Nuveen Preferred and Income Term Fund

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number  

811-22699

Nuveen Preferred and Income Term Fund

 

(Exact name of registrant as specified in charter)

Nuveen Investments

333 West Wacker Drive, Chicago, IL 60606

 

(Address of principal executive offices)  (Zip code)

Kevin J. McCarthy

Nuveen Investments

333 West Wacker Drive, Chicago, IL 60606

 

(Name and address of agent for service)

Registrant’s telephone number, including area code:   (312) 917-7700                    

Date of fiscal year end:   July 31                       

Date of reporting period:   January 31, 2016                    

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policy making roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss.3507.


ITEM 1. REPORTS TO STOCKHOLDERS.


     LOGO
Closed-End Funds   

 

     Nuveen Investments
     Closed-End Funds

 

 

 

 

       

 

 

Semi-Annual Report  January 31, 2016

 

     
           
JPC            
Nuveen Preferred Income Opportunities Fund  
           
JPI            
Nuveen Preferred and Income Term Fund  
           
JPW            
Nuveen Flexible Investment Income Fund  

 


 

 

     

 

           
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LOGO


Table

of Contents

 

Chairman’s Letter to Shareholders

     4   

Portfolio Managers’ Comments

     5   

Fund Leverage

     15   

Common Share Information

     16   

Risk Considerations

     19   

Performance Overview and Holding Summaries

     20   

Portfolios of Investments

     26   

Statement of Assets and Liabilities

     46   

Statement of Operations

     47   

Statement of Changes in Net Assets

     48   

Statement of Cash Flows

     50   

Financial Highlights

     52   

Notes to Financial Statements

     56   

Additional Fund Information

     70   

Glossary of Terms Used in this Report

     71   

Reinvest Automatically, Easily and Conveniently

     73   

 

Nuveen Investments     3   


Chairman’s Letter

to Shareholders

 

LOGO

Dear Shareholders,

For better or for worse, the financial markets spent most of the past year waiting for the U.S. Federal Reserve (Fed) to end its accommodative monetary policy. The policy has propped up stock and bond markets since the Great Recession, but the question remains: how will markets behave without its influence? This uncertainty was a considerable source of volatility for stock and bond prices for much of 2015, despite the Fed carefully conveying its intention to raise rates slowly and only when the economy shows evidence of readiness.

As was widely expected, the long-awaited Fed rate hike materialized in mid-December. While the move was interpreted as a vote of confidence on the U.S. economy’s underlying strength, the Fed emphasized that future rate increases will be gradual and guided by its ongoing assessment of financial conditions. Headwinds including rising borrowing costs, softer commodity prices, low inflation, a strong U.S. dollar and a stagnant global economy could necessitate keeping monetary conditions accommodative for longer. Meanwhile, policy makers in Europe and Japan are deploying their available tools to try to bolster their economies’ fragile growth, while Chinese authorities have stepped up efforts to manage China’s slowdown.

Although the new year began with a more pessimistic tone to investor sentiment and elevated volatility in the markets, we caution investors from making long-term decisions based on short-term news. In times like these, you can look to a professional investment manager with the experience and discipline to maintain the proper perspective on short-term events. And if the daily headlines do concern you, I encourage you to reach out to your financial advisor. Your financial advisor can help you evaluate your investment strategies in light of current events, your time horizon and risk tolerance.

On behalf of the other members of the Nuveen Fund Board, we look forward to continuing to earn your trust in the months and years ahead.

Sincerely,

 

LOGO

William J. Schneider

Chairman of the Board

March 23, 2016

 

 

  4      Nuveen Investments


Portfolio Managers’

Comments

 

Nuveen Preferred Income Opportunities Fund (JPC)

Nuveen Preferred and Income Term Fund (JPI)

Nuveen Flexible Investment Income Fund (JPW)

Nuveen Asset Management, LLC (NAM) and NWQ Investment Management Company, LLC (NWQ), affiliates of Nuveen Investments, Inc., are sub-advisers for the Nuveen Preferred Income Opportunities Fund (JPC). NAM and NWQ each manage approximately half of the Fund’s investment portfolio. Douglas Baker, CFA and Brenda Langenfeld, CFA, are the portfolio managers for the NAM team. The NWQ income-oriented investment team is led by Thomas J. Ray, CFA and Susi Budiman, CFA.

The Nuveen Preferred and Income Term Fund (JPI) features management by Nuveen Asset Management, LLC (NAM), an affiliate of Nuveen Investments, Inc. Douglas Baker, CFA, and Brenda Langenfeld, CFA, have served as the Fund’s portfolio managers since its inception.

Effective subsequent to the release of this semi-annual report, the primary and secondary benchmarks for JPI and the NAM managed sleeve of JPC will change in order to better represent the investible universe of preferred securities. The BofA/Merrill Lynch U.S. All Capital Securities Index is the Proposed Primary Benchmark. The proposed secondary blended benchmark will consist of 60% BofA/Merrill Lynch U.S. All Capital Securities Index and 40% BofA/Merrill Lynch Contingent Capital Index. This proposed secondary blended benchmark better aligns the portfolios with the investible universe of preferreds and hybrids by adding the contingent capital index to the performance benchmark. The proposed secondary blended benchmark would also better reflect the portfolio’s positioning with regard to $25 par securities and $1,000 par securities, as well as from a credit quality and duration perspective. The BofA/Merrill Lynch Contingent Capital Index has a recent inception date of December 31, 2013.

Additionally, the limit to non-U.S. issuers will be removed in order to allow for an increased number of contingent capital securities (CoCos) in each Fund’s portfolio.

The Nuveen Flexible Investment Income Fund (JPW) features portfolio management by NWQ Investment Management Company, LLC (NWQ), an affiliate of Nuveen Investments, Inc. Thomas J. Ray, CFA, and Susi Budiman, CFA, are the portfolio managers.

Here they discuss their management strategies and the performance of the Funds for the six-month reporting period ended January 31, 2016.

 

 

Certain statements in this report are forward-looking statements. Discussions of specific investments are for illustration only and are not intended as recommendations of individual investments. The forward-looking statements and other views expressed herein are those of the portfolio managers as of the date of this report. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements and the views expressed herein are subject to change at any time, due to numerous market and other factors. The Funds disclaim any obligation to update publicly or revise any forward-looking statements or views expressed herein.

Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor’s (S&P), Moody’s Investors Service, Inc. (Moody’s) or Fitch, Inc. (Fitch). Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.

Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.

 

Nuveen Investments     5   


Portfolio Managers’ Comments (continued)

 

What key strategies were used to manage the Funds during this six-month reporting period ended January 31, 2016 and how did these strategies influence performance?

Nuveen Preferred Income Opportunities Fund (JPC)

The table in the Performance Overview and Holding Summaries section of this report provides total return performance for the Fund for the six-month, one-year, five-year and ten-year periods ended January 31, 2016. For the six-month reporting period ended January 31, 2016 the Fund’s common shares at net asset value (NAV) outperformed the JPC Blended Index, but underperformed the BofA/Merrill Lynch Preferred Securities Fixed Rate Index.

JPC invests at least 80% of its managed assets in preferred securities and up to 20% opportunistically over the market cycle in other types of securities, primarily income oriented securities such as corporate and taxable municipal debt and common equity. The Fund is managed by two experienced portfolio teams with distinctive, complementary approaches to the preferred market. NAM employs a debt-oriented approach that combines top down relative value analysis of industry sectors with fundamental credit analysis. NWQ’s investment process identifies undervalued securities within a company’s capital structure that offer the most attractive risk/reward potential. This multi-team approach gives investors access to a broader investment universe with greater diversification potential.

Nuveen Asset Management

For the portion of the Fund managed by NAM, the Fund seeks to achieve its investment objective of providing a high level of current income and total return by investing in preferred securities and other income producing securities. The Fund’s portfolio is actively managed seeking to capitalize on strong and continuously improving credit fundamentals across our issuer base, coupled with historically wide credit spreads (the difference between current yields on preferred securities and U.S. Treasury Bonds and other fixed income benchmarks) for the preferred security asset class. The Fund’s strategy focuses opportunistically on highly regulated industries, like utilities, banks, and insurance companies, with a current emphasis broadly on financial services companies.

