (e.g., earning power, cash flow, and other liquidity measures) and
will continuously monitor the corporations ability to meet all of its financial obligations, because the Funds liquidity might be impaired if the corporation were unable to pay principal and interest on demand. Investments in commercial
paper will be limited to commercial paper rated in the highest categories by a NRSRO and which mature within one year of the date of purchase or carry a variable or floating rate of interest.
Other Investment Companies. The Fund may invest in securities of other investment companies, including
open- or closed-end investment companies or ETFs, that invest primarily in securities of the types in which the Fund may invest directly. The Fund generally expects that it may invest in other investment companies either during periods when it has
large amounts of uninvested cash, such as during periods when there is a shortage of attractive securities of the types in which the Fund may invest directly available in the market. As an investor in an investment company, the Fund will bear its
ratable share of that investment companys expenses, and would remain subject to payment of the Funds advisory and administrative fees with respect to assets so invested. Common shareholders would therefore be subject to duplicative
expenses to the extent the Fund invests in other investment companies. The Sub-Adviser will take expenses into account when evaluating the investment merits of an investment in the investment company relative to available securities of the types in
which the Fund may invest directly. In addition, the securities of other investment companies may be leveraged and therefore will be subject to leverage risks. Leverage risks related to an investment in the securities of a leveraged investment
company include the likelihood of greater volatility of the NAV and market price of the investment companys shares.
Portfolio Trading and Turnover Rate. Portfolio trading may be undertaken to accomplish the investment
objective of the Fund. In addition, a security may be sold and another with similar characteristics purchased at approximately the same time to take advantage of what the Sub-Adviser believes to be a temporary price disparity between the two
securities. Temporary price disparities between two comparable securities may result from supply and demand imbalances where, for example, a temporary oversupply of certain securities may cause a temporarily low price for such securities, as
compared with other securities of like quality and characteristics. A security may also be sold when the Sub-Adviser anticipates a change in the price of such security, the Sub-Adviser believes the price of a security has reached or is near a
realistic maximum, or there are other securities that the Sub-Adviser believes are more attractive given the Funds investment objective.
14
The Fund may engage in portfolio trading when considered appropriate, but short-term
trading in the Funds equity portfolio will not be used as the primary means of achieving the Funds investment objective. While there can be no assurance thereof, the Fund anticipates that its annual portfolio turnover rate will generally
not exceed 50% under normal circumstances. For the fiscal year ended December 31, 2019, the Funds portfolio turnover rate was 11%. However, there are no limits on the rate of portfolio turnover, and investments may be sold without regard to
length of time held when, in the opinion of the Sub-Adviser, investment considerations warrant such action. Therefore, depending upon market conditions, the annual portfolio turnover rate of the Fund may exceed 50% in particular years. A higher
portfolio turnover rate results in correspondingly greater brokerage commissions and other transactional expenses that are borne by the Fund. High portfolio turnover may result in the realization of net short-term capital gains by the Fund which,
when distributed to shareholders, will be taxable as ordinary income for federal income tax purposes.
15
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The management of the Fund, including general supervision of the duties performed for the Fund under the Investment Management Agreement
(as defined under Investment Adviser, Sub-Adviser and Portfolio ManagerInvestment Management Agreement and Related Fees), is the responsibility of the Board. The number of trustees of the Fund is nine, all of whom are not
interested persons (referred to herein as independent trustees). None of the independent trustees has ever been a director, trustee or employee of, or consultant to, Nuveen LLC (Nuveen), Nuveen Fund Advisors, Nuveen Asset
Management, or their affiliates. The Board is divided into three classes, Class I, Class II and Class III, the Class I trustees serving until the 2022 annual meeting, the Class II trustees serving until the 2023 annual meeting
and the Class III trustees serving until the 2021 annual meeting, in each case until their respective successors are elected and qualified, as described below. Currently, William C. Hunter, Judith M. Stockdale, Carole E. Stone and Margaret L. Wolff
are slated in Class I, John K. Nelson, Terence J. Toth and Robert L. Young are slated in Class II, and Jack B. Evans and Albin F. Moschner are slated in Class III. If the Fund has Preferred Shares outstanding, two of the Funds trustees
will be elected by the holders of such preferred shares, voting separately as a class. The remaining trustees of the Fund are elected by holders of Common Shares and Preferred Shares, voting separately as a class. In the event that the Fund fails to
pay dividends on outstanding Preferred Shares for two years, holders of Preferred Shares are entitled to elect a majority of trustees of the Fund. The officers of the Fund serve annual terms through August of each year and are elected on an annual
basis. The names, business addresses and years of birth of the trustees and officers of the Fund, their principal occupations and other affiliations during the past five years, the number of portfolios each trustee oversees and other directorships
they hold are set forth below. Except as noted in the table below, the trustees of the Fund are directors or trustees, as the case may be, of 156 Nuveen-sponsored registered investment companies (the Nuveen Funds), which includes 73
open-end mutual funds (the Nuveen Mutual Funds), 70 closed-end funds and 13 Nushares ETFs.
16
|
|
|
|
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen By
Trustee
|
|
Other
Directorships
Held by
Trustee
During Past
Five Years
|
Independent Trustees:
|
Terence J. Toth
333 West Wacker Drive
Chicago, IL 60606
(1959)
|
|
Chairman
of the
Board
and
Trustee
|
|
TermClass II
Length of
Service
Since 2008
|
|
Formerly, Co-Founding Partner, Promus Capital (2008-2017); Director of Quality Control Corporation (since 2012); formerly, Director, Fulcrum IT Service LLC (2010-2019); formerly,
Director LogicMark LLC (2012-2016); formerly, Director, Legal & General Investment Management America, Inc. (2008-2013); formerly, CEO and President, Northern Trust Global Investments (2004-2007); Executive Vice President, Quantitative
Management & Securities Lending (2000-2004); prior thereto, various positions with Northern Trust Company (since 1994); Member of Catalyst Schools of Chicago Board (since 2008) and Mather Foundation Board (since 2012) and Chair of its Investment
Committee; formerly, Member, Chicago Fellowship Board (2005-2016); formerly, Member, Northern Trust Mutual Funds Board (2005-2007), Northern Trust Global Investments Board (2004-2007), Northern Trust Japan Board (2004-2007), Northern Trust
Securities Inc. Board (2003-2007) and Northern Trust Hong Kong Board (1997-2004).
|
|
156
|
|
None.
|
17
|
|
|
|
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen By
Trustee
|
|
Other
Directorships
Held by
Trustee
During Past
Five Years
|
Jack B. Evans
333 West Wacker Drive
Chicago, IL 60606
(1948)
|
|
Trustee
|
|
TermClass III
Length of
Service
Since 1999
|
|
Chairman (since 2019), formerly, President (1996-2019), The Hall-Perrine Foundation, a private philanthropic corporation; Director, Public Member, American Board of Orthopaedic
Surgery (since 2015); Life Trustee of Coe College and the Iowa College Foundation; formerly, Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm;
formerly, Member and President Pro Tem of the Board of Regents for the State of Iowa University System; formerly, Director, The Gazette Company.
|
|
156
|
|
Director and Chairman, United Fire Group, a publicly held company; formerly, Director, Alliant Energy.
|
|
|
|
|
|
|
William C. Hunter
333 West Wacker Drive
Chicago, IL 60606
(1948)
|
|
Trustee
|
|
TermClass I
Length of
Service
Since 2003
|
|
Dean Emeritus, formerly, Dean (2006-2012), Tippie College of Business, University of Iowa; past Director (2005-2015) and past President (2010-2014) of Beta Gamma Sigma, Inc., The
International Business Honor Society; formerly, Director (1997-2007), Credit Research Center at Georgetown University; formerly, Dean and Distinguished Professor of Finance (2003-2006), School of Business at the University of Connecticut;
previously, Senior Vice President and Director of Research (1995-2003) at the Federal Reserve Bank of Chicago.
|
|
156
|
|
Director of Wellmark, Inc. (since 2009); Director of Xerox Corporation
(2004-2018).
|
18
|
|
|
|
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen By
Trustee
|
|
Other
Directorships
Held by
Trustee
During Past
Five Years
|
Albin F. Moschner
333 West Wacker Drive
Chicago, IL 60606
(1952)
|
|
Trustee
|
|
TermClass III
Length of
Service
Since
2016
|
|
Founder and Chief Executive Officer, Northcroft Partners, LLC, a management consulting firm (since 2012); previously, held positions at Leap Wireless International, Inc., including
Consultant (2011-2012), Chief Operating Officer (2008-2011) and Chief Marketing Officer (2004-2008); formerly, President, Verizon Card Services division of Verizon Communications, Inc. (2000-2003); formerly, President, One Point Services at One
Point Communications (1999-2000); formerly, Vice Chairman of the Board, Diba, Incorporated (1996-1997); formerly, various executive positions (1991-1996), including Chief Executive Officer (1995-1996), Zenith
Electronics Corporation.
|
|
156
|
|
Chairman (2019) and Director (2012-2019), USA Technologies, Inc., a provider of solutions and services to facilitate electronic payment transactions; formerly, Director, Wintrust
Financial Corporation (1996-2016).
|
|
|
|
|
|
|
John K. Nelson
333 West Wacker Drive
Chicago, IL 60606
(1962)
|
|
Trustee
|
|
TermClass II
Length of
Service
Since 2013
|
|
Member of Board of Directors of Core12 LLC. (since 2008), a private firm which develops branding, marketing and communications strategies for clients; served The Presidents
Council of Fordham University (2010-2019) and previously a Director of the Curran Center for Catholic American Studies (2009-2018); formerly, senior external advisor to the Financial Services practice of Deloitte Consulting LLP (2012-2014); former
Chair of the Board of Trustees of Marian University (2010-2014 as trustee, 2011-2014 as Chair); formerly Chief Executive Officer of ABN AMRO Bank N.V., North America, and Global Head of the Financial Markets Division (2007-2008), with various
executive leadership roles in ABN AMRO Bank N.V. between 1996 and 2007.
|
|
156
|
|
None.
|
19
|
|
|
|
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen By
Trustee
|
|
Other
Directorships
Held by
Trustee
During Past
Five Years
|
Judith M. Stockdale
333 West Wacker Drive
Chicago, IL 60606
(1947)
|
|
Trustee
|
|
TermClass I
Length of
Service
Since 1997
|
|
Board Member of the Land Trust Alliance (since 2013); formerly, Board Member of the U.S. Endowment for Forestry and Communities (2013-2019); formerly, Executive Director
(1994-2012), Gaylord and Dorothy Donnelley Foundation; prior thereto, Executive Director, Great Lakes Protection Fund (1990-1994).
|
|
156
|
|
None.
|
|
|
|
|
|
|
Carole E. Stone
333 West Wacker Drive
Chicago, IL 60606
(1947)
|
|
Trustee
|
|
TermClass I
Length of
Service
Since 2007
|
|
Former Director, Chicago Board Options Exchange (2006-2017) and C2 Options Exchange, Incorporated (2009-2017); formerly, Commissioner, New York State Commission on Public Authority
Reform (2005-2010).
|
|
156
|
|
Director, Cboe Global Markets, Inc., formerly, CBOE Holdings, Inc. (since 2010).
|
|
|
|
|
|
|
Margaret L. Wolff
333 West Wacker Drive
Chicago, IL 60606
(1955)
|
|
Trustee
|
|
TermClass I
Length of
Service
Since 2016
|
|
Formerly, Of Counsel (2005-2014), Skadden, Arps, Slate, Meagher & Flom LLP (Mergers & Acquisitions Group); Member of the Board of Trustees of New York-Presbyterian
Hospital (since 2005); Member (since 2004) and Chair (since 2015) of the Board of Trustees of The John A. Hartford Foundation (a philanthropy dedicated to improving the care of older adults); formerly, Member (2005-2015) and Vice Chair (2011- 2015)
of the Board of Trustees of Mt. Holyoke College.
|
|
156
|
|
Formerly Member of the Board of Directors (2013-2017) of Travelers Insurance Company of Canada and The Dominion of Canada General
Insurance Company (each, a part of Travelers Canada, the Canadian operation of The Travelers Companies, Inc.).
|
20
|
|
|
|
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen By
Trustee
|
|
Other
Directorships
Held by
Trustee
During Past
Five Years
|
Robert L. Young
333 West Wacker Drive
Chicago, IL 60606
(1963)
|
|
Trustee
|
|
TermClass II
Length of
Service
Since 2017
|
|
Formerly, Chief Operating Officer and Director, J.P. Morgan Investment Management Inc. (2010-2016); formerly, President and Principal Executive Officer (2013-2016), and Senior
Vice President and Chief Operating Officer (2005-2010), J.P. Morgan Funds; formerly, Director and various officer positions, J.P. Morgan Investment Management Inc. (formerly, JPMorgan Funds Management, Inc. and formerly, One Group
Administrative Services) and JPMorgan Distribution Services, Inc. (formerly, One Group Dealer Services, Inc.) (1999-2017).
|
|
156
|
|
None.
|
OFFICERS OF THE FUND:
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
Cedric H. Antosiewicz
333 West Wacker Drive
Chicago, IL 60606
(1962)
|
|
Chief
Administrative
Officer
|
|
TermUntil
August 2020
Length of
Service
Since 2007
|
|
Senior Managing Director (since 2017), formerly, Managing Director (2004-2017), of Nuveen Securities LLC; Senior Managing Director (since January 2017), formerly, Managing Director
(2014-2017), of Nuveen Fund Advisors, LLC.
|
|
|
|
|
Nathaniel T. Jones
333 West Wacker Drive
Chicago, IL 60606
(1979)
|
|
Vice President
and Treasurer
|
|
TermUntil
August 2020
Length of Service
Since
2016
|
|
Managing Director (since 2017), formerly, Senior Vice President (2016-2017), formerly, Vice President (2011-2016), of Nuveen, LLC; Managing Director (since 2015) of Nuveen Fund
Advisors, LLC; Chartered Financial Analyst.
|
|
|
|
|
Walter M. Kelly
333 West Wacker Drive
Chicago, IL 60606
(1970)
|
|
Vice President
and Chief
Compliance
Officer
|
|
TermUntil
August 2020
Length of Service
Since 2003
|
|
Managing Director (since 2017), formerly, Senior Vice President (2008-2017), of Nuveen, LLC.
|
|
|
|
|
David J. Lamb
333 West Wacker Drive
Chicago, IL 60606
(1963)
|
|
Vice President
|
|
TermUntil
August 2020
Length of Service
Since 2015
|
|
Managing Director (since 2017), formerly, Senior Vice President, of Nuveen, LLC (2006-2017), Vice President prior to
2006.
|
21
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
|
|
|
|
Tina M. Lazar
333 West Wacker Drive
Chicago, IL 60606
(1961)
|
|
Vice President
|
|
TermUntil
August 2020
Length of Service
Since
2002
|
|
Managing Director (since 2017), formerly, Senior Vice President (2014-2017), of Nuveen Securities, LLC.
|
|
|
|
|
Brian J. Lockhart
333 West Wacker Drive
Chicago, IL 60606
(1974)
|
|
Vice President
|
|
TermUntil
August 2020
Length of Service
Since 2019
|
|
Managing Director (since 2019) of Nuveen Fund Advisors, LLC; Managing Director (since January 2017), formerly, Vice President (2010-2017), of Nuveen, LLC; Head of Investment
Oversight (since September 2017), formerly, Team Leader of Manager Oversight (2015-2017); Chartered Financial Analyst and Certified Financial Risk Manager.
|
|
|
|
|
Jacques M. Longerstaey
8500 Andrew Carnegie Boulevard
Charlotte, NC 28262
(1963)
|
|
Vice President
|
|
TermUntil
August 2020
Length of Service
Since 2019
|
|
Senior Managing Director and Chief Risk Officer of Nuveen, LLC (since May 2019); Senior Managing Director (since May 2019) of Nuveen Fund Advisors, LLC; formerly, Chief Investment
and Model Risk Officer, Wealth & Investment Management Division, Wells Fargo Bank (NA) (2013-2019).
|
22
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
Kevin J. McCarthy
333 West Wacker Drive
Chicago, IL 60606
(1966)
|
|
Vice President
and Assistant
Secretary
|
|
TermUntil
August 2020
Length of Service
Since
2007
|
|
Senior Managing Director (since 2017) and Secretary and General Counsel (since 2016) of Nuveen Investments, Inc., formerly, Executive Vice President (2016-2017) and Managing
Director and Assistant Secretary (2008-2016); Senior Managing Director (since 2017) and Assistant Secretary (since 2008) of Nuveen Securities, LLC, formerly Executive Vice President (2016-2017) and Managing Director (2008-2016); Senior Managing
Director (since 2017), Secretary (since 2016) and Co-General Counsel (since 2011) of Nuveen Fund Advisors, LLC, formerly, Executive Vice President (2016-2017), Managing Director, (2008-2016) and Assistant Secretary (2007-2016); Senior Managing
Director (since 2017), Secretary (since 2016) and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC, formerly Executive Vice President (2016-2017) and Managing Director and Assistant Secretary (2011-2016); Vice President (since
2007) and Secretary (since 2016) (formerly, Assistant Secretary) of NWQ Investment Management Company, LLC, Symphony Asset Management LLC, Santa Barbara Asset Management, LLC and Winslow Capital Management, LLC (since 2010); Senior Managing Director
(since 2017) and Secretary (since 2016) of Nuveen Alternative Investments, LLC.
|
|
|
|
|
Jon Scott Meissner
8500 Andrew Carnegie Boulevard
Charlotte, NC 28262
(1973)
|
|
Vice President
and Assistant
Secretary
|
|
TermUntil
August 2020
Length of Service
Since
2019
|
|
Managing Director of Mutual Fund Tax and Financial Reporting groups at Nuveen, LLC (since 2017); Managing Director (since 2019) of Nuveen Fund Advisors, LLC; Senior Director of
Teachers Advisors, LLC and TIAA-CREF Investment Management, LLC (since 2016); Senior Director (since 2015), Mutual Fund Taxation to the TIAA-CREF Funds, the TIAA-CREF Life Funds, the TIAA Separate Account VA-1 and the CREF Accounts; has held various positions with TIAA since 2004.
|
23
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
William T. Meyers
333 West Wacker Drive
Chicago, IL 60606
(1966)
|
|
Vice President
|
|
TermUntil
August 2020
Length of Service
Since
2018
|
|
Senior Managing Director (since 2017), formerly, Managing Director (2016-2017), and Senior Vice President (2010-2016), of Nuveen Securities, LLC; Senior Managing Director (since
2017), formerly, Managing Director (2016-2017) and Senior Vice President (2010-2016), of Nuveen, LLC, has held various positions with Nuveen, LLC since 1991.
|
|
|
|
|
Deann D. Morgan
100 Park Avenue
New York, NY 10016
(1969)
|
|
Vice President
|
|
TermUntil
August 2020
Length of Service
Since
February 2020
|
|
Executive Vice President, Global Head of Product at Nuveen (since November 2019); Co-Chief Executive Officer of Nuveen Securities, LLC; Managing Member, MDR Collaboratory LLC (since
2018); Managing Director, Head of Wealth Management Product Structuring & COO Multi Asset Investing, The Blackstone Group (2013-2017).
|
|
|
|
|
Michael A. Perry
333 West Wacker Drive
Chicago, IL 60606
(1967)
|
|
Vice President
|
|
TermUntil
August 2020
Length of Service
Since
2017
|
|
Executive Vice President (since 2017), previously, Managing Director (2016-2017), of Nuveen Fund Advisors, LLC; Co-Chief Executive Officer
(since 2019), formerly, Executive Vice President (2017-2019) and Managing Director (2015-2017), of Nuveen Securities, LLC and Nuveen Alternative Investments, LLC;
formerly, Managing Director (2010-2015) of UBS Securities LLC.
|
|
|
|
|
Christopher M. Rohrbacher
333 West Wacker Drive
Chicago, IL 60606
(1971)
|
|
Vice President
and Assistant
Secretary
|
|
TermUntil
August 2020
Length of Service
Since 2008
|
|
Managing Director (since 2017), Co-General Counsel (since 2019) and Assistant Secretary (since 2016), formerly, Senior Vice President
(2016-2017), of Nuveen Fund Advisors, LLC; Managing Director (since 2017) of Nuveen Securities, LLC; Managing Director (since 2017), and Associate General Counsel (since 2016), formerly, Senior Vice President
(2012-2017) and Assistant General Counsel (2008-2016), of Nuveen, LLC.
|
|
|
|
|
William A. Siffermann
333 West Wacker Drive
Chicago, IL 60606
(1975)
|
|
Vice President
|
|
TermUntil
August 2020
Length of Service
Since 2017
|
|
Managing Director (since 2017), formerly, Senior Vice President (2016-2017) and Vice President (2011-2016), of Nuveen,
LLC.
|
24
|
|
|
|
|
|
|
Name, Business Address
and Year of Birth
|
|
Position(s)
Held with
Fund
|
|
Term of Office
and Length of
Time Served
with Funds in the
Fund Complex
|
|
Principal Occupation(s)
During Past Five Years
|
E. Scott Wickerham
TIAA
730 Third Avenue
New York, NY 10017
(1973)
|
|
Vice President
and Controller
|
|
TermUntil
August 2020
Length of Service
Since
2019
|
|
Senior Managing Director, Head of Fund Administration of Nuveen, LLC (since 2019), formerly, Managing Director; Senior Managing Director (since 2019) of Nuveen Fund Advisors, LLC;
Principal Financial Officer, Principal Accounting Officer and Treasurer (since 2017) of the TIAA-CREF Funds, the TIAA-CREF Life Funds, the TIAA Separate Account VA-1 and Treasurer (since 2017) to the CREF
Accounts; formerly, Senior Director, TIAA-CREF Fund Administration (2014-2015); has held various positions with TIAA since 2006.
|
|
|
|
|
Mark L. Winget
333 West Wacker Drive
Chicago, IL 60606
(1968)
|
|
Vice President
and Assistant
Secretary
|
|
TermUntil
August 2020
Length of Service
Since 2008
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Vice President and Assistant Secretary of Nuveen Securities, LLC (since 2008); Vice President and Assistant Secretary of Nuveen Fund Advisors, LLC (since 2019); Vice President
(since 2010) and Associate General Counsel (since 2019), formerly, Assistant General Counsel (2008-2016), of Nuveen, LLC.
