Table of Contents
|
|
Chairman’s Letter to Shareholders
|
4
|
Portfolio Manager’s Comments
|
5
|
Fund Leverage
|
8
|
Share Information
|
9
|
Risk Considerations
|
11
|
Performance Overview and Holding Summaries
|
12
|
Shareholder Meeting Report
|
16
|
Portfolios of Investments
|
17
|
Statement of Assets and Liabilities
|
29
|
Statement of Operations
|
30
|
Statement of Changes in Net Assets
|
31
|
Statement of Cash Flows
|
32
|
Financial Highlights
|
34
|
Notes to Financial Statements
|
36
|
Additional Fund Information
|
47
|
Glossary of Terms Used in this Report
|
48
|
Reinvest Automatically, Easily and Conveniently
|
50
|
Annual Investment Management Agreement Approval Process
|
51
|
Nuveen Investments
|
3
|
4
|
Nuveen Investments
|
Nuveen Investments
|
5
|
6
|
Nuveen Investments
|
Nuveen Investments
|
7
|
NBB
|
NBD
|
||||||
Effective Leverage*
|
28.20%
|
28.59%
|
|||||
Regulatory Leverage*
|
13.03%
|
6.39%
|
*
|
Effective leverage is a Fund’s effective economic leverage, and includes both regulatory leverage and the leverage effects of certain derivative and other investments in a Fund’s portfolio that increase the Fund’s investment exposure. Currently, the leverage effects of Tender Option Bond (TOB) inverse floater holdings are included in effective leverage values, in addition to any regulatory leverage. Regulatory leverage consists of preferred shares issued or borrowings of a Fund. Both of these are part of a Fund’s capital structure. Regulatory leverage is subject to asset coverage limits set forth in the Investment Company Act of 1940.
|
NBB
|
NBD
|
||||||
Bank Borrowings
|
$
|
89,000,000
|
$
|
11,500,000
|
8
|
Nuveen Investments
|
Per Share Amounts
|
|||||||
Ex-Dividend Date
|
NBB
|
NBD
|
|||||
April 2014
|
$
|
0.1160
|
$
|
0.1140
|
|||
May
|
0.1160
|
0.1140
|
|||||
June
|
0.1160
|
0.1140
|
|||||
July
|
0.1160
|
0.1140
|
|||||
August
|
0.1160
|
0.1140
|
|||||
September 2014
|
0.1160
|
0.1140
|
|||||
Market Yield*
|
6.83
|
% |
6.45
|
% |
*
|
Market Yield is based on the Fund’s current annualized monthly distribution divided by the Fund’s current market price as of the end of the reporting period.
|
Nuveen Investments
|
9
|
NBB
|
NBD
|
||||||
Shares Cumulatively Repurchased and Retired
|
0
|
0
|
|||||
Shares Authorized for Repurchase
|
2,645,000
|
720,000
|
NBB
|
NBD
|
||||||
NAV
|
$
|
22.44
|
$
|
23.40
|
|||
Share Price
|
$
|
20.39
|
$
|
21.20
|
|||
Premium/(Discount) to NAV
|
(9.14
|
)%
|
(9.40
|
)%
|
|||
6-Month Average Premium/(Discount) to NAV
|
(9.01
|
)%
|
(9.28
|
)%
|
10
|
Nuveen Investments
|
Nuveen Investments
|
11
|
NBB
|
|
Nuveen Build America Bond Fund
|
|
Performance Overview and Holding Summaries as of September 30, 2014
|
Cumulative
|
Average Annual
|
||||||||
|
Since
|
||||||||
6-Month
|
1-Year
|
Inception1
|
|||||||
NBB at NAV
|
7.92%
|
18.83%
|
10.57%
|
||||||
NBB at Share Price
|
7.52%
|
21.24%
|
7.50%
|
||||||
Barclays Aggregate – Eligible Build America Bond Index
|
7.15%
|
16.58%
|
10.25%
|
1
|
Since inception returns are from 4/27/10.
|
12
|
Nuveen Investments
|
Fund Allocation
|
||||
(% of net assets)
|
||||
Municipal Bonds
|
121.3
|
%
|
||
Short-Term Investments
|
0.4
|
%
|
||
Borrowings
|
(15.0)
|
%
|
||
Floating Rate Obligations
|
(8.9)
|
%
|
||
Other Assets Less Liabilities
|
2.2
|
%
|
Credit Quality
|
||||
(% of total investment exposure)2
|
||||
AAA/U.S. Guaranteed
|
9.7
|
%
|
||
AA
|
59.6
|
%
|
||
A
|
21.8
|
%
|
||
BBB
|
6.4
|
%
|
||
BB or Lower
|
1.2
|
%
|
||
N/R (not rated)
|
1.0
|
%
|
||
N/A (not applicable)
|
0.3
|
%
|
Portfolio Composition
|
||||
(% of total investments)2
|
||||
Tax Obligation/Limited
|
23.9
|
%
|
||
Tax Obligation/General
|
22.1
|
%
|
||
Transportation
|
18.2
|
%
|
||
Utilities
|
17.2
|
%
|
||
Water and Sewer
|
13.4
|
%
|
||
Short-Term Investments
|
0.3
|
%
|
||
Other Industries
|
4.9
|
%
|
States
|
||||
(% of total long-term investments)2
|
||||
California
|
21.9
|
%
|
||
Illinois
|
12.8
|
%
|
||
New York
|
10.2
|
%
|
||
Texas
|
8.3
|
%
|
||
Ohio
|
5.6
|
%
|
||
Michigan
|
4.5
|
%
|
||
South Carolina
|
4.4
|
%
|
||
Nevada
|
4.1
|
%
|
||
Georgia
|
3.9
|
%
|
||
Virginia
|
3.5
|
%
|
||
Louisiana
|
3.2
|
%
|
||
Other States
|
17.6
|
%
|
2
|
Excluding investments in derivatives.
|
Nuveen Investments
|
13
|
NBD
|
|
Nuveen Build America Bond Opportunity Fund
|
|
Performance Overview and Holding Summaries as of September 30, 2014
|
Cumulative
|
Average Annual
|
||||||||
|
Since
|
||||||||
6-Month
|
1-Year
|
Inception1
|
|||||||
NBD at NAV
|
6.22%
|
17.55%
|
11.96%
|
||||||
NBD at Share Price
|
6.77%
|
22.19%
|
8.34%
|
||||||
Barclays Aggregate – Eligible Build America Bond Index
|
7.15%
|
16.58%
|
11.85%
|
1
|
Since inception returns are from 11/23/10.
|
14
|
Nuveen Investments
|
Fund Allocation
|
||||
(% of net assets)
|
||||
Municipal Bonds
|
109.0
|
%
|
||
Borrowings
|
(6.8)
|
%
|
||
Floating Rate Obligations
|
(4.3)
|
%
|
||
Other Assets Less Liabilities
|
2.1
|
%
|
Credit Quality
|
||||
(% of total investment exposure)2
|
||||
AAA/U.S. Guaranteed
|
11.7
|
%
|
||
AA
|
67.3
|
%
|
||
A
|
15.2
|
%
|
||
BBB
|
3.6
|
%
|
||
BB or Lower
|
1.7
|
%
|
||
N/R (not rated)
|
0.5
|
%
|
Portfolio Composition
|
||||
(% of total investments)2
|
||||
Tax Obligation/Limited
|
33.2
|
%
|
||
Transportation
|
17.9
|
%
|
||
Water and Sewer
|
16.7
|
%
|
||
Utilities
|
14.2
|
%
|
||
Tax Obligation/General
|
11.4
|
%
|
||
Other Industries
|
6.6
|
%
|
States
|
||||
(% of total investments)2
|
||||
California
|
19.1
|
%
|
||
Illinois
|
13.6
|
%
|
||
New York
|
11.6
|
%
|
||
South Carolina
|
8.4
|
%
|
||
New Jersey
|
6.2
|
%
|
||
Colorado
|
4.1
|
%
|
||
Ohio
|
3.9
|
%
|
||
Michigan
|
3.8
|
%
|
||
Texas
|
3.8
|
%
|
||
Virginia
|
3.5
|
%
|
||
Georgia
|
3.2
|
%
|
||
Other States
|
18.8
|
%
|
2
|
Excluding investments in derivatives.
|
Nuveen Investments
|
15
|
NBB
|
NBD
|
||||||
Common
|
Common
|
||||||
shares
|
shares
|
||||||
To approve a new investment management agreement
|
|||||||
For
|
10,143,951
|
2,854,468
|
|||||
Against
|
318,140
|
87,983
|
|||||
Abstain
|
301,159
|
66,949
|
|||||
Broker Non-Votes
|
2,993,709
|
963,585
|
|||||
Total
|
13,756,959
|
3,972,985
|
|||||
To approve a new sub-advisory agreement
|
|||||||
For
|
10,092,173
|
2,856,534
|
|||||
Against
|
363,150
|
89,411
|
|||||
Abstain
|
307,927
|
63,455
|
|||||
Broker Non-Votes
|
2,993,709
|
963,585
|
|||||
Total
|
13,756,959
|
3,972,985
|
|||||
Approval of the Board Members was reached as follows:
|
|||||||
William Adams IV
|
|||||||
For
|
13,264,471
|
3,773,209
|
|||||
Withhold
|
492,488
|
199,776
|
|||||
Total
|
13,756,959
|
3,972,985
|
|||||
David J. Kundert
|
|||||||
For
|
13,249,769
|
3,769,286
|
|||||
Withhold
|
507,190
|
203,699
|
|||||
Total
|
13,756,959
|
3,972,985
|
|||||
John K. Nelson
|
|||||||
For
|
13,257,376
|
3,768,252
|
|||||
Withhold
|
499,583
|
204,733
|
|||||
Total
|
13,756,959
|
3,972,985
|
|||||
Terence J. Toth
|
|||||||
For
|
13,263,814
|
3,776,411
|
|||||
Withhold
|
493,145
|
196,574
|
|||||
Total
|
13,756,959
|
3,972,985
|
16
|
Nuveen Investments
|
NBB
|
||
Nuveen Build America Bond Fund
|
||
Portfolio of Investments
|
September 30, 2014 (Unaudited)
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
LONG-TERM INVESTMENTS – 121.3% (99.7% of Total Investments)
|
||||||||||
MUNICIPAL BONDS – 121.3% (99.7% of Total Investments)
|
||||||||||
Alabama – 0.3% (0.3% of Total Investments)
|
||||||||||
$
|
2,000
|
Baptist Health Care Authority, Alabama, An Affiliate of UAB Health System, Taxable Bond Series 2013A, 5.500%, 11/15/43
|
No Opt. Call
|
A3
|
$
|
1,969,880
|
||||
Arizona – 1.7% (1.3% of Total Investments)
|
||||||||||
4,070
|
Downtown Phoenix Hotel Corporation, Arizona, Revenue Bonds, Subordinate Lien Series 2005C, 5.290%, 7/01/18 – FGIC Insured
|
No Opt. Call
|
AA–
|
4,125,556
|
||||||
5,000
|
Mesa, Arizona, Utility System Revenue Bonds, Series 2010, 6.100%, 7/01/34
|
7/20 at 100.00
|
Aa2
|
5,639,800
|
||||||
9,070
|
Total Arizona
|
9,765,356
|
||||||||
California – 26.6% (21.8% of Total Investments)
|
||||||||||
2,520
|
Alameda Corridor Transportation Authority, California, User Fee Revenue Bonds, Subordinate Lien Series 2004B, 0.000%, 10/01/31 – AMBAC Insured
|
No Opt. Call
|
BBB+
|
899,741
|
||||||
150
|
Bay Area Toll Authority, California, Revenue Bonds, San Francisco Bay Area Toll Bridge, Build America Federally Taxable Bond Series 2009F-2, 6.263%, 4/01/49
|
No Opt. Call
|
AA
|
201,701
|
||||||
75
|
Bay Area Toll Authority, California, Revenue Bonds, San Francisco Bay Area Toll Bridge, Subordinate Lien, Build America Federally Taxable Bond Series 2010S-1, 6.793%, 4/01/30
|
No Opt. Call
|
A+
|
93,934
|
||||||
500
|
California Infrastructure and Economic Development Bank, Revenue Bonds, University of California San Francisco Neurosciences Building, Build America Taxable Bond Series 2010B, 6.486%, 5/15/49
|
No Opt. Call
|
AA–
|
587,335
|
||||||
465
|
California Municipal Finance Authority Charter School Revenue Bonds, Albert Einstein Academies Project, Taxable Series 2013B, 7.000%, 8/01/18
|
No Opt. Call
|
BB
|
464,679
|
||||||
3,005
|
California State Public Works Board, Lease Revenue Bonds, Various Capital Projects, Build America Taxable Bond Series 2009G-2, 8.361%, 10/01/34
|
No Opt. Call
|
A1
|
4,229,237
|
||||||
2,050
|
California State Public Works Board, Lease Revenue Bonds, Various Capital Projects, Build America Taxable Bond Series 2010A-2, 8.000%, 3/01/35
|
3/20 at 100.00
|
A1
|
2,370,764
|
||||||
7,000
|
California State University, Systemwide Revenue Bonds, Build America Taxable Bond Series 2010B, 6.484%, 11/01/41
|
No Opt. Call
|
Aa2
|
8,789,690
|
||||||
7,115
|
California State, General Obligation Bonds, Various Purpose Build America Taxable Bond Series 2010, 7.950%, 3/01/36
|
3/20 at 100.00
|
Aa3
|
8,690,403
|
||||||
16,610
|
California State, General Obligation Bonds, Various Purpose, Build America Taxable Bond Series 2010, 7.600%, 11/01/40
|
No Opt. Call
|
Aa3
|
24,653,723
|
||||||
15,000
|
Los Angeles Community College District, California, General Obligation Bonds, Build America Taxable Bonds, Series 2010, 6.600%, 8/01/42
|
No Opt. Call
|
Aa1
|
20,385,899
|
||||||
10,000
|
Los Angeles Community College District, Los Angeles County, California, General Obligation Bonds, Series 2010, 6.600%, 8/01/42 (UB) (4)
|
No Opt. Call
|
Aa1
|
13,590,600
|
||||||
Los Angeles County Public Works Financing Authority, California, Lease Revenue Bonds, Multiple Capital Projects I, Build America Taxable Bond Series 2010B:
|
||||||||||
5,500
|
7.488%, 8/01/33
|
No Opt. Call
|
AA
|
7,113,645
|
||||||
17,735
|
7.618%, 8/01/40
|
No Opt. Call
|
AA
|
24,528,213
|
||||||
9,390
|
Los Angeles Department of Airports, California, Revenue Bonds, Los Angeles International Airport, Build America Taxable Bonds, Series 2009C, 6.582%, 5/15/39
|
No Opt. Call
|
AA–
|
11,660,596
|
||||||
50
|
Los Angeles Department of Water and Power, California, Power System Revenue Bonds, Federally Taxable – Direct Payment – Build America Bonds, Series 2010A, 5.716%, 7/01/39
|
No Opt. Call
|
AA–
|
61,336
|
||||||
1,685
|
Los Angeles Department of Water and Power, California, Power System Revenue Bonds, Federally Taxable – Direct Payment – Build America Bonds, Series 2010D, 6.574%, 7/01/45
|
No Opt. Call
|
AA–
|
2,324,104
|
||||||
2,000
|
Los Angeles Department of Water and Power, California, Water System Revenue Bonds, Tender Option Bond Trust T0003, 29.822%, 7/01/42 (IF) (4)
|
No Opt. Call
|
AA
|
6,004,800
|
Nuveen Investments
|
17
|
NBB
|
Nuveen Build America Bond Fund
|
|
Portfolio of Investments (continued)
|
September 30, 2014 (Unaudited)
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
California (continued)
|
||||||||||
$
|
3,000
|
Oakland Redevelopment Agency, California, Subordinated Housing Set Aside Revenue Bonds, Federally Taxable Series 2011A-T, 7.500%, 9/01/19
|
No Opt. Call
|
A
|
$
|
3,376,170
|
||||
1,365
|
San Francisco City and County Public Utilities Commission, California, Water Revenue Bonds, Build America Taxable Bonds, Series 2010B, 6.000%, 11/01/40
|
No Opt. Call
|
AA–
|
1,693,706
|
||||||
3,000
|
San Francisco City and County Public Utilities Commission, California, Water Revenue Bonds, Build America Taxable Bonds, Series 2010G, 6.950%, 11/01/50
|
No Opt. Call
|
AA–
|
4,255,170
|
||||||
4,000
|
San Francisco City and County, California, Certificates of Participation, 525 Golden Gate Avenue, San Francisco Public Utilities Commission Office Project, Tender Option Bond Trust B001, 29.437%, 11/01/30 (IF)
|
No Opt. Call
|
AA
|
8,169,600
|
||||||
Stanton Redevelopment Agency, California, Consolidated Project Tax Allocation Bonds, Series 2011A:
|
||||||||||
275
|
6.500%, 12/01/17
|
No Opt. Call
|
A–
|
297,410
|
||||||
295
|
6.750%, 12/01/18
|
No Opt. Call
|
A–
|
324,240
|
||||||
2,505
|
University of California, General Revenue Bonds, Limited Project, Build America Taxable Bond Series 2010F, 5.946%, 5/15/45
|
No Opt. Call
|
AA–
|
3,104,021
|
||||||