We employed a credit-based investment approach, using a top-down process to position the portfolio in a manner that reflects the investment team’s overall macro-economic outlook, while also incorporating a bottom-up approach that focuses on fundamental credit research, security structure selection, and option adjusted spread (OAS) analysis. The process begins with identifying the investable universe of $1,000 par and $25 par preferred securities. In an effort to capitalize on the inefficiencies between the different structure of the preferred securities market, we tactically and strategically shift capital between the $25 par exchange listed market and the $1,000 par over-the-counter market. Periods of volatility may drive notably different valuations between these two markets. This dynamic is often related to periodic differences in how retail and institutional markets perceive and price risk. Technical factors such as new issue supply may also influence the relative valuations between $25 par exchange listed structures and $1,000 par over-the-counter structures.

We will continue to monitor developments across the domestic and international financial markets, but we do not anticipate materially changing the Fund’s relative positioning strategy in the near future. We feel that valuations on the $25 par retail side of the market have run rich versus the $1,000 par institutional side of the market. We will likely maintain an overweight to $1,000 par securities as a result of this relative value opportunity, and because of our desire to position defensively against rising interest rates. Indeed, we have been concerned about the potential impact of rising rates on preferred security valuations for several quarters now. Callable securities, like most preferred securities, can be more vulnerable to rising rates compared to similar non-callable fixed rate structures. The duration on callable fixed rate coupon securities tends to extend during periods of rising interest rates. Luckily, there are coupon structures within the preferred securities market, like floating rate coupons and fixed-to-floating rate coupons that do not expose investors to the aforementioned duration extension risk. Given our concern regarding rising interest rates, we have favored fixed-to-floating rate coupon structures which, all else equal, provide a lower duration profile on day one, and almost no duration

 

  6      Nuveen Investments


 

extension risk, versus traditional fixed rate coupon structures. Fixed-to-floating rate securities are more common on the $1,000 par side of the market, and thus one reason for our current, and foreseeable, overweight to $1,000 par securities relative to the JPC Blended Index.

As mentioned in previous reports, the population of “new generation” preferred securities, such as contingent capital securities (otherwise known as CoCos), have indeed become a meaningful presence within the preferred/hybrid security marketplace. We estimate the total CoCo universe today to be just under $385 billion in size, with total capacity over the next few years totaling between $500 billion and $600 billion based upon the current size of international banks’ balance sheets. Of today’s $385 billion market, we estimate that roughly $235 billion is Additional Tier 1 (AT1)-qualifying securities, and the remaining $150 billion is Tier 2-qualifying paper. As a reminder, international bank capital standards outlined in Basel III require new AT1-qualifying and Tier 2-qualifying securities to contain explicit loss-absorbing features upon the breach of certain predetermined capital thresholds. These loss-absorbing features come in one of three options, including equity conversion, permanent write-down of principle or temporary write-down of principle with the possibility of future write-up when/if the issuer is able to replenish capital levels back above the threshold trigger level. We have allocated modestly to this new universe of securities. We have focused on those issuers that have, in our opinion, meaningful capital cushions above regulatory minimum capital levels. Limiting exposure to these issuers helps minimize to a great extent the likelihood of a conversion event, or a skipped coupon payment. We also favor those issuers that have, or have nearly, issued their regulatory maximum amount of AT1 securities, to reduce the impact that future new issue supply might have on secondary valuations.

With respect to the Fund’s allocation to lower investment grade and below investment grade securities, we continue to believe that these segments will, over the long term, provide a more compelling risk-adjusted return profile than higher rated preferred/hybrid securities. Lower rated securities are often overlooked by retail and institutional investors, and especially by investors with investment grade-only mandates. Below investment grade securities typically are not index eligible, limiting the potential investor base and frequently creating opportunities for the Fund within this particular segment of the asset class. While lower rated preferred securities may exhibit periods of higher price volatility, we believe the return potential is disproportionately higher due to inefficiencies inherent in the segment. In addition, this lower rated segment of the asset class tends to exhibit lower interest rate sensitivity than higher rated security structures. As a result, this allocation also helps express our defensive interest rate positioning. Again, please note that preferred/hybrid securities are typically rated several notches below an issuer’s senior unsecured debt rating. Consequently, in most instances, a BB rated preferred/hybrid security has been issued by an entity with an investment grade senior unsecured credit rating of BBB or higher.

Over the past few years, the rating agencies have revised their methodologies for preferred securities which have resulted in a broad drift lower in average rating for the asset class. This is primarily driven by the fact that the rating agencies no longer place a high likelihood of government support for the preferred security investor during times of crisis. In our opinion, however, these same rating agencies have yet to recognize the tremendous improvements in bank balance sheets post financial crisis, nor have they seemingly recognized the lower risk profile of the banks under the monumental amount of regulatory oversight. At some point, we do expect rating agencies to take these factors into consideration and eventually rate bank-issued preferred securities higher than what we see today.

As with any fixed income asset class, preferred securities are not immune from the impact of rising interest rates. As mentioned above, we seek to minimize the impact of higher rates on the market value of the Fund’s portfolio by establishing a position in less interest rate sensitive securities, like fixed-to-floating rate coupon structures. We also feel that rising interest rates are frequently the result of an improving macro-economic landscape, and one where the current domestic economic recovery has likely gained meaningful traction. In this type of environment risk premiums should shrink, reflecting the lower risk profile of the overall market. As a result, credit spreads should also narrow. We believe therefore, that credit spread compression in the preferred security asset class could help mitigate the negative impact of rising interest rates.

 

Nuveen Investments     7   


Portfolio Managers’ Comments (continued)

 

While we held several distinct active overweights and underweights versus the indices during the reporting period, there were three active positions that were responsible for driving a majority of the relative performance. These included an underweight to $25 par vs $1,000 par securities, a relatively shorter duration profile, and an overweight to non-U.S. and CoCo securities.

With the $1,000 par dominated Barclays USD Capital Securities Index posting a 0.7% return during the reporting period and the $25 par dominated BofA/Merrill Lynch Preferred Securities Fixed Rate Index posting a 3.5% return, the Fund’s overweight to $1,000 par structures detracted from its relative performance. In this prolonged low interest rate environment, retail investors’ demand for income producing securities has grown dramatically. Indeed, with a single-minded focus on income, retail investors continued to drive valuations on the $25 par side of the market to increasingly higher levels. Valuations have run so high on the $25 par side of the market that there is now a large population of these securities trading at a negative yield-to-worst. In addition, all roughly $3 billion of domestic bank new issue preferred securities during the month of January 2016 came as $25 par securities, suggesting even issuers find $25 valuations rich versus $1,000 par. We expect valuations to normalize in the near future, and thus should result in relative outperformance of the $1,000 par side of the market.

Our overweight in the $1,000 par side of the market was also heavily concentrated in fixed-to-floating rate coupon structures, which, all else being equal, have lower interest rate sensitivity and lower duration extension risk compared to preferred/hybrid securities with standard fixed rate coupons. Given our outlook for gradually rising interest rates, the fixed-to-floating rate structures were better aligned with our strategy versus traditional fixed rate coupon securities, and helped us to attain a duration profile that was shorter versus the respective indexes. Unexpectedly so, interest rates actually decreased during the reporting period. All else equal, the directional move in interest rates worked against our overweight to fixed-to-floating rate security structures because of their lower duration profile. We also feel that during the reporting period, investors again grew increasing complacent regarding interest rate risk. Couple this complacency with a continued low interest rate environment, demand grew for longer duration traditional fixed rate coupon securities.

Finally, our modest overweight to non-U.S. securities worked against the Fund on a relative basis. Increasing concerns regarding global growth outside the U.S. put relatively more pressure on preferred security valuations of foreign issuers. Despite the release of fourth quarter 2015 earnings from the domestic and international banks confirming that balance sheets remained generally strong, and continued to improve quarter-over-quarter, investor focus on lagging top line metrics overwhelmed what should have been a positive story for preferred securities. In our opinion, lackluster top line results should have affected bank equity valuations more so than preferred securities. During the latter part of the reporting period, this negative sentiment did leak over into valuations of non-U.S. preferred securities. The Fund’s allocation to CoCo securities was part of the non-U.S. exposure, and accordingly the allocation to CoCo securities detracted from relative performance.

NWQ Investment Management Company

For the portion of the Fund managed by NWQ, we seek to achieve high income and a measure of capital appreciation. While the Fund’s investments are primarily preferred securities, a portion of the Fund allows the flexibility to invest across the capital structure in any type of debt, preferred or equity securities offered by a particular company. The portfolio management team then evaluates all available investment choices within a selected company’s capital structure to determine the portfolio investment that may offer the most favorable risk-adjusted return potential. The Fund’s portfolio is constructed with an emphasis on seeking a sustainable level of income and an overall analysis for downside risk management.