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Gifford R. Zimmerman
333 West Wacker Drive
Chicago, IL 60606
(1956)
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Vice President
and Secretary
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TermUntil
August 2020
Length of Service
Since 1988
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Managing Director (since 2002) and Assistant Secretary (since 2002) of Nuveen Securities, LLC; Managing Director (since 2002), Assistant Secretary (since 1997) and Co-General
Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Managing Director, Assistant Secretary and Associate General Counsel of Nuveen Asset Management, LLC
(since 2011); Vice President (since February 2017) and Assistant Secretary (since 2003), formerly, Managing Director (2003-2017), of Symphony Asset Management LLC; Vice President and Assistant Secretary of NWQ Investment Management Company, LLC,
Santa Barbara Asset Management, LLC (since 2006) and Winslow Capital Management, LLC (since 2010); Chartered Financial Analyst.
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Board Leadership Structure and Risk Oversight
The Board of Directors or the Board of Trustees (as the case may be, each is referred to hereafter as the Board and the
trustees or directors of the Nuveen Funds, as applicable, are referred to herein as Trustees)
25
oversees the operations and management of the Nuveen Funds, including the duties performed for the Nuveen Funds by Nuveen Fund Advisors and each Nuveen Funds sub-adviser(s), as applicable.
The Board has adopted a unitary board structure. A unitary board consists of one group of trustees who serve on the board of every Nuveen Fund in the fund complex. In adopting a unitary board structure, the Trustees seek to provide effective
governance through establishing a board, the overall composition of which, will, as a body, possess the appropriate skills, independence and experience to oversee the Nuveen Funds business. With this overall framework in mind, when the Board,
through its Nominating and Governance Committee discussed below, seeks nominees for the Board, the Trustees consider, not only the candidates particular background, skills and experience, among other things, but also whether such background,
skills and experience enhance the Boards diversity and at the same time complement the Board given its current composition and the mix of skills and experiences of the incumbent Trustees.
The Board believes the unitary board structure enhances good and effective governance, particularly given the nature of the structure of
the investment company complex. Funds in the same complex generally are served by the same service providers and personnel and are governed by the same regulatory scheme which raises common issues that must be addressed by the trustees across the
fund complex (such as compliance, valuation, liquidity, brokerage, trade allocation or risk management). The Board believes it is more efficient to have a single board review and oversee common policies and procedures which increases the
Boards knowledge and expertise with respect to the many aspects of fund operations that are complex-wide in nature. The unitary structure also enhances the Boards influence and oversight over Nuveen Fund Advisors and other service
providers.
In an effort to enhance the independence of the Board, the Board also has a Chairman that is an independent
trustee. The Board recognizes that a chairman can perform an important role in setting the agenda for the Board, establishing the boardroom culture, establishing a point person on behalf of the Board for fund management, and reinforcing the
Boards focus on the long-term interests of shareholders. The Board recognizes that a chairman may be able to better perform these functions without any conflicts of interests arising from a position with fund management. Terence J. Toth
currently serves as the Independent Chairman of the Board. Specific responsibilities of the Chairman include: (i) presiding at all meetings of the Board and of the shareholders; (ii) seeing that all orders and resolutions of the Trustees
are carried into effect; and (iii) maintaining records of and, whenever necessary, certifying all proceedings of the Trustees and the shareholders.
Although the Board has direct responsibility over various matters (such as advisory contracts, underwriting contracts and Fund performance), the Board also exercises certain of its oversight
responsibilities through several committees that it has established and which report back to the full Board. The Board believes that a committee structure is an effective means to permit Trustees to focus on particular operations or issues affecting
the Nuveen Funds, including risk oversight. More specifically, with respect to risk oversight, the Board has delegated matters relating to valuation and compliance to certain committees (as summarized below) as well as certain aspects of investment
risk. In addition, the Board believes that the periodic rotation of Trustees among the different committees allows the Trustees to gain additional and different perspectives of the Funds operations. The Board has established six standing
committees: the Executive Committee, the Dividend Committee, the Closed-End Funds Committee, the Audit Committee, the Compliance, Risk Management and Regulatory Oversight Committee, and the Nominating and Governance Committee. The Board also may
from time to time create ad hoc committees to focus on particular issues as the need arises. The membership and functions of the standing committees are summarized below.
The Executive Committee, which meets between regular meetings of the Board, is authorized to exercise all of the powers of the Board. The members of the Executive Committee are Terence J. Toth (Chair),
Margaret L. Wolff and Albin F. Moschner. During the fiscal year ended December 31, 2019, the Executive Committee did not meet.
The Dividend Committee is authorized to declare distributions on each Nuveen Funds shares including, but not limited to, regular and special dividends, capital gains and ordinary income
distributions. The members of the
26
Dividend Committee are William C. Hunter, Albin F. Moschner, Margaret L. Wolff and Robert L. Young (Chair). During the fiscal year ended December 31, 2019, the Dividend Committee met four
(4) times.
The Compliance, Risk Management and Regulatory Oversight Committee (the Compliance Committee) is
responsible for the oversight of compliance issues, risk management and other regulatory matters affecting the Nuveen Funds that are not otherwise the jurisdiction of the other committees. The Board has adopted and periodically reviews policies and
procedures designed to address the Nuveen Funds compliance and risk matters. As part of its duties, the Compliance Committee reviews the policies and procedures relating to compliance matters and recommends modifications thereto as necessary
or appropriate to the full Board; develops new policies and procedures as new regulatory matters affecting the Nuveen Funds arise from time to time; evaluates or considers any comments or reports from examinations from regulatory authorities and
responses thereto; and performs any special reviews, investigations or other oversight responsibilities relating to risk management, compliance and/or regulatory matters as requested by the Board.
In addition, the Compliance Committee is responsible for risk oversight, including, but not limited to, the oversight of risks related to
investments and operations. Such risks include, among other things, exposures to particular issuers, market sectors, or types of securities; risks related to product structure elements, such as leverage; and techniques that may be used to address
those risks, such as hedging and swaps. In assessing issues brought to the committees attention or in reviewing a particular policy, procedure, investment technique or strategy, the Compliance Committee evaluates the risks to the Nuveen Funds
in adopting a particular approach or resolution compared to the anticipated benefits to the Nuveen Funds and their shareholders. In fulfilling its obligations, the Compliance Committee meets on a quarterly basis, and at least once a year in person.
The Compliance Committee receives written and oral reports from the Nuveen Funds Chief Compliance Officer (CCO) and meets privately with the CCO at each of its quarterly meetings. The CCO also provides an annual report to the full
Board regarding the operations of the Nuveen Funds and other service providers compliance programs as well as any recommendations for modifications thereto. The Compliance Committee also receives reports from the investment services
group of Nuveen Investments regarding various investment risks. Notwithstanding the foregoing, the full Board also participates in discussions with management regarding certain matters relating to investment risk, such as the use of leverage and
hedging. The investment services group therefore also reports to the full Board at its quarterly meetings regarding, among other things, Fund performance and the various drivers of such performance. Accordingly, the Board directly and/or in
conjunction with the Compliance Committee oversees matters relating to investment risks. Matters not addressed at the committee level are addressed directly by the full Board. The committee operates under a written charter adopted and approved by
the Board. The members of the Compliance Committee are Albin F. Moschner, John K. Nelson (Chair), Terence J. Toth, Margaret L. Wolff and Robert L. Young. During the fiscal year ended December 31, 2019, the Compliance Committee met six
(6) times.
The Audit Committee assists the Board in the oversight and monitoring of the accounting and reporting
policies, processes and practices of the Nuveen Funds, and the audits of the financial statements of the Nuveen Funds; the quality and integrity of the financial statements of the Nuveen Funds; the Nuveen Funds compliance with legal and
regulatory requirements relating to the Nuveen Funds financial statements; the independent auditors qualifications, performance and independence; and the pricing procedures of the Nuveen Funds and the internal valuation group of Nuveen.
It is the responsibility of the Audit Committee to select, evaluate and replace any independent auditors (subject only to Board and, if applicable, shareholder ratification) and to determine their compensation. The Audit Committee is also
responsible for, among other things, overseeing the valuation of securities comprising the Nuveen Funds portfolios. Subject to the Boards general supervision of such actions, the Audit Committee addresses any valuation issues, oversees
the Nuveen Funds pricing procedures and actions taken by Nuveens internal valuation group which provides regular reports to the committee, reviews any issues relating to the valuation of the Nuveen Funds securities brought to its
attention and considers the risks to the Nuveen Funds in assessing the possible resolutions to these matters. The Audit Committee also may consider any financial risk exposures for the Nuveen Funds in conjunction with performing its functions.
27
To fulfill its oversight duties, the Audit Committee receives annual and semi-annual
reports and has regular meetings with the external auditors for the Nuveen Funds and Nuveen Fund Advisors internal audit group at Nuveen Investments. The Audit Committee also may review in a general manner the processes the Board or other
Board committees have in place with respect to risk assessment and risk management as well as compliance with legal and regulatory matters relating to the Nuveen Funds financial statements. The committee operates under a written charter
adopted and approved by the Board. Members of the Audit Committee shall be independent (as set forth in the charter) and free of any relationship that, in the opinion of the trustees, would interfere with their exercise of independent judgment as an
Audit Committee member. The members of the Audit Committee are Jack B. Evans, William C. Hunter, John K. Nelson, Judith M. Stockdale and Carole E. Stone (Chair), each of whom is an Independent Trustee of the Nuveen Funds. During the fiscal year
ended December 31, 2019, the Audit Committee met four (4) times.
The Nominating and Governance Committee is
responsible for seeking, identifying and recommending to the Board qualified candidates for election or appointment to the Board. In addition, the Nominating and Governance Committee oversees matters of corporate governance, including the evaluation
of Board performance and processes, the assignment and rotation of committee members, and the establishment of corporate governance guidelines and procedures, to the extent necessary or desirable, and matters related thereto. Although the unitary
and committee structure has been developed over the years and the Nominating and Governance Committee believes the structure has provided efficient and effective governance, the committee recognizes that as demands on the Board evolve over time
(such as through an increase in the number of funds overseen or an increase in the complexity of the issues raised), the committee must continue to evaluate the Board and committee structures and their processes and modify the foregoing as may be
necessary or appropriate to continue to provide effective governance. Accordingly, the Nominating and Governance Committee has a separate meeting each year to, among other things, review the Board and committee structures, their performance and
functions, and recommend any modifications thereto or alternative structures or processes that would enhance the Boards governance over the Nuveen Funds business.
In addition, the Nominating and Governance Committee, among other things, makes recommendations concerning the continuing education of
trustees; monitors performance of legal counsel and other service providers; establishes and monitors a process by which security holders are able to communicate in writing with members of the Board; and periodically reviews and makes
recommendations about any appropriate changes to Trustee compensation. In the event of a vacancy on the Board, the Nominating and Governance Committee receives suggestions from various sources, including suggestions from fund security holders, as to
suitable candidates. Suggestions should be sent in writing to William Siffermann, Manager of Fund Board Relations, Nuveen, 333 West Wacker Drive, Chicago, IL 60606. The Nominating and Governance Committee sets appropriate standards and requirements
for nominations for new Trustees and reserves the right to interview any and all candidates and to make the final selection of any new Trustees. In considering a candidates qualifications, each candidate must meet certain basic requirements,
including relevant skills and experience, time availability (including the time requirements for due diligence site visits to internal and external sub-advisers and service providers) and, if qualifying as an Independent Trustee candidate,
independence from Nuveen Fund Advisors, subadvisors, underwriters or other service providers, including any affiliates of these entities. These skill and experience requirements may vary depending on the current composition of the Board, since the
goal is to ensure an appropriate range of skills, diversity and experience, in the aggregate. Accordingly, the particular factors considered and weight given to these factors will depend on the composition of the Board and the skills and backgrounds
of the incumbent Trustees at the time of consideration of the nominees. All candidates, however, must meet high expectations of personal integrity, independence, governance experience and professional competence. All candidates must be willing to be
critical within the Board and with management and yet maintain a collegial and collaborative manner toward other Board members. The committee operates under a written charter adopted and approved by the Board. This committee is composed of the
Independent Trustees of the Nuveen Funds. The members of the Nominating and Governance Committee are Terence J. Toth (Chair), Jack B. Evans, William C. Hunter, Albin F. Moschner, John K. Nelson, Judith M. Stockdale, Carole E. Stone,
Margaret L. Wolff and Robert L. Young. During the fiscal year ended December 31, 2019, the Nominating and Governance Committee met six (6) times.
28
The Closed-End Funds Committee is responsible for assisting the Board in the oversight
and monitoring of the Nuveen Funds that are registered as closed-end management investment companies (the Closed-End Funds). The committee may review and evaluate matters related to the formation and the initial presentation to the Board
of new Closed-End Funds and may review and evaluate any matters relating to existing Closed-End Funds. The committee operates under a written charter adopted and approved by the Board. The members of the
Closed-End Funds Committee are Carole E. Stone, Jack B. Evans (Chair), Terence J. Toth, Margaret L. Wolff and Robert L. Young. During the fiscal year ended December 31, 2019, the Closed-End Funds
Committee met four (4) times.
Board Diversification and Trustee Qualifications
In determining that a particular Trustee was qualified to serve on the Board, the Board has considered each Trustees background,
skills, experience and other attributes in light of the composition of the Board with no particular factor controlling. The Board believes that the Funds Trustees need to have the ability to critically review, evaluate, question and discuss
information provided to them, and to interact effectively with Fund management, service providers and counsel, in order to exercise effective business judgment in the performance of their duties, and the Board believes each Trustee satisfies this
standard. An effective Trustee may achieve this ability through his or her educational background; business, professional training or practice; public service or academic positions; experience from service as a board member or executive of
investment funds, public companies or significant private or not-for-profit entities or other organizations; and/or other life experiences. Accordingly, set forth below is a summary of the experiences, qualifications, attributes, and skills that led
to the conclusion, as of the date of this document, that each Trustee should continue to serve in that capacity. References to the experiences, qualifications, attributes and skills of Trustees are pursuant to requirements of the SEC, do not
constitute holding out of the Board or any Trustee as having any special expertise or experience and shall not impose any greater responsibility or liability on any such person or on the Board by reason thereof.
Jack B. Evans. Mr. Evans has served as Chairman (since 2019), formerly, President (1996-2019), of the Hall-Perrine Foundation, a
private philanthropic corporation. Mr. Evans was formerly President and Chief Operating Officer of the SCI Financial Group, Inc., a regional financial services firm headquartered in Cedar Rapids, Iowa. He was a member of the Board of the
Federal Reserve Bank of Chicago as well as a Director of Alliant Energy and President Pro Tem of the Board of Regents for the State of Iowa University System. Mr. Evans is Chairman of the Board of United Fire Group, sits on the Board as a
Public Member of the American Board of Orthopaedic Surgery and is a Life Trustee of Coe College. He has a Bachelor of Arts from Coe College and a M.B.A. from the University of Iowa.
William C. Hunter. Dr. Hunter became Dean Emeritus of the Henry B. Tippie College of Business at the University of Iowa in 2012,
after having served as Dean of the College since July 2006. He had been Dean and Distinguished Professor of Finance at the University of Connecticut School of Business from 2003 to 2006. From 1995 to 2003, he was the Senior Vice President and
Director of Research at the Federal Reserve Bank of Chicago. He has held faculty positions at Emory University, Atlanta University, the University of Georgia and Northwestern University. He has consulted with numerous foreign central banks and
official agencies in Western Europe, Central and Eastern Europe, Asia, Central America and South America. He has been a Director of Wellmark, Inc. since 2009. He is a past Director (2005-2015) and a past President (2010-2014) of Beta Gamma Sigma,
Inc., The International Business Honor Society, and a past Director (2004-2018) of the Xerox Corporation.
Albin F.
Moschner. Mr. Moschner is a consultant in the wireless industry and, in July 2012, founded Northcroft Partners, LLC, a management consulting firm that provides operational, management and governance solutions. Prior to founding Northcroft
Partners, LLC, Mr. Moschner held various positions at Leap Wireless International, Inc., a provider of wireless services, where he was a consultant from February 2011 to July 2012, Chief Operating Officer from July 2008 to February 2011, and
Chief Marketing Officer from August 2004 to June 2008. Before he joined Leap Wireless International, Inc., Mr. Moschner was President of the Verizon Card
29
Services division of Verizon Communications, Inc. from 2000 to 2003, and President of One Point Services at One Point Communications from 1999 to 2000. Mr. Moschner also served at Zenith
Electronics Corporation as Director, President and Chief Executive Officer from 1995 to 1996, and as Director, President and Chief Operating Officer from 1994 to 1995. Mr. Moschner was formerly Chairman (2019) and a member of the Board of
Directors (since 2012) of USA Technologies, Inc. and, from 1996 until 2016, he was a member of the Board of Directors of Wintrust Financial Corporation. In addition, he is emeritus (since 2018) of the Advisory Boards of the Kellogg School of
Management (1995-2018) and the Archdiocese of Chicago Financial Council (2012-2018). Mr. Moschner received a Bachelor of Engineering degree in Electrical Engineering from The City College of New York in 1974 and a Master of Science degree in
Electrical Engineering from Syracuse University in 1979.
Mr. Nelson is on the Board of Directors of Core12, LLC. (since
2008), a private firm which develops branding, marketing, and communications strategies for clients. Mr. Nelson has extensive experience in global banking and markets, having served in several senior executive positions with ABN AMRO Holdings N.V.
and its affiliated entities and predecessors, including LaSalle Bank Corporation from 1996 to 2008, ultimately serving as Chief Executive Officer of ABN AMRO N.V. North America. During his tenure at the bank, he also served as Global Head of its
Financial Markets Division, which encompassed the banks Currency, Commodity, Fixed Income, Emerging Markets, and Derivatives businesses. He was a member of the Foreign Exchange Committee of the Federal Reserve Bank of the United States and
during his tenure with ABN AMRO served as the banks representative on various committees of The Bank of Canada, European Central Bank, and The Bank of England. Mr. Nelson previously served as a senior, external advisor to the financial
services practice of Deloitte Consulting LLP. (2012-2104). At Fordham University, he served as a director of The Presidents Council (2010- 2019) and previously served as a director of The Curran Center for Catholic American Studies
(2009-2018). He served as a trustee and Chairman of The Board of Trustees of Marian University (2011-2013). Mr. Nelson is a graduate of Fordham University and holds a BA in Economics (1984) and an MBA in Finance (1991). Mr. Nelson joined the Fund
Board in September of 2013.
Judith M. Stockdale. Ms. Stockdale retired in 2012 as Executive Director of the
Gaylord and Dorothy Donnelley Foundation, a private foundation working in land conservation and artistic vitality in the Chicago region and the Low Country of South Carolina. She is currently a board member of the Land Trust Alliance (since 2013).
Her previous positions include Executive Director of the Great Lakes Protection Fund, Executive Director of Openlands, and Senior Staff Associate at the Chicago Community Trust. She has served on the Advisory Councils of the National Zoological
Park, the Governors Science Advisory Council (Illinois) and the Nancy Ryerson Ranney Leadership Grants Program. She has served on the boards of Brushwood Center, Forefront f/k/a Donors Forum and the U.S. Endowment for Forestry and Communities.
Ms. Stockdale, a native of the United Kingdom, has a Bachelor of Science degree in geography from the University of Durham (UK) and a Master of Forest Science degree from Yale University.
Carole E. Stone. Ms. Stone is currently on the Board of Directors of the Cboe Global Markets, Inc. (formerly, CBOE Holdings,
Inc.), having previously served on the Boards of the Chicago Board Options Exchange, and C2 Options Exchange, Incorporated. Ms. Stone retired from the New York State Division of the Budget in 2004, having served as its Director for nearly five
years and as Deputy Director from 1995 through 1999. She has also served as the Chair of the New York Racing Association Oversight Board, as a Commissioner on the New York State Commission on Public Authority Reform and as a member of the Boards of
Directors of several New York State public authorities. Ms. Stone has a Bachelor of Arts from Skidmore College in Business Administration.
Terence J. Toth. Mr. Toth, the Nuveen Funds Independent Chairman, was a Co-Founding Partner of Promus Capital (2008-2017). From 2010 to 2019, he was a Director of Fulcrum IT Service LLC
and, from 2012 to 2016, a Director of LogicMark LLC. From 2008 to 2013, he was a Director of Legal & General Investment Management America, Inc. From 2004 to 2007, he was Chief Executive Officer and President of Northern Trust Global
Investments, and Executive Vice President of Quantitative Management & Securities Lending from 2000 to 2004. He also formerly served on the Board of the Northern Trust Mutual Funds. He joined Northern Trust in
30
1994 after serving as Managing Director and Head of Global Securities Lending at Bankers Trust (1986 to 1994) and Head of Government Trading and Cash Collateral Investment at Northern Trust from
1982 to 1986. He currently serves on the Board of Quality Control Corporation (since 2012) and Catalyst Schools of Chicago. He is on the Mather Foundation Board (since 2012) and is the Chair of its Investment Committee. Mr. Toth graduated with
a Bachelor of Science degree from the University of Illinois, and received his M.B.A. from New York University. In 2005, he graduated from the CEO Perspectives Program at Northwestern University.