115,290
|
Total California
|
157,870,717
|
||||||||
Colorado – 0.6% (0.5% of Total Investments)
|
||||||||||
3,100
|
Denver School District 1, Colorado, General Obligation Bonds, Build America Taxable Bonds, Series 2009C, 5.664%, 12/01/33
|
No Opt. Call
|
AA+
|
3,645,538
|
||||||
Connecticut – 0.9% (0.8% of Total Investments)
|
||||||||||
4,500
|
Harbor Point Infrastructure Improvement District, Connecticut, Special Obligation Revenue Bonds, Harbor Point Project, Federally Taxable – Issuer Subsidy – Recovery Zone Economic Development Bond Series 2010B, 12.500%, 4/01/39
|
4/20 at 100.00
|
N/R
|
5,487,435
|
||||||
Florida – 1.4% (1.2% of Total Investments)
|
||||||||||
2,850
|
Academic Charter Schools Finance LLC, Florida, Mortgage Loan Revenue Bonds, Series 2004A, 144A, 8.000%, 8/15/24
|
2/15 at 103.00
|
N/R
|
2,855,159
|
||||||
5,000
|
Florida State Board of Education, Public Education Capital Outlay Bonds, Build America Taxable Bonds, Series 2010G, 5.750%, 6/01/35
|
6/19 at 100.00
|
AAA
|
5,472,600
|
||||||
7,850
|
Total Florida
|
8,327,759
|
||||||||
Georgia – 4.8% (3.9% of Total Investments)
|
||||||||||
9,000
|
Georgia Municipal Electric Authority, Plant Vogtle Units 3 & 4 Project J Bonds, Taxable Build America Bonds Series 2010A, 6.637%, 4/01/57
|
No Opt. Call
|
A+
|
11,312,190
|
||||||
15,000
|
Georgia Municipal Electric Authority, Plant Vogtle Units 3 & 4 Project P Bonds, Refunding Taxable Build America Bonds Series 2010A, 7.055%, 4/01/57
|
No Opt. Call
|
A–
|
16,981,650
|
||||||
24,000
|
Total Georgia
|
28,293,840
|
||||||||
Illinois – 15.5% (12.8% of Total Investments)
|
||||||||||
4,200
|
Chicago Transit Authority, Illinois, Sales Tax Receipts Revenue Bonds, Federally Taxable Build America Bonds, Series 2010B, 6.200%, 12/01/40
|
No Opt. Call
|
AA
|
4,800,726
|
||||||
10,925
|
Chicago, Illinois, General Airport Revenue Bonds, O’Hare International Airport, Third Lien, Build America Taxable Bond Series 2010B, 6.845%, 1/01/38
|
1/20 at 100.00
|
A2
|
12,246,816
|
||||||
12,405
|
Chicago, Illinois, Wastewater Transmission Revenue Bonds, Build America Taxable Bond Series 2010B, 6.900%, 1/01/40
|
No Opt. Call
|
AA
|
14,746,196
|
||||||
14,695
|
Chicago, Illinois, Water Revenue Bonds, Taxable Second Lien Series 2010B, 6.742%, 11/01/40
|
No Opt. Call
|
AA
|
18,477,787
|
||||||
15,480
|
Cook County, Illinois, General Obligation Bonds, Build America Taxable Bonds, Series 2010D, 6.229%, 11/15/34
|
No Opt. Call
|
AA
|
17,322,739
|
||||||
260
|
Illinois Finance Authority, Revenue Bonds, Illinois Institute of Technology, Refunding Series 2006A, 6.100%, 4/01/15
|
10/14 at 100.00
|
Baa3
|
259,997
|
||||||
14,000
|
Illinois State, General Obligation Bonds, Taxable Build America Bonds, Series 2010-3, 6.725%, 4/01/35
|
No Opt. Call
|
A–
|
15,393,980
|
||||||
4,900
|
Illinois Toll Highway Authority, Toll Highway Revenue Bonds, Build America Taxable Bonds, Senior Lien Series 2009A, 6.184%, 1/01/34
|
No Opt. Call
|
AA–
|
6,103,293
|
18
|
Nuveen Investments
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
Illinois (continued)
|
||||||||||
$
|
1,555
|
Illinois Toll Highway Authority, Toll Highway Revenue Bonds, Build America Taxable Bonds, Senior Lien Series 2009B, 5.851%, 12/01/34
|
No Opt. Call
|
AA–
|
$
|
1,917,548
|
||||
685
|
Northern Illinois Municipal Power Agency, Power Project Revenue Bonds, Prairie State Project, Build America Taxable Bond Series 2010A, 7.820%, 1/01/40
|
No Opt. Call
|
A2
|
908,639
|
||||||
79,105
|
Total Illinois
|
92,177,721
|
||||||||
Indiana – 0.9% (0.7% of Total Investments)
|
||||||||||
5,000
|
Indiana University, Consolidated Revenue Bonds, Build America Taxable Bonds, Series 2010B, 5.636%, 6/01/35
|
6/20 at 100.00
|
Aaa
|
5,442,800
|
||||||
Kentucky – 1.8% (1.5% of Total Investments)
|
||||||||||
5,000
|
Kentucky Municipal Power Agency, Power Supply System Revenue Bonds, Prairie State Project, Tender Option Bond Trust B002, 29.306%, 9/01/37 – AGC Insured (IF)
|
9/20 at 100.00
|
AA
|
8,006,750
|
||||||
1,950
|
Louisville and Jefferson County Metropolitan Sewer District, Kentucky, Sewer and Drainage System Revenue Bonds, Build America Taxable Bonds Series 2010A, 6.250%, 5/15/43
|
No Opt. Call
|
AA
|
2,516,456
|
||||||
6,950
|
Total Kentucky
|
10,523,206
|
||||||||
Louisiana – 3.8% (3.1% of Total Investments)
|
||||||||||
20,350
|
East Baton Rouge Sewerage Commission, Louisiana, Revenue Bonds, Build America Taxable Bonds, Series 2010B, 6.087%, 2/01/45 (UB) (4)
|
2/20 at 100.00
|
AA
|
22,707,548
|
||||||
Massachusetts – 0.7% (0.6% of Total Investments)
|
||||||||||
2,000
|
Massachusetts, Transportation Fund Revenue Bonds, Accelerated Bridge Program, Tender Option Bond Trust T0004, 25.650%, 6/01/40 (IF) (4)
|
No Opt. Call
|
AAA
|
4,309,300
|
||||||
Michigan – 5.4% (4.5% of Total Investments)
|
||||||||||
11,905
|
Detroit City School District, Wayne County, Michigan, General Obligation Bonds, Build America Taxable Bond Series 2009B, 7.747%, 5/01/39
|
No Opt. Call
|
Aa2
|
14,818,273
|
||||||
3,145
|
Michigan Tobacco Settlement Finance Authority, Tobacco Settlement Asset-Backed Revenue Bonds, Taxable Turbo Series 2006A, 7.309%, 6/01/34
|
No Opt. Call
|
B2
|
2,736,842
|
||||||
13,955
|
Wayne County Building Authority, Michigan, General Obligation Bonds, Jail Facilities, Federally Taxable Recovery Zone Economic Development Series 2010, 10.000%, 12/01/40
|
12/20 at 100.00
|
BBB–
|
14,668,519
|
||||||
29,005
|
Total Michigan
|
32,223,634
|
||||||||
Missouri – 0.3% (0.2% of Total Investments)
|
||||||||||
1,290
|
Curators of the University of Missouri, System Facilities Revenue Bonds, Build America Taxable Bonds, Series 2009A, 5.960%, 11/01/39
|
No Opt. Call
|
AA+
|
1,615,648
|
||||||
Nevada – 5.0% (4.1% of Total Investments)
|
||||||||||
8,810
|
Clark County, Nevada, Airport Revenue Bonds, Senior Lien Series 2009B, 6.881%, 7/01/42
|
7/19 at 100.00
|
AA–
|
9,946,842
|
||||||
1,800
|
Clark County, Nevada, Airport Revenue Bonds, Taxable Direct Payment Build America Bond Series 2010C, 6.820%, 7/01/45
|
No Opt. Call
|
AA–
|
2,465,316
|
||||||
8,800
|
Las Vegas Valley Water District, Nevada, General Obligation Bonds, Build America Taxable Bonds, Series 2009C, 7.013%, 6/01/39
|
No Opt. Call
|
AA+
|
9,679,208
|
||||||
1,315
|
Las Vegas, Nevada, Certificates of Participation, City Hall Project, Build America Federally Taxable Bonds, Series 2009B, 7.800%, 9/01/39
|
9/19 at 100.00
|
AA–
|
1,577,066
|
||||||
5,250
|
North Las Vegas, Nevada, General Obligation Water and Wastewater Improvement Bonds, Build America Taxable Bonds, Series 2010A, 6.572%, 6/01/40
|
No Opt. Call
|
BB–
|
4,695,075
|
||||||
1,050
|
Reno, Nevada, 1999 Special Assessment District 2 Local Improvement Bonds, ReTRAC Project, Taxable Series 2006, 6.890%, 6/01/16
|
No Opt. Call
|
BBB
|
1,089,711
|
||||||
27,025
|
Total Nevada
|
29,453,218
|
||||||||
New Jersey – 3.7% (3.0% of Total Investments)
|
||||||||||
130
|
New Jersey Transportation Trust Fund Authority, Transportation System Bonds, Build America Bonds Issuer Subsidy Program, Series 2010C, 6.104%, 12/15/28
|
12/20 at 100.00
|
A2
|
145,465
|
Nuveen Investments
|
19
|
NBB
|
Nuveen Build America Bond Fund
|
|
Portfolio of Investments (continued)
|
September 30, 2014 (Unaudited)
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
New Jersey (continued)
|
||||||||||
$
|
3,100
|
New Jersey Turnpike Authority, Revenue Bonds, Build America Taxable Bonds, Series 2009F, 7.414%, 1/01/40
|
No Opt. Call
|
A+
|
$
|
4,452,344
|
||||
12,535
|
New Jersey Turnpike Authority, Revenue Bonds, Build America Taxable Bonds, Series 2010A, 7.102%, 1/01/41
|
No Opt. Call
|
A+
|
17,434,555
|
||||||
15,765
|
Total New Jersey
|
22,032,364
|
||||||||
New York – 12.4% (10.2% of Total Investments)
|
||||||||||
25,000
|
Dormitory Authority of the State of New York, State Personal Income Tax Revenue Bonds, Build America Taxable Bonds, Series 2010D, 5.600%, 3/15/40 (UB)
|
No Opt. Call
|
AAA
|
30,083,250
|
||||||
5,000
|
Long Island Power Authority, New York, Electric System Revenue Bonds, Build America Taxable Bond Series 2010B, 5.850%, 5/01/41
|
No Opt. Call
|
A–
|
5,433,900
|
||||||
1,815
|
Metropolitan Transportation Authority, New York, Dedicated Tax Fund Bonds, Build America Taxable Bonds, Series 2010C, 7.336%, 11/15/39
|
No Opt. Call
|
AA
|
2,686,472
|
||||||
4,980
|
Metropolitan Transportation Authority, New York, Transportation Revenue Bonds, Build America Taxable Bonds, Series 2009A-1, 5.871%, 11/15/39
|
No Opt. Call
|
AA–
|
6,094,673
|
||||||
100
|
Metropolitan Transportation Authority, New York, Transportation Revenue Bonds, Build America Taxable Bonds, Series 2010B-1, 6.648%, 11/15/39
|
No Opt. Call
|
AA–
|
132,956
|
||||||
2,595
|
New York City Municipal Water Finance Authority, New York, Water and Sewer System Revenue Bonds, Second Generation Resolution, Build America Taxable Bonds, Series 2010DD, 5.952%, 6/15/42
|
No Opt. Call
|
AA+
|
3,319,472
|
||||||
2,025
|
New York City Municipal Water Finance Authority, New York, Water and Sewer System Revenue Bonds, Second Generation Resolution, Build America Taxable Bonds, Series 2010DD, 5.952%, 6/15/42 (UB)
|
No Opt. Call
|
AA+
|
2,590,340
|
||||||
1,595
|
New York City Municipal Water Finance Authority, New York, Water and Sewer System Revenue Bonds, Second Generation Resolution, Taxable Tender Option Bonds Trust T30001-2, 26.888%, 6/15/44 (IF)
|
No Opt. Call
|
AA+
|
3,824,890
|
||||||
6,340
|
New York City Transitional Finance Authority, New York, Building Aid Revenue Bonds, Build America Taxable Bond Fiscal 2011 Series 2010S-1B, 6.828%, 7/15/40
|
No Opt. Call
|
Aa2
|
8,176,636
|
||||||
10,000
|
New York City Transitional Finance Authority, New York, Future Tax Secured Bonds, Build America Taxable Bonds, Series 2010G-1, 5.467%, 5/01/40
|
No Opt. Call
|
AAA
|
11,401,800
|
||||||
59,450
|
Total New York
|
73,744,389
|
||||||||
Ohio – 6.8% (5.6% of Total Investments)
|
||||||||||
American Municipal Power Inc., Ohio, Combined Hydroelectric Projects Revenue Bonds, Federally Taxable Build America Bonds, Series 2010B:
|
||||||||||
10,700
|
7.834%, 2/15/41
|
No Opt. Call
|
A
|
15,481,188
|
||||||
5,000
|
8.084%, 2/15/50
|
No Opt. Call
|
A
|
7,737,450
|
||||||
25
|
JobsOhio Beverage System, Ohio, Statewide Liquor Profits Revenue Bonds, Senior Lien Taxable Series 2013B, 4.532%, 1/01/35
|
No Opt. Call
|
AA
|
25,828
|
||||||
15,000
|
Northeast Ohio Regional Sewer District, Wastewater Improvement Revenue Bonds, Build America Taxable Bonds, Series 2010, 6.038%, 11/15/40
|
11/20 at 100.00
|
AA+
|
16,918,650
|
||||||
30,725
|
Total Ohio
|
40,163,116
|
||||||||
Oregon – 2.7% (2.2% of Total Investments)
|
||||||||||
4,000
|
Oregon Department of Administrative Services, Certificates of Participation, Federally Taxable Build America Bonds, Tender Option Bond Trust TN-011, 26.764%, 5/01/35 (IF) (4)
|
5/20 at 100.00
|
AA
|
6,358,800
|
||||||
9,080
|
Warm Springs Reservation Confederated Tribes, Oregon, Tribal Economic Development Bonds, Hydroelectric Revenue Bonds, Pelton Round Butte Project, Refunding Series 2009A, 8.250%, 11/01/19
|
No Opt. Call
|
A3
|
9,932,975
|
||||||
13,080
|
Total Oregon
|
16,291,775
|
||||||||
Pennsylvania – 1.1% (0.9% of Total Investments)
|
||||||||||
1,915
|
Commonwealth Financing Authority, Pennsylvania, State Appropriation Lease Bonds, Build America Taxable Bonds, Series 2009D, 6.218%, 6/01/39
|
No Opt. Call
|
A+
|
2,303,496
|
20
|
Nuveen Investments
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
Pennsylvania (continued)
|
||||||||||
$
|
2,000
|
Pennsylvania State, General Obligation Bonds, Build America Taxable Bonds, Third Series 2010B, 5.850%, 7/15/30
|
7/20 at 100.00
|
Aa3
|
$
|
2,249,360
|
||||
1,420
|
Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, Build America Taxable Bonds, Series 2009A, 6.105%, 12/01/39
|
No Opt. Call
|
A+
|
1,755,759
|
||||||
5,335
|
Total Pennsylvania
|
6,308,615
|
||||||||
South Carolina – 5.4% (4.4% of Total Investments)
|
||||||||||
15,000
|
South Carolina Public Service Authority, Electric System Revenue Bonds, Santee Cooper, Federally Taxable Build America Series 2010C, 6.454%, 1/01/50
|
No Opt. Call
|
AA–
|
19,548,600
|
||||||
205
|
South Carolina Public Service Authority, Electric System Revenue Bonds, Santee Cooper, Federally Taxable Build America, Tender Option Bond Trust T30002, 28.371%, 1/01/50 (IF)
|
No Opt. Call
|
AA–
|
515,821
|
||||||
8,985
|
South Carolina Public Service Authority, Electric System Revenue Bonds, Santee Cooper, Federally Taxable Build America, Series 2010C, 6.454%, 1/01/50 (UB)
|
No Opt. Call
|
AA–
|
11,709,611
|
||||||
24,190
|
Total South Carolina
|
31,774,032
|
||||||||
South Dakota – 0.3% (0.3% of Total Investments)
|
||||||||||
2,000
|
South Dakota Educational Enhancement Funding Corporation, Tobacco Settlement Revenue Bonds, Series 2013A, 3.539%, 6/01/22
|
No Opt. Call
|
A
|
1,984,240
|
||||||
Tennessee – 1.5% (1.2% of Total Investments)