This reporting period was difficult for most risk assets. Macroeconomic uncertainty driven by the economic trouble in emerging economies, falling commodity prices, along with uncertainty around the Fed’s hiking cycle all contributed to the significant volatility to the market. Common equity and high yield bonds suffered the most during the reporting

 

  8      Nuveen Investments


 

period, generating total return of -8.6% as measured by the Russell 1000 Value® Index and -7.9% for the BofA/Merrill Lynch U.S. High Yield Index. Investment grade corporate bond did better with a -0.3% return. The best performing asset class was the $25 par preferred market, with a 3.5% return.

Within the common equity and high yield markets, much of the sell-off was attributed to energy, metals & mining, and distressed companies, although negative sentiment did spread across most sectors in both markets. In addition to the decline in commodity prices, uncertainty around the hiking cycle and the immense supply volumes caused by debt-funded strategic mergers and acquisitions and share buybacks also plagued the investment grade corporate bond market, causing credit spreads to widen near the widest levels since late summer of 2012. We think preferreds held in much better than other asset classes possibly because of the technical support with the preferred market (limited supply with strong demand from exchange-traded funds (ETF) and retail investors). Within the preferred market, $1,000 par preferred securities underperformed $25 par, and investment grade rated real estate investment trust (REIT) preferreds performed extraordinarily well. We believe $1,000 par preferreds underperformed $25 par due to greater institutional ownership by high yield and core bond accounts and increased fears that fixed-to-floating rate securities will extend at the first call dates. As these high yield and core bond managers experienced large outflows beginning mid-year, they sold preferreds to raise cash for redemptions, keeping technical pressure on the $1,000 par market. Despite valuations that look historically rich, REIT preferreds rallied on demand from overseas buyers, very little new REIT preferred issuance and multiple calls and redemptions of existing securities.

Throughout the reporting period, we reduced our overall exposure to mortgage REITs. We grew concerned that the expectation of rate hikes combined with lower long-run inflation would lead to a compression in swap spreads that would negatively affect mortgage REITs’ book values. Although our exposure was mainly in preferred stocks and senior debt, we believed the impact may ripple through the entire capital structure, though at a lesser magnitude. During the reporting period, we moved up the capital structure from preferred stock to senior debt in companies we liked while eliminating/reducing our positions in companies we viewed as more levered to downside risks.

Several of our holdings performed well during the reporting period, including National Storage Affiliates Trust (NSA) common stock. NSA is a self-storage REIT that has been underperforming its peers since its IPO in April. Their first earnings release since the IPO was significantly better than expected and they also increased their dividend. Also positively contributing was the preferred stock of General Electric Company. It was among the higher yielding securities in the marketplace. The attractive current yield and modest duration aided its performance. Lastly, the preferred stock of Land O’Lakes Inc. contributed to performance. Land O’Lakes is the second largest U.S. agricultural cooperative with a diversified business mix. We believe, given the capital and leverage profile of the company, the 8% fixed rate preferred was priced at an attractive level and also offers downside risk management should rates rise.

Several positions detracted from performance. Our position in Gilead Sciences, Inc. was the largest detractor from performance. The stock came under pressure because of negative political and media coverage pertaining to drug pricing. Although we wouldn’t completely dismiss the potential for price controls, we feel they are very unlikely. Also, most of the focus has been on off-patent drugs or newly acquired drugs that underwent significant price increases. Gilead certainly has expensive drug therapies, but they are novel in their development and treat diseases that are life threatening. As fundamentals prevail and earnings are reported we believe investors may be rewarded with a stock trading at very attractive multiples of projected earnings and free cash flows, a strong management team and catalysts for future growth.

Our industrial holdings, including energy-related company Teekay Offshore Partners LP detracted from performance. The company ships crude oil, petroleum products and liquefied natural gas (LNG). As oil prices declined during the reporting period, energy sector stocks broadly sold off. The senior note of Teekay was not immune from the downside volatility.

 

Nuveen Investments     9   


Portfolio Managers’ Comments (continued)

 

Also detracting from performance was Seagate Technology which designs, manufactures and markets hard disk drives for use in enterprise storage, servers, desktops, laptop computers, and other consumer electronic devices. It also has a growing solid state drive and storage systems portfolio. Recent weak demand within PC markets dragged the stock price lower as earnings were expected to be negatively affected by lower volumes. However, we believe negative sentiment has already been priced into the share price and the company has other catalysts, which include growth in the enterprise space, deferring operating expenditure plans, and share buybacks, to offset recent weak stock performance.

We have always been cognizant of the risk of an interest rate rise when making investment decisions, therefore, we think the Fund has been positioned to minimize potential rate impact through investments in shorter duration preferred securities such as those with higher coupon or fix-to-float structure as well as increasing exposure to other asset classes through security selection. Higher interest rates would decrease the call risk of bond holdings and conversely lower rates would increase the call risk of bond holdings, all other factors remaining constant. Effective duration would increase as interest rates rise.

During the period, the Fund wrote covered call options on common stocks to hedge equity exposure. These options had a negligible impact on performance.

Nuveen Preferred and Income Term Fund (JPI)

The table in the Performance Overview and Holding Summaries section of this report provides total return performance for the Fund for the six-month, one-year and since inception periods ended January 31, 2016. For the six-month reporting period ended January 31, 2016, the Fund’s shares at net asset value (NAV) underperformed both the JPI Blended Benchmark Index and the BofA/Merrill Lynch Preferred Securities Fixed Rate Index and the BofA/Merrill Lynch U.S. All Capital Securities Index new primary benchmark.

The Fund seeks to achieve its investment objective of providing a high level of current income and total return by investing in preferred securities and other income producing securities. The Fund’s portfolio is actively managed seeking to capitalize on strong and continuously improving credit fundamentals across our issuer base, coupled with historically wide credit spreads (the difference between current yields on preferred securities and U.S. Treasury Bonds and other fixed income benchmarks) for the preferred security asset class. The Fund’s strategy focuses opportunistically on highly regulated industries, like utilities, banks, and insurance companies, with a current emphasis broadly on financial services companies.

We employ a credit-based investment approach, using a top-down process to position the portfolio in a manner that reflects the investment team’s overall macro-economic outlook, while also incorporating a bottom-up approach that focuses on fundamental credit research, security structure selection, and option adjusted spread (OAS) analysis. The process begins with identifying the investable universe of $1,000 par and $25 par preferred securities. In an effort to capitalize on the inefficiencies between the different structure of the preferred securities market, we tactically and strategically shift capital between the $25 par exchange listed market and the $1,000 par over-the-counter market. Periods of volatility may drive notably different valuations between these two markets. This dynamic is often related to periodic differences in how retail and institutional markets perceive and price risk. Technical factors such as new issue supply may also influence the relative valuations between $25 par exchange listed structures and $1,000 par over-the-counter structures.

We will continue to monitor developments across the domestic and international financial markets, but we do not anticipate materially changing the Fund’s relative positioning strategy in the near future. We feel that valuations on the $25 par retail side of the market have run rich versus the $1,000 par institutional side of the market. We will likely maintain an overweight to $1,000 par securities as a result of this relative value opportunity, and because of our desire to position defensively against rising interest rates. Indeed, we have been concerned about the potential impact of rising rates on preferred security valuations for several quarters now. Callable securities, like most preferred securities, can be more

 

  10      Nuveen Investments


 

vulnerable to rising rates compared to similar non-callable structures. The duration on callable fixed rate coupon securities tends to extend during periods of rising interest rates. Luckily, there are coupon structures within the preferred securities market, like floating rate coupons and ‘fixed-to-floating’ rate coupons, which do not expose investors to the aforementioned duration extension risk. Given our concern regarding rising interest rates, we have favored fixed-to-floating rate coupon structures which, all else equal, provide a lower duration profile on day one, and almost no duration extension risk, versus traditional fixed rate coupon structures. Fixed-to-floating rate securities are more common on the $1,000 par side of the market, and thus one reason for our current, and foreseeable, overweight to $1,000 par securities relative to the JPI Blended Benchmark Index.