Margaret L. Wolff. Ms. Wolff retired from Skadden, Arps, Slate, Meagher & Flom LLP in 2014 after more than 30 years
of providing client service in the Mergers & Acquisitions Group. During her legal career, Ms. Wolff devoted significant time to advising boards and senior management on U.S. and international corporate, securities, regulatory and
strategic matters, including governance, shareholder, fiduciary, operational and management issues. Ms. Wolff has been a trustee of New York-Presbyterian Hospital since 2005 and, since 2004, she has served as a trustee of The John A. Hartford
Foundation (a philanthropy dedicated to improving the care of older adults) where she currently is the Chair. From 2013 to 2017, she was a Board member of Travelers Insurance Company of Canada and The Dominion of Canada General Insurance Company
(each of which is a part of Travelers Canada, the Canadian operation of The Travelers Companies, Inc.). From 2005 to 2015, she was a trustee of Mt. Holyoke College and served as Vice Chair of the Board from 2011 to 2015. Ms. Wolff received her
Bachelor of Arts from Mt. Holyoke College and her Juris Doctor from Case Western Reserve University School of Law.
Robert L. Young. Mr. Young has more than 30 years of experience in the investment management industry. From 1997 to 2017, he held
various positions with J.P. Morgan Investment Management Inc. (J.P. Morgan Investment) and its affiliates (collectively, J.P. Morgan). Most recently, he served as Chief Operating Officer and Director of
J.P. Morgan Investment (from 2010 to 2016) and as President and Principal Executive Officer of the J.P. Morgan Funds (from 2013 to 2016). As Chief Operating Officer of J.P. Morgan Investment, Mr. Young led service, administration and
business platform support activities for J.P. Morgans domestic retail mutual fund and institutional commingled and separate account businesses, and co-led these activities for J.P. Morgans global retail and institutional
investment management businesses. As President of the J.P. Morgan Funds, Mr. Young interacted with various service providers to these funds, facilitated the relationship between such funds and their boards, and was directly involved in
establishing board agendas, addressing regulatory matters, and establishing policies and procedures. Before joining J.P. Morgan, Mr. Young, a former Certified Public Accountant (CPA), was a Senior Manager (Audit) with Deloitte & Touche LLP
(formerly, Touche Ross LLP), where he was employed from 1985 to 1996. During his tenure there, he actively participated in creating, and ultimately led, the firms midwestern mutual fund practice. Mr. Young holds a Bachelor of Business
Administration degree in Accounting from the University of Dayton and, from 2008 to 2011, he served on the Investment Committee of its Board of Trustees.
Independent Chairman
Terence J. Toth currently serves as the independent
Chairman of the Board. Specific responsibilities of the Chairman include (a) presiding at all meetings of the Board and of the shareholders; (b) seeing that all orders and resolutions of the Trustees are carried into effect; and
(c) maintaining records of and, whenever necessary, certifying all proceedings of the Trustees and the shareholders.
Class I Trustees will serve until the annual meeting of shareholders in 2022; Class II Trustees will serve until the annual meeting of
shareholders in 2023; and Class III Trustees will serve until the annual meeting of shareholders in 2021. As each Trustees term expires, shareholders will be asked to elect trustees and such trustees shall be elected for a term expiring at the
time of the third succeeding annual meeting subsequent to their election or thereafter in each case when their respective successors are duly elected and qualified. These provisions could delay for up to two years the replacement of a majority of
the Board. See Certain Provisions in the Declaration of Trust in the Prospectus.
31
SHARE OWNERSHIP
The following table sets forth the dollar range of equity securities beneficially owned by each Trustee as of December 31, 2019:
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Name of Trustee
|
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Dollar Range
of Equity
Securities in
the Fund
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Aggregate Dollar Range
of Equity Securities in
All Registered
Investment
Companies
Overseen by Trustee
in Family of Investment
Companies
|
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Jack B. Evans
|
|
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None
|
|
|
|
Over $ 100,000
|
|
William C. Hunter
|
|
|
None
|
|
|
|
Over $ 100,000
|
|
Albin F. Moschner
|
|
|
None
|
|
|
|
Over $ 100,000
|
|
John K. Nelson
|
|
|
None
|
|
|
|
Over $ 100,000
|
|
Judith M. Stockdale
|
|
|
None
|
|
|
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Over $ 100,000
|
|
Carole E. Stone .
|
|
|
None
|
|
|
|
Over $ 100,000
|
|
Terence J. Toth
|
|
|
None
|
|
|
|
Over $ 100,000
|
|
Margaret L. Wolff
|
|
|
None
|
|
|
|
Over $ 100,000
|
|
Robert L. Young
|
|
|
None
|
|
|
|
Over $ 100,000
|
|
As of April 1, 2020, the officers and Trustees as a group beneficially owned less than 1%
of any class of the Funds outstanding securities. As of April 1, 2020, none of the disinterested Trustees or their immediate family members owned, beneficially, or of record, any securities in (i) an investment adviser or principal
underwriter of the Fund or (ii) a person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with an investment adviser or principal underwriter of the Fund.
5% Shareholders
As
of April 1, 2020 no shareholders owned of record, or were known by the Fund to own of record or beneficially, 5% or more of any class of shares of the Fund.
COMPENSATION
The following table shows, for each independent Trustee,
(1) the aggregate compensation paid to each Trustee by the Fund for its fiscal year ended December 31, 2019, (2) the amount of total compensation paid to each Trustee by the Fund that has been deferred, and (3) the total
compensation paid to each Trustee by the Nuveen Funds during the calendar year ended December 31, 2019. The Fund does not have a retirement or pension plan. The officers and Trustees affiliated with Nuveen Investments serve without any
compensation from the Fund. Certain of the Nuveen Funds have a deferred compensation plan (the Compensation Plan) that permits any Trustee who is not an interested person of certain funds to elect to defer receipt of all or a
portion of his or her compensation as a Trustee. The deferred compensation of a participating trustee is credited to the book reserve account of a fund when the compensation would otherwise have been paid to the trustee. The value of the
Trustees deferral account at any time is equal to the value that the account would have had if contributions to the account had been invested and reinvested in shares of one or more of the eligible Nuveen Funds. At the time for commencing
distributions from a Trustees deferral account, the Trustee may elect to receive distributions in a lump sum or over a period of five years. The Fund will not be liable for any other funds obligations to make distributions under the
Compensation Plan.
32
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|
|
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|
|
Aggregate
Compensation from Fund(1)
|
|
|
Amount of
Total Compensation
From the Fund
That Has Been
Deferred(2)
|
|
|
Total Compensation from
Fund and Fund Complex(3)
|
|
Jack B. Evans
|
|
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$2,422
|
|
|
$
|
258
|
|
|
$
|
400,437
|
|
William C. Hunter
|
|
|
2,523
|
|
|
|
|
|
|
|
420,625
|
|
Albin F. Moschner
|
|
|
2,230
|
|
|
|
|
|
|
|
376,050
|
|
John K. Nelson
|
|
|
2,532
|
|
|
|
|
|
|
|
420,625
|
|
Judith M. Stockdale
|
|
|
2,334
|
|
|
|
453
|
|
|
|
388,232
|
|
Carole E. Stone
|
|
|
2,476
|
|
|
|
1,280
|
|
|
|
409,035
|
|
Terence J. Toth
|
|
|
2,948
|
|
|
|
|
|
|
|
490,225
|
|
Margaret L. Wolff
|
|
|
2,286
|
|
|
|
792
|
|
|
|
384,687
|
|
Robert L. Young
|
|
|
2,172
|
|
|
|
2,172
|
|
|
|
363,189
|
|
(1)
|
The compensation paid, including deferred amounts, to the independent trustees for the fiscal year ended December 31, 2019 for services
to the Fund.
|
(2)
|
Pursuant to a deferred compensation agreement with certain of the Nuveen Funds, deferred amounts are treated as though an equivalent dollar
amount has been invested in shares of one or more eligible Nuveen Funds. Total deferred fees for the Fund (including the return from the assumed investment in the eligible Nuveen Funds) payable are stated above.
|
(3)
|
Based on the compensation paid (including any amounts deferred) for the calendar year ended December 31, 2019 for services to the Nuveen open-end and closed-end funds. Because the funds in the Fund Complex have different fiscal year ends, the amounts shown in this column are presented on a calendar year basis.
|
Effective January 1, 2020, each Independent trustee receives a $195,000 annual retainer, increased from
$190,000 as of January 1, 2019, plus: (a) a fee of $6,750 per day, which was increased from $6,500 per day as of January 1, 2019, for attendance in person or by telephone at regularly scheduled meetings of the Board; (b) a fee of $3,000 per meeting
for attendance in person or by telephone at special, non-regularly scheduled meetings of the Board where in-person attendance is required and $2,000 per meeting for attendance by telephone or in person at such meetings where in-person attendance is
not required; (c) a fee of $2,500 per meeting for attendance in person or by telephone at Audit Committee meetings where in-person attendance is required and $2,000 per meeting for attendance by telephone or in person at such meetings where
in-person attendance is not required; (d) a fee of $5,000 per meeting, which was increased from $2,500 per meeting as of January 1, 2019, for attendance in person or by telephone at Compliance, Risk Management and Regulatory Oversight Committee
meetings where in-person attendance is required and $2,000 per meeting for attendance by telephone or in person at such meetings where in-person attendance is not required; (e) a fee of $1,000 per meeting for attendance in person or by telephone at
Dividend Committee meetings; (f) a fee of $2,500 per meeting for attendance in person or by telephone at Closed-End Funds Committee meetings where in-person attendance is required and $2,000 per meeting for attendance by telephone or in person at
such meetings where in-person attendance is not required; and (g) a fee of $500 per meeting for attendance in person or by telephone at all other committee meetings ($1,000 for shareholder meetings) where in-person attendance is required and $250
per meeting for attendance by telephone or in person at such committee meetings (excluding shareholder meetings) where in-person attendance is not required, and $100 per meeting when the Executive Committee acts as pricing committee for IPOs; plus,
in each case, expenses incurred in attending such meetings, provided that no fees are received for meetings held on days on which regularly scheduled Board meetings are held. In addition to the payments described above, the Chairman of the Board
receives $90,000 and the chairpersons of the Audit Committee, the Dividend Committee, the Compliance, Risk Management and Regulatory Oversight Committee, the Closed-End Funds Committee and the Nominating and Governance Committee receive $15,000 as
annual retainers. Independent trustees also receive a fee of $3,000 per day for site visits to entities that provide services to the Nuveen funds on days on which no Board meeting is held. When ad hoc committees are organized, the Nominating and
Governance Committee will at the time of formation determine compensation to be paid to the members of such committee;
33
however, in general, such fees will be $1,000 per meeting for attendance in person or by telephone at ad hoc committee meetings where in-person attendance is required and $500 per meeting for
attendance by telephone or in person at such meetings where in-person attendance is not required. The annual retainer, fees and expenses are allocated among the Nuveen funds on the basis of relative net assets, although management may, in its
discretion, establish a minimum amount to be allocated to each fund. In certain instances, fees and expenses will be allocated only to those Nuveen funds that are discussed at a given meeting.
The Fund has no employees. The officers of the Fund and the trustees of the Fund who are not independent trustees serve without any
compensation from the Fund.
INVESTMENT ADVISER,
SUB-ADVISER AND PORTFOLIO MANAGER
Investment Adviser. Nuveen Fund
Advisors, LLC, the Funds investment adviser, is responsible for overseeing the Funds overall investment strategy and its implementation. Nuveen Fund Advisors offers advisory and investment management services to a broad range of
investment company clients. Nuveen Fund Advisors has overall responsibility for management of the Fund, oversees the management of the Funds portfolio, manages the Funds business affairs and provides certain clerical, bookkeeping and
other administrative services. Nuveen Fund Advisors is located at 333 West Wacker Drive, Chicago, Illinois 60606. Nuveen Fund Advisors is a subsidiary of Nuveen, LLC, the investment management arm of Teachers Insurance and Annuity Association of
America (TIAA). TIAA is a life insurance company founded in 1918 by the Carnegie Foundation for the Advancement of Teaching and is the companion organization of College Retirement Equities Fund. As of March 31, 2020, Nuveen managed
approximately $957.3 billion in assets, of which approximately $138.1 billion was managed by Nuveen Fund Advisors.
Investment Management Agreement and Related Fees. Pursuant to an investment management agreement between Nuveen Fund
Advisors and the Fund (the Investment Management Agreement), the Fund has agreed to pay an annual management fee for the overall advisory and administrative services and general office facilities provided by Nuveen Fund Advisors. The
Funds management fee is separated into two componentsa complex-level component, based on the aggregate amount of all fund assets managed by Nuveen Fund Advisors, and a specific fund-level component, based only on the amount of assets
within the 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 Nuveen Fund Advisors.
Fund-Level Fee. The annual fund-level fee for the Fund, payable monthly, is calculated according to the following schedule:
|
|
|
|
|
Average Daily Managed Assets*
|
|
Fund-Level
Fee Rate
|
|
For the first $500 million
|
|
|
0.6900
|
%
|
For the next $500 million
|
|
|
0.6650
|
%
|
For the next $500 million
|
|
|
0.6400
|
%
|
For the next $500 million
|
|
|
0.6150
|
%
|
For managed assets over $2 billion
|
|
|
0.5900
|
%
|
34
Complex-Level Fee. The annual complex-level fee for the Fund,
payable monthly, is calculated by multiplying the current complex-wide fee rate, determined according to the following schedule, by the Funds daily managed assets:
|
|
|
|
|
Complex-Level Eligible
Asset Breakpoint Level*
|
|
Effective
Complex-Level
Fee Rate
at
Breakpoint Level
|
|
$55 billion
|
|
|
0.2000
|
%
|
$56 billion
|
|
|
0.1996
|
%
|
$57 billion
|
|
|
0.1989
|
%
|
$60 billion
|
|
|
0.1961
|
%
|
$63 billion
|
|
|
0.1931
|
%
|
$66 billion
|
|
|
0.1900
|
%
|
$71 billion
|
|
|
0.1851
|
%
|
$76 billion
|
|
|
0.1806
|
%
|
$80 billion
|
|
|
0.1773
|
%
|
$91 billion
|
|
|
0.1691
|
%
|
$125 billion
|
|
|
0.1599
|
%
|
$200 billion
|
|
|
0.1505
|
%
|
$250 billion
|
|
|
0.1469
|
%
|
$300 billion
|
|
|
0.1445
|
%
|
*
|
The complex-level fee is calculated based upon the aggregate daily eligible assets of all Nuveen open-end and closed-end funds.
Eligible assets do not include assets attributable to investments in other Nuveen funds or assets in excess of a determined amount (originally $2 billion) added to the Nuveen fund complex in connection with Nuveen Fund Advisors assumption of
the management of the former First American Funds effective January 1, 2011, but do include certain assets of certain Nuveen funds that were reorganized into funds advised by an affiliate of Nuveen Fund Advisors during the 2019 calendar year.
Eligible assets include closed-end fund assets managed by Nuveen Fund Advisors that are attributable to certain types of leverage. For these purposes, leverage includes the closed-end funds use of preferred stock and borrowings and certain
investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by the TOB trust that has been effectively financed by the trusts
issuance of floating rate securities, subject to an agreement by Nuveen Fund Advisors as to certain funds to limit the amount of such assets for determining eligible assets in certain circumstances. As of December 31, 2019, the complex-level fee
rate for the Fund was 0.1562%.
|
The following table sets forth the management fee paid by the Fund for
the last three fiscal years:
|
|
|
|
|
|
|
|
|
|
|
Management Fee Net of Expense
Reimbursement Paid for
the
Fiscal Year Ended
|
|
|
Expense
Reimbursement for the
Fiscal Year Ended
|
|
Fiscal year ended December 31, 2017
|
|
$
|
6,619,084
|
|
|
$
|
|
|
Fiscal year ended December 31, 2018
|
|
$
|
7,241,718
|
|
|
$
|
|
|
Fiscal year ended December 31, 2019
|
|
$
|
7,362,076
|
|
|
$
|
|
|
In addition to the fee of Nuveen Fund Advisors, the Fund pays all other costs and expenses of its
operations, including compensation of its Trustees (other than those affiliated with Nuveen Fund Advisors and Nuveen Asset Management), custodian, transfer agency and dividend disbursing expenses, legal fees, expenses of independent auditors,
expenses of repurchasing shares, expenses of issuing Preferred Shares (if any), expenses of preparing, printing and distributing shareholder reports, notices, proxy statements and reports to governmental agencies and taxes, if any. All fees and
expenses are accrued daily and deducted before payment of dividends to investors.
A discussion regarding the Boards
most recent approval of the Investment Management Agreement may be found in the Funds semi-annual report to shareholders dated June 30 of each year.
35
Sub-Adviser. Nuveen Asset
Management, LLC, 333 West Wacker Drive, Chicago, Illinois 60606, serves as the Funds sub-adviser pursuant to a sub-advisory agreement between Nuveen Fund Advisors
and Nuveen Asset Management (the Sub-Advisory Agreement). Nuveen Asset Management, a registered investment adviser, is a wholly-owned subsidiary of Nuveen Fund Advisors. Nuveen Asset Management oversees day-to-day operations and provides portfolio management services to the Fund. Pursuant to the Sub-Advisory Agreement, Nuveen Asset Management will be compensated
for the services it provides to the Fund with a portion of the management fee Nuveen Fund Advisors receives from the Fund. Nuveen Fund Advisors and Nuveen Asset Management retain the right to reallocate investment advisory responsibilities and fees
between themselves in the future.
Sub-Advisory Agreement and Related Fees.
Pursuant to the Sub-Advisory Agreement, Nuveen Asset Management will receive from Nuveen Fund Advisors a management fee equal to 0.3900% of the Funds average daily Managed Assets, payable on a
monthly basis.
The following table sets forth the management fee paid by Nuveen Fund Advisors to Nuveen Asset Management for
the last three fiscal years:
|
|
|
|
|
|
|
Sub-Advisory Fee Paid by
Nuveen Fund Advisors
to
Nuveen Asset Management
|
|
Fiscal year ended December 31, 2017
|
|
$
|
3,067,771
|
|
Fiscal year ended December 31, 2018
|
|
$
|
3,367,265
|
|
Fiscal year ended December 31, 2019
|
|
$
|
3,430,629
|
|
A discussion regarding the Boards most recent approval of the Sub-Advisory Agreement may be found in the Funds semi-annual report to shareholders for the period ended June 30 of each year.
Portfolio Manager. Unless otherwise indicated, the information below is provided as of the date of this SAI.
Portfolio Management. David Friar, Managing Director and Portfolio Manager (since 2011) of Nuveen Asset Management, entered the financial services industry in 1998. He is the lead manager of the
equity index, mid cap index, small cap index and enhanced equity index strategies and related institutional portfolios. He joined the team managing the equity, mid cap and small cap index strategies in 2000 and became part of the enhanced equity
index team in 2007. He joined the firm in 1999 as a member of the performance measurement group.
Other Accounts. The
Portfolio Manager also has responsibility for the day-to-day management of accounts other than the Fund. Information regarding these other accounts is set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Other Accounts Managed and Assets by Account Type as of December
31, 2019
|
Portfolio Manager
|
|
Type of
Account Managed
|
|
Number
of Accounts
|
|
Total Assets
|
|
Number of
Accounts with
Performance
Based Fees
|
|
Assets of
Accounts with
Performance
Based Fees
|
David Friar
|
|
Registered Investment Companies
|
|
4
|
|
$2.24 billion
|
|
0
|
|
0
|
|
|
Other Pooled Investment Vehicles
|
|
0
|
|
$0
|
|
0
|
|
0
|
|
|
Other Accounts
|
|
0
|
|
$0
|
|
0
|
|
0
|
|
|
|
|
1**
|
|
$95 million
|
|
|
|
|
**
|
Other Accounts-overlay strategiesThe portfolio manager is responsible for the management of overlay strategies employed by this account
that use derivative instruments either to obtain, offset or substitute for certain portfolio exposures beyond those provided by the accounts underlying portfolios.
|
The Portfolio Manager is responsible for managing the Fund and other accounts, including separate accounts and unregistered funds.
36
As shown in the above table, the Portfolio Manager may manage accounts in addition to
the Fund. The potential for conflicts of interest exists when a portfolio manager manages other accounts with similar investment objectives and strategies to the Fund (Similar Accounts). Potential conflicts may include, for example,
conflicts between investment strategies and conflicts in the allocation of investment opportunities.
Responsibility for
managing Nuveen Fund Advisors clients portfolios is organized according to investment strategies. Generally, client portfolios with similar strategies are managed using the same objectives, approach and philosophy. Therefore, portfolio
holdings, relative position sizes and sector exposures tend to be similar across similar portfolios which minimizes the potential for conflicts of interest.
Nuveen Fund Advisors may receive more compensation with respect to certain Similar Accounts than that received with respect to the Fund or may receive compensation based in part on the performance of
certain Similar Accounts. This may create a potential conflict of interest for the Portfolio Managers by providing an incentive to favor these Similar Accounts when, for example, placing securities transactions. Potential conflicts of interest may
arise with both the aggregation and allocation of securities transactions and allocation of limited investment opportunities. Allocations of aggregated trades, particularly trade orders that were only partially completed due to limited availability,
and allocation of investment opportunities generally, could raise a potential conflict of interest.