|
||||||||||
5,000
|
Metropolitan Government Nashville & Davidson County Convention Center Authority, Tennessee, Tourism Tax Revenue Bonds, Build America Taxable Bonds, Series 2010A-2, 7.431%, 7/01/43
|
No Opt. Call
|
A1
|
6,543,100
|
||||||
1,780
|
Metropolitan Government Nashville & Davidson County Convention Center Authority, Tennessee, Tourism Tax Revenue Bonds, Build America Taxable Bonds, Subordinate Lien Series 2010B, 6.731%, 7/01/43
|
No Opt. Call
|
Aa3
|
2,290,433
|
||||||
6,780
|
Total Tennessee
|
8,833,533
|
||||||||
Texas – 10.1% (8.3% of Total Investments)
|
||||||||||
10,230
|
Dallas Convention Center Hotel Development Corporation, Texas, Hotel Revenue Bonds, Build America Taxable Bonds, Series 09B, 7.088%, 1/01/42
|
No Opt. Call
|
A+
|
12,883,867
|
||||||
10,000
|
North Texas Tollway Authority, System Revenue Bonds, Subordinate Lien Taxable Revenue Bonds, Federally Taxable Build America Bonds, Series 2010-B2, 8.910%, 2/01/30
|
2/20 at 100.00
|
Baa3
|
11,921,300
|
||||||
15,000
|
North Texas Tollway Authority, System Revenue Bonds, Taxable Build America Bond Series 2009B, 6.718%, 1/01/49
|
No Opt. Call
|
A2
|
20,758,649
|
||||||
5,000
|
San Antonio, Texas, General Obligation Bonds, Build America Taxable Bonds, Series 2010B, 6.038%, 8/01/40
|
8/20 at 100.00
|
AAA
|
5,702,550
|
||||||
7,015
|
Texas State, General Obligation Bonds, Transportation Commission, Build America Taxable Bonds, Series 2009A, 5.517%, 4/01/39
|
No Opt. Call
|
AAA
|
8,713,402
|
||||||
47,245
|
Total Texas
|
59,979,768
|
||||||||
Utah – 0.9% (0.8% of Total Investments)
|
||||||||||
4,000
|
Central Utah Water Conservancy District, Utah, Revenue Bonds, Federally Taxable Build America Bonds, Series 2010A, 5.700%, 10/01/40
|
4/20 at 100.00
|
AA+
|
4,327,360
|
||||||
1,000
|
Tooele County Municipal Building Authority, Utah, Lease Revenue Bonds, Build America Bond Series 2010A-2, 8.000%, 12/15/32
|
12/20 at 100.00
|
A+
|
1,126,500
|
||||||
5,000
|
Total Utah
|
5,453,860
|
||||||||
Virginia – 4.2% (3.5% of Total Investments)
|
||||||||||
17,300
|
Metropolitan Washington Airports Authority, Virginia, Dulles Toll Road Second Senior Lien Revenue Bonds, Build America Bonds, Series 2009D, 7.462%, 10/01/46 – AGC Insured
|
No Opt. Call
|
BBB+
|
23,453,090
|
||||||
2,170
|
Tobacco Settlement Financing Corporation of Virginia, Tobacco Settlement Asset Backed Bonds, Refunding Senior Lien Series 2007A, 6.706%, 6/01/46
|
12/14 at 100.00
|
B–
|
1,609,945
|
||||||
19,470
|
Total Virginia
|
25,063,035
|
Nuveen Investments
|
21
|
NBB
|
Nuveen Build America Bond Fund
|
|
Portfolio of Investments (continued)
|
September 30, 2014 (Unaudited)
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
Washington – 2.5% (2.0% of Total Investments)
|
||||||||||
$
|
4,000
|
Seattle, Washington, Municipal Light and Power Revenue Bonds, Federally Taxable Build America Bonds, Tender Option Bond Trust T0001, 24.504%, 2/01/40 (IF) (4)
|
No Opt. Call
|
AA
|
$
|
8,786,200
|
||||
5,000
|
Washington State Convention Center Public Facilities District, Lodging Tax Revenue Bonds, Build America Taxable Bond Series 2010B, 6.790%, 7/01/40
|
No Opt. Call
|
Aa3
|
6,055,300
|
||||||
9,000
|
Total Washington
|
14,841,500
|
||||||||
$
|
574,575
|
Total Long-Term Investments (cost $626,064,939)
|
720,283,827
|
Principal
|
||||||||||
Amount (000)
|
Description (1)
|
Coupon
|
Maturity
|
Value
|
||||||
SHORT-TERM INVESTMENTS – 0.4% (0.3% of Total Investments)
|
||||||||||
$
|
2,318
|
Repurchase Agreement with Fixed Income Clearing Corporation, dated 9/30/14, repurchase price $2,318,424, collateralized by: $1,705,000 U.S. Treasury Notes, 1.750%, due 9/30/19, value $1,700,738 and $655,000 U.S. Treasury Notes, 2.250%, due 4/30/21, value $664,825
|
0.000%
|
10/01/14
|
$
|
2,318,424
|
||||
Total Short-Term Investments (cost $2,318,424)
|
2,318,424
|
|||||||||
Total Investments (cost $628,383,363) – 121.7%
|
722,602,251
|
|||||||||
Borrowings – (15.0)% (5), (6)
|
(89,000,000
|
) | ||||||||
Floating Rate Obligations – (8.9)%
|
(53,090,000
|
) | ||||||||
Other Assets Less Liabilities – 2.2% (7)
|
13,346,595
|
|||||||||
Net Assets – 100%
|
$
|
593,858,846
|
22
|
Nuveen Investments
|
Counterparty
|
Notional
Amount
|
Fund Pay/Receive Floating Rate
|
Floating Rate Index
|
Fixed Rate (Annualized)
|
Fixed Rate Payment Frequency
|
Effective
Date (8)
|
Termination Date
|
Value
|
Unrealized Appreciation (Depreciation) (7) | |||||||||||||
Barclays Bank PLC
|
$ | 60,500,000 |
Receive
|
1-Month USD-LIBOR
|
1.450 | % |
Monthly
|
10/01/14
|
10/01/18
|
$ | 254,142 | $ | 254,141 | |||||||||
Barclays Bank PLC*
|
46,500,000 |
Receive
|
3-Month USD-LIBOR
|
3.502 |
Semi-Annually
|
6/15/15
|
6/15/44
|
(1,766,252 | ) | (1,767,465 | ) | |||||||||||
Morgan Stanley
|
19,200,000 |
Receive
|
1-Month USD-LIBOR
|
2.064 |
Monthly
|
3/21/11
|
3/21/16
|
(460,572 | ) | (460,572 | ) | |||||||||||
Morgan Stanley
|
60,500,000 |
Receive
|
1-Month USD-LIBOR
|
1.764 |
Monthly
|
10/01/14
|
12/01/19
|
278,636 | 278,636 | |||||||||||||
$ | 186,700,000 | $ | (1,694,046 | ) | $ | (1,695,260 | ) |
(1)
|
All percentages shown in the Portfolio of Investments are based on net assets unless otherwise noted.
|
(2)
|
Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns.
|
(3)
|
Ratings: Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investors Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies.
|
(4)
|
Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in inverse floating rate transactions.
|
(5)
|
Borrowings as a percentage of Total Investments is 12.3%.
|
(6)
|
The Fund segregates 100% of its eligible investments in the Portfolio of Investments as collateral for Borrowings.
|
(7)
|
Other Assets Less Liabilities includes the Unrealized Appreciation (Depreciation) of derivative instruments as listed within Investments in Derivatives as of the end of the reporting period.
|
(8)
|
Effective date represents the date on which both the Fund and Counterparty commence interest payment accruals on each contract.
|
(IF)
|
Inverse floating rate investment.
|
(UB)
|
Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Note 3 – Portfolio Securities and Investments in Derivatives, Inverse Floating Rate Securities for more information.
|
144A
|
Investment is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These investments may only be resold in transactions exempt from registration, which are normally those transactions with qualified institutional buyers.
|
USD-LIBOR
|
United States Dollar-London Inter-Bank Offered Rate.
|
Nuveen Investments
|
23
|
NBD
|
||
Nuveen Build America Bond Opportunity Fund
|
||
Portfolio of Investments
|
September 30, 2014 (Unaudited)
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
LONG-TERM INVESTMENTS – 109.0% (100.0% of Total Investments)
|
||||||||||
MUNICIPAL BONDS – 109.0% (100.0% of Total Investments)
|
||||||||||
Alabama – 0.6% (0.5% of Total Investments)
|
||||||||||
$
|
1,000
|
Baptist Health Care Authority, Alabama, An Affiliate of UAB Health System, Taxable Bond Series 2013A, 5.500%, 11/15/43
|
No Opt. Call
|
A3
|
$
|
984,940
|
||||
California – 20.9% (19.1% of Total Investments)
|
||||||||||
1,500
|
California State Public Works Board, Lease Revenue Bonds, Various Capital Projects, Build America Taxable Bond Series 2009G-2, 8.361%, 10/01/34
|
No Opt. Call
|
A1
|
2,111,100
|
||||||
2,000
|
Los Angeles Community College District, Los Angeles County, California, General Obligation Bonds, Tender Option Bond Trust TN027, 29.977%, 8/01/49 (IF) (4)
|
No Opt. Call
|
Aa1
|
6,200,600
|
||||||
3,185
|
Los Angeles County Public Works Financing Authority, California, Lease Revenue Bonds, Multiple Capital Projects I, Build America Taxable Bond Series 2010B, 7.618%, 8/01/40
|
No Opt. Call
|
AA
|
4,404,982
|
||||||
2,650
|
Los Angeles Department of Airports, California, Revenue Bonds, Los Angeles International Airport, Build America Taxable Bonds, Series 2009C, 6.582%, 5/15/39
|
No Opt. Call
|
AA–
|
3,290,797
|
||||||
2,000
|
Los Angeles Department of Water and Power, California, Water System Revenue Bonds, Tender Option Bond Trust T0003, 29.822%, 7/01/42 (IF) (4)
|
No Opt. Call
|
AA
|
6,004,800
|
||||||
1,000
|
Oakland Redevelopment Agency, California, Subordinated Housing Set Aside Revenue Bonds, Federally Taxable Series 2011A-T, 7.500%, 9/01/19
|
No Opt. Call
|
A
|
1,125,390
|
||||||
2,200
|
San Diego County Regional Transportation Commission, California, Sales Tax Revenue Bonds, Build America Taxable Bonds Series 2010A, 5.911%, 4/01/48
|
No Opt. Call
|
AAA
|
2,829,926
|
||||||
675
|
San Francisco City and County Redevelopment Financing Authority, California, Taxable Tax Allocation Revenue Bonds, San Francisco Redevelopment Projects, Series 2009F, 8.406%, 8/01/39
|
No Opt. Call
|
A
|
869,225
|
||||||
2,000
|
San Francisco City and County, California, Certificates of Participation, 525 Golden Gate Avenue, San Francisco Public Utilities Commission Office Project, Tender Option Bond Trust B001, 29.437%, 11/01/41 (IF)
|
No Opt. Call
|
AA
|
4,084,800
|
||||||
315
|
Stanton Redevelopment Agency, California, Consolidated Project Tax Allocation Bonds, Series 2011A, 7.000%, 12/01/19
|
No Opt. Call
|
A–
|
349,581
|
||||||
3,000
|
The Regents of the University of California, Medical Center Pooled Revenue Bonds, Build America Taxable Bonds, Series 2010H, 6.548%, 5/15/48
|
No Opt. Call
|
AA–
|
3,871,020
|
||||||
20,525
|
Total California
|
35,142,221
|
||||||||
Colorado – 4.5% (4.1% of Total Investments)
|
||||||||||
4,000
|
Colorado State Bridge Enterprise Revenue Bonds, Federally Taxable Build America Series 2010A, 6.078%, 12/01/40
|
No Opt. Call
|
AA
|
5,046,320
|
||||||
2,000
|
Regional Transportation District, Colorado, Sales Tax Revenue Bonds, Fastracks Project, Build America Series 2010B, 5.844%, 11/01/50
|
No Opt. Call
|
AA+
|
2,558,260
|
||||||
6,000
|
Total Colorado
|
7,604,580
|
||||||||
Connecticut – 0.7% (0.7% of Total Investments)
|
||||||||||
1,000
|
Harbor Point Infrastructure Improvement District, Connecticut, Special Obligation Revenue Bonds, Harbor Point Project, Federally Taxable – Issuer Subsidy – Recovery Zone Economic Development Bond Series 2010B, 12.500%, 4/01/39
|
4/20 at 100.00
|
N/R
|
1,219,430
|
||||||
Georgia – 3.5% (3.2% of Total Investments)
|
||||||||||
2,000
|
Georgia Municipal Electric Authority, Plant Vogtle Units 3 & 4 Project J Bonds, Taxable Build America Bonds Series 2010A, 6.637%, 4/01/57
|
No Opt. Call
|
A+
|
2,513,820
|
||||||
3,000
|
Georgia Municipal Electric Authority, Plant Vogtle Units 3 & 4 Project P Bonds, Refunding
|
No Opt. Call
|
A–
|
3,396,330
|
||||||
Taxable Build America Bonds Series 2010A, 7.055%, 4/01/57
|
||||||||||
5,000
|
Total Georgia
|
5,910,150
|
24
|
Nuveen Investments
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
Illinois – 14.8% (13.6% of Total Investments)
|
||||||||||
$
|
3,715
|
Chicago Transit Authority, Illinois, Sales Tax Receipts Revenue Bonds, Federally Taxable Build America Bonds, Series 2010B, 6.200%, 12/01/40
|
No Opt. Call
|
AA
|
$
|
4,246,356
|
||||
1,255
|
Chicago, Illinois, General Airport Revenue Bonds, O’Hare International Airport, Third Lien, Build America Taxable Bond Series 2010B, 6.845%, 1/01/38
|
1/20 at 100.00
|
A2
|
1,406,842
|
||||||
5,160
|
Chicago, Illinois, Wastewater Transmission Revenue Bonds, Build America Taxable Bond Series 2010B, 6.900%, 1/01/40
|
No Opt. Call
|
AA
|
6,133,847
|
||||||
4,000
|
Chicago, Illinois, Water Revenue Bonds, Taxable Second Lien Series 2010B, 6.742%, 11/01/40
|
No Opt. Call
|
AA
|
5,029,680
|
||||||
255
|
Illinois Finance Authority, Revenue Bonds, Illinois Institute of Technology, Refunding Series 2006A, 6.100%, 4/01/15
|
10/14 at 100.00
|
Baa3
|
254,997
|
||||||
2,000
|
Illinois State, General Obligation Bonds, Build America Taxable Bonds, Series 2010-5, 7.350%, 7/01/35
|
No Opt. Call
|
A–
|
2,304,160
|
||||||
4,010
|
Illinois Toll Highway Authority, Toll Highway Revenue Bonds, Build America Taxable Bonds, Senior Lien Series 2009A, 6.184%, 1/01/34
|
No Opt. Call
|
AA–
|
4,994,736
|
||||||
240
|
Northern Illinois Municipal Power Agency, Power Project Revenue Bonds, Prairie State Project, Build America Bond Series 2009C, 6.859%, 1/01/39
|
No Opt. Call
|
A2
|
286,788
|
||||||
205
|
Northern Illinois Municipal Power Agency, Power Project Revenue Bonds, Prairie State Project, Build America Taxable Bond Series 2010A, 7.820%, 1/01/40
|
No Opt. Call
|
A2
|
271,928
|
||||||
20,840
|
Total Illinois
|
24,929,334
|
||||||||
Indiana – 2.2% (2.1% of Total Investments)
|
||||||||||
2,980
|
Indianapolis Local Public Improvement Bond Bank, Indiana, Build America Taxable Bonds, Series 2010B-2, 6.116%, 1/15/40
|
No Opt. Call
|
AA+
|
3,764,038
|
||||||
Kentucky – 2.3% (2.1% of Total Investments)
|
||||||||||
3,000
|
Louisville and Jefferson County Metropolitan Sewer District, Kentucky, Sewer and Drainage System Revenue Bonds, Build America Taxable Bonds Series 2010A, 6.250%, 5/15/43