As mentioned in previous reports, the population of “new generation” preferred securities, such as contingent capital securities (otherwise known as CoCos), have indeed become a meaningful presence within the preferred/hybrid security marketplace. We estimate the total CoCo universe today to be just under $385 billion in size, with total capacity over the next few years totaling between $500 billion and $600 billion based upon the current size of international banks’ balance sheets. Of today’s $385 billion market, we estimate that roughly $235 billion is Additional Tier 1 (AT1)-qualifying securities, and the remaining $150 billion is Tier 2-qualifying paper. As a reminder, international bank capital standards outlined in Basel III require new AT1-qualifying and Tier 2-qualifying securities to contain explicit loss-absorbing features upon the breach of certain predetermined capital thresholds. These loss-absorbing features come in one of three options, including equity conversion, permanent write-down of principle, or temporary write-down of principle with the possibility of future write-up when/if the issuer is able to replenish capital levels back above the threshold trigger level. We have allocated modestly to this new universe of securities. We have focused on those issuers that have, in our opinion, meaningful capital cushions above regulatory minimum capital levels. Limiting exposure to these issuers helps minimize to a great extent the likelihood of a conversion event or a skipped coupon payment. We also favor those issuers that have, or have nearly, issued their regulatory maximum amount of AT1 securities, to reduce the impact that future new issue supply might have on secondary valuations.

With respect to the Fund’s allocation to lower investment grade and below investment grade securities, we continue to believe that these segments will, over the long term, provide a more compelling risk-adjusted return profile than higher rated preferred/hybrid securities. Lower rated securities are often overlooked by retail and institutional investors, and especially by investors with investment grade-only mandates. Below investment grade securities typically are not index eligible, limiting the potential investor base and frequently creating opportunities for the Fund within this particular segment of the asset class. While lower rated preferred securities may exhibit periods of higher price volatility, we believe the return potential is disproportionately higher due to inefficiencies inherent in the segment. In addition, this lower rated segment of the asset class tends to exhibit lower interest rate sensitivity than higher rated security structures. As a result, this allocation also helps express our defensive interest rate positioning. Again, please note that preferred/hybrid securities are typically rated several notches below an issuer’s senior unsecured debt rating. Consequently, in most instances, a BB rated preferred/hybrid security has been issued by an entity with an investment grade senior unsecured credit rating of BBB or higher.

Over the past few years, the rating agencies have revised their methodologies for preferred securities which have resulted in a broad drift lower in average rating for the asset class. This is primarily driven by the fact that the rating agencies no longer place a high likelihood of government support for the preferred security investor during times of crisis. In our opinion, however, these same rating agencies have yet to recognize the tremendous improvements in bank balance sheets post financial crisis, nor have they seemingly recognized the lower risk profile of the banks under the monumental amount of regulatory oversight. At some point, we do expect rating agencies to take these factors into consideration and eventually rate bank-issued preferred securities higher than what we see today.

As with any fixed income asset class, preferred securities are not immune from the impact of rising interest rates. As mentioned above, we seek to minimize the impact of higher rates on the market value of the Fund’s portfolio by establishing a position in less interest rate sensitive securities, like fixed-to-floating rate coupon structures. We also feel that

 

Nuveen Investments     11   


Portfolio Managers’ Comments (continued)

 

rising interest rates are frequently the result of an improving macro-economic landscape, and one where the current domestic economic recovery has likely gained meaningful traction. In this type of environment risk premiums should shrink, reflecting the lower risk profile of the overall market. As a result, credit spreads should also narrow. We believe therefore, that credit spread compression in the preferred security asset class could help mitigate the negative impact of rising interest rates.

While we held several distinct active overweights and underweights versus the indices during the reporting period, there were three active positions that were responsible for driving a majority of the relative performance. These included an underweight to $25 par vs $1,000 par securities, a relatively shorter duration profile, and an overweight to non-U.S. and CoCo securities.

With the $1,000 par dominated Barclays USD Capital Securities Index posting a 0.7% return during the reporting period and the $25 par dominated BofA/Merrill Lynch U.S. Preferred Securities Fixed Rate Index posting a 3.5% return, the Fund’s overweight to $1,000 par structures detracted from its relative performance. In this prolonged low interest rate environment, retail investors’ demand for income producing securities has grown dramatically. Indeed, with a single-minded focus on income, retail investors continued to drive valuations on the $25 par side of the market to increasingly higher levels. Valuations have run so high on the $25 par side of the market that there is now a large population of these securities trading at a negative yield-to-worst. In addition, all roughly $3 billion of domestic bank new issue preferred securities during the month of January 2016 came as $25 par securities, suggesting even issuers find $25 valuations rich versus $1,000 par. We expect valuations to normalize in the near future, and thus should result in relative outperformance of the $1,000 par side of the market.

Our overweight in the $1,000 par side of the market was also heavily concentrated in fixed-to-floating rate coupon structures, which, all else being equal, have lower interest rate sensitivity and lower duration extension risk compared to preferred/hybrid securities with standard fixed rate coupons. Given our outlook for gradually rising interest rates, the fixed-to-floating rate structures were better aligned with our strategy versus traditional fixed rate coupon securities, and helped us to attain a duration profile that was shorter versus the respective indices. Unexpectedly so, interest rates actually decreased during the reporting period. All else equal, the directional move in interest rates worked against our overweight to fixed-to-floating rate security structures because of their lower duration profile. We also feel that during the reporting period, investors again grew increasing complacent regarding interest rate risk. Couple this complacency with a continued low interest rate environment, demand grew for longer duration traditional fixed rate coupon securities.

Finally, our modest overweight to non-U.S. securities worked against the Fund on a relative basis. Increasing concerns regarding global growth outside the U.S. put relatively more pressure on preferred security valuations of foreign issuers. Despite the release of fourth quarter 2015 earnings from the domestic and international banks confirming that balance sheets remained generally strong, and continued to improve quarter-over-quarter, investor focus on lagging top line metrics overwhelmed what should have been a positive story for preferred securities. In our opinion, lackluster top line results should have affected bank equity valuations more so than preferred securities. During the latter part of the reporting period, this negative sentiment did leak over into valuations of non-U.S. preferred securities. The Fund’s allocation to CoCo securities was part of the non-U.S. exposure, and accordingly the allocation to CoCo securities detracted from relative performance.

Nuveen Flexible Investment Income Fund (JPW)

The table in the Performance Overview and Holding Summaries section of this report provides total return performance for the Fund for the six-month, one-year and since inception periods ended January 31, 2016. For the six-month reporting period ended January 31, 2016, the Fund’s common shares at net asset value (NAV) underperformed the Barclays U.S. Aggregate Bond Index.

JPW invests at least 80% of its managed assets in income producing preferred, debt and equity securities issued by companies located anywhere in the world. Up to 50% of its managed assets may be in securities issued by non-U.S.

 

  12      Nuveen Investments


 

companies, though all (100%) Fund assets will be in U.S. dollar-denominated securities. Up to 40% of its managed assets may consist of equity securities, not including preferred securities. Up to 75% of investments in debt and preferred securities that are of a type customarily rated by a credit rating agency, may be rated below investment grade, or if unrated, will be judged to be of comparable quality by NWQ. The Fund will invest at least 25% in securities issued by financial services companies.

The Fund’s investment objectives are to provide high current income and, secondarily, capital appreciation. The Fund seeks to achieve its investment objectives by investing in undervalued securities with attractive investment characteristics. The Fund’s portfolio is actively managed by NWQ and has the flexibility to invest across the capital structure in any type of debt, preferred or equity securities offered by a particular company. The portfolio management team then evaluates all available investment choices within a selected company’s capital structure to determine the portfolio investment that may offer the most favorable risk-adjusted return potential. The Fund’s portfolio is constructed with an emphasis on seeking a sustainable level of income and an overall analysis for downside risk management.

The six-month reporting period was difficult for most risk assets. Macroeconomic uncertainty driven by the economic trouble in emerging economies, falling commodity prices, along with uncertainty around the Fed’s hiking cycle all contributed to the significant volatility to the market. Common equity and high yield bonds suffered the most during the reporting period, generating total return of -8.6% as measured by the Russell 1000 Value® Index and -7.9% for the BofA/Merrill Lynch U.S. High Yield Index. Investment grade corporate bond did better with a -0.3% return. Best performing asset class is undoubtedly the $25 par preferred market, with a 3.5% return.