Nuveen Asset Management
has policies and procedures designed to manage these conflicts described above such as allocation of investment opportunities to achieve fair and equitable allocation of investment opportunities among its clients over time. For example, orders for
the same equity security are aggregated on a continual basis throughout each trading day consistent with Nuveen Asset Managements duty of best execution for its clients. If aggregated trades are fully executed, accounts participating in the
trade will be allocated their pro rata share on an average price basis. Partially completed orders will be allocated among the participating accounts on a pro-rata average price basis as well.
Compensation. Portfolio managers are compensated through a combination of base salary and variable components consisting of (i) a
cash bonus; (ii) a long-term performance award; and (iii) participation in a profits interest plan.
Base salary. A
portfolio managers base salary is determined based upon an analysis of the portfolio managers general performance, experience and market levels of base pay for such position.
Cash bonus. A portfolio manager is eligible to receive an annual cash bonus that is based on three variables: risk-adjusted
investment performance relative to benchmark generally measured over the most recent three and five year periods (unless the portfolio managers tenure is shorter), ranking versus Morningstar peer funds generally measured over the most recent
three and five year periods (unless the portfolio managers tenure is shorter), and management and peer reviews.
Long-term performance award. A portfolio manager is eligible to receive a long-term performance award that vests after three
years. The amount of the award when granted is based on the same factors used in determining the cash bonus. The value of the award at the completion of the three-year vesting period is adjusted based on the risk-adjusted investment performance of
Fund(s) managed by the portfolio manager during the vesting period and the performance of the TIAA organization as a whole.
Profits interest plan. Portfolio managers are eligible to receive profits interests in Nuveen Asset Management and its affiliate,
Teachers Advisors, LLC, which vest over time and entitle their holders to a percentage of the firms annual profits. Profits interests are allocated to each portfolio manager based on such persons overall contribution to the firms.
37
Material Conflicts of Interest. Actual or apparent conflicts of interest may arise
when a portfolio manager has day-to-day management responsibilities with respect to more than one account. More specifically, portfolio managers who manage multiple
accounts are presented a number of potential conflicts, including, among others, those discussed below.
The management of
multiple accounts may result in a portfolio manager devoting unequal time and attention to the management of each account. Nuveen Asset Management seeks to manage such competing interests for the time and attention of portfolio managers by having
portfolio managers focus on a particular investment discipline. Most accounts managed by a portfolio manager in a particular investment strategy are managed using the same investment models.
If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one account, an account may not be
able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible accounts. To deal with these situations, Nuveen Asset Management has adopted procedures for allocating limited opportunities
across multiple accounts.
With respect to many of its clients accounts, Nuveen Asset Management determines which broker
to use to execute transaction orders, consistent with its duty to seek best execution of the transaction. However, with respect to certain other accounts, Nuveen Asset Management may be limited by the client with respect to the selection of brokers
or may be instructed to direct trades through a particular broker. In these cases, Nuveen Asset Management may place separate, non-simultaneous, transactions for the Fund and other accounts which may
temporarily affect the market price of the security or the execution of the transaction, or both, to the detriment of the Fund or the other accounts.
Some clients are subject to different regulations. As a consequence of this difference in regulatory requirements, some clients may not be permitted to engage in all the investment techniques or
transactions or to engage in these transactions to the same extent as the other accounts managed by a portfolio manager. Finally, the appearance of a conflict of interest may arise where Nuveen Asset Management has an incentive, such as a
performance-based management fee, which relates to the management of some accounts, with respect to which a portfolio manager has day-to-day management responsibilities.
Conflicts of interest may also arise when the sub-adviser invests one or more of its client accounts in different or
multiple parts of the same issuers capital structure, including investments in public versus private securities, debt versus equity, or senior versus junior/subordinated debt, or otherwise where there are different or inconsistent rights or
benefits. Decisions or actions such as investing, trading, proxy voting, exercising, waiving or amending rights or covenants, workout activity, or serving on a board, committee or other involvement in governance may result in conflicts of interest
between clients holding different securities or investments. Generally, individual portfolio managers will seek to act in a manner that they believe serves the best interest of the accounts they manage. In cases where a portfolio manager or team
faces a conflict among its client accounts, it will seek to act in a manner that it believes best reflects its overall fiduciary duty, which may result in relative advantages or disadvantages for particular accounts.
Nuveen Asset Management has adopted certain compliance procedures which are designed to address these types of conflicts common among
investment managers. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
Fund Shares Owned by the Portfolio Manager. As of March 31, 2020, the Portfolio Manager beneficially owned (as determined pursuant to Rule 16a-1(a)(2)
under the Securities Exchange Act of 1934, as amended (the 1934 Act) shares of the Fund having values within the indicated dollar ranges.
|
|
|
|
|
Portfolio Manager
|
|
Dollar Range of Equity Securities
Beneficially Owned in the
Fund
|
|
David Friar
|
|
|
None
|
|
38
CODE OF ETHICS
The Fund, Nuveen Fund Advisors, Nuveen Asset Management, Nuveen Securities and other related entities have adopted a combined Code of
Ethics (Code of Ethics) that essentially prohibits certain of their personnel, including the Funds Portfolio Manager, from engaging in personal investments that compete or interfere with, or attempt to take advantage of a
clients, including the Funds, anticipated or actual portfolio transactions, and are designed to assure that the interests of clients, including Fund shareholders, are placed before the interests of personnel in connection with personal
investment transactions. Personnel subject to the Code of Ethics may purchase shares of the Fund subject to the restrictions set forth in the Code of Ethics. Personnel subject to the Code of Ethics may generally invest in securities in which the
Fund may also invest. A text-only version of the Code of Ethics of the Fund, can be viewed online or downloaded from the EDGAR Database on the SECs internet web site at www.sec.gov. In addition, copies of the Code of Ethics may be obtained,
after paying a duplicating fee, by e-mail request at publicinfo@sec.gov.
PROXY
VOTING POLICIES
The Adviser has delegated to the Sub-Adviser the full responsibility for proxy voting on securities held
in the Funds portfolio and related duties in accordance with the Sub-Advisers policies and procedures. The Adviser periodically monitors the Sub-Advisers voting to ensure that it is carrying out its duties. The Sub-Advisers
proxy voting policies and procedures are attached to this filing as Appendix A.
Information regarding how the Fund voted
proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling (800) 257-8787 or from the Funds website at
http://www.nuveen.com, and on the SECs website at http://www.sec.gov.
PORTFOLIO
TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board and the Adviser, the Sub-Adviser is responsible for
decisions to purchase and sell securities for the Fund, the negotiation of the prices to be paid and the allocation of transactions among various dealer firms. Transactions on stock exchanges involve the payment by the Fund of brokerage commissions.
There generally is no stated commission in the case of securities traded in the OTC market but the price paid by the Fund usually includes an undisclosed dealer commission or mark-up. Transactions in the OTC
market can also be placed with broker-dealers who act as agents and charge brokerage commissions for effecting OTC transactions. The Fund may place its OTC transactions either directly with principal market makers, or with broker-dealers if that is
consistent with the Sub-Advisers obligation to obtain best qualitative execution. In certain instances, the Fund may make purchases of underwritten issues at prices that include underwriting fees.
Portfolio securities may be purchased directly from an underwriter or in the OTC market from the principal dealers in such
securities, unless it appears that a better price or execution may be obtained through other means. Portfolio securities will not be purchased from Nuveen or its affiliates except in compliance with the 1940 Act.
It is the policy of the Sub-Adviser to seek the best execution under the circumstances of each trade. The Sub-Adviser will evaluate price
as the primary consideration, with the financial condition, reputation and responsiveness of the dealer considered secondary in determining best execution. Given the best execution obtainable, it will be the Sub-Advisers practice to select
dealers that, in addition, furnish research information (primarily credit analyses of issuers and general economic reports) and statistical and other services to the Sub-Adviser. It is not possible to place a dollar value on information and
statistical and other services received from dealers. Since it is only supplementary to the Sub-Advisers own research efforts, the receipt of research information is not expected to reduce significantly the Sub-Advisers expenses. While
the Sub-Adviser will be primarily responsible for the placement of the business of the Fund, the policies and practices of the Sub-Adviser in this regard must be consistent with the foregoing and will, at all times, be subject to review by the Board
of the Fund.
39
The Sub-Adviser may manage other investment accounts and investment companies for other
clients that may invest in the same types of securities as the Fund and that may have investment objectives similar to those of the Fund. The Sub-Adviser seeks to allocate portfolio transactions equitably whenever concurrent decisions are made to
purchase or sell assets or securities by the Fund and another advisory account. If an aggregated order cannot be filled completely, allocations will generally be made on a pro rata basis. An order may not be allocated on a pro rata basis where, for
example (i) consideration is given to portfolio managers who have been instrumental in developing or negotiating a particular investment; (ii) consideration is given to an account with specialized investment policies that coincide with the
particulars of a specific investment; (iii) pro rata allocation would result in odd-lot or de minimis amounts being allocated to a portfolio or other client; or (iv) where the Sub-Adviser reasonably
determines that departure from a pro rata allocation is advisable. There may also be instances where the Fund will not participate at all in a transaction that is allocated among other accounts. While these allocation procedures could have a
detrimental effect on the price or amount of the securities available to the Fund from time to time, it is the opinion of the Board that the benefits available from the Sub-Advisers management outweigh any disadvantage that may arise from the
Sub-Advisers larger management activities and its need to allocate securities.
Substantially all of the Funds
trades are effected on a principal basis. The following table sets forth the aggregate amount of brokerage commissions paid by the Fund for the last three fiscal years:
|
|
|
|
|
|
|
Brokerage Commissions Paid
|
|
Fiscal year ended December 31, 2017
|
|
$
|
162,104
|
|
Fiscal year ended December 31, 2018
|
|
$
|
124,288
|
|
Fiscal year ended December 31, 2019
|
|
$
|
70,493
|
|
During the fiscal year ended December 31, 2019, the Fund did not pay commissions to brokers in
return for research services or hold any securities of its regular broker-dealers.
During the fiscal year ended December 31,
2019, the Fund did not acquire securities of its regular brokers or dealers, as defined in Rule 10b-1 under the 1940 Act, or of the parents of the brokers or dealers.
NET ASSET VALUE
The Funds NAV per
Common Share is determined as of the close of regular session trading (normally 4:00 p.m., Eastern Time) on each day the NYSE is open for business. NAV is computed by dividing the value of all assets of the Fund (including accrued interest and
dividends), less all liabilities (including accrued expenses and dividends declared but unpaid), by the total number of Common Shares outstanding. In determining NAV, expenses are accrued and applied daily and securities and other assets for which
market quotations are available are valued at market value. Exchange-traded equity securities are generally valued at the last sales price on the securities exchange on which such securities are primarily traded. Exchange-traded equity securities
traded on a securities exchange for which there are no transactions on a given day or securities not listed on a securities exchange are valued at closing mid or bid prices. Securities reported on Nasdaq are valued at the Nasdaq Official Closing
Price. Exchange-listed option contracts are valued using the prices reported on the exchanges where such instruments are primarily traded as of 4:00 p.m. Eastern Time. Investors should note that the listed options markets generally close at 4:15
p.m. Eastern Time. Changes in the value of the Funds options portfolio after 4:00 p.m. generally would not be reflected in that days NAV. Exchange-traded futures contracts and options on futures contracts are generally valued at the
final settlement price or official closing price on the exchange such futures contracts and options on futures contracts are primarily traded. OTC derivatives, including OTC options, are valued based on prices from a third party evaluation service.
Temporary investments in securities that have variable rate and demand features qualifying them as short-term investments are valued at amortized cost, which approximates market value.
40
The Funds securities are valued in accordance with procedures approved by the Board.
Where a security is traded on more than one exchange, the security is generally valued at the price on the exchange considered to be the primary exchange. In the case of securities not traded on an exchange, or if exchange prices are not otherwise
available, the prices are typically determined by independent third party pricing services that use a variety of techniques and methodologies.
The valuations for fixed income securities and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer
quotations or a variety of fair valuation techniques and methodologies. Any independent pricing service determining fair value will do so pursuant to procedures adopted by, or under the supervision of, the Board. If independent third party pricing
services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed to be unreliable, the market price may be determined by using quotations from one or more broker/dealers. When such prices or quotations are not
available, or when believed to be unreliable, securities may be priced using fair value procedures approved by the Board. These procedures permit, among other things, the use of a matrix, formula or other method that takes into consideration market
indexes, yield curves and other specific adjustments to determine fair value. The Fund may also use fair value procedures if it is determined that a significant event has occurred between the time at which a market price is determined and the time
at which the funds NAV is calculated. The effect of using fair value pricing is that the Common Share NAV will be subject to the judgment of the Board or its designee instead of being determined by the market.
DISTRIBUTIONS
The Fund will pay quarterly distributions stated in terms of a fixed cents per Common Share that would be composed of net investment income and supplemental amounts generally representing realized capital
gains or, possibly, returns of capital representing unrealized capital gains. Quarterly distributions, including such supplemental amounts, are sometimes referred to as managed distributions. The Funds managed distribution policy
is pursuant to an exemptive order issued by the SEC, which permits the Fund to distribute long-term capital gains to shareholders more frequently than once per year. The Fund will seek to establish a Common Share distribution rate that roughly
corresponds to Nuveen Fund Advisors projections of the total return that could reasonably be expected to be generated by the Funds Common Shares over an extended period of time, although the distribution rate will not be solely dependent
on the amount of income earned or capital gains realized. Nuveen Fund Advisors, in making such projections, may consider long-term historical returns and a variety of other factors. Distributions can only be made after paying any interest and
required principal payments on borrowings, if any, and any accrued dividends to preferred shareholders, if any.
If, for any
quarterly distribution, net investment income and net realized capital gains were less than the amount of the distribution, the difference would be distributed from the Funds assets. In order to raise the cash for such distributions, the Fund
expects to sell portfolio securities. Such portfolio sales may occur at a time when independent investment judgment might not otherwise have dictated such action. The Funds final distribution for each calendar year may include any remaining
net investment income and net realized capital gains not distributed during the year.
The Funds actual financial
performance will likely vary significantly from month-to-month and from year-to-year, and there may be extended periods when the distribution rate will exceed the Funds actual total returns. The Funds projected or actual distribution
rate is not a prediction of what the Funds actual total returns will be over any specific future period.
As portfolio
and market conditions change, the rate of distributions on the Common Shares and the Funds distribution policy could change. To the extent that the total return of the Funds overall strategy exceeds the distribution rate for an extended
period, the Fund may be in a position either to increase the distribution rate or to distribute supplemental amounts to shareholders, or both. Conversely, if the total return of the Funds overall
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strategy is less than the distribution rate for an extended period of time, the Fund will effectively be drawing upon its assets to meet payments prescribed by its distribution policy. Similarly,
for tax purposes such distributions by the Fund may consist in part of a return of capital to Common Shareholders. The exact tax characteristics of the Funds Common Share distributions will not be known until after the Funds fiscal
year-end. Common Shareholders should not confuse a return of capital distribution with dividend yield or total return. At the same time that it pays a quarterly distribution, the Fund will post on its website
(www.nuveen.com/cef), and make available in written form to holders of its Common Shares a notice of the estimated sources and tax characteristics of the Funds distributions (i.e., what percentage of the distributions is estimated to
constitute ordinary income, short- term capital gains, long-term capital gains, and/or a non-taxable return of capital) on a year-to-date basis, in compliance with a federal securities law requirement that any fund paying a distribution from sources
other than net investment income disclose to shareholders the respective portion attributable to such other sources. These estimates may be based on certain assumptions about the Funds expected investment returns and the realization of net
gains, if any, over the remaining course of the year. These estimates may, and likely will, vary over time based on the activities of the Fund and changes in the value of portfolio investments. The final determination of the source and tax
characteristics of all distributions will be made after December 31 in each year, and reported to Common Shareholders on Form 1099-DIV early the following year.
As explained more fully below in Tax Matters, the Fund intends to distribute to Common Shareholders any net capital gain (which is the excess of net long-term capital gain over net short-term
capital loss) for each taxable year through its managed distributions or, alternatively, to retain all or a portion of the years net capital gain and pay federal income tax on the retained gain. Each Common Shareholder of record as of the end
of the Funds taxable year will include in income for federal income tax purposes, as long-term capital gain, his or her share of any retained gain, will be deemed to have paid his or her proportionate share of the tax paid by the Fund on such
retained gain, and will be entitled to an income tax credit or refund for that share of the tax. The Fund may treat any retained capital gain amount as a substitute for equivalent cash distributions. In addition, the Fund may make total Common Share
distributions during a given calendar year in an amount that exceeds the Funds net investment income and net realized long-term capital gains for that calendar year, in which case the excess will generally be treated by Common Shareholders as
return of capital for tax purposes. A return of capital reduces a shareholders tax basis, which could result in more taxable gain when the shareholder sells his or her shares. This may cause the shareholder to pay taxes even if he or she sells
shares for less than the original price.
The Fund reserves the right to change its distribution policy and the basis for
establishing the rate of its quarterly Common Share distributions at any time upon notice to Common Shareholders, upon a determination by the Funds Board of Trustees that such change is in the best interests of the Fund and its Common
Shareholders.
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly with the Fund or if you hold your Common Shares with a brokerage firm that participates in
the Funds Dividend Reinvestment Plan (the Plan), your distributions, including any capital gain distributions, will automatically be reinvested in additional Common Shares under the Plan unless you request otherwise. If you elect
not to participate in the Plan, or are not eligible to participate because your brokerage firm does not participate in the Plan, you will receive all distributions in cash paid by check mailed directly to you or your brokerage firm by Computershare
Trust Company, N.A. and Computershare Inc. (together Computershare), as dividend paying agent (the Plan Agent). The tax consequences of a distribution are the same regardless of whether such distribution is reinvested or
received in cash. See Tax Matters.
Under the Plan, the number of Common Shares you will receive will be
determined as follows:
(1) If Common Shares are trading at or above NAV at the time of valuation, the Fund
will issue new shares at the then current market price;
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(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and will purchase Common Shares in the open market, on the Nasdaq or elsewhere, for the participants accounts. It is possible that the market price for the Common Shares may increase
before the Plan Agent has completed its purchases. Therefore, the average purchase price per share paid by the Plan Agent may exceed the market price at the time of valuation, resulting in the purchase of fewer shares than if the dividend or
distribution had been paid in Common Shares issued by the Fund. The Plan Agent will use all dividends and distributions received in cash to purchase Common Shares in the open market within 30 days of the valuation date. Interest will not be paid on
any uninvested cash payments; or
(3) If the Plan Agent begins purchasing Fund shares on the open market while
shares are trading below NAV, but the Funds shares subsequently trade at or above their NAV before the Plan Agent is able to complete its purchases, the Plan Agent may cease open-market purchases and may invest the uninvested portion of the
distribution in newly-issued Fund shares at a price equal to the greater of the shares NAV or 95% of the shares market value.
You may withdraw from the Plan at any time by giving written notice to the Plan Agent. If you withdraw or the Plan is terminated, you will receive whole shares in your account under the Plan and you will
receive a cash payment for any fraction of a share in your account. If you wish, the Plan Agent will sell your shares and send you the proceeds, minus brokerage commissions and a $2.50 service fee.
The Plan Agent maintains all shareholders accounts in the Plan and gives written confirmation of all transactions in the accounts,
including information you may need for tax records. Upon a repurchase of your shares, the Fund (or its administrative agent) may be required to report to the Internal Revenue Service (the IRS) and furnish to you cost basis and holding
period information for the Funds shares purchased on or after January 1, 2012 (covered shares).
For
shares of the Fund held in the Plan, you are permitted to elect from among several permitted cost basis methods. In the absence of an election, the Plan will use first-in
first-out (FIFO) methodology for tracking and reporting your cost basis on covered shares as its default cost basis method. The cost basis method you use may not be changed with respect to a
repurchase of shares after the settlement date of the repurchase by the Fund. You should consult with your tax advisors to determine the best permitted cost basis method for your tax situation and to obtain more information about how the cost basis
reporting rules apply to you. Shareholders should also carefully review and cost basis information provided to them and make any additional basis, holding period or other adjustments that are required when reporting those amounts on their U.S.
federal income tax returns.
Common Shares in your account will be held by the Plan Agent in non-certificated form. Any proxy you receive will include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions in Common Shares. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent
when it makes open market purchases.
Automatically reinvesting dividends and distributions does not mean that you do not have
to pay income taxes due upon receiving dividends and distributions.
If you hold your Common Shares with a brokerage firm that
does not participate in the Plan, you will not be able to participate in the Plan and any dividend reinvestment may be effected on different terms than those described above. Consult your financial advisor for more information.
The Fund reserves the right to amend or terminate the Plan if in the judgment of the Board the change is warranted. There is no direct
service charge to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants. Additional information about the Plan may be obtained by writing to Computershare, P.O. Box
505000, Louisville, Kentucky, 40233-5000, (800) 257-8787.
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PLAN OF DISTRIBUTION
The Fund may sell the Common Shares offered under the Prospectus and this SAI through
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at-the-market transactions;
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underwriting syndicates; and
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privately negotiated transactions.
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The Fund will bear the expenses of the offering, including but not limited to, the expenses of preparation of the Prospectus and this SAI for the offering and the expense of counsel and auditors in
connection with the offering.
Distribution Through
At-The-Market Transactions
The Fund has
entered into a distribution agreement with Nuveen Securities (the Distribution Agreement), which has been filed as an exhibit to the Registration Statement of which this SAI is a part. Subject to the terms and conditions of the
Distribution Agreement, the Fund may from time to time issue and sell its Common Shares through Nuveen Securities to certain broker-dealers which have entered into selected dealer agreements with Nuveen Securities. Currently, Nuveen Securities has
entered into a Selected Dealer Agreement (the Selected Dealer Agreement) with BB&T Capital Markets (BB&T), a division of BB&T Securities, LLC, pursuant to which BB&T, will act as Nuveen Securities sub-placement agent with respect to at-the-market offerings of Common Shares. The Selected Dealer Agreement has been filed as an
exhibit to the Registration Statement of which this SAI forms a part.