|
No Opt. Call
|
AA
|
3,871,470
|
||||||
Massachusetts – 2.6% (2.3% of Total Investments)
|
||||||||||
2,000
|
Massachusetts, Transportation Fund Revenue Bonds, Accelerated Bridge Program, Tender Option Bond Trust T0004, 25.650%, 6/01/40 (IF) (4)
|
No Opt. Call
|
AAA
|
4,309,300
|
||||||
Michigan – 4.1% (3.8% of Total Investments)
|
||||||||||
3,000
|
Detroit City School District, Wayne County, Michigan, General Obligation Bonds, Build America Taxable Bond Series 2010B, 6.845%, 5/01/40
|
5/20 at 100.00
|
Aa2
|
3,135,960
|
||||||
1,960
|
Michigan Tobacco Settlement Finance Authority, Tobacco Settlement Asset-Backed Revenue Bonds, Taxable Turbo Series 2006A, 7.309%, 6/01/34
|
No Opt. Call
|
B2
|
1,705,631
|
||||||
2,000
|
Wayne County Building Authority, Michigan, General Obligation Bonds, Jail Facilities, Federally Taxable Recovery Zone Economic Development Series 2010, 10.000%, 12/01/40
|
12/20 at 100.00
|
BBB–
|
2,102,260
|
||||||
6,960
|
Total Michigan
|
6,943,851
|
||||||||
Mississippi – 1.4% (1.3% of Total Investments)
|
||||||||||
2,085
|
Mississippi State, General Obligation Bonds, Build America Taxable Bond Series 2010F, 5.245%, 11/01/34
|
No Opt. Call
|
AA+
|
2,373,335
|
||||||
Nevada – 3.3% (3.0% of Total Investments)
|
||||||||||
1,950
|
Clark County, Nevada, Airport Revenue Bonds, Senior Lien Series 2009B, 6.881%, 7/01/42
|
7/19 at 100.00
|
AA–
|
2,201,628
|
||||||
1,500
|
Clark County, Nevada, Airport Revenue Bonds, Taxable Direct Payment Build America Bond Series 2010C, 6.820%, 7/01/45
|
No Opt. Call
|
AA–
|
2,054,430
|
||||||
1,210
|
Las Vegas Valley Water District, Nevada, General Obligation Bonds, Build America Taxable Bonds, Series 2009C, 7.013%, 6/01/39
|
No Opt. Call
|
AA+
|
1,330,891
|
||||||
4,660
|
Total Nevada
|
5,586,949
|
||||||||
New Jersey – 6.8% (6.2% of Total Investments)
|
||||||||||
3,055
|
New Jersey Transportation Trust Fund Authority, Transportation System Bonds, Build America Bonds Issuer Subsidy Program, Series 2010C, 5.754%, 12/15/28
|
No Opt. Call
|
A2
|
3,483,769
|
Nuveen Investments
|
25
|
NBD
|
Nuveen Build America Bond Opportunity Fund
|
|
Portfolio of Investments (continued)
|
September 30, 2014 (Unaudited)
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
New Jersey (continued)
|
||||||||||
$
|
4,000
|
New Jersey Turnpike Authority, Revenue Bonds, Build America Taxable Bonds, Series 2010A, 7.102%, 1/01/41
|
No Opt. Call
|
A+
|
$
|
5,563,480
|
||||
2,000
|
Rutgers State University, New Jersey, Revenue Bonds, Build America Taxable Bond Series 2010H, 5.665%, 5/01/40
|
No Opt. Call
|
AA–
|
2,418,520
|
||||||
9,055
|
Total New Jersey
|
11,465,769
|
||||||||
New York – 12.6% (11.6% of Total Investments)
|
||||||||||
2,000
|
Dormitory Authority of the State of New York, State Personal Income Tax Revenue Bonds, Tender Option Bond Trust B004, 25.309%, 3/15/40 (IF)
|
No Opt. Call
|
AAA
|
4,033,300
|
||||||
3,270
|
Metropolitan Transportation Authority, New York, Transportation Revenue Bonds, Federally Taxable Issuer Subsidy Build America Bonds, Series 2010A, 6.668%, 11/15/39
|
11/14 at 100.00
|
AA–
|
4,390,171
|
||||||
1,500
|
New York City Municipal Water Finance Authority, New York, Water and Sewer System Revenue Bonds, Second Generation Resolution, Build America Taxable Bonds, Fiscal 2011 Series AA, 5.440%, 6/15/43 (4)
|
No Opt. Call
|
AA+
|
1,795,725
|
||||||
2,000
|
New York City Municipal Water Finance Authority, New York, Water and Sewer System Revenue Bonds, Second Generation Resolution, Taxable Tender Option Bonds Trust T30001-2, 26.888%, 6/15/44 (IF)
|
No Opt. Call
|
AA+
|
4,796,100
|
||||||
3,500
|
New York City Transitional Finance Authority, New York, Building Aid Revenue Bonds, Build America Taxable Bond Fiscal 2011 Series 2010S-1B, 6.828%, 7/15/40
|
No Opt. Call
|
Aa2
|
4,513,915
|
||||||
1,500
|
New York City, New York, General Obligation Bonds, Federally Taxable Build America Bonds, Series 2010-F1, 6.646%, 12/01/31
|
12/20 at 100.00
|
AA
|
1,786,860
|
||||||
13,770
|
Total New York
|
21,316,071
|
||||||||
North Carolina – 1.3% (1.2% of Total Investments)
|
||||||||||
1,870
|
North Carolina Turnpike Authority, Triangle Expressway System State Annual Appropriation Revenue Bonds, Federally Taxable Issuer Subsidy Build America Bonds, Series 2009B, 6.700%, 1/01/39
|
1/19 at 100.00
|
AA
|
2,104,816
|
||||||
Ohio – 4.3% (3.9% of Total Investments)
|
||||||||||
3,000
|
American Municipal Power Inc., Ohio, Meldahl Hydroelectric Projects Revenue Bonds, Federally Taxable Build America Bonds, Series 2010B, 7.499%, 2/15/50
|
No Opt. Call
|
A
|
4,249,410
|
||||||
2,650
|
Northeast Ohio Regional Sewer District, Wastewater Improvement Revenue Bonds, Build America Taxable Bonds, Series 2010, 6.038%, 11/15/40
|
11/20 at 100.00
|
AA+
|
2,988,962
|
||||||
5,650
|
Total Ohio
|
7,238,372
|
||||||||
Pennsylvania – 1.7% (1.6% of Total Investments)
|
||||||||||
2,500
|
Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, Build America Taxable Bonds, Series 2010B, 5.511%, 12/01/45
|
No Opt. Call
|
A+
|
2,936,650
|
||||||
South Carolina – 9.1% (8.4% of Total Investments)
|
||||||||||
2,395
|
South Carolina Public Service Authority, Electric System Revenue Bonds, Santee Cooper, Federally Taxable Build America Series 2010C, 6.454%, 1/01/50
|
No Opt. Call
|
AA–
|
3,121,260
|
||||||
205
|
South Carolina Public Service Authority, Electric System Revenue Bonds, Santee Cooper, Federally Taxable Build America, Tender Option Bond Trust T30002, 28.371%, 1/01/50 (IF)
|
No Opt. Call
|
AA–
|
515,821
|
||||||
8,985
|
South Carolina Public Service Authority, Electric System Revenue Bonds, Santee Cooper, Federally Taxable Build America, Series 2010C, 6.454%, 1/01/50 (UB)
|
No Opt. Call
|
AA–
|
11,709,611
|
||||||
11,585
|
Total South Carolina
|
15,346,692
|
||||||||
South Dakota – 0.6% (0.5% of Total Investments)
|
||||||||||
1,000
|
South Dakota Educational Enhancement Funding Corporation, Tobacco Settlement Revenue Bonds, Series 2013A, 3.539%, 6/01/22
|
No Opt. Call
|
A
|
992,120
|
||||||
Tennessee – 3.1% (2.8% of Total Investments)
|
||||||||||
4,060
|
Metropolitan Government Nashville & Davidson County Convention Center Authority, Tennessee, Tourism Tax Revenue Bonds, Build America Taxable Bonds, Subordinate Lien Series 2010B, 6.731%, 7/01/43
|
No Opt. Call
|
Aa3
|
5,224,245
|
26
|
Nuveen Investments
|
Principal
|
Optional Call
|
|||||||||
Amount (000)
|
Description (1)
|
Provisions (2)
|
Ratings (3)
|
Value
|
||||||
Texas – 4.1% (3.8% of Total Investments)
|
||||||||||
$
|
2,000
|
Dallas Area Rapid Transit, Texas, Senior Lien Sales Tax Revenue Bonds, Build America Taxable Bonds, Series 2009B, 5.999%, 12/01/44
|
No Opt. Call
|
AA+
|
$
|
2,580,360
|
||||
2,000
|
Dallas Convention Center Hotel Development Corporation, Texas, Hotel Revenue Bonds, Build America Taxable Bonds, Series 09B, 7.088%, 1/01/42
|
No Opt. Call
|
A+
|
2,518,840
|
||||||
1,500
|
North Texas Tollway Authority, System Revenue Bonds, Subordinate Lien Taxable Revenue Bonds, Federally Taxable Build America Bonds, Series 2010-B2, 8.910%, 2/01/30
|
2/20 at 100.00
|
Baa3
|
1,788,195
|
||||||
5,500
|
Total Texas
|
6,887,395
|
||||||||
Virginia – 3.8% (3.5% of Total Investments)
|
||||||||||
3,110
|
Metropolitan Washington Airports Authority, Virginia, Dulles Toll Road Second Senior Lien Revenue Bonds, Build America Bonds, Series 2009D, 7.462%, 10/01/46 – AGC Insured
|
No Opt. Call
|
BBB+
|
4,216,134
|
||||||
2,915
|
Tobacco Settlement Financing Corporation of Virginia, Tobacco Settlement Asset Backed Bonds, Refunding Senior Lien Series 2007A, 6.706%, 6/01/46
|
12/14 at 100.00
|
B–
|
2,162,668
|
||||||
6,025
|
Total Virginia
|
6,378,802
|
||||||||
Washington – 0.7% (0.7% of Total Investments)
|
||||||||||
1,000
|
Washington State Convention Center Public Facilities District, Lodging Tax Revenue Bonds, Build America Taxable Bond Series 2010B, 6.790%, 7/01/40
|
No Opt. Call
|
Aa3
|
1,211,060
|
||||||
$
|
138,065
|
Total Long-Term Investments (cost $143,071,600)
|
183,741,590
|
|||||||
Borrowings – (6.8)% (5), (6)
|
(11,500,000
|
) | ||||||||
Floating Rate Obligations – (4.3)%
|
(7,190,000
|
) | ||||||||
Other Assets Less Liabilities – 2.1% (7)
|
3,541,273
|
|||||||||
Net Assets – 100%
|
$
|
168,592,863
|
Nuveen Investments
|
27
|
NBD
|
Nuveen Build America Bond Opportunity Fund
|
|
Portfolio of Investments (continued)
|
September 30, 2014 (Unaudited)
|
Counterparty
|
Notional Amount
|
Fund Pay/Receive Floating Rate
|
Floating Rate Index
|
Fixed Rate (Annualized)
|
Fixed Rate Payment Frequency
|
Effective
Date (8)
|
Termination Date
|
Value
|
Unrealized Appreciation (Depreciation) (7) | |||||||||||||
Barclays Bank PLC
|
$ | 11,200,000 |
Receive
|
1-Month USD-LIBOR
|
2.240 | % |
Monthly
|
12/17/10
|
12/17/15
|
$ | (265,332 | ) | $ | (265,332 | ) | |||||||
Barclays Bank PLC
|
14,750,000 |
Receive
|
1-Month USD-LIBOR
|
1.450 |
Monthly
|
10/01/14
|
10/01/18
|
61,960 | 61,960 | |||||||||||||
Barclays Bank PLC
|
20,000,000 |
Receive
|
3-Month USD-LIBOR
|
3.280 |
Semi-Annually
|
2/19/15
|
2/19/42
|
(122,589 | ) | (122,589 | ) | |||||||||||
Barclays Bank PLC*
|
21,000,000 |
Receive
|
3-Month USD-LIBOR
|
3.502 |
Semi-Annually
|
6/15/15
|
6/15/44
|
(797,662 | ) | (798,429 | ) | |||||||||||
Morgan Stanley
|
14,750,000 |
Receive
|
1-Month USD-LIBOR
|
1.875 |
Monthly
|
10/01/14
|
6/01/20
|
70,426 | 70,426 | |||||||||||||
$ | 81,700,000 | $ | (1,053,197 | ) | $ | (1,053,964 | ) |
(1)
|
All percentages shown in the Portfolio of Investments are based on net assets unless otherwise noted.
|
(2)
|
Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns.
|
(3)
|
Ratings: Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investors Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies.
|
(4)
|
Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in derivatives and/or inverse floating rate transactions.
|
(5)
|
Borrowings as a percentage of Total Investments is 6.3%.
|
(6)
|
The Fund segregates 100% of its eligible investments in the Portfolio of Investments as collateral for Borrowings.
|
(7)
|
Other Assets Less Liabilities includes the Unrealized Appreciation (Depreciation) of derivative instruments as listed within Investments in Derivatives as of the end of the reporting period.
|
(8)
|
Effective date represents the date on which both the Fund and Counterparty commence interest payment accruals on each contract.
|
(IF)
|
Inverse floating rate investment.
|
(UB)
|
Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Note 3 – Portfolio Securities and Investments in Derivatives, Inverse Floating Rate Securities for more information.
|
USD-LIBOR
|
United States Dollar-London Inter-Bank Offered Rate.
|
28
|
Nuveen Investments
|
Statement of
|
|
|
Assets and Liabilities
|
September 30, 2014 (Unaudited)
|
Build America
Bond
|
Build America
Bond Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Assets
|
|||||||
Long-term investments, at value (cost $626,064,939 and $143,071,600, respectively)
|
$
|
720,283,827
|
$
|
183,741,590
|
|||
Short-term investments, at value (cost approximates value)
|
2,318,424
|
—
|
|||||
Cash collateral at brokers(1)
|
3,836,393
|
1,745,408
|
|||||
Interest rate swaps premiums paid
|
1,214
|
768
|
|||||
Unrealized appreciation on interest rate swaps
|
254,141
|
70,426
|
|||||
Receivable for:
|
|||||||
Interest
|
12,965,831
|
3,502,792
|
|||||
Variation margin on swap contracts
|
278,870
|
125,941
|
|||||
Other assets
|
56,466
|
8,750
|
|||||
Total assets
|
739,995,166
|
189,195,675
|
|||||
Liabilities
|
|||||||
Borrowings
|
89,000,000
|
11,500,000
|
|||||
Cash overdraft
|
262,865
|
611,229
|
|||||
Floating rate obligations
|
53,090,000
|
7,190,000
|
|||||
Unrealized depreciation on interest rate swaps, net
|
181,936
|
325,961
|
|||||
Payable for:
|
|||||||
Dividends
|
2,924,346
|
778,433
|
|||||
Investments purchased
|
56,552
|
—
|
|||||
Accrued expenses:
|
|||||||
Management fees
|
402,871
|
119,094
|
|||||
Interest on borrowings
|
62,968
|
8,133
|
|||||
Trustees fees
|
24,787
|
1,106
|
|||||
Other
|
129,995
|
68,856
|
|||||
Total liabilities
|
146,136,320
|
20,602,812
|
|||||
Net assets
|
$
|
593,858,846
|
$
|
168,592,863
|
|||
Shares outstanding
|
26,461,985
|
7,205,250
|
|||||
Net asset value (“NAV”) per share outstanding
|
$
|
22.44
|
$
|
23.40
|
|||
Net assets consist of:
|
|||||||
Shares, $.01 par value per share
|
$
|
264,620
|
$
|
72,053
|
|||
Paid-in surplus
|
504,137,904
|
137,235,389
|
|||||
Undistributed (Over-distribution of) net investment income
|
(973,454
|
)
|
70,410
|
||||
Accumulated net realized gain (loss)
|
(2,093,852
|
)
|
(8,401,015
|
)
|
|||
Net unrealized appreciation (depreciation)
|
92,523,628
|
39,616,026
|
|||||
Net assets
|
$
|
593,858,846
|
$
|
168,592,863
|
|||
Authorized shares
|
Unlimited
|
Unlimited
|
(1)
|
Cash pledged to collateralize the net payment obligations for investments in derivatives.