Within the common equity and high yield markets, much of the sell-off was attributed to energy, metals & mining, and distressed companies, although negative sentiment did spread across most sectors in both markets. In addition to the decline in commodity prices, uncertainty around the hiking cycle and the immense supply volumes caused by debt-funded strategic mergers and acquisitions and share buybacks also plagued the investment grade corporate bond market, causing credit spreads to widen near the widest levels since late summer of 2012. We think preferreds held in much better than other asset classes possibly because of the technical support with the preferred market (limited supply with strong demand from ETF and retail investors). Within the preferred market, $1,000 par preferred securities underperformed $25 par, and investment grade rated REIT preferreds performed extraordinarily well. We believe $1,000 par preferreds underperformed $25 par due to greater institutional ownership by high yield and core bond accounts and increased fears that fixed-to-floating rate securities will extend at the first call dates. As these high yield and core bond managers experienced large outflows beginning mid-year, they sold preferreds to raise cash for redemptions, keeping technical pressure on the $1,000 par market. Despite valuations that look historically rich, REIT preferreds rallied on demand from overseas buyers, very little new REIT preferred issuance, and multiple calls and redemptions of existing securities.

Throughout the reporting period, we reduced our overall exposure to mortgage REITs. We grew concerned that the expectation of rate hikes combined with lower long-run inflation would lead to a compression in swap spreads that would negatively affect mortgage REITs’ book values. Although our exposure was mainly in preferred stocks and senior debt, we believed the impact may ripple through the entire capital structure, though at a lesser magnitude. During the reporting period, we moved up the capital structure from preferred stock to senior debt in companies we liked while eliminating/reducing our positions in companies we viewed as more levered to downside risks.

Several of our equity holdings performed well during the reporting period, including National Storage Affiliates Trust (NSA) common stock. NSA is a self-storage REIT that has been underperforming its peers since its IPO in April. Their first earnings release since the IPO was significantly better than expected and they also increased their dividend. Also positively contributing was Phillips 66. The company is a Texas-based energy manufacturing and logistics company that owns stakes in 14 refineries in the U.S., U.K, Ireland and Germany, with 2.1 million barrels per day of crude capacity. Earlier in 2014, there were concerns that the company was entering a heavier spending phase, which would reduce its

 

Nuveen Investments     13   


Portfolio Managers’ Comments (continued)

 

distribution yield during 2015/2016. However, we believe transformational growth will likely unfold as opportunities are capitalized on their other businesses as the company redeploys the cash flow from its refining business to diversify earnings toward these higher multiple businesses. Additionally, Phillips 66 offers exposure to the West Texas Intermediate (WTI) Brent spread but without the same level of volatility that characterizes pure play peers. Lastly, the preferred stock of Land O’Lakes Inc. contributed to performance. Land O’Lakes is the second largest U.S. agricultural cooperative with a diversified business mix. We believe, given the capital and leverage profile of the company, the 8% fixed rate preferred was priced at an attractive level and also offers downside risk management should rates rise.

Several positions detracted from performance. Our position in Gilead Sciences, Inc. was the largest detractor from performance. The stock came under pressure because of negative political and media coverage pertaining to drug pricing. Although we wouldn’t completely dismiss the potential for price controls, we feel they are very unlikely. Also, most of the focus has been on off-patent drugs or newly acquired drugs that underwent significant price increases. Gilead certainly has expensive drug therapies, but they are novel in their development and treat diseases that are life threatening. As fundamentals prevail and earnings are reported we believe investors may be rewarded with a stock trading at very attractive multiples of projected earnings and free cash flows, a strong management team and catalysts for future growth.

Our industrial holdings, including energy-related company Teekay Offshore Partners LP detracted from performance. The company ships crude oil, petroleum products and liquefied natural gas (LNG). As oil prices declined during the reporting period, energy sector stocks broadly sold off. The senior notes of Teekay was not immune from the downside volatility.

Also detracting from performance was Seagate Technology which designs, manufactures and markets hard disk drives for use in enterprise storage, servers, desktops, laptop computers and other consumer electronic devices. It also has a growing solid state drive and storage systems portfolio. Recent weak demand within PC markets dragged the stock price lower as earnings were expected to be negatively affected by lower volumes. However, we believe negative sentiment has already been priced into the share price and the company has other catalysts, which include growth in the enterprise space, deferring operating expenditure plans, and share buybacks, to offset recent weak stock performance.

We have always been cognizant of the risk of an interest rate rise when making investment decisions, therefore, we think the Fund has been positioned to minimize potential rate impact through investments in shorter duration preferred securities such as those with higher coupon or fix-to-float structure as well as increasing exposure to other asset classes through security selection. Higher interest rates would decrease the call risk of bond holdings and conversely lower rates would increase the call risk of bond holdings, all other factors remaining constant. Effective duration would increase as interest rates rise.

During the period, the Fund wrote covered call options on common stocks to hedge equity exposure. These options had a positive impact on performance.

 

  14      Nuveen Investments


Fund

Leverage

 

IMPACT OF THE FUNDS’ LEVERAGE STRATEGIES ON PERFORMANCE

One important factor impacting the return of the Funds relative to their benchmarks was the Funds’ use of leverage through the use of bank borrowings. The Funds use leverage because our research has shown that, over time, leveraging provides opportunities for additional income and total return for common shareholders. However, use of leverage also can expose common shareholders to additional volatility. For example, as the prices of securities held by a Fund decline, the negative impact of these valuation changes on common share NAV and common shareholder total return is magnified by the use of leverage. Conversely, leverage may enhance common share returns during periods when the prices of securities held by a Fund generally are rising. The Funds’ use of leverage had a negative impact on performance for JPC and JPW during this reporting period while it had a positive impact for JPI during this reporting period.

JPC and JPI continued to use swap contracts to partially fix the interest cost of leverage, which as mentioned previously, is through the use of bank borrowings. During this reporting period, these swap contracts detracted from overall Fund performance.

As of January 31, 2016, the Funds’ percentages of leverage are shown in the accompanying table.

 

     JPC        JPI        JPW  

Effective Leverage*

    29.46        29.22        30.34

Regulatory Leverage*

    29.46        29.22        30.34
* Effective leverage is the 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. Regulatory leverage consists of preferred shares issued or borrowings of the Fund. Both of these are part of the Fund’s capital structure. Regulatory leverage is subject to asset coverage limits set forth in the Investment Company Act of 1940.

THE FUNDS’ REGULATORY LEVERAGE

Bank Borrowings

As noted above, the Funds employs leverage through the use of bank borrowings. The Funds’ bank borrowing activities are as shown in the accompanying table.

 

            Current Reporting Period      Subsequent to the Close of
the Reporting Period
 
Fund    Regulatory Leverage      August 1, 2015      Draws      Paydowns      January 31, 2016      Draws      Paydowns      March 29, 2016  

JPC

     Bank Borrowings       $ 404,100,000       $   —       $       $ 404,100,000      $   —       $       $ 404,100,000   

JPI

     Bank Borrowings       $ 225,000,000       $       $       $ 225,000,000      $       $       $ 225,000,000   

JPW

     Bank Borrowings       $ 30,000,000       $       $ (3,500,000    $ 26,500,000      $       $ (2,000,000    $ 24,500,000   

Refer to Notes to Financial Statements, Note 8 – Borrowing Arrangements for further details.

 

Nuveen Investments     15   


Common Share

Information

 

JPC AND JPI COMMON SHARE DISTRIBUTION INFORMATION

The following information regarding JPC’s and JPI’s distributions is as of January 31, 2016. Each Fund’s distribution

levels may vary over time based on each Fund’s investment activity and portfolio investment value changes.

During the current reporting period, each Fund’s distributions to common shareholders were as shown in the accompanying table.

 

    Per Common Share Amounts  
Ex-Dividend Date   JPC        JPI  

August 2015

  $ 0.0670         $ 0.1625   

September

    0.0670           0.1625   

October

    0.0670           0.1625   

November

    0.0670           0.1625   

December

    0.0670           0.1625   

January 2016

    0.0670           0.1625   

Ordinary Income Distribution*

  $         $ 0.0026   

Long-Term Capital Gain*

              0.1824   

Current Distribution Rate**

    8.61        8.25
* Distribution paid in December 2015.
** Current distribution rate is based on the Fund’s current annualized monthly distribution divided by the Fund’s current market price. The Fund’s monthly distributions to its shareholders may be comprised of ordinary income, net realized capital gains and, if at the end of the fiscal year the Fund’s cumulative net ordinary income and net realized gains are less than the amount of the Fund’s distributions, a return of capital for tax purposes.