Common Shares will only be sold on such days as shall
be agreed to by the Fund and Nuveen Securities. Common Shares will be sold at prevailing market prices through the National Market System, subject to a minimum price to be established each day by Nuveen Securities. The minimum price on any day will
not be less than the current NAV per Common Share plus the per share amount of the commission to be paid to Nuveen Securities. The Fund and Nuveen Securities will suspend the sale of Common Shares if the per share price of the shares is less than
the minimum price.
The Fund will compensate Nuveen Securities with respect to sales of the Common Shares at a commission
rate of up to 1.0% of the gross proceeds of the sale of Common Shares. Nuveen Securities will compensate sub-placement agents or other broker-dealers at a rate of up to 0.8% of the gross proceeds of the sale
of Common Shares sold by that sub-placement agent or broker-dealer. Settlements of sales of Common Shares will occur on the second business day following the date on which any such sales are made.
In connection with the sale of the Common Shares on behalf of the Fund, Nuveen Securities may be deemed to be an underwriter within
the meaning of the 1933 Act, and the compensation of Nuveen Securities may be deemed to be underwriting commissions or discounts. Unless otherwise indicated in a further Prospectus supplement, Nuveen Securities will act as underwriter on a
reasonable efforts basis.
The offering of Common Shares pursuant to the Distribution Agreement will terminate upon the
earlier of (i) the sale of all Common Shares subject thereto or (ii) termination of the Distribution Agreement. The Fund and Nuveen Securities each have the right to terminate the Distribution Agreement in its discretion at any time.
The Fund currently intends to distribute the shares offered pursuant to the Prospectus and this SAI through at-the-market transactions, although from time to time it may also distribute shares through an underwriting syndicate or a privately negotiated transaction. To the extent
shares are distributed other than through at-the-market transactions, the Fund will file a supplement to the Prospectus and this SAI describing such transactions.
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As of April 24, 2020, the Fund has sold in this offering an aggregate of 432,922 Common
Shares, representing net proceeds to the Fund of $9,639,213, after payment of commissions of $97,368 in the aggregate.
The
Funds closing price on the Nasdaq on April 24, 2020 was $21.23.
Distribution Through Underwriting Syndicates
The Fund from time to time may issue additional Common Shares through a syndicated secondary offering. In order to limit the impact on the
market price of the Funds Common Shares, underwriters will market and price the offering on an expedited basis (e.g., overnight or similarly abbreviated offering period). The Fund will launch a syndicated offering on a day, and upon
terms, mutually agreed upon between the Fund, Nuveen Securities, one of the Funds underwriters, and the underwriting syndicate.
The Fund will offer its shares at price equal to a specified discount of up to 5% from the closing market price of the Funds Common Shares on the day prior to the offering date. The applicable
discount will be negotiated by the Fund and Nuveen Securities in consultation with the underwriting syndicate on a transaction-by-transaction basis. The Fund will
compensate the underwriting syndicate out of the proceeds of the offering based upon a sales load of up to 4% of the gross proceeds of the sale of Common Shares. The minimum net proceeds per share to the Fund will not be less than the greater of
(i) the Funds latest NAV per share of Common Shares or (ii) 91% of the closing market price of the shares of the Funds Common Shares on the day prior to the offering date.
Distribution Through Privately Negotiated Transactions
The Fund from time
to time may sell directly to, and solicit offers from, institutional and other sophisticated investors, who may be deemed to be underwriters as defined in the 1933 Act for any resale of Common Shares.
The terms of such privately negotiated transactions will be subject to the discretion of the management of the Fund. In determining
whether to sell Common Shares through a privately negotiated transaction, the Fund will consider relevant factors including, but not limited to, the attractiveness of obtaining additional funds through the sale of Common Shares, the purchase price
to apply to any such sale of Common Shares and the person seeking to purchase the Common Shares.
Common Shares issued by the
Fund through privately negotiated transactions will be issued at a price equal to the greater of (i) the NAV per share of the Funds Common Shares or (ii) at a discount ranging from 0% to 5% of the average daily closing market price
of the Funds Common Shares at the close of business on the ten business days preceding the date upon which Common Shares are sold pursuant to the privately negotiated transaction. The applicable discount will be determined by the Fund on a transaction-by-transaction basis.
The principal
business address of Nuveen Securities is 333 West Wacker Drive, Chicago, Illinois 60606.
DESCRIPTION OF SHARES
COMMON SHARES
The Funds Declaration of Trust (the
Declaration) authorizes the issuance of an unlimited number of Common Shares. The Common Shares being offered have a par value of $0.01 per share and, subject to the rights of holders of Preferred Shares, if issued, and borrowings, if
incurred have equal rights as to the payment of dividends and the distribution of assets upon liquidation of the Fund. The Common Shares being offered will, when issued, be fully paid and, subject to matters discussed in Certain Provisions in
the Declaration of Trust, non-assessable, and will have no pre-emptive or conversion rights or rights to cumulative voting. The Fund has no current intention of
issuing
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Preferred shares or incurring borrowings. However, if at some future time the Fund issues Preferred Shares and/or incurs borrowings, the Common Shareholders will not be entitled to receive any
cash distributions from the Fund unless accrued dividends on Preferred Shares and interest on borrowings have been paid, and (i) unless asset coverage (as defined in the 1940 Act) with respect to Preferred Shares would be at least 200% after
giving effect to the distributions and (ii) unless asset coverage (again, as defined in the 1940 Act) with respect to any borrowings would be at least 300% after giving effect to the distributions. See Preferred Shares below.
The Common Shares are listed on Nasdaq and trade under the ticker symbol QQQX. The Fund intends to hold annual
meetings of shareholders so long as the Common Shares are listed on a national securities exchange and such meetings are required as a condition to such listing. The Fund will not issue share certificates.
Unlike open-end funds, closed-end funds like the Fund do
not provide daily redemptions. Rather, if a shareholder determines to purchase additional Common Shares or sell shares held, the shareholder may do so by trading on the exchange through a broker or otherwise. Shares of
closed-end investment companies may frequently trade at prices lower than NAV. Shares of closed-end investment companies like the Fund have, during some periods, traded
at prices higher than NAV and, during other periods, have traded at prices lower than NAV. Because the market value of the Common Shares may be influenced by such factors as distribution levels (which are in turn affected by expenses), distribution
stability, NAV, relative demand for and supply of such shares in the market, general market and economic conditions, and other factors beyond the control of the Fund, the Fund cannot guarantee that Common Shares will trade at a price equal to or
higher than NAV in the future. The NAV per Common Share also will be reduced by any costs associated with the issuance of Preferred Shares or any borrowings, if any. Whether investors will realize gains or losses upon the sale of Common Shares will
not depend upon a Funds NAV but will depend entirely upon whether the market price of the Common Shares at the time of sale is above or below the original purchase price for the shares. Since the market price of the Funds Common Shares
will be determined by factors beyond the control of the Fund, the Fund cannot guarantee you that Common Shares will trade at a price equal to or higher than NAV in the future. Accordingly, the Common Shares are designed primarily for long-term
investors, and investors in the Common Shares should not view the Fund as a vehicle for trading purposes. See Repurchase of Fund Shares; Conversion to Open-End Fund and the Funds Prospectus
under The Funds Investments.
PREFERRED SHARES
As a non-fundamental policy, the Fund will not leverage its capital structure by issuing senior
securities such as preferred shares or debt instruments. However, the Declaration authorizes the issuance of an unlimited number of Preferred shares in one or more classes or series, with rights as determined by the Board of the Fund, by action of
the Board without the approval of the Common Shareholders. The terms of any Preferred shares that may be issued by the Fund may be the same as, or different from, the terms described below, subject to applicable law and the Declaration.
Limited Issuance of Preferred Shares. Under the 1940 Act, the Fund could issue Preferred shares with an aggregate liquidation value of up
to one-half of the value of the Funds total net assets, measured immediately after issuance of the Preferred shares. Liquidation value means the original purchase price of the shares being
liquidated plus any accrued and unpaid dividends. In addition, the Fund is not permitted to declare any cash dividend or other distribution on its Common Shares unless the liquidation value of the Preferred shares is less than one-half of the value of the Funds total net assets (determined after deducting the amount of such dividend or distribution) immediately after the distribution.
Distribution Preference. The Preferred shares would have complete priority over the Common Shares as to distribution of assets.
Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of
the Fund, holders of Preferred shares would be entitled to receive a preferential liquidating
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distribution (expected to equal the original purchase price per share plus accumulated and unpaid dividends thereon, whether or not earned or declared) before any distribution of assets is made
to holders of Common Shares. After payment of the full amount of the liquidating distribution to which they are entitled, holders of Preferred shares will not be entitled to any further participation in any distribution of assets by the Fund. A
consolidation or merger of the Fund with or into any Massachusetts business trust or corporation or a sale of all or substantially all of the assets of the Fund shall not be deemed to be a liquidation, dissolution or winding up of the Fund.
Voting Rights. In connection with any issuance of Preferred shares, the Fund must comply with Section 18(i) of the 1940
Act, which requires, among other things, that Preferred shares be voting shares and have equal voting rights with Common Shares. Except as otherwise indicated in this SAI and except as otherwise required by applicable law, holders of Preferred
shares would vote together with Common Shareholders as a single class.
In connection with the election of the Funds
trustees, holders of Preferred shares, voting as a separate class, would be entitled to elect two of the Funds trustees, and the remaining trustees would be elected by Common Shareholders and holders of Preferred shares, voting together as a
single class. In addition, if at any time dividends on the Funds outstanding Preferred shares would be unpaid in an amount equal to two full years dividends thereon, the holders of all outstanding Preferred shares, voting as a separate
class, would be entitled to elect a majority of the Funds trustees until all dividends in arrears have been paid or declared and set apart for payment.
The affirmative vote of the holders of a majority of the Funds outstanding Preferred shares of any class or series, as the case may be, voting as a separate class, would be required to, among other
things, (1) take certain actions that would affect the preferences, rights, or powers of such class or series or (2) authorize or issue any class or series ranking prior to the Preferred shares. Except as may otherwise be required by law,
(1) the affirmative vote of the holders of at least two-thirds of the Funds Preferred shares outstanding at the time, voting as a separate class, would be required to approve any conversion of the
Fund from a closed-end to an open-end investment company and (2) the affirmative vote of the holders of at least two-thirds
of the outstanding Preferred shares, voting as a separate class, would be required to approve any plan of reorganization (as such term is used in the 1940 Act) adversely affecting such shares, provided however, that such separate class vote would be
a majority vote if the action in question has previously been approved, adopted or authorized by the affirmative vote of two-thirds of the total number of trustees fixed in accordance with the Declaration or
the By-laws. The affirmative vote of the holders of a majority of the outstanding Preferred shares, voting as a separate class, would be required to approve any action not described in the preceding sentence
requiring a vote of security holders under Section 13(a) of the 1940 Act including, among other things, changes in the Funds investment objective or changes in the investment restrictions described as fundamental policies under
Investment Restrictions. The class or series vote of holders of Preferred Shares described above would in each case be in addition to any separate vote of the requisite percentage of Common Shares and Preferred Shares necessary to
authorize the action in question.
The foregoing voting provisions would not apply with respect to the Funds Preferred
Shares if, at or prior to the time when a vote was required, such shares would have been (1) redeemed or (2) called for redemption and sufficient funds would have been deposited in trust to effect such redemption.
Redemption, Purchase and Sale of Preferred Shares. The terms of the Preferred Shares may provide that they are redeemable by the Fund at
certain times, in whole or in part, at the original purchase price per share plus accumulated dividends that the Fund may tender for or purchase Preferred Shares and that the Fund may subsequently resell any shares so tendered for or purchased. Any
redemption or purchase of Preferred Shares by the Fund would reduce the leverage applicable to Common Shares, while any resale of such shares by the Fund would increase such leverage.
In the event of any future issuance of Preferred Shares, the Fund likely would apply for ratings from an NRSRO. In such event, as long as
Preferred Shares are outstanding, the composition of the Funds portfolio
47
would reflect guidelines established by such NRSRO. Based on previous guidelines established by such NRSROs for the securities of other issuers, the Fund anticipates that the guidelines may
impose asset coverage or portfolio composition requirements that are more stringent than those imposed on the Fund by the 1940 Act. However, at this time, no assurance can be given as to the nature or extent of the guidelines that may be imposed in
connection with obtaining a rating of any Preferred Shares.
BORROWINGS
As a non-fundamental policy, the Fund will not leverage its capital structure by issuing senior
securities such as preferred shares or debt instruments. However, the Declaration authorizes the Fund, without prior approval of the Common Shareholders, to borrow money. In this connection, the Fund may issue borrowings (including bank borrowings
or commercial paper) and may secure any such borrowings by mortgaging, pledging or otherwise subjecting as security the Funds assets. In connection with such borrowings, the Fund may be required to maintain minimum average balances with the
lender or to pay a commitment or other fee to maintain a line of credit. Any such requirements would increase the cost of borrowing over the stated interest rate. Under the requirements of the 1940 Act, the Fund, immediately after any borrowings,
must have an asset coverage of at least 300%. With respect to any such borrowings, asset coverage means the ratio that the value of the total assets of the Fund, less all liabilities and indebtedness not represented by senior securities (as defined
in the 1940 Act), bears to the aggregate amount of such borrowings represented by senior securities issued by the Fund. Certain types of borrowings may result in the Fund being subject to covenants in credit agreements relating to asset coverages or
portfolio composition or otherwise. In addition, as with the issue of Preferred Shares, the Fund may be subject to certain restrictions imposed by guidelines of one or more ratings agencies that may issue ratings on commercial paper or notes issued
by the Fund. Such restrictions may be more stringent than those imposed by the 1940 Act.
The rights of lenders to the Fund to
receive interest on and repayment of principal of any such borrowings would be senior to those of the Common Shareholders, and the terms of any such borrowings may contain provisions that limit certain activities of the Fund, including the payment
of dividends to Common Shareholders in certain circumstances. Further, the 1940 Act would (in certain circumstances) grant to the lenders to the Fund certain voting rights in the event of default in the payment of interest on or repayment of
principal. In the event that such provisions would impair the Funds status as a regulated investment company (RIC) under the Code, the Fund would repay the borrowings. Any borrowings will likely be ranked senior or equal to all
other existing and future borrowings of the Fund. The Fund also may borrow up to an additional 5% of its total assets for temporary purposes.
CERTAIN PROVISIONS IN THE DECLARATION OF TRUST
Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Declaration contains an express disclaimer of shareholder
liability for debts or obligations of the Fund and requires that notice of such limited liability be given in each agreement, obligation or instrument entered into or executed by the Fund or the trustees. The Declaration further provides for
indemnification out of the assets and property of the Fund for all loss and expense of any shareholder held personally liable for the obligations of the Fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund would be unable to meet its obligations. The Fund believes that the likelihood of such circumstances is remote.
The Declaration includes provisions that could limit the ability of other entities or persons to acquire control of the Fund or to convert the Fund to open-end
status. Specifically, the Declaration requires a vote by holders of at least two-thirds of the Common Shares and, if issued, Preferred shares, voting together as a single class, except as described below, to
authorize (1) a conversion of the Fund from a closed-end to an open-end investment company, (2) a merger or consolidation of the Fund, or a series or class of
the Fund, with any corporation, association, trust or other organization or a reorganization of the Fund, or a series or class of the Fund, (3) a sale,
48
lease or transfer of all or substantially all of the Funds assets (other than in the regular course of the Funds investment activities), (4) in certain circumstances, a termination of
the Fund, or a series or class of the Fund or (5) a removal of trustees by shareholders, and then only for cause, unless, with respect to (1) through (4), such transaction has already been authorized by the affirmative vote of two-thirds of the total number of trustees fixed in accordance with the Declaration or the By-laws, in which case the affirmative vote of the holders of at least a majority of
the Funds Common Shares and, if issued, Preferred shares outstanding at the time, voting together as a single class, would be required, provided, however, that where only a particular class or series is affected (or, in the case of removing a
trustee, when the trustee has been elected by only one class), the required vote by only the applicable class or series would be required. Approval of shareholders would not be required, however, for any transaction, whether deemed a merger,
consolidation, reorganization or otherwise whereby the Fund issues shares in connection with the acquisition of assets (including those subject to liabilities) from any other investment company or similar entity. In the case of the conversion of the
Fund to an open-end investment company, or in the case of any of the foregoing transactions constituting a plan of reorganization that adversely affects the holders of any outstanding Preferred shares, the
action in question would also require the affirmative vote of the holders of at least two-thirds of the Funds Preferred shares outstanding at the time, voting as a separate class, or, if such action has
been authorized by the affirmative vote of two-thirds of the total number of trustees fixed in accordance with the Declaration or the Bylaws, the affirmative vote of the holders of at least a majority of the
Funds Preferred shares outstanding at the time, voting as a separate class. None of the foregoing provisions may be amended except by the vote of at least two-thirds of the Common Shares and, if issued,
Preferred shares, voting together as a single class. The votes required to approve the conversion of the Fund from a closed-end to an open-end investment company or to
approve transactions constituting a plan of reorganization that adversely affects the holders of any outstanding Preferred shares are higher than those required by the 1940 Act. The Board believes that the provisions of the Declaration relating to
such higher votes are in the best interest of the Fund and its shareholders. The Board is divided into three classes, with each class serving a different term. This staggered Board structure could delay for up to two years the replacement of a
majority of the Board.
The Declaration provides that the obligations of the Fund are not binding upon the trustees of the
Fund individually, but only upon the assets and property of the Fund, and that the trustees shall not be liable for errors of judgment or mistakes of fact or law. Nothing in the Declaration, however, protects a trustee against any liability to which
he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.
The provisions of the Declaration described above could have the effect of depriving the Common Shareholders of opportunities to sell their Common Shares at a premium over market value by discouraging a
third party from seeking to obtain control of the Fund in a tender offer or similar transaction. The overall effect of these provisions is to render more difficult the accomplishment of a merger or the assumption of control by a third party. They
provide, however, the advantage of potentially requiring persons seeking control of the Fund to negotiate with its management regarding the price to be paid and facilitating the continuity of the Funds investment objective and policies. The
Board of the Fund has considered the foregoing anti-takeover provisions and concluded that they are in the best interests of the Fund and its Common Shareholders.
Reference should be made to the Declaration on file with the SEC for the full text of these provisions.
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REPURCHASE OF FUND SHARES; CONVERSION TO OPEN-END FUND
The Fund is a closed-end
investment company and as such its shareholders will not have the right to cause the Fund to redeem their shares. Instead, the Funds Common Shares will trade in the open market at a price that will be a function of several factors, including
distribution levels (which are in turn affected by expenses), NAV, distribution stability, relative demand for and supply of such shares in the market, general market and economic conditions and other factors. Because shares of a closed-end investment company may frequently trade at prices lower than NAV, the Funds Board has currently determined that, at least annually, it will consider action that might be taken to reduce or eliminate
any material discount from NAV in respect of Common Shares, which may include the repurchase of such shares in the open market or in private transactions, the making of a tender offer for such shares at NAV, or the conversion of the Fund to an open-end investment company. There can be no assurance, however, that the Board will decide to take any of these actions, or that share repurchases or tender offers, if undertaken, will reduce market discount. On
August 9, 2019, the Funds Board renewed the Funds open market share repurchase program under which the Fund may repurchase up to 10% of its Common Shares. Since the inception of the Funds share repurchase program through
April 24, 2020, the Fund has not repurchased any Common Shares under the program.
Notwithstanding the foregoing, at
any time when the Funds Preferred Shares are outstanding, the Fund may not purchase, redeem or otherwise acquire any of its Common Shares unless (1) all accrued Preferred shares dividends have been paid and (2) at the time of such
purchase, redemption or acquisition, the NAV of the Funds portfolio (determined after deducting the acquisition price of the Common Shares) is at least 200% of the liquidation value of the outstanding Preferred shares (expected to equal the
original purchase price per share plus any accrued and unpaid dividends thereon). The staff of the SEC currently requires that any tender offer made by a closed-end investment company for its shares must be at
a price equal to the NAV of such shares on the close of business on the last day of the tender offer. Any service fees incurred in connection with any tender offer made by the Fund will be borne by the Fund and will not reduce the stated
consideration to be paid to tendering shareholders.
Subject to its investment limitations, the Fund may borrow to finance the
repurchase of shares or to make a tender offer. Interest on any borrowings to finance share repurchase transactions or the accumulation of cash by the Fund in anticipation of share repurchases or tenders will reduce the Funds net income. Any
share repurchase, tender offer or borrowing that might be approved by the Board would have to comply with the Securities Exchange Act of 1934, as amended, and the 1940 Act and the rules and regulations thereunder.