|
Nuveen Investments
|
29
|
Statement of
|
|
|
Operations
|
Six Months Ended September 30, 2014 (Unaudited)
|
Build America
Bond
|
Build America
Bond Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Investment Income
|
$
|
21,599,942
|
$
|
5,877,301
|
|||
Expenses
|
|||||||
Management fees
|
2,434,611
|
721,379
|
|||||
Shareholder servicing agent fees and expenses
|
94
|
94
|
|||||
Interest expense
|
561,489
|
76,979
|
|||||
Custodian fees and expenses
|
54,840
|
22,655
|
|||||
Trustees fees and expenses
|
11,158
|
2,973
|
|||||
Professional fees
|
29,619
|
31,069
|
|||||
Shareholder reporting expenses
|
47,768
|
13,405
|
|||||
Stock exchange listing fees
|
4,485
|
4,485
|
|||||
Investor relations expenses
|
42,871
|
11,625
|
|||||
Other expenses
|
14,461
|
5,516
|
|||||
Total expenses
|
3,201,396
|
890,180
|
|||||
Net investment income (loss)
|
18,398,546
|
4,987,121
|
|||||
Realized and Unrealized Gain (Loss)
|
|||||||
Net realized gain (loss) from:
|
|||||||
Investments
|
5,545,500
|
156,185
|
|||||
Swaps
|
5,296,392
|
853,557
|
|||||
Change in net unrealized appreciation (depreciation) of:
|
|||||||
Investments
|
29,881,757
|
9,370,427
|
|||||
Swaps
|
(14,535,319
|
)
|
(5,236,685
|
)
|
|||
Net realized and unrealized gain (loss)
|
26,188,330
|
5,143,484
|
|||||
Net increase (decrease) in net assets from operations
|
$
|
44,586,876
|
$
|
10,130,605
|
30
|
Nuveen Investments
|
Statement of
|
|
|
Changes in Net Assets
|
(Unaudited)
|
Build America
Bond (NBB)
|
Build America
Bond Opportunity (NBD)
|
||||||||||||
Six Months
|
Year
|
Six Months
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
||||||||||
9/30/14
|
3/31/14
|
9/30/14
|
3/31/14
|
||||||||||
Operations
|
|||||||||||||
Net investment income (loss)
|
$
|
18,398,546
|
$
|
36,889,533
|
$
|
4,987,121
|
$
|
10,119,412
|
|||||
Net realized gain (loss) from:
|
|||||||||||||
Investments
|
5,545,500
|
2,655,764
|
156,185
|
759,391
|
|||||||||
Swaps
|
5,296,392
|
(555,048
|
)
|
853,557
|
(322,055
|
)
|
|||||||
Change in net unrealized appreciation (depreciation) of:
|
|||||||||||||
Investments
|
29,881,757
|
(45,752,110
|
)
|
9,370,427
|
(14,880,533
|
)
|
|||||||
Swaps
|
(14,535,319
|
)
|
13,393,057
|
(5,236,685
|
)
|
5,114,608
|
|||||||
Net increase (decrease) in net assets from operations
|
44,586,876
|
6,631,196
|
10,130,605
|
790,823
|
|||||||||
Distributions to Shareholders
|
|||||||||||||
From net investment income
|
(18,417,542
|
)
|
(37,054,718
|
)
|
(4,928,391
|
)
|
(9,730,690
|
)
|
|||||
Decrease in net assets from distributions to shareholders
|
(18,417,542
|
)
|
(37,054,718
|
)
|
(4,928,391
|
)
|
(9,730,690
|
)
|
|||||
Net increase (decrease) in net assets
|
26,169,334
|
(30,423,522
|
)
|
5,202,214
|
(8,939,867
|
)
|
|||||||
Net assets at the beginning of period
|
567,689,512
|
598,113,034
|
163,390,649
|
172,330,516
|
|||||||||
Net assets at the end of period
|
$
|
593,858,846
|
$
|
567,689,512
|
$
|
168,592,863
|
$
|
163,390,649
|
|||||
Undistributed (Over-distribution of) net investment income at the end of period
|
$
|
(973,454
|
)
|
$
|
(954,458
|
)
|
$
|
70,410
|
$
|
11,680
|
Nuveen Investments
|
31
|
Statement of
|
|
|
Cash Flows
|
Six Months Ended September 30, 2014 (Unaudited)
|
Build America
Bond
|
Build America
Bond Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Cash Flows from Operating Activities:
|
|||||||
Net Increase (Decrease) in Net Assets from Operations
|
$
|
44,586,876
|
$
|
10,130,605
|
|||
Adjustments to reconcile the net increase (decrease) in net assets from operations to net cash provided by (used in) operating activities:
|
|||||||
Purchases of investments
|
(32,572,524
|
)
|
(3,055,020
|
)
|
|||
Proceeds from sales and maturities of investments
|
33,654,530
|
3,042,100
|
|||||
Proceeds from (Purchases of) short-term investments, net
|
(1,210,882
|
)
|
327,446
|
||||
Proceeds from (Payments for) swap contracts, net
|
5,296,392
|
853,557
|
|||||
Amortization (Accretion) of premiums and discounts, net
|
360,991
|
27,477
|
|||||
(Increase) Decrease in:
|
|||||||
Cash collateral at brokers
|
(3,836,393
|
)
|
(1,745,408
|
)
|
|||
Interest rate swaps premiums paid
|
(1,214
|
)
|
(768
|
)
|
|||
Receivable for interest
|
(8,891
|
)
|
5,560
|
||||
Receivable for investments sold
|
240,000
|
811,085
|
|||||
Receivable for variation margin on swaps
|
(278,870
|
)
|
(125,941
|
)
|
|||
Other assets
|
(22,823
|
)
|
586
|
||||
Increase (Decrease) in:
|
|||||||
Payable for investments purchased
|
(31,852
|
)
|
—
|
||||
Accrued management fees
|
1,952
|
(36
|
)
|
||||
Accrued interest on borrowings
|
(5,263
|
)
|
(684
|
)
|
|||
Accrued Trustees fees
|
(2,135
|
)
|
(1,101
|
)
|
|||
Accrued other expenses
|
2,585
|
(1,960
|
)
|
||||
Net realized (gain) loss from:
|
|||||||
Investments
|
(5,545,500
|
)
|
(156,185
|
)
|
|||
Swaps
|
(5,296,392
|
)
|
(853,557
|
)
|
|||
Change in net unrealized (appreciation) depreciation of:
|
|||||||
Investments
|
(29,881,757
|
)
|
(9,370,427
|
)
|
|||
Swaps(1)
|
12,767,854
|
4,438,256
|
|||||
Net cash provided by (used in) operating activities
|
18,216,684
|
4,325,585
|
|||||
Cash Flows from Financing Activities:
|
|||||||
Increase (decrease) in cash overdraft
|
254,039
|
602,404
|
|||||
Cash distributions paid to shareholders
|
(18,470,723
|
)
|
(4,927,989
|
)
|
|||
Net cash provided by (used in) financing activities
|
(18,216,684
|
)
|
(4,325,585
|
)
|
|||
Net Increase (Decrease) in Cash
|
—
|
—
|
|||||
Cash at the beginning of period
|
—
|
—
|
|||||
Cash at the end of period
|
$
|
—
|
$
|
—
|
Supplemental Disclosure of Cash Flow Information
|
|||||||
Build America
Bond
|
Build America
Bond Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Cash paid for interest (excluding borrowing costs)
|
$
|
538,774
|
$
|
69,900
|
(1)
|
Excluding exchange-cleared swaps.
|
32
|
Nuveen Investments
|
Nuveen Investments
|
33
|
Financial
|
|
Highlights (Unaudited)
|
Investment Operations
|
Less Distributions
|
|||||||||||||||||||||||||||||||||||||||
Beginning NAV
|
Net Investment Income (Loss)
|
(a) |
Net Realized/ Unrealized Gain (Loss
|
) |
Total
|
From
Net Investment Income
|
From Accumulated Net Realized Gains
|
Total
|
Offering Costs
|
Ending NAV
|
Ending Market Value
|
|||||||||||||||||||||||||||||
Build America Bond (NBB)
|
||||||||||||||||||||||||||||||||||||||||
Year Ended 3/31:
|
||||||||||||||||||||||||||||||||||||||||
2015(h)
|
$ | 21.45 | $ | .70 | $ | .99 | $ | 1.69 | $ | (.70 | ) | $ | — | $ | (.70 | ) | $ | — | $ | 22.44 | $ | 20.39 | ||||||||||||||||||
2014
|
22.60 | 1.39 | (1.14 | ) | .25 | (1.40 | ) | — | (1.40 | ) | — | 21.45 | 19.62 | |||||||||||||||||||||||||||
2013
|
21.39 | 1.35 | 1.17 | 2.52 | (1.31 | ) | — | (1.31 | ) | — | 22.60 | 20.97 | ||||||||||||||||||||||||||||
2012
|
18.86 | 1.36 | 2.57 | 3.93 | (1.40 | ) | — | (1.40 | ) | — | 21.39 | 20.18 | ||||||||||||||||||||||||||||
2011(f)
|
19.10 | 1.19 | (.22 | ) | .97 | (1.17 | ) | — | (1.17 | ) | (.04 | ) | 18.86 | 18.06 | ||||||||||||||||||||||||||
Build America Bond Opportunity (NBD)
|
||||||||||||||||||||||||||||||||||||||||
Year Ended 3/31:
|
||||||||||||||||||||||||||||||||||||||||
2015(h)
|
22.68 | .69 | .71 | 1.40 | (.68 | ) | — | (.68 | ) | — | 23.40 | 21.20 | ||||||||||||||||||||||||||||
2014
|
23.92 | 1.40 | (1.29 | ) | .11 | (1.35 | ) | — | (1.35 | ) | — | 22.68 | 20.50 | |||||||||||||||||||||||||||
2013
|
22.56 | 1.34 | 1.31 | 2.65 | (1.29 | ) | — | (1.29 | ) | — | 23.92 | 22.12 | ||||||||||||||||||||||||||||
2012
|
19.43 | 1.45 | 3.17 | 4.62 | (1.49 | ) | — | (1.49 | ) | — | 22.56 | 20.97 | ||||||||||||||||||||||||||||
2011(g)
|
19.10 | .47 | .28 | .75 | (.38 | ) | — | (.38 | ) | (.04 | ) | 19.43 | 18.63 |
Borrowings at the End of Period
|
||||||||
Aggregate
|
||||||||
Amount
|
Asset
|
|||||||
Outstanding
|
Coverage
|
|||||||
(000 | ) |
Per $1,000
|
||||||
Build America Bond (NBB)
|
||||||||
Year Ended 3/31:
|
||||||||
2015(h)
|
$ | 89,000 | $ | 7,673 | ||||
2014
|
89,000 | 7,379 | ||||||
2013
|
89,000 | 7,720 | ||||||
2012
|
44,000 | 13,863 | ||||||
2011(f)
|
44,000 | 12,341 | ||||||
Build America Bond Opportunity (NBD)
|
||||||||
Year Ended 3/31:
|
||||||||
2015(h)
|
11,500 | 15,660 | ||||||
2014
|
11,500 | 15,208 | ||||||
2013
|
11,500 | 15,985 | ||||||
2012
|
— | — | ||||||
2011(g)
|
— | — |
34
|
Nuveen Investments
|
Ratios/Supplemental Data | |||||||||||||||||
Total Returns
|
Ratios to Average
Net Assets (c)
|
||||||||||||||||
|
Based on
|
Ending
|
|
Net
|
Portfolio
|
||||||||||||
Based on
|
Market
|
Net Assets
|
|
Investment
|
Turnover
|
||||||||||||
NAV
|
(b)
|
Value
|
(b)
|
(000
|
)
|
Expenses
|
(d)
|
Income (Loss
|
)
|
Rate
|
(e)
|
||||||
7.92
|
%
|
7.52
|
%
|
$
|
593,859
|
1.08
|
%*
|
6.24
|
%*
|
5
|
%
|
||||||
1.44
|
.63
|
567,690
|
1.12
|
6.63
|
6
|
||||||||||||
12.05
|
10.57
|
598,113
|
1.10
|
6.10
|
7
|
||||||||||||
21.29
|
19.92
|
565,952
|
1.05
|
6.63
|
18
|
||||||||||||
4.90
|
(3.99
|
)
|
499,020
|
1.11
|
* |
6.70
|
* |
100
|
|||||||||
6.22
|
6.77
|
168,593
|
1.05
|
* |
5.90
|
* |
2
|
||||||||||
.76
|
(.85
|
)
|
163,391
|
1.08
|
6.34
|
4
|
|||||||||||
11.97
|
11.88
|
172,331
|
1.07
|
5.74
|
4
|
||||||||||||
24.34
|
21.00
|
162,578
|
.97
|
6.74
|
7
|
||||||||||||
3.73
|
(4.96
|
)
|
139,972
|
.87
|
* |
6.90
|
* |
77
|
(a)
|
Per share Net Investment Income (Loss) is calculated using the average daily shares method.
|
(b)
|
Total Return Based on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period 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.
|
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 Fund’s market price (and not its NAV), and therefore may be different from the price used in the calculation. Total returns are not annualized.
|
|
(c)
|
Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to borrowings, where applicable.
|
(d)
|
The expense ratios reflect, among other things, the interest expense deemed to have been paid by the Fund on the floating rate certificates issued by the special purpose trusts for the self-deposited inverse floaters held by the Fund, and/or all interest expense paid and other costs related to borrowings, where applicable, as described in Note 3 – Portfolio Securities and Investments in Derivatives, Inverse Floating Rate Securities and in Note 8 – Borrowing Arrangements, respectively, as follows:
|
Build America Bond (NBB)
|
||||
Year Ended 3/31:
|
||||
2015(h)
|
.19
|
%*
|
||
2014
|
.22
|
|||
2013
|
.22
|
|||
2012
|
.18
|
|||
2011(f)
|
.24
|
* |
Build America Bond Opportunity (NBD)
|
||||
Year Ended 3/31:
|
||||
2015(h)
|
.09
|
%*
|
||
2014
|
.11
|
|||
2013
|
.10
|
|||
2012
|
.03
|
|||
2011(g)
|
.03
|
* |
(e)
|
Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales (as disclosed in Note 5 – Investment Transactions) divided by the average long-term market value during the period.
|
(f)
|
For the period April 27, 2010 (commencement of operations) through March 31, 2011.
|
(g)
|
For the period November 23, 2010 (commencement of operations) through March 31, 2011.
|
(h)
|
For the sixth months ended September 30, 2014.
|
*
|
Annualized.
|
Nuveen Investments
|
35
|
•
|
Nuveen Build America Bond Fund (NBB) (“Build America Bond (NBB)”)
|
|
•
|
Nuveen Build America Bond Opportunity Fund (NBD) (“Build America Bond Opportunity (NBD)”)
|
36
|
Nuveen Investments
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Outstanding when-issued/delayed delivery purchase commitments
|
$
|
—
|
$
|
—
|
Nuveen Investments
|
37
|
Level 1 –
|
Inputs are unadjusted and prices are determined using quoted prices in active markets for identical securities.
|
Level 2 –
|
Prices are determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
|
Level 3 –
|
Prices are determined using significant unobservable inputs (including management’s assumptions in determining the fair value of investments).
|
38
|
Nuveen Investments
|
Build America Bond (NBB)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||
Long-Term Investments*:
|
|||||||||||||
Municipal Bonds
|
$
|
—
|
$
|
720,283,827
|
$
|
—
|
$
|
720,283,827
|
|||||
Short-Term Investments:
|
|||||||||||||
Repurchase Agreements
|
—
|
2,318,424
|
—
|
2,318,424
|
|||||||||
Investments in Derivatives:
|
|||||||||||||
Interest Rate Swaps**
|
—
|
(1,695,260
|
)
|
—
|
(1,695,260
|
)
|
|||||||
Total
|
$
|
—
|
$
|
720,906,991
|
$
|
—
|
$
|
720,906,991
|
|||||
Build America Bond Opportunity (NBD)
|
|||||||||||||
Long-Term Investments*:
|
|||||||||||||
Municipal Bonds
|
$
|
—
|
$
|
183,741,590
|
$
|
—
|
$
|
183,741,590
|
|||||
Investments in Derivatives:
|
|||||||||||||
Interest Rate Swaps**
|
—
|
(1,053,964
|
)
|
—
|
(1,053,964
|
)
|
|||||||
Total
|
$
|
—
|
$
|
182,687,626
|
$
|
—
|
$
|
182,687,626
|
*
|
Refer to the Fund’s Portfolio of Investments for state classifications.