JPC and JPI seek to pay regular monthly dividends out of their net investment income at a rate that reflects their past and projected net income performance. To permit each Fund to maintain a more stable monthly dividend, the Fund may pay dividends at a rate that may be more or less than the amount of net income actually earned by the Fund during the period. If a Fund has cumulatively earned more than it has paid in dividends, it will hold the excess in reserve as undistributed net investment income (UNII) as part of the Fund’s net asset value. Conversely, if a Fund has cumulatively paid in dividends more than it has earned, the excess will constitute a negative UNII that will likewise be reflected in the Fund’s net asset value. Each Fund will, over time, pay all its net investment income as dividends to shareholders.

As of January 31, 2016, JPC and JPI had positive UNII balances, based upon our best estimate, for tax purposes and positive UNII balances for financial reporting purposes.

All monthly dividends paid by JPC and JPI during the current reporting period, were paid from net investment income. If a portion of the Funds’ monthly distributions were sourced from or comprised of elements other than net investment income, including capital gains and/or a return of capital, shareholders would have received a notice to that effect. For financial reporting purposes, the composition and per share amounts of the Funds’ dividends for the reporting period are presented in this report’s Statement of Changes in Net Assets and Financial Highlights, respectively. For income tax purposes, distribution information for the Funds as of their most recent tax year end is presented in Note 6 – Income Tax Information within the Notes to Financial Statements of this report.

 

  16      Nuveen Investments


 

JPW DISTRIBUTION INFORMATION

The following information regarding JPW’s distributions is as of January 31, 2016.

The Fund has a cash flow-based distribution program. Under this program, the Fund seeks to maintain an attractive and stable regular distribution based on the Fund’s net cash flow received from its portfolio investments. Fund distributions are not intended to include expected portfolio appreciation; however, the Fund invests in securities that make payments which ultimately may be fully or partially treated as gains or return of capital for tax purposes. This tax treatment will generally “flow through” to the Fund’s distributions, but the specific tax treatment is often not known with certainty until after the end of the Fund’s tax year. As a result, regular distributions throughout the year are likely to be re-characterized for tax purposes as either long-term gains (both realized and unrealized), or as a non-taxable return of capital.

The figures in the table below provide an estimate as of January 31, 2016 of the sources (for tax purposes) of the Fund’s distributions. These source estimates include amounts currently estimated to be attributable to realized gains and/or returns of capital. The Fund attributes these non-income sources equally to each regular distribution throughout the fiscal year. The estimated information shown below is for the distributions paid on common shares for all prior months in the current fiscal year. These estimates should not be used for tax reporting purposes, and the distribution sources may differ for financial reporting than for tax reporting. The final determination of the tax characteristics of all distributions paid in 2016 will be made in early 2017 and reported to you on Form 1099-DIV. More details about the tax characteristics of the Fund’s distributions are available on www.nuveen.com/CEFdistributions.

Data as of January 31, 2016

 

Current Month
Estimated Percentage of Distributions
    Fiscal YTD
Estimated Per Share Amounts
 
Net
Investment
Income
    Realized
Gains
    Return of
Capital
    Total
Distributions
    Net
Investment
Income
    Realized
Gains
    Return of
Capital
 
  83.7%        0.0%        16.3%        $0.7160        $0.5995        $0.0000        $0.1165   

The following table provides information regarding Fund distributions and total return performance over various time periods. This information is intended to help you better understand whether Fund returns for the specified time periods were sufficient to meet Fund distributions.

Data as of January 31, 2016

 

            Annualized     Cumulative  
Inception
Date
    Latest
Monthly
Per Share
Distribution
    Current
Distribution on
NAV
    1-Year
Return on
NAV
    Since Inception
Return on
NAV
    Calendar YTD
Distributions on
NAV
    Calendar
YTD Return
on NAV
 
  6/25/2013        $0.1180        8.61%        (4.12)%        2.86%        0.72%        (3.56)%   

COMMON SHARE REPURCHASES

During August 2015, the Funds’ Board of Trustees reauthorized an open-market share repurchase program, allowing each Fund to repurchase an aggregate of up to approximately 10% of its outstanding shares.

As of January 31, 2016, and since the inception of the Funds’ repurchase programs, the Funds have cumulatively repurchased and retired their outstanding common shares as shown in the accompanying table.

 

     JPC        JPI        JPW  

Common shares cumulatively repurchased and retired

    2,826,100           0           6,500   

Common shares authorized for repurchase

    9,690,000           2,275,000           370,000   

 

Nuveen Investments     17   


Common Share Information (continued)

 

During the current reporting period, the following Fund repurchased and retired common shares at a weighted average price per share and a weighted average discount per common share as shown in the accompanying table.

 

        JPW  

Common shares repurchased and retired

       6,500   

Weighted average price per common share repurchased and retired

       $14.28   

Weighted average discount per common share repurchased and retired

       15.28

OTHER COMMON SHARE INFORMATION

As of January 31, 2016, and during the current reporting period, the Funds’ common share prices were trading at a premium/(discount) to their common share NAVs as shown in the accompanying table.

 

     JPC        JPI        JPW  

Common share NAV

    $9.99           $23.96           $16.45   

Common share price

    $9.34           $23.64           $14.20   

Premium/(Discount) to NAV

    (6.51 )%         (1.34 )%         (13.68 )% 

6-month average premium/(discount) to NAV

    (10.36 )%         (6.87 )%         (13.61 )% 

 

  18      Nuveen Investments


Risk

Considerations

 

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation.

Nuveen Preferred Income Opportunities Fund (JPC)

Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure, and therefore are subject to greater credit risk. Debt or fixed income securities such as those held by the Fund, are subject to market risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. Lower credit debt securities may be more likely to fail to make timely interest or principal payments. Leverage increases return volatility and magnifies the Fund’s potential return and its risks; there is no guarantee a fund’s leverage strategy will be successful. These and other risk considerations such as concentration and foreign securities risk are described in more detail on the Fund’s web page at www.nuveen.com/JPC.

Nuveen Preferred and Income Term Fund (JPI)

Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure, and therefore are subject to greater credit risk. Debt or fixed income securities such as those held by the Fund, are subject to market risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. Lower credit debt securities may be more likely to fail to make timely interest or principal payments. Leverage increases return volatility and magnifies the Fund’s potential return and its risks; there is no guarantee a fund’s leverage strategy will be successful. For these and other risks, including the Fund’s limited term and concentration risk, see the Fund’s web page at www.nuveen.com/JPI.

Nuveen Flexible Investment Income Fund (JPW)

Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure, and therefore are subject to greater credit risk. Debt or fixed income securities such as those held by the Fund, are subject to market risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. Lower credit debt securities may be more likely to fail to make timely interest or principal payments. Prices of equity securities may decline significantly over short or extended periods of time. Leverage increases return volatility and magnifies the Fund’s potential return and its risks; there is no guarantee a fund’s leverage strategy will be successful. For these and other risks such as concentration and foreign securities risk, please see the Fund’s web page at www.nuveen.com/JPW.

 

Nuveen Investments     19   


JPC

 

Nuveen Preferred Income Opportunities Fund

Performance Overview and Holding Summaries as of January 31, 2016

 

Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.

Average Annual Total Returns as of January 31, 2016

 

    Cumulative        Average Annual  
     6-Month        1-Year        5-Year        10-Year  
JPC at Common Share NAV     (0.57)%           3.00%           8.52%           4.71%   
JPC at Common Share Price     6.17%           6.82%           11.27%           6.37%   
JPC Blended Index (Comparative Benchmark)     (4.63)%           (1.51)%           5.88%           5.08%   
BofA/Merrill Lynch Preferred Securities Fixed Rate Index     3.54%           5.40%           7.00%           3.20%   

Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses and assume reinvestment of distributions. Comparative index return information is provided for the Fund’s shares at NAV only. Indexes are not available for direct investment.

Common Share Price Performance — Weekly Closing Price

LOGO

 

  20      Nuveen Investments


 

This data relates to the securities held in the Fund’s portfolio of investments as of the end of the reporting period. It should not be construed as a measure of performance for the Fund itself. Holdings are subject to change.

Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor’s Group, Moody’s Investors Service, Inc. or Fitch, Inc. Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below-investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.