Although the decision to take action in response to a discount from NAV will be made by the Board at the time it considers such issue, it
is the Boards present policy, which may be changed by the Board, not to authorize repurchases of Common Shares or a tender offer for such shares if (1) such transactions, if consummated, would (a) result in the delisting of the
Common Shares from the Nasdaq or elsewhere, or (b) impair the Funds status as a RIC under the Code (which would make the Fund a taxable entity, causing the Funds income to be taxed at the corporate level in addition to the taxation
of shareholders who receive dividends from the Fund) or as a registered closed-end investment company under the 1940 Act; (2) the Fund would not be able to liquidate portfolio securities in an orderly
manner and consistent with the Funds investment objective and policies in order to repurchase shares; or (3) there is, in the Boards judgment, any (a) material legal action or proceeding instituted or threatened challenging
such transactions or otherwise materially adversely affecting the Fund, (b) general suspension of or limitation on prices for trading securities on the Nasdaq or elsewhere, (c) declaration of a banking moratorium by Federal or state
authorities or any suspension of payment by United States or state banks in which the Fund invests, (d) material limitation affecting the Fund or the issuers of its portfolio securities by Federal or state authorities on the extension of credit
by lending institutions or on the exchange of non-U.S. currency, (e) commencement of war, armed hostilities or other international or national calamity directly or indirectly involving the United States,
or (f) other event or condition that would have a material adverse effect (including any adverse tax effect) on the Fund or its shareholders if shares were repurchased. The Board may in the future modify these conditions in light of experience.
50
Conversion to an open-end company would require the
approval of the holders of at least two-thirds of the Funds Common Shares and Preferred shares outstanding at the time, voting together as a single class, and of the holders of at least two-thirds of the Funds Preferred shares outstanding at the time, voting as a separate class, provided however, that such separate class vote shall be a majority vote if the action in question has previously
been approved, adopted or authorized by the affirmative vote of two-thirds of the total number of trustees fixed in accordance with the Declaration or By-laws. See the
Prospectus under Certain Provisions in the Declaration of Trust for a discussion of voting requirements applicable to conversion of the Fund to an open-end company. If the Fund converted to an open-end company, it would be required to redeem all Preferred shares then outstanding (requiring in turn that it liquidate a portion of its investment portfolio), and the Funds Common Shares would no longer
be listed on Nasdaq or elsewhere. Shareholders of an open-end investment company may require the company to redeem their shares on any business day (except in certain circumstances as authorized by or under
the 1940 Act or rules thereunder) at their NAV, less such redemption charge, if any, as might be in effect at the time of redemption. In order to avoid maintaining large cash positions or liquidating favorable investments to meet redemptions, open-end companies typically engage in a continuous offering of their shares. Open-end companies are thus subject to periodic asset
in-flows and out-flows that can complicate portfolio management. As a result, conversion to open-end status may require changes in the management of the Funds
portfolio in order to meet the liquidity requirements applicable to open-end funds. Because portfolio securities may have to be liquidated to meet redemptions, conversion could affect the Funds ability to meet its investment objective or to
use certain investment policies and techniques described above. If converted to an open-end fund, the Fund expects to pay all redemptions in cash, but intends to reserve the right to pay redemption requests in a combination of cash or securities. If
such partial payment in securities were made, investors may incur brokerage costs in converting such securities to cash. If the Fund were converted to an open-end fund, it is likely that new Common Shares would be sold at NAV plus a sales load. The
Board of the Fund may at any time propose conversion of the Fund to an open-end company depending upon their judgment as to the advisability of such action in light of circumstances then prevailing.
The repurchase by the Fund of its shares at prices below NAV will result in an increase in the NAV of those shares that
remain outstanding. However, there can be no assurance that share repurchases or tenders at or below NAV will result in the Funds shares trading at a price equal to their NAV. Nevertheless, the fact that the Funds shares may be the
subject of repurchase or tender offers at NAV from time to time, or that the Fund may be converted to an open-end company, may reduce any spread between market price and NAV that might otherwise exist.
In addition, a purchase by the Fund of its Common Shares will decrease the Funds total assets, which would likely have
the effect of increasing the Funds expense ratio. Any purchase by the Fund of its Common Shares at a time when Preferred Shares are outstanding will increase the leverage applicable to the outstanding Common Shares then remaining.
Before deciding whether to take any action if the Funds Common Shares trade below NAV, the Board would consider all relevant
factors, including the extent and duration of the discount, the liquidity of the Funds portfolio, the impact of any action that might be taken on the Fund or its shareholders and market considerations. Based on these considerations, even if
the Funds shares should trade at a discount, the Board may determine that, in the interest of the Fund and its shareholders, no action should be taken.
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following is a general summary of certain U.S. federal income tax consequences that may be relevant to a shareholder that acquires,
holds and/or disposes of shares of a Fund. This discussion addresses only U.S. federal income tax consequences to U.S. shareholders who hold their shares as capital assets and does not address
51
all of the U.S. federal income tax consequences that may be relevant to particular shareholders in light of their individual circumstances. This discussion also does not address the tax
consequences to shareholders who are subject to special rules, including, without limitation, shareholders with large positions in the Fund, financial institutions, insurance companies, dealers in securities or foreign currencies, foreign holders,
persons who hold their shares as or in a hedge against currency risk, a constructive sale, or conversion transaction, holders who are subject to the alternative minimum tax, or tax-exempt or tax-deferred plans, accounts, or entities. In addition,
the discussion does not address any state, local, or foreign tax consequences. The discussion is based upon present provisions of the Code, the regulations promulgated thereunder, and judicial and administrative ruling authorities, all of which are
subject to change, which change may be retroactive. We have not sought and will not seek any ruling from the IRS regarding any matters discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain, a
position contrary to those set forth below. No attempt is made to present a detailed explanation of all U.S. federal income tax concerns affecting a Fund and its shareholders, and the discussion set forth herein does not constitute tax advice.
Investors are urged to consult their own tax advisers to determine the specific tax consequences to them of investing in a Fund, including the applicable federal, state, local and foreign tax consequences to them and the effect of possible
changes in tax laws.
The Fund intends to elect to be treated, and the Fund intends to qualify each year, as a RIC
under Subchapter M of the Code. To qualify for the favorable U.S. federal income tax treatment generally accorded to RICs, the Fund must, among other things, (a) derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or non-U.S. currencies, other income derived with respect to its business of investing in such stock, securities or currencies, and
net income derived from interests in qualified publicly traded partnerships, as defined in the Code; (b) diversify its holdings so that, at the end of each quarter of each taxable year, (i) at least 50% of the value of the
Funds assets is represented by cash and cash items (including receivables), U.S. government securities, the securities of other RICs and other securities, with such other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of the Funds total assets and not greater than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its total assets is invested,
including through corporations in which the Fund owns a 20% or more voting stock interest, in the securities (other than U.S. government securities or the securities of other RICs) of a single issuer, or two or more issuers that the Fund controls
and are engaged in the same, similar or related trades or businesses, or the securities of one or more qualified publicly traded partnerships; and (c) distribute each year an amount equal to or greater than the sum of 90% of its investment
company taxable income (as that term is defined in the Code, but without regard to the deduction for dividends paid) and 90% of its net tax-exempt interest. The requirements for qualification as a RIC may significantly limit the extent to which a
Fund may invest in some investments.
If the Fund failed to qualify as a RIC or failed to satisfy the 90% distribution
requirement in any taxable year, and was unable to cure such failure, the Fund would be taxed in the same manner as a regular corporation on its taxable income (even if such income were distributed to its shareholders) and distributions to
shareholders would not be deductible by the Fund in computing its taxable income. Additionally, all distributions out of current and accumulated earnings and profits (including distributions from net capital gain and net tax-exempt interest) would
be taxed to shareholders as ordinary dividend income. Such distributions generally would be eligible (i) to be treated as qualified dividend income, as discussed below in the case of non-corporate shareholders and (ii) for the
dividends received deduction under Section 243 of the Code (the Dividends Received Deduction) in the case of corporate shareholders. In addition, in order to requalify for taxation as a RIC, the Fund could be required to recognize
unrealized gains, pay substantial taxes and interest, and make certain distributions. In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying as
a RIC.
As a RIC, the Fund generally will not be subject to U.S. federal income tax on its investment company taxable
income (determined without regard to the deduction for dividends paid) and net capital gain (the excess
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of net long-term capital gain over net short-term capital loss), if any, that it distributes to shareholders. The Fund may retain for investment its net capital gain. However, if the Fund retains
any net capital gain or any investment company taxable income, it will be subject to tax at the regular corporate rate on the amount retained. If the Fund retains any net capital gain, it may designate the retained amount as undistributed capital
gains in a notice to its shareholders who, if subject to U.S. federal income tax on long-term capital gains, (i) will be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their share of such
undistributed amount, and (ii) will be entitled to credit their proportionate shares of the federal income tax paid by the Fund on such undistributed amount against their U.S. federal income tax liabilities, if any, and to claim refunds to the
extent the credit exceeds such liabilities. For U.S. federal income tax purposes, the basis of shares owned by a shareholder of the Fund will be increased by an amount equal to the difference between the amount of undistributed capital gains
included in the shareholders gross income and the federal income tax deemed paid by the shareholder under clause (ii) of the preceding sentence. The Fund intends to distribute to its shareholders, at least annually, substantially all of
its investment company taxable income (determined without regard to the deduction for dividends paid) and the net capital gain not otherwise retained by the Fund.
Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% federal excise tax. To prevent imposition of the excise tax, the
Fund must distribute during each calendar year an amount at least equal to the sum of (1) 98% of its ordinary taxable income (not taking into account any capital gains or losses) for the calendar year, (2) 98.2% of its capital gains in
excess of its capital losses (adjusted for certain ordinary losses) for the one-year period ending October 31 of the calendar year, and (3) any ordinary taxable income and capital gains for previous years that were not distributed during
those years and on which the Fund paid no U.S. federal income tax. To prevent application of the excise tax, the Fund intends to make its distributions in accordance with the calendar year distribution requirement.
The Fund may elect to treat part or all of any qualified late year loss as if it had been incurred in the succeeding taxable
year in determining the Funds taxable income, net capital gain, net short-term capital gain, and earnings and profits. The effect of this election is to treat any such qualified late year loss as if it had been incurred in the
succeeding taxable year in characterizing Fund distributions for any calendar year. A qualified late year loss generally includes net capital loss, net long-term capital loss, or net short-term capital loss incurred after October 31 of
the current taxable year (commonly referred to as post-October losses) and certain other late-year losses.
The treatment of capital loss carryovers for the Fund is similar to the rules that apply to capital loss carryovers of individuals, which
provide that such losses are carried over indefinitely. If the Fund has a net capital loss (that is, capital losses in excess of capital gains), the excess of the Funds net short-term capital losses over its net long-term capital
gains is treated as a short-term capital loss arising on the first day of the Funds next taxable year, and the excess (if any) of the Funds net long-term capital losses over its net short-term capital gains is treated as a long-term
capital loss arising on the first day of the Funds next taxable year. In addition, the carryover of capital losses may be limited under the general loss limitation rules if the Fund experiences an ownership change as defined in the Code.
As of December 31, 2019, the Funds tax year end, the Fund had unused capital loss carryforwards available for federal
tax purposes in the amount of:
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|
|
|
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Not subject to expiration
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$
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10,508,636
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|
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|
|
Distributions
Except for distributions of qualified dividend income (discussed below), distributions to shareholders of net investment income received by a Fund and of net short-term capital gains realized by the Fund,
if any, will be taxable to its shareholders as ordinary income. Distributions by the Fund of net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss), if any, are taxable as long-term capital gain,
regardless of
53
the length of time the shareholder has owned the shares with respect to which such distributions are made. Distributions, if any, in excess of the Funds earnings and profits will first
reduce the adjusted tax basis of a shareholders shares and, after that basis has been reduced to zero, will constitute capital gain to the shareholder (assuming the shares are held as a capital asset).
Qualified dividend income received by non-corporate shareholders is taxed for federal income tax purpose at rates equivalent
to long-term capital gain tax rates, which reach a maximum of 20%. Qualified dividend income generally includes dividends from domestic corporations and dividends from non-U.S. corporations that meet certain specified criteria. In order for some
portion of the dividends received by a Fund shareholder to be qualified dividend income, the Fund must meet certain holding period and other requirements with respect to some portion of the dividend-paying stocks in its portfolio and the shareholder
must meet the same holding period and other requirements with respect to the shareholders Fund shares. A dividend will not be treated as qualified dividend income (at either the Fund or shareholder level) (i) if the dividend is received with
respect to any share of stock held (or treated as held) for fewer than 61 days during the 121-day period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of
certain preferred stock, 91 days during the 181-day period beginning 90 days before such date), (ii) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to
positions in substantially similar or related property, (iii) if the recipient elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest, or (iv) if the dividend is
received from a foreign corporation that is (a) not eligible for the benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign corporation that is readily tradable on an
established securities market in the United States) or (b) treated as a passive foreign investment company.
In general,
dividends of net investment income received by corporate shareholders of a Fund will qualify for the 50% Dividends Received Deduction generally available to corporations to the extent of the amount of eligible dividends received by the Fund from
domestic corporations for the taxable year. A dividend received by the Fund will not be treated as a qualifying dividend (i) if it has been received with respect to any share of stock that the Fund has held (or is treated as holding) for less than
46 days (91 days in the case of certain preferred stock) during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend (during the 181-day period beginning 90
days before such date in the case of certain preferred stock) or (ii) to the extent that the Fund is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related
property. Moreover, the Dividends Received Deduction may be disallowed or reduced (i) if a corporate shareholder fails to satisfy the foregoing requirements with respect to its shares of the Fund or (ii) by application of various provisions of the
Code (for instance, the Dividends Received Deduction is reduced in the case of a dividend received on debt-financed portfolio stock (generally, stock acquired with borrowed funds)). For purposes of determining the holding period for stock on which a
dividend is received, such holding period is reduced for any period the recipient has an option to sell, is under a contractual obligation to sell or has made (and not closed) a short sale of substantially identical stock or securities, and in
certain other circumstances.
The straddle rules discussed below could cause distributions that would otherwise qualify for
the Dividends Received Deduction or constitute qualified dividend income to fail to satisfy the applicable holding period requirements.
The tax character of dividends and distributions is the same for federal income tax purposes whether reinvested in additional shares of a Fund or paid in cash.
Although dividends generally will be treated as distributed when paid, dividends declared in October, November or December, payable to
shareholders of record on a specified date in one of those months and paid during the following January, will be treated as having been distributed by a Fund (and received by the shareholders) on December 31 of the year declared.
54
Shareholders will be notified annually as to the U.S. federal tax status of distributions,
and shareholders receiving distributions in the form of additional shares will receive a report as to the NAV of those shares.
A dividend or distribution received shortly after the purchase of shares reduces the NAV of the shares by the amount of the dividend or
distribution and, although in effect a return of capital, will be taxable to the shareholder. If the NAV of shares were reduced below the shareholders cost by dividends or distributions representing gains realized on sales of securities, such
dividends or distributions, although also in effect returns of capital, would be taxable to the shareholder in the same manner as other dividends or distributions. This is known as buying a dividend and should be avoided by taxable
investors.
Sale, Exchange or Liquidation of Fund Shares
The sale or exchange of shares of the Fund normally will result in capital gain or loss to shareholders who hold their shares as capital assets. Generally, a shareholders gain or loss will be
long-term capital gain or loss if the shares have been held for more than one year. The gain or loss on shares held for one year or less will generally be treated as short-term capital gain or loss. Present law taxes both long-term and short-term
capital gains of corporations at the same rates applicable to ordinary income. For non-corporate taxpayers, however, long-term capital gains are currently taxed at a maximum federal income tax rate of 20%, while short-term capital gains and other
ordinary income are currently taxed at ordinary income rates. If a shareholder sells or otherwise disposes of shares before holding them for more than six months, any loss on the sale or disposition will be treated as a long-term capital loss to the
extent of any net capital gain dividends received by the shareholder with respect to such shares. Any loss realized on a sale or exchange of shares of a Fund will be disallowed to the extent those shares of the Fund are replaced by other
substantially identical shares of the Fund or other substantially identical stock or securities (including through reinvestment of dividends) within a period of 61 days beginning 30 days before and ending 30 days after the date of disposition of the
original shares. In that event, the basis of the replacement stock or securities will be adjusted to reflect the disallowed loss. The ability to deduct capital losses may be subject to other limitations under the Code.
Medicare Tax
Certain
non-corporate shareholders are subject to an additional 3.8% tax on some or all of their net investment income, which includes dividends and net capital gain distributions received from a Fund and net gains from taxable dispositions of
Fund shares. This tax generally applies to the extent net investment income, when added to other modified adjusted gross income, exceeds $200,000 for an unmarried individual, $250,000 for a married taxpayer filing a joint return (or a surviving
spouse), or $125,000 for a married individual filing a separate return. Shareholders should consult their tax advisers regarding the applicability of this tax in respect of their shares.
Nature of Funds Investments
The Funds investments may be
subject to special provisions of the Code that may, among other things, (i) disallow, suspend or otherwise limit the allowance of certain losses or deductions, (ii) convert lower taxed long-term capital gains into higher taxed short-term
capital gains or ordinary income, (iii) convert an ordinary loss or a deduction into a capital loss, (iv) cause the Fund to recognize income or gain without a corresponding receipt of cash, (v) adversely alter the characterization of
certain Fund investments or distributions, (vi) and/or affect the Funds ability to qualify as a RIC.
The Fund
may invest in, or write, certain futures and options contracts subject to section 1256 of the Code (Section 1256 Contracts). Some of the Funds index call options may be Section 1256 Contracts. In general, any gain or loss arising
from the lapse, closing out or exercise of a Section 1256 Contract is treated as 60% long-term and 40% short-term capital gain or loss. In addition, the Fund generally will be required to mark to market (i.e., treat as sold for fair
market value) each outstanding index option position that is a Section 1256 Contract at the close of each taxable year (and on October 31 of each year for excise tax purposes). If a Section
55
1256 Contract held by the Fund at the end of a taxable year is sold in the following year, the amount of any gain or loss realized on such sale will be adjusted to reflect the gain or loss
previously taken into account under the mark to market rules.
The Funds call options that do not qualify as
Section 1256 Contracts generally will be governed by Code section 1234. Pursuant to Code section 1234, if a written option expires unexercised, the premium received is short-term capital gain to the Fund. If the Fund enters into a closing
transaction, the difference between the premium received for writing the option, and the amount paid to close out its position generally is short-term capital gain or loss.
Offsetting positions held by the Fund involving certain derivative instruments, such as options, forward, and futures, as well as its long and short positions in portfolio securities, may be considered,
for U.S. federal income tax purposes, to constitute straddles. Straddles are defined to include offsetting positions in actively traded personal property. For instance, a straddle can arise if the Fund writes a covered call
option on a stock (i.e., a call on a stock owned by the Fund), or writes a call option on a stock index to the extent the Funds stock holdings (and any subset thereof) and the index on which it has written a call overlap sufficiently to
constitute a straddle under applicable Treasury Regulations. The tax treatment of straddles is governed by section 1092 of the Code which, in certain circumstances, overrides or modifies the rules applicable to 1256 Contracts described
above. If the Fund is treated as entering into a straddle and at least one (but not all) of the Funds positions in derivative contracts comprising a part of such straddle is a Section 1256 Contract then such straddle could be
characterized as a mixed straddle. The Fund may make one or more elections with respect to mixed straddles. Depending upon which election is made, if any, the results with respect to the Fund may differ. Generally, to the
extent the straddle rules apply to positions established by a Fund, losses realized by the Fund may be deferred to the extent of unrealized gain in any offsetting positions. Moreover, as a result of the straddle rules, short-term capital loss on
straddle positions may be recharacterized as long-term capital loss, and long-term capital gain may be characterized as short-term capital gain. In addition, the existence of a straddle can cause the holding periods to be tolled on the offsetting
positions. As a result, the straddle rules could cause distributions that would otherwise constitute qualified dividend income or qualify for the Dividends Received Deduction to fail to satisfy the applicable holding period requirements
described below. Furthermore, the Fund may be required to capitalize, rather than deduct currently, any interest expense and carrying charges applicable to a position that is part of a straddle, including any interest on indebtedness incurred or
continued to purchase or carry any positions that are part of a straddle. The application of the straddle rules to certain offsetting Fund positions can therefore affect the amount, timing and/or character of distributions to shareholders, and may
result in significant differences from the amount, timing and/or character of distributions that would have been made by the Fund if it had not entered into offsetting positions in respect of certain of its portfolio securities.
If the Fund enters into a constructive sale of any appreciated financial position in its portfolio, the Fund will be treated
as if it had sold and immediately repurchased the property and must recognize gain (but not loss) with respect to that position. A constructive sale of an appreciated financial position occurs when a Fund enters into certain offsetting transactions
with respect to the same or substantially identical property, including, but not limited to: (i) a short sale; (ii) an offsetting notional principal contract; (iii) a futures or forward contract; or (iv) other transactions
identified in future Treasury Regulations. The character of the gain from constructive sales will depend upon the Funds holding period in the appreciated financial position. Losses realized from a sale of a position that was previously the
subject of a constructive sale will be recognized when the position is subsequently disposed of. The character of such losses will depend upon the Funds holding period in the position beginning with the date the constructive sale was deemed to
have occurred and the application of various loss deferral provisions in the Code. Constructive sale treatment does not apply to certain closed transactions, including if such a transaction is closed on or before the 30th day after the close of the
Funds taxable year and the Fund holds the appreciated financial position unhedged throughout the 60-day period beginning with the day such transaction was closed.
56
The Fund may acquire debt securities that are market discount bonds. A market discount bond
is a security acquired in the secondary market at a price below its redemption value (or its adjusted issue price if it is also an original issue discount bond). If the Fund invests in a market discount bond, it will be required to treat any gain
recognized on the disposition of such market discount bond as ordinary taxable income to the extent of the accrued market discount unless the Fund elects to include the market discount in taxable income as it accrues.