|
**
|
Represents net unrealized appreciation (depreciation) as reported in the Fund’s Portfolio of Investments.
|
|
(i)
|
If available, fair value determinations shall be derived by extrapolating from recent transactions or quoted prices for identical or comparable securities.
|
|
(ii)
|
If such information is not available, an analytical valuation methodology may be used based on other available information including, but not limited to: analyst appraisals, research reports, corporate action information, issuer financial statements and shelf registration statements. Such analytical valuation methodologies may include, but are not limited to: multiple of earnings, discount from market value of a similar freely-traded security, discounted cash flow analysis, book value or a multiple thereof, risk premium/yield analysis, yield to maturity and/or fundamental investment analysis.
|
Nuveen Investments
|
39
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Average floating rate obligations outstanding
|
$
|
53,090,000
|
$
|
7,190,000
|
|||
Average annual interest rate and fees
|
0.54
|
%
|
0.53
|
%
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Floating rate obligations: self-deposited inverse floaters
|
$
|
53,090,000
|
$
|
7,190,000
|
|||
Floating rate obligations: externally-deposited inverse floaters
|
91,190,000
|
48,810,000
|
|||||
Total
|
$
|
144,280,000
|
$
|
56,000,000
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Maximum exposure to Recourse Trusts
|
$
|
91,190,000
|
$
|
40,810,000
|
40
|
Nuveen Investments
|
Collateral
|
|||||||||||||
Short-Term
|
Pledged (From
|
)
|
Net
|
||||||||||
Fund
|
Counterparty
|
Investments, at Value
|
Counterparty*
|
Exposure
|
|||||||||
Build America Bond (NBB)
|
Fixed Income Clearing Corporation
|
$
|
2,318,424
|
$
|
(2,318,424
|
)
|
$
|
—
|
*
|
As of September 30, 2014, the value of the collateral pledged from the counterparty exceeded the value of the repurchase agreements. Refer to the Fund’s Portfolio of Investments for details on the repurchase agreements.
|
Nuveen Investments
|
41
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Average notional amount of interest rate swap contracts outstanding*
|
$
|
216,200,000
|
$
|
85,700,000
|
*
|
The average notional amount is calculated based on the outstanding notional at the beginning of the fiscal year and at the end of each fiscal quarter within the current fiscal year.
|
Location on the Statement of Assets and Liabilities
|
||||||||||||
Asset Derivatives
|
(Liability) Derivatives
|
|||||||||||
Underlying
Risk Exposure
|
Derivative
Instrument
|
Location
|
Value
|
Location
|
Value
|
|||||||
Build America Bond (NBB)
|
||||||||||||
Interest rate
|
Swaps (OTC)
|
Unrealized appreciation on interest rate swaps
|
$
|
254,141
|
Unrealized depreciation on interest rate swaps, net
|
$
|
(460,572
|
)
|
||||
—
|
—
|
Unrealized depreciation on interest rate swaps, net
|
278,636
|
|||||||||
Interest rate
|
Swaps (Exchange-Cleared)
|
Receivable for variation margin on swap contracts*
|
(1,767,465
|
)
|
—
|
—
|
||||||
Total
|
$
|
(1,513,324
|
)
|
$
|
(181,936
|
)
|
||||||
Build America Bond Opportunity (NBD)
|
||||||||||||
Interest rate
|
Swaps (OTC)
|
Unrealized appreciation on interest rate swaps
|
$
|
70,426
|
Unrealized depreciation on interest rate swaps, net
|
$
|
(387,921
|
)
|
||||
—
|
—
|
Unrealized depreciation on interest rate swaps, net
|
61,960
|
|||||||||
Interest rate
|
Swaps (Exchange-Cleared)
|
Receivable for variation margin on swap contracts*
|
(798,429
|
)
|
—
|
—
|
||||||
Total
|
$
|
(728,003
|
)
|
$
|
(325,961
|
)
|
*
|
Value represents unrealized appreciation (depreciation) of swaps as reported on the Fund’s Portfolio of Investments and not the asset and liability derivative location as described in the table above.
|
Fund
|
Counterparty
|
Gross
Unrealized Appreciation on Interest
Rate Swaps*
|
Gross
Unrealized (Depreciation) on Interest
Rate Swaps*
|
Amounts
Netted on Statement of Assets and Liabilities
|
Net Unrealized Appreciation (Depreciation) on Interest Rate Swaps
|
Collateral Pledged to
(from) Counterparty
|
Net
Exposure
|
|||||||||||||||||||
Build America Bond (NBB)
|
||||||||||||||||||||||||||
Barclays Bank PLC
|
$ | 254,141 | $ | — | $ | — | $ | 254,141 | $ | (254,141 | ) | $ | — | |||||||||||||
Morgan Stanley
|
278,636 | (460,572 | ) | 278,636 | (181,936 | ) | — | (181,936 | ) | |||||||||||||||||
Total
|
$ | 532,777 | $ | (460,572 | ) | $ | 278,636 | $ | 72,205 | $ | (254,141 | ) | $ | (181,936 | ) | |||||||||||
Build America Bond Opportunity (NBD)
|
||||||||||||||||||||||||||
Barclays Bank PLC
|
$ | 61,960 | $ | (387,921 | ) | $ | 61,960 | $ | (325,961 | ) | $ | 325,625 | $ | (336 | ) | |||||||||||
Morgan Stanley
|
70,426 | — | — | 70,426 | (28,906 | ) | 41,520 | |||||||||||||||||||
Total
|
$ | 132,386 | $ | (387,921 | ) | $ | 61,960 | $ | (255,535 | ) | $ | 296,719 | $ | 41,184 |
*
|
Represents gross unrealized appreciation (depreciation) for the counterparty as reported in the Fund’s Portfolio of Investments.
|
42
|
Nuveen Investments
|
Fund
|
Underlying
Risk Exposure
|
Derivative
Instrument
|
Net Realized
Gain (Loss from)
Swaps
|
Change in Net Unrealized
Appreciation (Depreciation of)
Swaps
|
||||||||
Build America Bond (NBB)
|
Interest rate
|
Swaps
|
$ | 5,296,392 | $ | (14,535,319 | ) | |||||
Build America Bond Opportunity (NBD)
|
Interest rate
|
Swaps
|
853,557 | (5,236,685 | ) |
Build America
Bond (NBB)
|
Build America
Bond Opportunity (NBD)
|
||||||||||||
Six Months
|
Year
|
Six Months
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
||||||||||
9/30/14
|
3/31/14
|
9/30/14
|
3/31/14
|
||||||||||
Shares issued to shareholders due to reinvestment of distributions
|
—
|
—
|
—
|
—
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Purchases
|
$
|
32,572,524
|
$
|
3,055,020
|
|||
Sales and maturities
|
33,654,530
|
3,042,100
|
Nuveen Investments
|
43
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Cost of investments
|
$
|
576,802,281
|
$
|
136,143,160
|
|||
Gross unrealized:
|
|||||||
Appreciation
|
$
|
94,998,546
|
$
|
40,681,888
|
|||
Depreciation
|
(2,291,609
|
)
|
(276,490
|
)
|
|||
Net unrealized appreciation (depreciation) of investments
|
$
|
92,706,937
|
$
|
40,405,398
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Paid-in surplus
|
$
|
—
|
$
|
—
|
|||
Undistributed (Over-distribution of) net investment income
|
(491,741
|
)
|
(314,955
|
)
|
|||
Accumulated net realized gain (loss)
|
491,741
|
314,955
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Undistributed net ordinary income1
|
$
|
3,516,849
|
$
|
888,756
|
|||
Undistributed net long-term capital gains
|
—
|
—
|
1
|
Net ordinary income consists of net taxable income derived from dividends, interest and net short-term capital gains, if any. Undistributed net ordinary income (on a tax basis) has not been reduced for the dividend declared on March 3, 2014, and paid on April 1, 2014.
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Distributions from net ordinary income2
|
$
|
36,988,563
|
$
|
9,705,472
|
|||
Distributions from net long-term capital gains
|
—
|
—
|
2
|
Net ordinary income consists of net taxable income derived from dividends, interest, and net short-term capital gains, if any.
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Not subject to expiration
|
$
|
13,683,467
|
$
|
9,410,757
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Utilized capital loss carryforwards
|
$
|
2,592,457
|
$
|
752,291
|
44
|
Nuveen Investments
|
Average Daily Managed Assets*
|
Fund-Level Fee Rate
|
|||
For the first $125 million
|
.4500
|
%
|
||
For the next $125 million
|
.4375
|
|||
For the next $250 million
|
.4250
|
|||
For the next $500 million
|
.4125
|
|||
For the next $1 billion
|
.4000
|
|||
For managed assets over $2 billion
|
.3875
|
Complex-Level Managed Asset Breakpoint Level*
|
Effective Rate at Breakpoint Level
|
|||
$55 billion
|
.2000
|
%
|
||
$56 billion
|
.1996
|
|||
$57 billion
|
.1989
|
|||
$60 billion
|
.1961
|
|||
$63 billion
|
.1931
|
|||
$66 billion
|
.1900
|
|||
$71 billion
|
.1851
|
|||
$76 billion
|
.1806
|
|||
$80 billion
|
.1773
|
|||
$91 billion
|
.1691
|
|||
$125 billion
|
.1599
|
|||
$200 billion
|
.1505
|
|||
$250 billion
|
.1469
|
|||
$300 billion
|
.1445
|
*
|
For the fund-level and complex-level fees, managed assets include closed-end fund assets managed by the Adviser that are attributable to certain types of leverage. For these purposes, leverage includes the funds’ use of preferred stock and borrowings and certain investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by a TOB trust that has been effectively financed by the trust’s issuance of floating rate securities, subject to an agreement by the Adviser as to certain funds to limit the amount of such assets for determining managed assets in certain circumstances. The complex-level fee is calculated based upon the aggregate daily managed assets of all Nuveen Funds that constitute “eligible assets.” Eligible assets do not include assets attributable to investments in other Nuveen Funds or assets in excess of $2 billion added to the Nuveen Fund complex in connection with the Adviser’s assumption of the management of the former First American Funds effective January 1, 2011. As of September 30, 2014, the complex-level fee rate for these Funds was .1646%.
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Maximum commitment amount
|
$
|
95,000,000
|
$
|
15,000,000
|
Nuveen Investments
|
45
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Maximum commitment amount
|
$
|
100,000,000
|
$
|
25,000,000
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Outstanding Borrowings
|
$
|
89,000,000
|
$
|
11,500,000
|
Build
|
Build America
|
||||||
America
|
Bond
|
||||||
Bond
|
Opportunity
|
||||||
(NBB
|
)
|
(NBD
|
)
|
||||
Average daily balance outstanding
|
$
|
89,000,000
|
$
|
11,500,000
|
|||
Average annual interest rate
|
0.86
|
%
|
0.86
|
%
|
46
|
Nuveen Investments
|
Additional Fund Information
|
Board of Trustees
|
||||||||||
William Adams IV*
|
Robert P. Bremner
|
Jack B. Evans
|
William C. Hunter
|
David J. Kundert
|
John K. Nelson
|
|||||
William J. Schneider
|
Thomas S. Schreier, Jr.*
|
Judith M. Stockdale
|
Carole E. Stone
|
Virginia L. Stringer
|
Terence J. Toth
|
|||||
* Interested Board Member.
|
||||||||||
Fund Manager
|
Custodian
|
Legal Counsel
|
Independent Registered
|
Transfer Agent and
|
||||
Nuveen Fund Advisors, LLC
|
State Street Bank
|
Chapman and Cutler LLP
|
Public Accounting Firm**
|
Shareholder Services
|
||||
333 West Wacker Drive
|
& Trust Company
|
Chicago, IL 60603
|
KPMG LLP
|
State Street Bank
|
||||
Chicago, IL 60606
|
Boston, MA 02111
|
Chicago, IL 60601
|
& Trust Company
|
|||||
Nuveen Funds
|
||||||||
P.O. Box 43071
|
||||||||
Providence, RI 02940-3071
|
||||||||
(800) 257-8787
|
**
|
During the fiscal period ended March 31, 2015, the Board of Trustees of the Funds, upon recommendation of the Audit Committee, engaged KPMG LLP (“KPMG”) as the independent registered public accounting firm to the Funds replacing Ernst & Young LLP (“Ernst & Young”), which resigned as the independent registered public accounting firm effective August 11, 2014 as a result of the pending acquisition of Nuveen Investments by TIAA-CREF.
|
Ernst & Young’s report on the Funds for the two most recent fiscal periods ended March 31, 2014 and March 31, 2013, contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. For the fiscal periods ended March 31, 2014 and March 31, 2013 for the Funds and for the period April 1, 2014 through August 11, 2014, there were no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Ernst & Young, would have caused it to make reference to the subject matter of the disagreements in connection with its reports on the Funds’ financial statements.
|
NBB
|
NBD
|
||
Shares repurchased
|
—
|
—
|
Nuveen Investments
|
47
|
Glossary of Terms Used in this Report
|
|
■
|
Auction Rate Bond: An auction rate bond is a security whose interest payments are adjusted periodically through an auction process, which process typically also serves as a means for buying and selling the bond. Auctions that fail to attract enough buyers for all the shares offered for sale are deemed to have “failed,” with current holders receiving a formula-based interest rate until the next scheduled auction.
|
■
|
Average Annual Total Return: This is a commonly used method to express an investment’s performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment’s actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered.
|
■
|
Barclays Aggregate-Eligible Build America Bond Index: An unleveraged index that comprises all direct pay Build America Bonds that are SEC-regulated, taxable, dollar-denominated and have at least one year to final maturity, at least $250 million par amount outstanding, and are determined to be investment grade by Barclays. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.
|
■
|
Duration: Duration is a measure of the expected period over which a bond’s principal and interest will be paid, and consequently is a measure of the sensitivity of a bond’s or bond fund’s value to changes when market interest rates change. Generally, the longer a bond’s or fund’s duration, the more the price of the bond or fund will change as interest rates change.
|
■
|
Effective Leverage: Effective leverage is a fund’s effective economic leverage, and includes both regulatory leverage (see leverage) and the leverage effects of certain derivative investments in a Fund’s portfolio. Currently, the leverage effects of Tender Option Bond (TOB) inverse floater holdings are included in effective leverage values, in addition to any regulatory leverage.
|
■
|
Forward Interest Rate Swap: A contractual agreement between two counterparties under which one party agrees to make periodic payments to the other for an agreed period of time based on a fixed rate, while the other party agrees to make periodic payments based on a floating rate of interest based on an underlying index. Alternatively, both series of cashflows to be exchanged could be calculated using floating rates of interest but floating rates that are based upon different underlying indices.
|
■
|
Gross Domestic Product (GDP): The total market value of all final goods and services produced in a country/region in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.
|
■
|
Inverse Floating Rate Securities: Inverse floating rate securities, also known as inverse floaters or tender option bonds (TOBs), are created by depositing a municipal bond, typically with a fixed interest rate, into a special purpose trust created by a broker-dealer. This trust, in turn, (a) issues floating rate certificates typically paying short-term tax-exempt interest rates to third parties in amounts equal to some fraction of the deposited bond’s par amount or market value, and (b) issues an inverse floating rate certificate (sometimes referred to as an “inverse floater”) to an investor (such as a fund) interested in gaining investment exposure to a long-term municipal bond. The income received by the holder of the inverse floater varies inversely with the short-term rate paid to the floating rate certificates’ holders, and in most circumstances the holder of the inverse floater bears substantially all of the underlying bond’s downside investment risk. The holder of the inverse floater typically also benefits disproportionately from any potential appreciation of the underlying bond’s value. Hence, an inverse floater essentially represents an investment in the underlying bond on a leveraged basis.
|
■
|
Leverage: Leverage is created whenever a fund has investment exposure (both reward and/or risk) equivalent to more than 100% of the investment capital.
|
■
|
Net Asset Value (NAV) Per Share: A fund’s Net Assets is equal to its total assets (securities, cash, accrued earnings and receivables) less its total liabilities. NAV per share is equal to the fund’s Net Assets divided by its number of shares outstanding.
|
48
|
Nuveen Investments
|
■
|
Pre-Refunding: Pre-Refunding, also known as advanced refundings or refinancings, is a procedure used by state and local governments to refinance municipal bonds to lower interest expenses. The issuer sells new bonds with a lower yield and uses the proceeds to buy U.S. Treasury securities, the interest from which is used to make payments on the higher-yielding bonds. Because of this collateral, pre-refunding generally raises a bond’s credit rating and thus its value.
|
■
|
Regulatory Leverage: Regulatory leverage consists of preferred shares issued by or borrowings of a fund. Both of these are part of a fund’s capital structure. Regulatory leverage is subject to asset coverage limits set in the Investment Company Act of 1940.
|
■
|
Total Investment Exposure: Total investment exposure is a fund’s assets managed by the Adviser that are attributable to financial leverage. For these purposes, financial leverage includes a fund’s use of preferred stock and borrowings and investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by a TOB trust that has been effectively financed by the trust’s issuance of floating rate securities.
|
■
|
Zero Coupon Bond: A zero coupon bond does not pay a regular interest coupon to its holders during the life of the bond. Income to the holder of the bond comes from accretion of the difference between the original purchase price of the bond at issuance and the par value of the bond at maturity and is effectively paid at maturity. The market prices of zero coupon bonds generally are more volatile than the market prices of bonds that pay interest periodically.
|
Nuveen Investments
|
49
|
Reinvest Automatically, Easily and Conveniently
|
50
|
Nuveen Investments
|
Annual Investment Management Agreement Approval Process (Unaudited)
|
Nuveen Investments
|
51
|
52
|
Nuveen Investments
|
A.