 

Fund Allocation

(% of net assets)

 

Common Stocks     5.4%   
$25 Par (or similar) Retail Preferred     63.1%   
Convertible Preferred Securities     1.1%   
Corporate Bonds     9.8%   
$1,000 Par (or similar) Institutional Preferred     59.9%   
Repurchase Agreements     3.8%   
Other Assets Less Liabilities     (1.3)%   

Net Assets Plus Borrowings

    141.8%   
Borrowings     (41.8)%   

Net Assets

    100%   

Top Five Issuers

(% of total long-term investments)

 

General Electric Company     3.0%   
Citigroup Inc.     2.9%   
JPMorgan Chase & Company     2.5%   
Morgan Stanley     2.5%   
CHS Inc.     2.3%   

Portfolio Composition

(% of total investments)1

 

Banks     28.7%   
Insurance     19.8%   
Real Estate Investment Trust     11.7%   
Capital Markets     8.9%   
Diversified Financial Services     5.1%   
Food Products     4.3%   
Other     18.8%   
Repurchases Agreements     2.7%   

Total

    100%   

 

Credit Quality

(% of total long-term fixed-income investments)

 

AA     3.1%   
A     2.8%   
BBB     44.7%   
BB or Lower     34.1%   
N/R (not rated)     15.3%   

Total

    100%   

 

 

 

1 Excluding investments in derivatives.

 

Nuveen Investments     21   


JPI

 

Nuveen Preferred and Income Term Fund

Performance Overview and Holding Summaries as of January 31, 2016

 

Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.

Average Annual Total Returns as of January 31, 2016

 

    Cumulative        Average Annual  
     6-Month        1-Year        Since
Inception
 
JPI at Common Share NAV     0.97%           4.35%           9.01%   
JPI at Common Share Price     11.59%           10.90%           7.79%   
BofA/Merrill Lynch Preferred Securities Fixed Rate Index     3.54%           5.40%           6.01%   
JPI Blended Benchmark Index     2.56%           3.19%           5.98%   

Since inception returns are from 7/26/12. Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses and assume reinvestment of distributions. Comparative index return information is provided for the Fund’s shares at NAV only. Indexes are not available for direct investment.

Common Share Price Performance — Weekly Closing Price

 

LOGO

 

  22      Nuveen Investments


 

This data relates to the securities held in the Fund’s portfolio of investments as of the end of the reporting period. It should not be construed as a measure of performance for the Fund itself. Holdings are subject to change.

Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor’s Group, Moody’s Investors Service, Inc. or Fitch, Inc. Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below-investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.

 

Fund Allocation

(% of net assets)

 

$25 Par (or similar) Retail Preferred     44.3%   
Corporate Bonds     10.4%   
$1,000 Par (or similar) Institutional Preferred     85.5%   
Repurchase Agreements     0.4%   
Other Assets Less Liabilities     0.7%   

Net Assets Plus Borrowings

    141.3%   
Borrowings     (41.3)%   

Net Assets

    100%   

Top Five Issuers

(% of total long-term investments)

 

Farm Credit Bank of Texas     3.7%   
Citigroup Inc.     3.6%   
Wells Fargo & Company     3.6%   
Bank of America Corporation     3.4%   
Symetra Financial Corporation     3.3%   

Portfolio Composition

(% of total investments)1

 

Banks     35.9%   
Insurance     26.3%   
Capital Markets     7.4%   
Diversified Financial Services     7.3%   
Real Estate Investment Trust     5.8%   
Other     17.0%   
Repurchase Agreements     0.3%   

Total

    100%   

Credit Quality

(% of total long-term investments)

 

AA     3.2%   
A     4.2%   
BBB     50.9%   
BB or Lower     37.7%   
N/R (not rated)     4.0%   

Total

    100%   
 

 

 

1 Excluding investments in derivatives.

 

Nuveen Investments     23   


JPW

 

Nuveen Flexible Investment Income Fund

Performance Overview and Holding Summaries as of January 31, 2016

 

Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.

Average Annual Total Returns as of January 31, 2016

 

    Cumulative        Average Annual  
     6-Month        1-Year        Since
Inception
 
JPW at Common Share NAV     (7.81)%           (4.12)%           2.86%   
JPW at Common Share Price     (8.65)%           (8.28)%           (3.50)%   
Barclays U.S. Aggregate Bond Index     1.33%           (0.16)%           3.48%   
BofA/Merrill Lynch Preferred Securities Fixed Rate Index     3.54%           5.40%           7.96%   

Since inception returns are from 6/25/13. Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses and assume reinvestment of distributions. Comparative index return information is provided for the Fund’s shares at NAV only. Indexes are not available for direct investment.

Common Share Price Performance — Weekly Closing Price

 

LOGO

 

  24      Nuveen Investments


 

This data relates to the securities held in the Fund’s portfolio of investments as of the end of the reporting period. It should not be construed as a measure of performance for the Fund itself. Holdings are subject to change.

Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor’s Group, Moody’s Investors Service, Inc. or Fitch, Inc. Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below-investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.

 

Fund Allocation

(% of net assets)

 

Common Stocks     25.6%   
$25 Par (or similar) Retail Preferred     39.3%   
Convertible Preferred Securities     3.9%   
Corporate Bonds     57.3%   
$1,000 Par (or similar) Institutional Preferred     10.8%   
Repurchase Agreements     7.3%   
Other Assets Less Liabilities     (0.6)%   

Net Assets Plus Borrowings

    143.6%   
Borrowings     (43.6)%   

Net Assets

    100%   

 

Portfolio Composition

(% of total investments)1

 

Real Estate Investment Trust     12.0%   
Banks     10.4%   
Diversified Telecommunication Services     6.7%   
Capital Markets     6.6%   
Insurance     5.2%   
Food Products     3.8%   
Media     3.8%   
Pharmaceuticals     3.7%   
Chemicals     3.3%   
Real Estate Management & Development     3.1%   
Consumer Finance     2.8%   
Biotechnology     2.8%   
Machinery     2.6%   
Specialty Retail     2.6%   
Semiconductors & Semiconductor Equipment     2.5%   
Technology Hardware, Storage & Peripherals     2.3%   
Beverages     2.1%   
Other     18.7%   
Repurchase Agreements     5.0%   

Total

    100%   

Credit Quality

(% of total long-term fixed-income investments)

 

A

    2.6%   

BBB

    17.5%   

BB or Lower

    56.9%   

N/R (not rated)

    23.0%   

Total

    100%   

Top Five Issuers

(% of total long-term investments)

 

Citigroup Inc.     2.3%   
Frontier Communications Corporation     2.2%   
CHS Inc.     2.1%   
Gilead Sciences, Inc.     2.0%   
Land O’ Lakes Incorporated     1.9%   

 

 

 

1 Excluding investments in derivatives.

 

Nuveen Investments     25   


JPC

 

Nuveen Preferred Income Opportunities Fund

  

Portfolio of Investments

   January 31, 2016 (Unaudited)

 

Shares     Description (1)                               Value  
 

LONG-TERM INVESTMENTS – 139.3% (97.3% of Total Investments)

     
 

COMMON STOCKS – 5.4% (3.7% of Total Investments)

     
      Air Freight & Logistics – 0.4%              
  44,200     

United Parcel Service, Inc., Class B, (2)

                              $ 4,119,440   
      Automobiles – 0.3%              
  256,800     

Ford Motor Company

                                3,066,192   
      Banks – 0.2%              
  55,500     

CIT Group Inc.

                                1,628,925   
      Biotechnology – 0.6%              
  72,400     

Gilead Sciences, Inc.

                                6,009,200   
      Capital Markets – 0.7%              
  220,435     

Ares Capital Corporation

                3,064,047   
  151,368     

Hercules Technology Growth Capital, Inc.

                1,662,021   
  98,632     

TPG Specialty Lending, Inc.