The application of certain requirements for qualification as a RIC and the application of certain other federal income tax rules may be
unclear in some respects in connection with investments in certain derivatives and other investments. As a result, the Fund may be required to limit the extent to which it invests in such investments and it is also possible that the IRS may not
agree with a Funds treatment of such investments. In addition, the tax treatment of derivatives and certain other investments may be affected by future legislation, Treasury Regulations and guidance issued by the IRS (which could apply
retroactively) that could affect the timing, character and amount of a Funds income and gains and distributions to shareholders, affect whether the Fund has made sufficient distributions and otherwise satisfied the requirements to maintain its
qualification as a RIC and avoid federal income and excise taxes or limit the extent to which a Fund may invest in certain derivatives and other investments in the future.
Generally, the character of the income or gains that the Fund receives from another investment company will pass through to the Funds shareholders as long as the Fund and the other investment
company each qualify as RICs. However, to the extent that another investment company that qualifies as a RIC realizes net losses on its investments for a given taxable year, the Fund will not be able to recognize its share of those losses until it
disposes of shares of such investment company. Moreover, even when the Fund does make such a disposition, a portion of its loss may be recognized as a long-term capital loss, which will not be treated as favorably for federal income tax purposes as
an ordinary deduction. In particular, the Fund will not be able to offset any capital losses from its dispositions of shares of other investment companies against its ordinary income. As a result of the foregoing rules, and certain other special
rules, it is possible that the amounts of net investment income and net capital gains that the Fund will be required to distribute to shareholders will be greater than such amounts would have been had the Fund invested directly in the securities
held by the investment companies in which it invests, rather than investing in shares of the investment companies. For similar reasons, the character of distributions from the Fund (e.g., long-term capital gain, qualified dividend income,
etc.) will not necessarily be the same as it would have been had the Fund invested directly in the securities held by the investment companies in which it invests.
If the Fund utilizes leverage through borrowings, or otherwise, asset coverage limitations imposed by the 1940 Act as well as additional restrictions that may be imposed by certain lenders on the payment
of dividends or distributions potentially could limit or eliminate the Funds ability to make distributions on its common shares and/or preferred shares, if any, until the asset coverage is restored. These limitations could prevent the Fund
from distributing at least 90% of its investment company taxable income as is required under the Code and therefore might jeopardize the Funds qualification as a RIC and/or might subject the Fund to a nondeductible 4% federal excise tax. Upon
any failure to meet the asset coverage requirements imposed by the 1940 Act, the Fund may, in its sole discretion and to the extent permitted under the 1940 Act, purchase or redeem preferred shares, if any, in order to maintain or restore the
requisite asset coverage and avoid the adverse consequences to the Fund and its shareholders of failing to meet the distribution requirements. There can be no assurance, however, that any such action would achieve these objectives. The Fund
endeavors to avoid restrictions on its ability to distribute dividends.
Foreign Taxes
Income received by the Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries.
Tax conventions between certain countries and the U.S. may reduce or eliminate such taxes. The Fund does not expect to be eligible to elect to pass through to the Funds shareholders the amount of eligible foreign income and similar
taxes paid by the Fund.
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Tax-Exempt Shareholders
Certain tax-exempt shareholders, including qualified pension plans, individual retirement accounts, salary deferral arrangements, 401(k)s, and other tax-exempt entities, generally are exempt from federal
income taxation except with respect to their unrelated business taxable income (UBTI). Tax-exempt entities are not permitted to offset losses from one trade or business against the income or gain of another trade or business. Certain net
losses incurred prior to January 1, 2018 are permitted to offset gain and income created by an unrelated trade or business, if otherwise available. Under current law, the Fund generally serves to block UBTI from being realized by their tax-exempt
shareholders. However, notwithstanding the foregoing, the tax-exempt shareholder could realize UBTI by virtue of an investment in the Fund where, for example: (i) the Fund invests in residual interests of Real Estate Mortgage Investment Conduits
(REMICs), (ii) the Fund invests in a REIT that is a taxable mortgage pool (TMP) or that has a subsidiary that is a TMP or that invests in the residual interest of a REMIC, or (iii) shares in the Fund constitute debt-financed
property in the hands of the tax-exempt shareholder within the meaning of section 514(b) of the Code. Charitable remainder trusts are subject to special rules and should consult their tax advisor. The IRS has issued guidance with respect to these
issues and prospective shareholders, especially charitable remainder trusts, are strongly encouraged to consult their tax advisors regarding these issues.
The Funds shares held in a tax-qualified retirement account will generally not be subject to federal taxation on income and capital gains distributions from the Fund until a shareholder begins
receiving payments from their retirement account. Because each shareholders tax situation is different, shareholders should consult their tax advisor about the tax implications of an investment in the Fund.
Backup Withholding
The
Fund may be required to withhold U.S. federal income tax from all distributions and redemption proceeds payable to shareholders who fail to provide the Fund with their correct taxpayer identification number or to make required certifications, or who
have been notified by the IRS that they are subject to backup withholding. The backup withholding percentage is 24%. Corporate shareholders and certain other shareholders specified in the Code generally are exempt from such backup withholding. This
withholding is not an additional tax. Any amounts withheld may be credited against the shareholders federal income tax liability, provided the required information is furnished to the IRS.
Foreign Shareholders
U.S. taxation of a shareholder who, as to the United States, is a nonresident alien individual, a foreign trust or estate, or a foreign
corporation (foreign shareholder) depends on whether the income of the Fund is effectively connected with a U.S. trade or business carried on by the shareholder. If a partnership (including an entity treated as a partnership
for U.S. federal income tax purposes) holds Fund shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A partner in a partnership holding Fund shares
should consult its tax advisors with respect to the purchase, ownership and disposition of Fund shares.
Income not Effectively Connected
If the income from the Fund is not effectively connected with a U.S. trade or business carried on by the
foreign shareholder, distributions of investment company taxable income will be subject to a U.S. tax of 30% (or lower treaty rate), which tax is generally withheld from such distributions. Distributions which are reported by the Fund as
interest-related dividends or short-term capital gain dividends are exempt from the 30% withholding tax. Interest-related dividends and short-term capital gain dividends generally represent distributions of interest or
short-term capital gains that would not have been subject to U.S. withholding tax at the source if they had been received directly by a foreign person and satisfy certain other requirements.
58
Distributions of capital gain dividends (including any amounts retained by the Fund which
are reported as undistributed capital gains) and gains recognized on the sale or other disposition of our common stock will not be subject to U.S. tax at the rate of 30% (or lower treaty rate) unless the foreign shareholder is a nonresident alien
individual and is physically present in the United States for more than 182 days during the taxable year and meets certain other requirements. However, this 30% tax on capital gains of nonresident alien individuals who are physically present in the
United States for more than the 182 day period only applies in exceptional cases because any individual present in the United States for more than 182 days during the taxable year is generally treated as a resident for U.S. income tax purposes; in
that case, he or she would be subject to U.S. income tax on his or her worldwide income at the graduated rates applicable to U.S. citizens, rather than the 30% U.S. tax. In the case of a foreign shareholder who is a nonresident alien individual, the
Fund may be required to withhold U.S. income tax from distributions of net capital gain unless the foreign shareholder certifies his or her non-U.S. status under penalties of perjury or otherwise establishes an exemption. See
Tax-MattersBackup Withholding.
Income Effectively Connected
If the income from the Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then
distributions of investment company taxable income and capital gain dividends, any amounts retained by the Fund which are reported as undistributed capital gains and any gains realized upon the sale or exchange of shares of the Fund will be subject
to U.S. income tax at the graduated rates applicable to U.S. citizens, residents and domestic corporations. Foreign corporate shareholders also may be subject to the branch profits tax imposed by the Code. Certain certification and disclosure
requirements, including delivery of a properly executed IRS Form W-8ECI, must be satisfied for income effectively connected with a U.S. trade or business to be exempt from the 30% withholding described above under Foreign
ShareholdersIncome not Effectively Connected.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may differ from those described herein. Foreign shareholders are advised to consult their own tax advisers with respect to the particular tax consequences to them of an investment in the Fund.
FATCA Reporting and Withholding Requirements
Under legislation known as FATCA (the Foreign Account Tax Compliance Act), the Fund will be required to withhold 30% of the ordinary dividends it pays to shareholders that fail to meet
prescribed information reporting or certification requirements. In general, no such withholding will be required with respect to a U.S. person or foreign person that timely provides the certifications required by the Fund or its agent on a valid IRS
Form W-9, W-8BEN or W-8BEN-E, respectively. Shareholders potentially subject to withholding include foreign financial institutions (FFIs), such as foreign investment funds, and non-financial foreign entities (NFFEs). To avoid
withholding under FATCA, an FFI generally must enter into an information sharing agreement with the IRS in which it agrees to report certain identifying information (including name, address, and taxpayer identification number) with respect to its
U.S. account holders (which, in the case of an entity shareholder, may include its direct and indirect U.S. owners), and an NFFE generally must identify itself and may be required to provide other required information to the Fund or other
withholding agent regarding its U.S. owners, if any. Such foreign shareholders also may fall into certain exempt, excepted or deemed compliant categories as established by regulations and other guidance. A non-U.S. entity that invests in the Fund
will need to provide the Fund with documentation properly certifying the entitys status under FATCA in order to avoid FATCA withholding. A foreign shareholder resident or doing business in a country that has entered into an intergovernmental
agreement with the U.S. to implement FATCA may be subject to different requirements provided that the shareholder and the applicable foreign government comply with the terms of such agreement. Foreign shareholders are encouraged to consult with
their tax advisers regarding the possible implications of these requirements on their investment in Fund shares.
59
REGULATIONS ON REPORTABLE TRANSACTIONS
Under Treasury regulations, generally, if a shareholder recognizes a loss with respect to Common Shares of $2 million or more for an
individual shareholder or $10 million or more for a corporate shareholder in any single taxable year (or a greater loss over a combination of years), the shareholder must file with the IRS a disclosure statement on Form 8886. Direct
shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. The fact that a loss is reportable under these regulations does not affect the legal
determination of whether the taxpayers treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.
OTHER TAX CONSIDERATIONS
Fund shareholders may be subject to state, local and foreign taxes on their Fund distributions. Shareholders are advised to consult their own tax advisors with respect to the particular tax consequences
to them of an investment in the Fund.
FINANCIAL STATEMENTS
The Financial Statements and the independent registered public accounting firms report thereon, appearing in the Funds annual
report for the fiscal year ended December 31, 2019 is incorporated herein by reference in this SAI. The Funds annual shareholder report may be obtained without charge by calling (800) 257-8787.
CUSTODIAN AND TRANSFER AGENT
The custodian of the Funds assets is State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111 (the
Custodian). The Custodian performs custodial, fund accounting and portfolio accounting services. The Funds transfer, shareholder services and dividend paying agent is Computershare Inc. and Computershare Trust Company, N.A.
Computershare is located at 250 Royall Street, Canton, Massachusetts 02021.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP, an independent registered public accounting firm, provides
auditing services to the Fund. The principal business address of PricewaterhouseCoopers LLP is located at 1 North Wacker Drive, Chicago, Illinois 60606.
LEGAL OPINION
Certain legal matters in
connection with the Common Shares will be passed upon for the Fund by Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Avenue NW, Washington, D.C. 20004.
OTHER MATTERS
The Fund is not sponsored,
endorsed, sold or promoted by The Nasdaq Stock Market, Inc. or its affiliates (Nasdaq, with its affiliates, are referred to as the Corporations). The Corporations have not passed on the legality or suitability of, or the accuracy or
adequacy of descriptions and disclosures relating to, the Fund. The
60
Corporations make no representation or warranty, express or implied to the owners of the Fund or any member of the public regarding the advisability of investing in securities generally or in the
Fund particularly, or the ability of the Nasdaq 100 Index® to track general stock market performance. The
Corporations only relationship to the Fund is in the licensing of the Nasdaq®, Nasdaq 100®, and Nasdaq 100 Index® trademarks, and certain trade names of the Corporations and the use of the Nasdaq 100 Index® which is determined, composed and calculated by Nasdaq without regard to the Fund. Nasdaq has no obligation to take the needs of the Fund or the owners of the Fund
into consideration in determining, composing or calculating the Nasdaq 100 Index®. The Corporations are not
responsible for and have not participated in the determination of the timing of, prices at, or quantities of the Fund to be issued or in the determination or calculation of the equation by which the Fund is to be converted into cash. The
Corporations have no liability in connection with the administration, marketing or trading of the Fund.
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE NASDAQ 100 INDEX® OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY
LICENSEE, OWNERS OF THE PRODUCT(S), OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE NASDAQ 100 INDEX® OR ANY
DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ 100 INDEX® OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY
LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
ADDITIONAL INFORMATION
A Registration
Statement on Form N-2, including amendments thereto, relating to the shares of the Fund offered hereby, has been filed by the Fund with the SEC, Washington, D.C. The Funds Prospectus and this SAI do not
contain all of the information set forth in the Registration Statement, including any exhibits and schedules thereto. For further information with respect to the Fund and the shares offered hereby, reference is made to the Funds Registration
Statement. Copies of the Registration Statement may be inspected without charge at the SECs principal office in Washington, D.C., and copies of all or any part thereof may be obtained from the SEC upon the payment of certain fees prescribed by
the SEC.
61
APPENDIX A
Proxy Voting Policies and Procedures
Effective Date: January 1, 2011, as last amended October 24, 2018
I. General Principles
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A.
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Nuveen Asset Management, LLC (NAM) is an investment sub-adviser for certain of the Nuveen
Funds (the Funds) and investment adviser for institutional and other separately managed accounts (collectively, with the Funds, Accounts). As such, Accounts may confer upon NAM complete discretion to vote proxies.1
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B.
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When NAM has proxy voting authority, it is NAMs duty to vote proxies in the best interests of its clients (which may involve
affirmatively deciding that voting the proxies may not be in the best interests of certain clients on certain matters). In voting proxies, NAM also seeks to enhance total investment return for its clients.
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C.
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If NAM contracts with another investment adviser to act as a sub-adviser for an Account, NAM may
delegate proxy voting responsibility to the sub-adviser. Where NAM has delegated proxy voting responsibility, the sub-adviser will be responsible for developing and
adhering to its own proxy voting policies, subject to oversight by NAM.
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D.
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NAMs Proxy Voting Committee (PVC) provides oversight of NAMs proxy voting policies and procedures, including
(1) providing an administrative framework to facilitate and monitor the exercise of such proxy voting and to fulfill the obligations of reporting and recordkeeping under the federal securities laws; and (2) approving the proxy voting
policies and procedures.
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II. Policies
The PVC after reviewing and concluding that such policies are reasonably designed to vote proxies in the best interests of clients,
has approved and adopted the proxy voting policies (Policies) of Institutional Shareholder Services, Inc. (ISS), a leading national provider of proxy voting administrative and research services.1 As a result, such Policies set forth NAMs positions on
recurring proxy issues and criteria for addressing non-recurring issues. These Policies are reviewed periodically by ISS, and therefore are subject to change. Even though it has adopted the Policies as drafted
by ISS, NAM maintains the fiduciary responsibility for all proxy voting decisions.
III. Procedures
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A.
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Supervision of Proxy
Voting. Day-to-day administration of proxy voting may be provided internally or by a third-party service provider, depending on client type,
subject to the ultimate oversight of the PVC. The PVC shall supervise the relationships with NAMs proxy voting services, ISS. ISS apprises Nuveen Global Operations (NGO) of shareholder meeting dates, and casts the actual proxy
votes. ISS also provides research on proxy proposals and voting recommendations. ISS serves as NAMs proxy voting record keepers and generate reports on how proxies were voted. NGO periodically reviews communications from ISS to determine
whether ISS voted the correct amount of proxies, whether the votes were cast in a timely manner, and whether the vote was in accordance with the Policies or NAMs specific instructions.
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1
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NAM does not vote proxies where a client withholds proxy voting authority, and in certain
non-discretionary and model programs NAM votes proxies in accordance with its Policies in effect from time to time. Clients may opt to vote proxies themselves, or to have proxies voted by an independent third
party or other named fiduciary or agent, at the clients cost. i ISS has separate polices for Taft Hartley plans and it is NAMs policy to apply the Taft Hartley polices to accounts that are Taft Hartley plans and have requested the
application of such policies.
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A-1
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B.
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General Avoidance of Conflicts of Interest.
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1.
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NAM believe that most conflicts of interest faced by NAM in voting proxies can be avoided by voting in accordance with the Policies. Examples
of such conflicts of interest are as follows:2
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a.
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The issuer or proxy proponent (e.g., a special interest group) is TIAA-CREF, the ultimate principal owner of NAM, or any of its
affiliates.
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b.
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The issuer is an entity in which an executive officer of NAM or a spouse or domestic partner of any such executive officer is or was (within
the past three years of the proxy vote) an executive officer or director.
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c.
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The issuer is a registered or unregistered fund or other client for which NAM or another affiliated adviser has a material relationship as
investment adviser or sub-adviser (e.g., Nuveen Funds and TIAA Funds) or an institutional separate account.
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d.
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Any other circumstances that NAM is aware of where NAMs duty to serve its clients interests, typically referred to as its
duty of loyalty, could be materially compromised.
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2.
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To further minimize this risk, Compliance will review ISS conflict avoidance policy at least annually to ensure that it adequately
addresses both the actual and perceived conflicts of interest ISS may face.
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3.
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In the event that ISS faces a material conflict of interest with respect to a specific vote, the PVC shall direct ISS how to vote. The PVC
shall receive voting direction from appropriate investment personnel. Before doing so, the PVC will consult with Legal to confirm that NAM faces no material conflicts of its own with respect to the specific proxy vote.
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4.
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Where ISS is determined to have a conflict of interest, or NAM determines to override the Policies and is determined to have a conflict, the
PVC will recommend to NAMs Compliance Committee or designee a course of action designed to address the conflict. Such actions could include, but are not limited to:
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a.
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Obtaining instructions from the affected client(s) on how to vote the proxy;
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b.
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Disclosing the conflict to the affected client(s) and seeking their consent to permit NAM to vote the proxy;
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c.
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Voting in proportion to the other shareholders;
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e.
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Recusing the individual with the actual or potential conflict of interest from all discussion or consideration of the matter, if the material
conflict is due to such persons actual or potential conflict of interest; or
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f.
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Following the recommendation of a different independent third party.
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5.
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In addition to all of the above-mentioned and other conflicts, the Head of Equity Research, NGO and any member of the PVC must notify
NAMs Chief Compliance Officer (CCO) of any direct, indirect or perceived improper influence exerted by any employee, officer or director of TIAA or its subsidiaries with regard to how NAM should vote proxies. NAM Compliance will
investigate any such allegations and will report the findings to the PVC and, if deemed appropriate, to NAMs Compliance Committee. If it is determined that improper influence was attempted, appropriate action shall be taken. Such appropriate
action may include disciplinary
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2
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A conflict of interest shall not be considered material for the purposes of these Policies and Procedures with respect to a specific vote or
circumstance if the matter to be voted on relates to a restructuring of the terms of existing securities or the issuance of new securities or a similar matter arising out of the holding of securities, other than common equity, in the context of a
bankruptcy or threatened bankruptcy of the issuer.
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A-2
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action, notification of the appropriate senior managers, or notification of the appropriate regulatory authorities. In all cases, NAM will not consider any improper influence in determining how
to vote proxies, and will vote in the best interests of clients.
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C.
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Proxy Vote Override. From time to time, a portfolio manager of an account (a Portfolio Manager) may
initiate action to override the Policies recommendation for a particular vote. Any such override by a NAM Portfolio Manager (but not a sub-adviser Portfolio Manager) shall be reviewed by NAMs Legal
Department for material conflicts. If the Legal Department determines that no material conflicts exist, the approval of one member of the PVC shall authorize the override. If a material conflict exists, the conflict and, ultimately, the override
recommendation will be rejected and will revert to the original Policies recommendation or will be addressed pursuant to the procedures described above under Conflicts of Interest.
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In addition, the PVC may determine from time to time that a particular recommendation in the Policies should be
overridden based on a determination that the recommendation is inappropriate and not in the best interests of shareholders. Any such determination shall be reflected in the minutes of a meeting of the PVC at which such decision is made.
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1.
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In order to generate incremental revenue, some clients may participate in a securities lending program. If a client has elected to participate
in the lending program then it will not have the right to vote the proxies of any securities that are on loan as of the shareholder meeting record date. A client, or a Portfolio Manager, may place restrictions on loaning securities and/or recall a
security on loan at any time. Such actions must be affected prior to the record date for a meeting if the purpose for the restriction or recall is to secure the vote.
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2.
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Portfolio Managers and/or analysts who become aware of upcoming proxy issues relating to any securities in portfolios they manage, or issuers
they follow, will consider the desirability of recalling the affected securities that are on loan or restricting the affected securities prior to the record date for the matter. If the proxy issue is determined to be material, and the determination
is made prior to the shareholder meeting record date the Portfolio Manager(s) will contact the Securities Lending Agent to recall securities on loan or restrict the loaning of any security held in any portfolio they manage, if they determine that it
is in the best interest of shareholders to do so.
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E.
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Proxy Voting Records. As required by Rule 204-2 of the Investment Advisers Act of 1940,
NAM shall make and retain five types of records relating to proxy voting; (1) NAMs Policies; (2) proxy statements received for securities in client accounts; (3) records of proxy votes cast by NAM on behalf of clients accounts;
(4) records of written requests from clients about how NAM voted their proxies, and written responses from NAM to either a written or oral request by clients; and (5) any documents prepared by the adviser that were material to making a
proxy voting decision or that memorialized the basis for the decision. NAM relies on ISS to make and retain on NAMs behalf certain records pertaining to Rule 204-2.
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F.
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Fund of Funds Provision. In instances where NAM provides investment advice to a fund of funds that acquires shares of affiliated
funds or three percent or more of the outstanding voting securities of an unaffiliated fund, the acquiring fund shall vote the shares in the same proportion as the vote of all other shareholders of the acquired fund. If compliance with this
procedure results in a vote of any shares in a manner different than the Policies recommendation, such vote will not require compliance with the Proxy Vote Override procedures set forth above.