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Nature, Extent and Quality of Services
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1. The Original Advisory Agreements
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In considering renewal of each Original Advisory Agreement, the Independent Board Members considered the nature, extent and quality of the respective Fund Adviser’s services, including portfolio management services (and the resulting Fund performance) and administrative services. The Independent Board Members further considered the overall reputation and capabilities of the Adviser and its affiliates, the commitment of the Adviser to provide high quality service to the Funds, their overall confidence in the capability and integrity of the Adviser and its staff and the Adviser’s responsiveness to questions and concerns raised by
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them. The Independent Board Members reviewed materials outlining, among other things: each Fund Adviser’s organization and business; the types of services that each Fund Adviser or its affiliates provide to each Fund; the performance record of each Fund (as described in further detail below); and any initiatives Nuveen had taken for the closed-end fund product line.
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In considering the services provided by the Fund Advisers, the Board recognized that the Adviser provides a myriad of investment management, administrative, compliance, oversight and other services for the Funds, and the Sub-Adviser generally provides the portfolio advisory services to the Funds under the oversight of the Adviser. The Board considered the wide range of services provided by the Adviser to the Nuveen funds beginning with developing the fund and monitoring and analyzing its performance to providing or overseeing the services necessary to support a fund’s daily operations. The Board recognized the Adviser, among other things, provides: (a) product management (such as analyzing ways to better position a fund in the marketplace, maintaining relationships to gain access to distribution platforms and setting dividends); (b) fund administration (such as preparing a fund’s tax returns, regulatory filings and shareholder communications; managing fund budgets and expenses; overseeing a fund’s various service providers; and supporting and analyzing new and existing funds); (c) Board administration (such as supporting the Board and its committees, in relevant part, by organizing and administering the Board and committee meetings and preparing the necessary reports to assist the Board in its duties); (d) compliance (such as monitoring adherence to a fund’s investment policies and procedures and applicable law; reviewing the compliance program periodically and developing new policies or updating existing compliance policies and procedures as considered necessary or appropriate; responding to regulatory requests; and overseeing compliance testing of sub-advisers); (e) legal support (such as preparing or reviewing fund registration statements, proxy statements and other necessary materials; interpreting regulatory requirements and compliance thereof; and maintaining applicable registrations); and (f) investment services (such as overseeing and reviewing sub-advisers and their investment teams; analyzing performance of the funds; overseeing investment and risk management; overseeing the daily valuation process for portfolio securities and developing and recommending valuation policies and methodologies and changes thereto; and participating in fund development, leverage management and the development of investment policies and parameters). With respect to closed-end funds, the Adviser also monitors asset coverage levels on leveraged funds, manages leverage, negotiates the terms of leverage, evaluates alternative forms and types of leverage, promotes an orderly secondary market for common shares and maintains an asset maintenance system for compliance with certain rating agency criteria.
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In its review, the Board also considered the new services, initiatives or other changes adopted since the last advisory contract review that were designed to enhance the services and support the Adviser provides to the Nuveen funds. The Board recognized that some initiatives are a multi-year process. In reviewing the activities of 2013, the Board recognized that the year reflected the Adviser’s continued focus on fund rationalization for both closed-end and open-end funds, consolidating certain funds through mergers that were designed to improve efficiencies and economies of scale for shareholders, repositioning various funds through updates in their investment policies and guidelines with the expectation of bringing greater value to shareholders, and liquidating certain funds. As in the past, the Board recognized the Adviser’s significant investment in its technology initiatives, including the continued progress toward a central repository for fund and other Nuveen product data and implementing a data system to support the risk oversight group enabling it to provide more detailed risk analysis for the Nuveen funds. The Board noted the new data system has permitted more in-depth analysis of the investment risks of the Funds and across the complex providing additional feedback and insights to the investment teams and more comprehensive risk reporting to the Board. The Adviser also conducted several workshops for the Board regarding the new data system, including explaining the risk measures being applied and their purpose. The Board also recognized the enhancements in the valuation group within the Adviser, including centralizing the fund pricing process within the valuation group, trending to more automated and expedient reviews and continuing to expand its valuation team. The Board further considered the expansion of personnel in the compliance department enhancing the collective expertise of the group, investments in additional compliance systems and the updates of various compliance policies.
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In addition to the foregoing actions, the Board also considered other initiatives related to the closed-end funds, including the continued investment of considerable resources and personnel dedicated to managing and overseeing the various forms of leverage utilized by certain funds. The Board recognized the results of these efforts included the development of less expensive forms of leverage, expansion of leverage providers, the negotiation of more favorable terms for existing leverage, the enhanced ability to respond to market and regulatory developments and the enhancements to technology systems to manage and track the various forms of leverage. The Board also noted Nuveen’s continued capital management services, including executing share repurchase programs, its implementation of data systems that permit more targeted solicitation strategies for fund mergers and more targeted marketing and promotional efforts and its continued focus and efforts to address the discounts of various funds. The Board further noted Nuveen’s continued commitment to supporting the secondary market for the common shares of its closed-end funds through a comprehensive communication program designed to further educate the investor and analyst about closed-end funds. Nuveen’s support services included, among other things, maintaining and enhancing a closed-end fund website, creating marketing campaigns and educational materials, communicating with financial advisers, sponsoring and participating in conferences, providing educational seminars and programs and evaluating the results of these marketing efforts.
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As noted, the Adviser also oversees the Sub-Adviser who provides the portfolio advisory services to the Funds. In reviewing the portfolio advisory services provided to each Fund, the Nuveen Investment Services Oversight Team of the Adviser analyzes the performance of the Sub-Adviser and may recommend changes to the investment team or investment strategies as appropriate. In assisting the Board’s review of the Sub-Adviser, the Adviser provides a report analyzing, among other things, the Sub-Adviser’s investment team and changes thereto, organization and history, assets under management, the investment team’s philosophy and strategies in managing each Fund, developments affecting the Sub-Adviser or the Funds and their performance. In their review of the Sub-Adviser, the Independent Board Members considered, among other things, the experience and qualifications of the relevant investment personnel, their investment philosophy and strategies, the Sub-Adviser’s organization and stability, its capabilities and any initiatives taken or planned to enhance its current capabilities or support potential growth of business and, as outlined in further detail below, the performance of the Funds. The Independent Board Members also reviewed portfolio manager compensation arrangements to evaluate each Fund Adviser’s ability to attract and retain high quality investment personnel, preserve stability, and reward performance while not providing an inappropriate incentive to take undue risks.
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Given the importance of compliance, the Independent Board Members also considered Nuveen’s compliance program, including the report of the chief compliance officer regarding the Nuveen funds’ compliance policies and procedures; the resources dedicated to compliance; the record of compliance with the policies and procedures; and Nuveen’s supervision of the Funds’ service providers. The Board recognized Nuveen’s commitment to compliance and strong commitment to a culture of compliance. Given the Adviser’s emphasis on monitoring investment risk, the Board has also appointed two Independent Board Members as point persons to review and keep the Board apprised of developments in this area and work with applicable Fund Adviser personnel.
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Based on their review, the Independent Board Members found that, overall, the nature, extent and quality of services provided to each Fund under the respective Original Advisory Agreement were satisfactory.
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2. The New Advisory Agreements
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In evaluating the nature, quality and extent of the services expected to be provided by the Fund Advisers under the New Investment Management Agreements and the New Sub-Advisory Agreements, the Board Members concluded that no diminution in the nature, quality and extent of services provided to each Fund and its shareholders by the respective Fund Advisers is expected as a result of the Transaction. In making their determination, the Independent Board Members considered, among other things: the expected impact, if any, of the Transaction on the operations, facilities, organization and personnel of each Fund
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Adviser; the ability of each Fund Adviser to perform its duties after the Transaction, including any changes to the level or quality of services provided to the Funds; the potential implications of any additional regulatory requirements imposed on the Fund Advisers or the Nuveen funds following the Transaction; and any anticipated changes to the investment and other practices of the Nuveen funds.
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The Board noted that the terms of each New Investment Management Agreement, including the fees payable thereunder, are substantially identical to those of the Original Investment Management Agreement relating to the same Fund. Similarly, the terms of each New Sub-Advisory Agreement, including fees payable thereunder, are substantially identical to those of the Original Sub-Advisory Agreement relating to the same Fund. The Board considered that the services to be provided and the standard of care under the New Investment Management Agreements and the New Sub-Advisory Agreements are the same as the corresponding original agreements. The Board Members noted the Transaction also does not alter the allocation of responsibilities between the Adviser and the Sub-Adviser. The Sub-Adviser will continue to furnish an investment program, make investment decisions and place all orders for the purchase and sale of securities, all on behalf of each Fund and subject to oversight of the Board and the Adviser. The Board noted that TIAA-CREF did not anticipate any material changes to the advisory, sub-advisory or other services provided to the Nuveen funds as a result of the Transaction. The Independent Board Members recognized that there were not any planned “cost cutting” measures that could be expected to reduce the nature, extent or quality of services. The Independent Board Members further noted that there were currently no plans for material changes to senior personnel at Nuveen or key personnel who provide services to the Nuveen funds and the Board following the Transaction. The key personnel who have responsibility for the Nuveen funds in each area, including portfolio management, investment oversight, fund management, fund operations, product management, legal/compliance and board support functions, are expected to be the same following the Transaction, although such personnel may have additional reporting requirements to TIAA-CREF. The Board also considered the anticipated incentive plans designed to retain such key personnel. Notwithstanding the foregoing, the Board Members recognized that personnel changes may occur in the future as a result of normal business developments or personal career decisions.
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The Board Members also considered Nuveen’s proposed governance structure following the Transaction and noted that Nuveen was expected to remain a stand-alone business within the TIAA-CREF enterprise and operate relatively autonomously from the other TIAA-CREF businesses, but would receive the general support and oversight from certain TIAA-CREF functional groups (such as legal, finance, internal audit, compliance, and risk management groups). The Board recognized, however, that Nuveen may be subject to additional reporting requirements as it keeps TIAA-CREF abreast of developments affecting the Nuveen business, may be required to modify certain of its reports, policies and procedures as necessary to conform to the practices followed in the TIAA-CREF enterprise and may need to collaborate with TIAA-CREF with respect to strategic planning for its business.
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In considering the implications of the Transaction, the Board Members also recognized the reputation and size of TIAA-CREF and the benefits that the Transaction may bring to the Nuveen funds and Nuveen. In this regard, the Board recognized, among other things, that the increased resources and support that may be available to Nuveen from TIAA-CREF and the improved capital structure of Nuveen Investments, Inc. (the parent of the Adviser) that would result from the significant reduction in its debt level may reinforce and enhance Nuveen’s ability to provide quality services to the Nuveen funds and to invest further into its infrastructure.
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Further, with the consummation of the Transaction, the Board recognized the enhanced distribution capabilities for the Nuveen funds as the funds may gain access to TIAA-CREF’s distribution network, particularly through TIAA-CREF’s retirement platform and institutional client base. The Board also considered that investors in TIAA-CREF’s retirement platform may choose to roll their investments as they exit their retirement plans into the Nuveen funds. The Independent Board Members recognized the potential cost savings to the benefit of all shareholders of the Nuveen funds from reduced expenses as assets in the Nuveen fund complex rise pursuant to the complex-wide fee arrangement described in further detail below.
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Based on their review, the Independent Board Members found that the expected nature, extent and quality of services to be provided to each Fund under its New Advisory Agreements were satisfactory and supported approval of the New Advisory Agreements.
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B.
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The Investment Performance of the Funds and Fund Advisers
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1. The Original Advisory Agreements
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The Board, including the Independent Board Members, considered the performance history of each Fund over various time periods. The Board reviewed reports, including an analysis of each Fund’s performance and the applicable investment team. In considering each Fund’s performance, the Board recognized that a fund’s performance can be reviewed through various measures including the fund’s absolute return, the fund’s return compared to the performance of other peer funds and the fund’s performance compared to its respective benchmark. Accordingly, the Board reviewed, among other things, each Fund’s historic investment performance as well as information comparing the Fund’s performance information with that of other funds (the “Performance Peer Group”) and with recognized and/or customized benchmarks (i.e., generally benchmarks derived from multiple recognized benchmarks) for the quarter, one- and three-year periods ending December 31, 2013, as well as performance information reflecting the first quarter of 2014. With respect to closed-end funds, the Independent Board Members also reviewed historic premium and discount levels, including a summary of actions taken to address or discuss other developments affecting the secondary market discounts of various funds. This information supplemented the Nuveen fund performance information provided to the Board at each of its quarterly meetings.
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In evaluating performance, the Board recognized several factors that may impact the performance data as well as the consideration given to particular performance data.
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• The performance data reflects a snapshot in time, in this case as of the end of the most recent calendar year or quarter. A different performance period, however, could generate significantly different results.
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• Long-term performance can be adversely affected by even one period of significant underperformance so that a single investment decision or theme has the ability to disproportionately affect long-term performance.
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• The investment experience of a particular shareholder in a fund will vary depending on when such shareholder invests in such fund, the class held (if multiple classes offered in the fund) and the performance of the fund (or respective class) during that shareholder’s investment period.
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• The usefulness of comparative performance data as a frame of reference to measure a fund’s performance may be limited because the Performance Peer Group, among other things, does not adequately reflect the objectives and strategies of the fund, has a different investable universe, or the composition of the peer set may be limited in size or number as well as other factors. In this regard, the Board noted that the Adviser classified the Performance Peer Groups of the Nuveen funds from highly relevant to less relevant. For funds classified with less relevant Performance Peer Groups, which include the Funds, the Board considered each fund’s performance compared to its benchmark to help assess the fund’s comparative performance. A fund was generally considered to have performed comparably to its benchmark if the fund’s performance was within certain thresholds compared to the performance of its benchmark and was considered to have outperformed or underperformed its benchmark if the fund’s performance was beyond these thresholds for the one- and three-year periods, subject to certain exceptions.i While the Board is cognizant of the relative performance of a fund’s peer set and/or benchmark(s), the Board evaluated fund performance in light of the respective fund’s investment objectives, investment parameters and guidelines and considered that the variations between the objectives and investment parameters or guidelines of the fund with its peers and/or benchmarks result in differences in performance results. Further, for funds that utilize leverage, the Board understands that leverage during different periods can provide both benefits and risks to a portfolio as compared to an unlevered benchmark.
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Nuveen Investments
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With respect to any Nuveen funds for which the Board has identified performance concerns, the Board monitors such funds closely until performance improves, discusses with the Adviser the reasons for such results, considers those steps necessary or appropriate to address such issues and reviews the results of any efforts undertaken. The Board is aware, however, that shareholders chose to invest or remain invested in a fund knowing that the Adviser manages the fund and knowing the fund’s fee structure.
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With respect to the Nuveen funds with Performance Peer Groups classified as less relevant as noted above, the Board considered such funds’ performance compared to their respective benchmarks and noted that the Funds’ performance over time was satisfactory compared to the performance of their benchmarks. In this regard, the Board considered that, although Nuveen Build America Bond Fund underperformed its benchmark in the three-year period, it outperformed its benchmark in the one-year period, and Nuveen Build America Bond Opportunity Fund outperformed its benchmark in the one-year period and provided comparable performance in the three-year period.
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Based on their review, the Independent Board Members determined that each Fund’s investment performance had been satisfactory.
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2. The New Advisory Agreements
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With respect to the performance of each Fund, the Board considered that the portfolio investment personnel responsible for the management of the respective Fund portfolios were expected to continue to manage such portfolios following the completion of the Transaction and the investment strategies of the Funds were not expected to change as a result of the Transaction (subject to changes unrelated to the Transaction that are approved by the Board and/or shareholders). Accordingly, the findings regarding performance outlined above for the Original Advisory Agreements are applicable to the review of the New Advisory Agreements.
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C.
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Fees, Expenses and Profitability
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1. Fees and Expenses
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The Board evaluated the management fees and expenses of each Fund, reviewing, among other things, such Fund’s gross management fees, net management fees and net expense ratios in absolute terms as well as compared to the fees and expenses of a comparable universe of funds provided by an independent fund data provider (the “Peer Universe”) and any expense limitations.
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The Independent Board Members further reviewed the methodology regarding the construction of the applicable Peer Universe. In reviewing the comparisons of fee and expense information, the Independent Board Members took into account that in certain instances various factors such as the limited size and particular composition of the Peer Universe (including the inclusion of other Nuveen funds in the peer set); expense anomalies; changes in the funds comprising the Peer Universe from year to year; levels of reimbursement or fee waivers; the timing of information used; and the differences in the type and use of leverage may impact the comparative data thereby limiting somewhat the ability to make a meaningful comparison with peers.
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In reviewing the fee schedule for a fund, the Independent Board Members also considered the fund-level and complex-wide breakpoint schedules (described in further detail below) and any fee waivers and reimbursements provided by Nuveen. In reviewing fees and expenses (excluding leverage costs and leveraged assets for the closed-end funds), the Board considered the expenses and fees to be higher if they were over 10 basis points higher, slightly higher if they were approximately 6 to 10 basis points higher, in line if they were within approximately 5 basis points higher than the peer average and below if they were below the peer average of the Peer Universe. In reviewing the reports, the Board noted that the majority of the Nuveen funds were at, close to or below their peer average based on the net total expense ratio. The Independent Board Members observed that the Funds had net management fees and net expense ratios (including fee waivers and expense reimbursements) that were below their respective peer averages.
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Nuveen Investments
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Based on their review of the fee and expense information provided, the Independent Board Members determined that each Fund’s management fees (as applicable) to a Fund Adviser were reasonable in light of the nature, extent and quality of services provided to the Fund.
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2. Comparisons with the Fees of Other Clients
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The Board recognized that all Nuveen funds have a sub-adviser, either affiliated or non-affiliated, and therefore the overall fund management fee can be divided into two components, the fee retained by the Adviser and the fee paid to the sub-adviser. In general terms, the fee to the Adviser reflects the administrative and other services it provides to support the Nuveen fund (as described above) and, while some administrative services may occur at the sub-adviser level, the fee to the sub-adviser generally reflects the portfolio management services provided by the sub-adviser. The Independent Board Members considered the fees a Fund Adviser assesses to the Funds compared to that of other clients. With respect to municipal funds, such other clients of a Fund Adviser may include: municipal separately managed accounts and passively managed exchange traded funds (ETFs) sub-advised by the Adviser.
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The Independent Board Members reviewed the nature of services provided by the Adviser, including through its affiliated sub-advisers and the average fee the affiliated sub-advisers assessed such clients as well as the range of fees assessed to the different types of separately managed accounts (such as retail, institutional or wrap accounts) to the extent applicable to the respective sub-adviser. In their review, the Independent Board Members considered the differences in the product types, including, but not limited to: the services provided, the structure and operations, product distribution and costs thereof, portfolio investment policies, investor profiles, account sizes and regulatory requirements. In evaluating the comparisons of fees, the Independent Board Members noted that the fee rates charged to the Nuveen funds and other clients vary, among other things, because of the different services involved and the additional regulatory and compliance requirements associated with registered investment companies, such as the Funds. The Independent Board Members noted that, as a general matter, higher fee levels reflect higher levels of service, increased investment management complexity, greater product management requirements and higher levels of risk or a combination of the foregoing. The Independent Board Members further noted, in particular, that the range of services provided to the Funds (as discussed above) is generally much more extensive than that provided to separately managed accounts. Many of the additional administrative services provided by the Adviser are not required for institutional clients. The Independent Board Members also recognized that the management fee rates of the foreign funds advised by the Adviser may vary due to, among other things, differences in the client base, governing bodies, operational complexities and services covered by the management fee. Given the inherent differences in the various products, particularly the extensive services provided to the Funds, the Independent Board Members believe such facts justify the different levels of fees.
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3. Profitability of Fund Advisers
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In conjunction with their review of fees, the Independent Board Members also considered the profitability of Nuveen for its advisory activities and its financial condition. The Independent Board Members reviewed the revenues and expenses of Nuveen’s advisory activities for the last two calendar years, the allocation methodology used in preparing the profitability data, an analysis of the key drivers behind the changes in revenues and expenses that impacted profitability in 2013 and Nuveen’s consolidated financial statements for 2013. The Independent Board Members noted this information supplemented the profitability information requested and received during the year to help keep them apprised of developments affecting profitability (such as changes in fee waivers and expense reimbursement commitments). In this regard, the Independent Board Members noted that two Independent Board Members served as point persons to review the profitability analysis and methodologies employed, and any changes thereto, and to keep the Board apprised of such changes. The Independent Board Members also considered Nuveen’s revenues for advisory activities, expenses and profit margin compared to that of various unaffiliated management firms.
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In reviewing profitability, the Independent Board Members noted the Adviser’s continued investment in its business with expenditures to, among other things, upgrade its investment technology and compliance systems and provide for additional personnel and other resources. The Independent Board Members recognized the Adviser’s continued commitment to its business should enhance the Adviser’s capacity and capabilities in providing the services necessary to meet the needs of the Nuveen funds as they grow or change over time. In addition, in evaluating profitability, the Independent Board Members also noted the subjective nature of determining profitability which may be affected by numerous factors including the allocation of expenses and that various allocation methodologies may each be reasonable but yield different results. Further, the Independent Board Members recognized the difficulties in making comparisons as the profitability of other advisers generally is not publicly available, and the profitability information that is available for certain advisers or management firms may not be representative of the industry and may be affected by, among other things, an adviser’s particular business mix, capital costs, size, types of funds managed and expense allocations. Notwithstanding the foregoing, the Independent Board Members noted the Adviser’s adjusted operating margin appears to be reasonable in relation to other investment advisers and sufficient to operate as a viable investment management firm meeting its obligations to the Nuveen funds. Based on their review, the Independent Board Members concluded that the Adviser’s level of profitability for its advisory activities was reasonable in light of the services provided.
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With respect to sub-advisers affiliated with Nuveen, including the Sub-Adviser, the Independent Board Members reviewed such sub-advisers’ revenues, expenses and profitability margins (pre- and post-tax) for their advisory activities and the methodology used for allocating expenses among the internal sub-advisers. Based on their review, the Independent Board Members were satisfied that the Sub-Adviser’s level of profitability was reasonable in light of the services provided.
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In evaluating the reasonableness of the compensation, the Independent Board Members also considered other amounts paid to a Fund Adviser by the funds as well as indirect benefits (such as soft dollar arrangements), if any, the Fund Adviser and its affiliates receive or are expected to receive that are directly attributable to the management of a Nuveen fund. See Section E below for additional information on indirect benefits the Fund Advisers may receive as a result of its relationship with a Nuveen fund. Based on their review of the overall fee arrangements of each Fund, the Independent Board Members determined that the advisory fees and expenses of the Funds were reasonable.
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4. The New Advisory Agreements
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As noted above, the terms of the New Advisory Agreements are substantially identical to their corresponding Original Advisory Agreements. The fee schedule, including the breakpoint schedule and complex-wide fee schedule, in each New Advisory Agreement is identical to that under the corresponding Original Advisory Agreement. The Board Members also noted that Nuveen has committed for a period of two years from the date of closing the Transaction not to increase contractual management fee rates for any Nuveen fund. This commitment shall not limit or otherwise affect mergers or liquidations of any funds in the ordinary course. Based on the information provided, the Board Members did not believe that the overall expenses would increase as a result of the Transaction. In addition, the Board Members recognized that the Nuveen funds may gain access to the retirement platform and institutional client base of TIAA-CREF, and the investors in the retirement platforms may roll their investments into one or more Nuveen funds as they exit their retirement plans. The enhanced distribution access may result in additional sales of the Nuveen funds resulting in an increase in total assets under management in the complex and a corresponding decrease in overall management fees if additional breakpoints at the fund-level or complex-wide level are met. Based on its review, the Board determined that the management fees and expenses under each New Advisory Agreement were reasonable.
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Further, other than from a potential reduction in the debt level of Nuveen Investments, Inc., the Board recognized that it is difficult to predict with any degree of certainty the impact of the Transaction on Nuveen’s profitability. Given the fee schedule was not expected to change under the New Advisory Agreements, however, the Independent Board Members concluded that each Fund Adviser’s level of profitability for its advisory activities under the respective New Advisory Agreements would continue to be reasonable in light of the services provided.
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D. | Economies of Scale and Whether Fee Levels Reflect These Economies of Scale |
1. The Original Advisory Agreements
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With respect to economies of scale, the Independent Board Members have recognized the potential benefits resulting from the costs of a fund being spread over a larger asset base, although economies of scale are difficult to measure and predict with precision, particularly on a fund-by-fund basis. One method to help ensure the shareholders share in these benefits is to include breakpoints in the advisory fee schedule. Generally, management fees for funds in the Nuveen complex are comprised of a fund-level component and a complex-level component, subject to certain exceptions. Accordingly, the Independent Board Members reviewed and considered the applicable fund-level breakpoints in the advisory fee schedules that reduce advisory fees as asset levels increase. Further, the Independent Board Members noted that, although closed-end funds may from time-to-time make additional share offerings, the growth of their assets would occur primarily through the appreciation of such funds’ investment portfolios.
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In addition to fund-level advisory fee breakpoints, the Board also considered the Nuveen funds’ complex-wide fee arrangement. Pursuant to the complex-wide fee arrangement, the fees of the funds in the Nuveen complex are reduced as the assets in the fund complex reach certain levels. The complex-wide fee arrangement seeks to provide the benefits of economies of scale to fund shareholders when total fund complex assets increase, even if assets of a particular fund are unchanged or have decreased. The approach reflects the notion that some of Nuveen’s costs are attributable to services provided to all its funds in the complex and therefore all funds benefit if these costs are spread over a larger asset base.
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Based on their review, the Independent Board Members concluded that the breakpoint schedules and complex-wide fee arrangement (as applicable) were acceptable and reflect economies of scale to be shared with shareholders when assets under management increase.
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2. The New Advisory Agreements
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As noted, the Independent Board Members recognized that the fund-level and complex-wide schedules will not change under the New Advisory Agreements. Assets in the funds advised by TIAA-CREF or its current affiliates will not be included in the complex-wide fee calculation. Nevertheless, the Nuveen funds may have access to TIAA-CREF’s retirement platform and institutional client base. The access to this distribution network may enhance the distribution of the Nuveen funds which, in turn, may lead to reductions in management and sub-advisory fees if the Nuveen funds reach additional fund-level and complex-wide breakpoint levels. Based on their review, including the considerations in the annual review of the Original Advisory Agreements, the Independent Board Members determined that the fund-level breakpoint schedules and complex-wide fee schedule continue to be appropriate and desirable in ensuring that shareholders participate in the benefits derived from economies of scale under the New Advisory Agreements.
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E. |
Indirect Benefits
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1. The Original Advisory Agreements
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In evaluating fees, the Independent Board Members received and considered information regarding potential “fall out” or ancillary benefits the respective Fund Adviser or its affiliates may receive as a result of its relationship with each Fund. In this regard, with respect to closed-end funds, the Independent Board Members considered any revenues received by affiliates of the Adviser for serving as co-manager in initial public offerings of new closed-end funds as well as revenues received in connection with secondary offerings.
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In addition to the above, the Independent Board Members considered whether the Fund Advisers received any benefits from soft dollar arrangements whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research that may be useful to a Fund Adviser in managing the assets of the fund and other clients. Each Fund’s portfolio transactions are allocated by the Sub-Adviser. Accordingly, the Independent Board Members considered that the Sub-Adviser may benefit from
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its soft dollar arrangements pursuant to which it receives research from brokers that execute the applicable Fund’s portfolio transactions. With respect to any fixed income securities, however, the Board recognized that such securities generally trade on a principal basis that does not generate soft dollar credits. Similarly, the Board recognized that the research received pursuant to soft dollar arrangements by the Sub-Adviser may also benefit the Funds and their shareholders to the extent the research enhances the ability of the Sub-Adviser to manage the Funds. The Independent Board Members noted that the Sub-Adviser’s profitability may be somewhat lower if it did not receive the research services pursuant to the soft dollar arrangements and had to acquire such services directly.
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Based on their review, the Independent Board Members concluded that any indirect benefits received by a Fund Adviser as a result of its relationship with the Funds were reasonable and within acceptable parameters.
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2. The New Advisory Agreements
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The Independent Board Members noted that, as the applicable policies and operations of the Fund Advisers with respect to the Nuveen funds were not anticipated to change significantly after the Transaction, such indirect benefits should remain after the Transaction. The Independent Board Members further noted the benefits the Transaction would provide to TIAA-CREF and Nuveen, including a larger-scale fund complex, certain shared services (noted above) and a broader range of investment capabilities, distribution capabilities and product line. Further, the Independent Board Members noted that Nuveen Investments, Inc. (the parent of the Adviser) would benefit from an improved capital structure through a reduction in its debt level.
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F.
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Other Considerations for the New Advisory Agreements
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In addition to the factors above, the Board Members also considered the following with respect to the Nuveen funds:
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• Nuveen would rely on the provisions of Section 15(f) of the 1940 Act. In this regard, to help ensure that an unfair burden is not imposed on the Nuveen funds, Nuveen has committed for a period of two years from the date of the closing of the Transaction not to increase contractual management fee rates for any fund. This commitment shall not limit or otherwise affect mergers or liquidations of any funds in the ordinary course.
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• The Nuveen funds would not incur any costs in seeking the necessary shareholder approvals for the New Investment Management Agreements or the New Sub-Advisory Agreements (except for any costs attributed to seeking shareholder approvals of fund specific matters unrelated to the Transaction, such as election of Board Members or changes to investment policies, in which case a portion of such costs will be borne by the applicable funds).
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• The reputation, financial strength and resources of TIAA-CREF.
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• The long-term investment philosophy of TIAA-CREF and anticipated plans to grow Nuveen’s business to the benefit of the Nuveen funds.
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• The benefits to the Nuveen funds as a result of the Transaction including: (i) increased resources and support available to Nuveen as well as an improved capital structure that may reinforce and enhance the quality and level of services it provides to the funds; (ii) potential additional distribution capabilities for the funds to access new markets and customer segments through TIAA-CREF’s distribution network, including, in particular, its retirement platforms and institutional client base; and (iii) access to TIAA-CREF’s expertise and investment capabilities in additional asset classes.
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G.
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Other Considerations
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The Independent Board Members did not identify any single factor discussed previously as all-important or controlling. The Board Members, including the Independent Board Members, unanimously concluded that the terms of each Original Advisory Agreement and New Advisory Agreement are fair and reasonable, that the respective Fund Adviser’s fees are reasonable in light of the services provided to each Fund and that the Original Advisory Agreements be renewed and the New Advisory Agreements be approved.
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62
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Nuveen Investments
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i
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The Board recognized that the Adviser considered a fund to have outperformed or underperformed its benchmark if the fund’s performance was higher or lower than the performance of the benchmark by the following thresholds: for open-end funds (+/- 100 basis points for equity funds excluding index funds; +/- 30 basis points for tax exempt fixed income funds; +/- 40 basis points for taxable fixed income funds) and for closed-end funds (assuming 30% leverage) (+/- 130 basis points for equity funds excluding index funds; +/- 39 basis points for tax exempt funds and +/-52 basis points for taxable fixed income funds).
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Nuveen Investments
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63
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Nuveen Investments:
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Serving Investors for Generations
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Distributed by Nuveen Investments, LLC | 333 West Wacker Drive | Chicago, IL 60606 | www.nuveen.com |
(a)
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The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")(17 CFR 240.13a-15(b) or 240.15d-15(b)).
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(b)
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There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
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(a)(1)
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Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable to this filing.
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(a)(2)
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A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: See Ex-99.CERT attached hereto.
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(a)(3)
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Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable.
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(b)
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If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: See Ex-99.906 CERT attached hereto.
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