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G.
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Legacy Securities. To the extent that NAM receives proxies for securities that are transferred into an accounts portfolio
that were not recommended or selected by it and are sold or expected to be sold promptly in an orderly manner (legacy securities), NAM will generally refrain from voting such proxies. In such circumstances, since legacy securities are
expected to be sold promptly, voting proxies on such securities would not further NAMs interest in maximizing the value of client investments.
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A-3
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NAM may agree to an accounts special request to vote a legacy security proxy, and would vote such proxy in accordance with the Policies.
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H.
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Terminated Accounts. Proxies received after the termination date of an account generally will not be voted. An exception will be
made if the record date is for a period in which an account was under NAMs discretionary management or if a separately managed account (SMA) custodian failed to remove the accounts holdings from its aggregated voting list.
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I.
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Non-votes. NGO shall be responsible for obtaining reasonable assurance from ISS that it
voted proxies on NAMs behalf, and that any special instructions from NAM about a given proxy or proxies are submitted to ISS in a timely manner. It should not be considered a breach of this responsibility if NGO or NAM does not receive a proxy
from ISS or a custodian with adequate time to analyze and direct to vote or vote a proxy by the required voting deadline.
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NAM may determine not to vote proxies associated with the securities of any issuer if as a result of voting such proxies, subsequent purchases or sales of such securities would be blocked. However, NAM
may decide, on an individual security basis that it is in the best interests of its clients to vote the proxy associated with such a security, taking into account the loss of liquidity. In addition, NAM may determine not to vote proxies where the
voting would in NAMs judgment result in some other financial, legal, regulatory disability or burden to the client (such as imputing control with respect to the issuer) or to NAM or its affiliates.
NAM may determine not to vote securities held by SMAs where voting would require the transfer of the security to another
custodian designated by the issuer. Such transfer is generally outside the scope of NAMs authority and may result in significant operational limitations on NAMs ability to conduct transactions relating to the securities during the period
of transfer. From time to time, situations may arise (operational or otherwise) that prevent NAM from voting proxies after reasonable attempts have been made.
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1.
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The PVC shall maintain a review schedule. The schedule shall include reviews of the Policies and the policies of any Sub-adviser engaged by NAM, the proxy voting record, account maintenance, and other reviews as deemed appropriate by the PVC. The PVC shall review the schedule at least annually.
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2.
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The PVC will report to NAMs Compliance Committee with respect to all identified conflicts and how they were addressed. These reports
will include all accounts, including those that are sub-advised. NAM also shall provide the Funds that it sub-advises with information necessary for preparing Form N-PX.
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K.
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Vote Disclosure to Clients. NAMs institutional and SMA clients can contact their relationship manager for more information
on NAMs Policies and the proxy voting record for their account. The information available includes name of issuer, ticker/CUSIP, shareholder meeting date, description of item and NAMs vote.
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IV. Responsible Parties
PVC
NGO
NAM Compliance
Legal Department
A-4
Nuveen Nasdaq 100 Dynamic Overwrite Fund
Up to 11,355,021 Common Shares
STATEMENT OF
ADDITIONAL INFORMATION
May 1, 2020
PART COTHER INFORMATION
Item 25: Financial Statements and Exhibits
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Financial Highlights of the Nuveen Nasdaq 100 Dynamic Overwrite Fund (the Registrant or the Fund) for the fiscal years
ended December 31, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, and 2010.
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a.
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Declaration of Trust dated May 20, 2014. Filed on May
23, 2014 as exhibit 1. to Registrants registration statement on Form N-14 (File No. 333-196253)
and incorporated herein by reference.
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b.
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By-laws
of Registrant (Amended and Restated as of November 18, 2009). Filed on May 23, 2014 as exhibit 2. to Registrants registration statement on Form N-14 (File No. 333-196253) and incorporated herein by reference.
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c.
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None.
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d.
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Not Applicable.
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e.
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Terms and Conditions of the Automatic Dividend Reinvestment Plan. Filed on June 28,
2018 as exhibit e to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by
reference.
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f.
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None.
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g.1
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Investment Management Agreement dated December
5, 2014 between Registrant and Nuveen Fund Advisors, LLC. Filed on April 11, 2018 as exhibit g.1 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by reference.
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g.2
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Continuance of Investment Management Agreements between the Nuveen Closed-End Funds and Nuveen Fund Advisors, LLC
dated July 30, 2019. Filed herewith.
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g.3
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Investment
Sub-Advisory Agreement dated December 5, 2014 between Nuveen Fund Advisors, LLC and Nuveen Asset Management, LLC. Filed on April 11, 2018 as exhibit g.2 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by reference.
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g.4
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Notice of Continuance of Investment Sub-Advisory Agreements between Nuveen Fund Advisors, LLC and Nuveen Asset Management,
LLC dated July 24, 2019. Filed herewith.
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h.1
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Distribution Agreement relating to At-the-Market Offerings dated May 3, 2018 between the Registrant and Nuveen Securities LLC. Filed on June 28, 2018 as exhibit
h.1 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by reference.
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h.2
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Dealer Agreement relating to At-the-Market Offerings dated June 27, 2018 between Nuveen Securities LLC and BB&T Capital Markets. Filed on June 28, 2018 as exhibit
h.2 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by reference.
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h.3
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Distribution Agreement relating to At-the-Market Offerings dated April 24, 2019 between the Registrant and Nuveen Securities LLC (File Nos. 333-230438). Filed on April
25, 2019 as exhibit h.3 to Registrants registration statement on Form N-2 (File Nos. 333-230438) and incorporated herein by reference.
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h.4
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Dealer Agreement Relating to At-the-Market Offerings dated April 24, 2019 between Nuveen Securities LLC and BB&T Capital Markets (File Nos. 333-230438). Filed on April
25, 2019 as exhibit h.4 to Registrants registration statement on Form N-2 (File Nos. 333-230438) and incorporated herein by
reference.
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C-1
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i.
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Nuveen Open-End
and Closed-End Funds Deferred Compensation Plan for Independent Directors and Trustees. (Restated effective April 27, 2017). Filed on April
11, 2018 as exhibit i to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by reference.
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j.1
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Amended and Restated Master Custodian Agreement dated July
15, 2015 between the Registrant and State Street Bank and Trust Company. Filed on April 11, 2018 as exhibit j.1 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by reference.
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j.2
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Appendix A, updated as of August
1, 2017, to the Amended and Restated Master Custodian Agreement dated July 15, 2015 between the Registrant and State Street Bank and Trust Company. Filed on April
11, 2018 as exhibit j.2 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by
reference.
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k.1
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Transfer Agency and Service Agreement dated June
15, 2017 between the Registrant and Computershare Inc. and Computershare Trust Company, N.A. Filed on April
11, 2018 as exhibit k.1 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by reference.
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k.2
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First Amendment and updated Schedule A, dated September
7, 2017, to the Transfer Agency and Service Agreement dated June 15, 2017 between the Registrant and Computershare Inc. and Computershare Trust Company, N.A. Filed on April
11, 2018 as exhibit k.2 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by
reference.
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l.1
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Opinion of Morgan, Lewis & Bockius LLP. Filed on June
28, 2018 as exhibit l.1 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein by
reference.
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1.2
|
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Consent of Morgan, Lewis & Bockius LLP. Filed on June
28, 2018 as exhibit l.2 to Registrants registration statement on Form N-2 (File Nos. 333-224240) and incorporated herein
by reference.
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1.3
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Opinion of Morgan, Lewis & Bockius LLP (File Nos. 333-230438). Filed on April
25, 2019 as exhibit l.3 to Registrants registration statement on Form N-2 (File Nos. 333-230438) and incorporated herein by reference.
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1.4
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Consent of Morgan, Lewis & Bockius LLP (File Nos. 333-230438). Filed herewith.
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m.
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|
None.
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n.
|
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Consent of PricewaterhouseCoopers LLP. Filed herewith.
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o.
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None.
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p.
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None.
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q.
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None.
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r.1
|
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Code of Ethics and Reporting Requirements of Nuveen (including affiliated entities) and the Nuveen Funds, as amended August
26, 2019. Filed herewith.
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|
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r.2
|
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Code of Ethics for the Independent Trustees of Nuveen Funds, as last amended May 23, 2019. Filed herewith.
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s.
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Powers of Attorney dated October 11, 2018. Filed on March
22, 2019 as exhibit s. to Registrants registration statement on Form N-2 (File Nos. 333-230438)
and incorporated herein by reference.
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Item 26: Marketing Arrangements
See relevant Sections of the Distribution Agreement and Dealer Agreement filed as Exhibits (h)(3) and (h)(4), respectively, to this
Registration Statement.
C-2
Item 27: Other Expenses of Issuance and Distribution
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Printing and Engraving Fees
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$
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25,000
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Legal Fees
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$
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35,000
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Accounting Fees
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$
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5,500
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Miscellaneous Fees
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$
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4,500
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$
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70,000
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Item 28: Persons Controlled by or under Common Control with Registrant
Not applicable.
Item 29: Number of Holders of Securities
As of March 31, 2020:
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Title of Class
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Number of Record Holders
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Common Shares, $0.01 par value
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43,182
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Item 30: Indemnification
Section 4 of Article XII of the Registrants Declaration of Trust provides as follows:
Subject to the exceptions and limitations contained in this Section 4, every person who is, or has been, a Trustee, officer, employee or agent of the Trust, including persons who serve at the request
of the Trust as directors, trustees, officers, employees or agents of another organization in which the Trust has an interest as a shareholder, creditor or otherwise (hereinafter referred to as a Covered Person), shall be indemnified by
the Trust to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of
his being or having been such a Trustee, director, officer, employee or agent and against amounts paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a)
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against any liability to the Trust or its Shareholders by reason of a final adjudication by the court or other body before which the
proceeding was brought that he engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office;
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(b)
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with respect to any matter as to which he shall have been finally adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interests of the Trust; or
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(c)
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in the event of a settlement or other disposition not involving a final adjudication (as provided in paragraph (a) or (b)) and resulting
in a payment by a Covered Person, unless there has been either a determination that such Covered Person did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office by
the court or other body approving the settlement or other disposition or a reasonable determination, based on a review of readily available facts (as opposed to a full trial-type inquiry), that he did not engage in such conduct:
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(i) by a vote of a majority of the Disinterested Trustees acting on the matter (provided that a majority of
the Disinterested Trustees then in office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable,
shall not affect any other rights to which any Covered Person may now or hereafter be
C-3
entitled, shall continue as to a person who has ceased to be such a Covered Person and shall inure to the benefit of the heirs, executors and administrators of such a person. Nothing contained
herein shall affect any rights to indemnification to which Trust personnel other than Covered Persons may be entitled by contract or otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action, suit or proceeding subject to a claim for indemnification under this Section 4 shall be advanced by the Trust prior to
final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he is not entitled to indemnification under this Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate security or the Trust shall be insured against losses arising
out of any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided that a majority of
the Disinterested Trustees then in office act on the matter) or independent legal counsel in a written opinion shall determine, based upon a review of the readily available facts (as opposed to a full trial-type inquiry), that there is reason to
believe that the recipient ultimately will be found entitled to indemnification.
As used in this Section 4, a
Disinterested Trustee is one (x) who is not an Interested Person of the Trust (including anyone, as such Disinterested Trustee, who has been exempted from being an Interested Person by any rule, regulation or order of the
Commission), and (y) against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending.
As used in this Section 4, the words claim, action, suit or proceeding shall apply
to all claims, actions, suits, proceedings (civil, criminal, administrative or other, including appeals), actual or threatened; and the words liability and expenses shall include without limitation, attorneys fees,
costs, judgments, amounts paid in settlement, fines, penalties and other liabilities.
The trustees and officers of the
Registrant are covered by joint errors and omissions insurance policies against liability and expenses of claims of wrongful acts arising out of their position with the Registrant and other Nuveen funds, subject to such policies coverage
limits, exclusions and deductibles.
Section 9 of the Form of Underwriting Agreement to be filed as Exhibit h.1 to
this Registration Statement provides for each of the parties thereto, including the Registrant and the Underwriters, to indemnify the others, their trustees, directors, certain of their officers, trustees, directors and persons who control them
against certain liabilities in connection with the offering described herein, including liabilities under the federal securities laws.
Insofar as indemnification for liability arising under the Securities Act of 1933 (the 1933 Act) may be permitted to directors, officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue.
Item 31: Business and Other Connections of Investment Adviser and Sub-Adviser
A description of any other business, profession, vocation or employment of a substantial nature in which the directors and officers of
Nuveen Fund Advisors, LLC (Nuveen Fund Advisors), the Funds investment adviser,
C-4
who serve as officers or Trustees of the Fund have engaged during the last two years for his or her account or in the capacity of director, officer, employee, partner or trustee appears under
Management in the Statement of Additional Information. Such information for the remaining senior officers appears below:
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Name and Position with Nuveen Fund Advisors
|
|
Other Business, Profession,
Vocation or
Employment During Past Two Years
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Joseph T. Castro, Senior Managing Director
|
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Senior Managing Director (since 2017), Head of Compliance (since 2013) of Nuveen, LLC; Senior Managing Director (since 2017) of
Nuveen Services, LLC.
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Erik Mogavero, Managing Director and Chief Compliance Officer
|
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Formerly employed by Deutsche Bank (2013-2017) as Managing Director, Head of Asset Management and Wealth Management Compliance for
the Americas region and Chief Compliance Officer of Deutsche Investment Management Americas.
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|
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Austin P. Wachter, Managing Director and Controller
|
|
Managing Director and Controller (since 2017) (formerly, Assistant Treasurer and Assistant Controller) of Nuveen Asset Management,
LLC; Controller (since 2017) of Nuveen Investments, Inc., Nuveen Alternative Investments, LLC, Nuveen Alternatives Advisors LLC, Nuveen Finance, LLC, Nuveen Services, LLC, NWQ Investment Management Company, Santa Barbara Asset Management, LLC,
Symphony Asset Management LLC and Winslow Capital Management, LLC; Controller (since 2014) of Nuveen, LLC; Controller (since 2016) formerly, Vice President and Funds Treasurer (2014-2016) of Teachers Advisors, LLC; Controller (since 2016),
formerly, Senior Director and Funds Treasurer (2014-2016) of Teachers Insurance and Annuity Association of America.
|
Nuveen Asset Management, LLC (Nuveen Asset Management) serves as investment sub-adviser to the Registrant and also serves as investment sub-adviser to other open-end and
closed-end funds and investment adviser to separately managed accounts. The following is a list of the remaining senior officers of Nuveen Asset Management. The principal business address of each person is 333
West Wacker Drive, Chicago, Illinois 60606.
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Name and Position with Nuveen Asset Management
|
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Other Business, Profession, Vocation or
Employment During Past Two
Years
|
William T. Huffman, President
|
|
None.
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|
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Stuart J. Cohen, Managing Director and Head of Legal
|
|
Managing Director and Assistant Secretary (since 2002) of Nuveen Securities, LLC; Managing Director (since 2007) and Assistant
Secretary (since 2003) of Nuveen Fund Advisors, LLC.
|
|
|
Diane S. Meggs, Managing Director and Chief Compliance Officer
|
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Managing Director and Compliance Manager (since 2011) of Nuveen Fund Advisors, LLC.
|
|
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Austin P. Wachter, Managing Director and Controller
|
|
Managing Director and Controller (since 2017) (formerly, Assistant Treasurer and Assistant Controller) of Nuveen Asset Management,
LLC; Controller (since 2017) of Nuveen Investments, Inc., Nuveen Alternative Investments, LLC, Nuveen Alternatives Advisors LLC, Nuveen Finance, LLC, Nuveen Services, LLC, NWQ Investment Management Company, Santa Barbara Asset Management, LLC,
Symphony Asset Management LLC and Winslow Capital Management, LLC; Controller (since 2014) of Nuveen, LLC; Controller (since 2016) formerly, Vice President and Funds Treasurer (2014-2016) of Teachers Advisors, LLC; Controller (since 2016),
formerly, Senior Director and Funds Treasurer (2014-2016) of Teachers Insurance and Annuity Association of America.
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C-5
Item 32: Location of Accounts and Records
Nuveen Fund Advisors, 333 West Wacker Drive, Chicago, Illinois 60606, maintains the Declaration of Trust,
By-Laws, minutes of trustees and shareholders meetings and contracts of the Registrant and all advisory material of the investment adviser. Nuveen Asset Management in its capacity as sub-adviser, may also hold
certain accounts and records of the Fund.
State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts
02111, maintains all general and subsidiary ledgers, journals, trial balances, records of all portfolio purchases and sales, and all other required records not maintained by Nuveen Fund Advisors or Nuveen Asset Management.
Item 33: Management Services
Not applicable.
Item 34: Undertakings
1.
|
Registrant undertakes to suspend the offering of its shares until the prospectus is amended if: (1) subsequent to the effective date of
its registration statement, the net asset value declines more than ten percent from its net asset value as of the effective date of the registration statement; or (2) the net asset value increases to an amount greater than its net proceeds as
stated in the prospectus.
|
4.
|
Registrant undertakes:
|
(a) to file, during any period in which offers or sales are being made, a post-effective amendment to the registration statement:
(1) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the 1933 Act);
(2) to reflect in the prospectus any facts or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and
(3) to include any material information with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the registration statement.
(b) that, for
the purpose of determining any liability under the 1933 Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of those securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(c) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(d) that, for the purpose of determining liability under the 1933 Act to any purchaser, if the Registrant is subject to Rule 430C: each prospectus filed pursuant to Rule 497(b), (c), (d) or
(e) under the 1933 Act as part of a registration statement relating to an offering, other than prospectuses filed in reliance on Rule 430A under the 1933 Act, shall be deemed to be part of and included in the registration statement as of
the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in this registration
statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
C-6
(e) that for the purpose of determining liability of the Registrant under
the 1933 Act to any purchaser in the initial distribution of securities:
The undersigned Registrant undertakes
that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to the purchaser:
(1) any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed
pursuant to Rule 497 under the 1933 Act;
(2) the portion of any advertisement pursuant to Rule 482 under the
1933 Act relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(3) any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
5.
|
The Registrant undertakes that:
|
a. for purposes of determining any liability under the 1933 Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained
in the form of prospectus filed by the Registrant under Rule 497(h) under the 1933 Act shall be deemed to be part of this Registration Statement as of the time it was declared effective; and
b. for the purpose of determining any liability under the 1933 Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.
6.
|
The Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of
receipt of a written or oral request, any Statement of Additional Information.
|
C-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in this City of Chicago, and State of Illinois, on the 1st day of May, 2020.
|
NUVEEN NASDAQ 100 DYNAMIC OVERWRITE FUND
|
|
/S/ GIFFORD R. ZIMMERMAN
|
Gifford R. Zimmerman,
Vice
President and Secretary
|
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by
the following persons in the capacities and on the date indicated.
|
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|
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|
|
Signature
|
|
Title
|
|
|
|
|
|
Date
|
/S/ E. SCOTT
WICKERHAM
E. SCOTT WICKERHAM
|
|
Vice President and Controller (principal financial and accounting officer)
|
|
|
|
|
|
May 1, 2020
|
|
|
|
|
|
/S/ CEDRIC H.
ANTOSIEWICZ
CEDRIC H. ANTOSIEWICZ
|
|
Chief Administrative Officer (principal executive officer)
|
|
|
|
|
|
May 1, 2020
|
|
|
|
|
|
TERENCE J. TOTH*
|
|
Chairman of the Board and Trustee
|
|
ü
ï
ï
ï
ï
ï
ï
ï
ï
ï
ý
ï
ï
ï
ï
ï
ï
ï
ï
ï
ï
ï
þ
|
|
By:
|
|
/S/ GIFFORD R.
ZIMMERMAN
GIFFORD R. ZIMMERMAN
Attorney-in-Fact
May 1, 2020
|
JACK B. EVANS*
|
|
Trustee
|
WILLIAM C. HUNTER*
|
|
Trustee
|
ALBIN F. MOSCHNER*
|
|
Trustee
|
JOHN K. NELSON*
|
|
Trustee
|
JUDITH M. STOCKDALE*
|
|
Trustee
|
CAROLE E. STONE*
|
|
Trustee
|
MARGARET L. WOLFF*
|
|
Trustee
|
ROBERT L. YOUNG*
|
|
Trustee
|
*
|
Original powers of attorney authorizing Gifford R. Zimmerman, among others, to execute this Registration Statement, and Amendments thereto,
for the trustees of the Registrant on whose behalf this Registration Statement is filed, have been executed and filed as Exhibit s. to this Registration Statement.
|
EXHIBIT INDEX
|
|
|
Exhibit
|
|
Name
|
|
|
Ex-99.G.2
|
|
Notice of Continuance of Investment Management Agreement between the Registrant and Nuveen Asset Management, LLC dated July 30, 2019
|
|
|
Ex-99.G.4
|
|
Notice of Continuance of Investment Sub-Advisory Agreements between Nuveen Fund Advisors, LLC and Nuveen Asset Management, LLC dated July 24, 2019
|
|
|
Ex-99.N
|
|
Consent of PricewaterhouseCoopers LLP
|
|
|
Ex-99.R.1
|
|
Code of Ethics and Reporting Requirements of Nuveen (including affiliated entities) and the Nuveen Funds, as amended August 26, 2019
|
|
|
Ex-99.R.2
|
|
Code of Ethics for the Independent Trustees of Nuveen Funds, as last amended May 23, 2019
|
|
|
Ex-99.L.4
|
|
Consent of Morgan, Lewis & Bockius LLP
|
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