                                1,579,098   
 

Total Capital Markets

                                6,305,166   
      Industrial Conglomerates – 0.4%              
  129,100     

Philips Electronics

                                3,444,388   
      Insurance – 0.3%              
  101,200     

Unum Group

                                2,898,368   
      Media – 0.4%              
  134,255     

National CineMedia, Inc., (3)

                2,099,748   
  39,035     

Viacom Inc., Class B

                                1,781,557   
 

Total Media

                                3,881,305   
      Pharmaceuticals – 1.1%              
  161,200     

AstraZeneca PLC, Sponsored ADR, (2)

                5,193,864   
  121,800     

GlaxoSmithKline PLC, Sponsored ADR, (2)

                                5,029,122   
 

Total Pharmaceuticals

                                10,222,986   
      Real Estate Investment Trust – 0.3%              
  192,000     

National Storage Affiliates Trust

                                3,338,880   
      Software – 0.2%              
  47,100     

Oracle Corporation

                                1,710,201   
      Technology Hardware, Storage & Peripherals – 0.1%              
  46,700     

Seagate Technology

                                1,356,635   
      Tobacco – 0.4%              
  187,015     

Vector Group Ltd., (3)

                                4,361,190   
 

Total Common Stocks (cost $57,004,370)

                                52,342,876   
Shares     Description (1)         Coupon            Ratings (4)      Value  
 

$25 PAR (OR SIMILAR) RETAIL PREFERRED – 63.1% (44.0% of Total Investments)

     
      Asset Backed Securities – 0.5%              
  102,495     

Oxford Lane Capital Corporation

       8.125%            N/R       $ 2,407,608   
  104,103     

Oxford Lane Capital Corporation

         7.500%              N/R         2,378,754   
 

Total Asset Backed Securities

                                4,786,362   

 

  26      Nuveen Investments


Shares     Description (1)         Coupon            Ratings (4)      Value  
      Banks – 15.6%              
  128,500     

AgriBank FCB, (11)

       6.875%            BBB+       $ 13,829,813   
  15,202     

Boston Private Financial Holdings Inc.

       6.950%            N/R         389,171   
  148,007     

Citigroup Inc.

       8.125%            BB+         4,147,156   
  445,498     

Citigroup Inc.

       7.125%            BB+         12,148,730   
  53,769     

Citigroup Inc.

       6.875%            BB+         1,477,034   
  172,975     

Cobank Agricultural Credit Bank, 144A, (11)

       6.250%            BBB+         17,892,102   
  48,055     

Cobank Agricultural Credit Bank, (11)

       6.200%            BBB+         4,838,538   
  38,725     

Cobank Agricultural Credit Bank, (11)

       6.125%            BBB+         3,632,889   
  288,251     

Countrywide Capital Trust III

       7.000%            BBB–         7,321,575   
  131,060     

Cowen Group, Inc.

       8.250%            N/R         3,023,554   
  152,203     

Fifth Third Bancorp.

       6.625%            Baa3         4,269,294   
  117,760     

First Naigara Finance Group

       8.625%            BB–         3,203,072   
  123,900     

FNB Corporation

       7.250%            Ba2         3,593,100   
  138,932     

HSBC Holdings PLC

       8.000%            Baa1         3,620,568   
  46,421     

PNC Financial Services

       6.125%            Baa2         1,294,217   
  260,212     

Private Bancorp Incorporated

       7.125%            N/R         6,835,769   
  390,258     

RBS Capital Trust

       6.080%            BB–         9,717,424   
  79,430     

Regions Financial Corporation

       6.375%            BB         2,071,534   
  444,575     

Regions Financial Corporation

       6.375%            BB         11,754,563   
  200,575     

Royal Bank of Canada

       6.750%            Baa2         6,027,279   
  133,300     

TCF Financial Corporation

       7.500%            BB–         3,625,760   
  78,740     

Texas Capital Bancshares Inc.

       6.500%            Ba2         1,911,020   
  132,000     

U.S. Bancorp.

       6.500%            A3         3,765,960   
  216,373     

Webster Financial Corporation

       6.400%            Baa3         5,591,078   
  170,400     

Wells Fargo & Company

       6.625%            BBB         4,880,256   
  187,983     

Zions Bancorporation

       7.900%            BB–         5,062,382   
  195,141     

Zions Bancorporation

         6.300%              BB–         5,120,500   
 

Total Banks

                                151,044,338   
      Capital Markets – 8.3%              
  130,200     

Apollo Investment Corporation

       6.875%            BBB         3,313,590   
  112,775     

Apollo Investment Corporation

       6.625%            BBB         2,850,952   
  187,440     

Capitala Finance Corporation

       7.125%            N/R         4,581,034   
  133,500     

Charles Schwab Corporation

       6.000%            BBB         3,493,695   
  149,435     

Fifth Street Finance Corporation

       6.125%            BBB–         3,617,821   
  60,700     

Gladstone Capital Corporation

       6.750%            N/R         1,369,999   
  43,604     

Gladstone Investment Corporation

       7.125%            N/R         1,110,158   
  89,100     

Goldman Sachs Group, Inc.

       5.500%            Ba1         2,224,827   
  65,013     

Hercules Technology Growth Capital, Inc.

       7.000%            N/R         1,635,727   
  56,207     

Hercules Technology Growth Capital, Inc.

       7.000%            N/R         1,415,854   
  163,458     

Hercules Technology Growth Capital, Inc.

       6.250%            N/R         4,137,122   
  37,355     

JMP Group Inc.

       7.250%            N/R         825,546   
  284,951     

Ladenburg Thalmann Financial Services Inc.

       8.000%            N/R         6,790,382   
  726,400     

Morgan Stanley

       7.125%            Ba1         20,651,552   
  239,900     

Morgan Stanley

       6.875%            Ba1         6,726,796   
  125,544     

MVC Capital Incorporated

       7.250%            N/R         3,043,187   
  261,622     

Solar Capital Limited

       6.750%            BBB–         6,365,263   
  72,375     

THL Credit Inc.

       6.750%            N/R         1,790,558   
  160,678     

Triangle Capital Corporation

         6.375%              N/R         3,925,364   
 

Total Capital Markets

                                79,869,427   
      Consumer Finance – 1.3%              
  48,000     

Capital One Financial Corporation

       6.700%            Baa3         1,306,560   
  272,000     

Discover Financial Services

       6.500%            BB–         7,058,400   
  90,659     

SLM Corporation, Series A

         6.970%              Ba3         3,959,079   
 

Total Consumer Finance

                                12,324,039   
      Diversified Financial Services – 1.9%              
  70,791     

KCAP Financial Inc.

       7.375%            N/R         1,712,434   
  30,291     

KKR Financial Holdings LLC

       7.500%            A–         789,989   
  325,399     

KKR Financial Holdings LLC

       7.375%            BBB         8,597,042   
  157,732     

Main Street Capital Corporation

       6.125%            N/R         3,943,300   

 

Nuveen Investments     27   


JPC    Nuveen Preferred Income Opportunities Fund   
   Portfolio of Investments (continued)    January 31, 2016 (Unaudited)

 

Shares     Description (1)         Coupon            Ratings (4)      Value  
      Diversified Financial Services (continued)              
  125,300     

PennantPark Investment Corporation

         6.250%              BBB–       $ 2,994,670   
 

Total Diversified Financial Services

                                18,037,435   
      Diversified Telecommunication Services – 1.1%              
  135,165     

Qwest Corporation

       7.000%            BBB–         3,503,477   
  163,815     

Qwest Corporation

       6.875%            BBB–         4,221,513   
  70,600     

Qwest Corporation

       6.625%            Baa3         1,750,174   
  57,500     

Verizon Communications Inc.

         5.900%              A–         1,524,900   
 

Total Diversified Telecommunication Services

                                11,000,064   
      Electric Utilities – 0.4%              
  136,900     

Entergy Arkansas Inc., (11)

         6.450%              BB+         3,448,169   
      Food Products – 3.6%              
  249,300     

CHS Inc.

       7.875%            N/R         7,067,655   
  460,600     

CHS Inc.

       7.100%            N/R         12,279,596   
  444,804     

CHS Inc.

       6.750%            N/R         11,480,391   
  23,000     

Dairy Farmers of America Inc., 144A, (11)

       7.875%            Baa3         2,447,345   
  19,500     

Dairy Farmers of America Inc., 144A, (11)

         7.875%              Baa3         1,987,173   
 

Total Food Products

                                35,262,160   
      Insurance – 11.8%              
  54,045     

Aegon N.V.

       8.000%            Baa1         1,459,215   
  410,933     

Arch Capital Group Limited

       6.750%            BBB+         10,684,258   
  302,283     

Argo Group US Inc.

       6.500%            BBB–         7,699,148   
  55,200     

Aspen Insurance Holdings Limited

       7.401%            BBB–         1,347,984   
  56,486     

Aspen Insurance Holdings Limited

       7.250%            BBB–         1,487,841   
  393,800     

Aspen Insurance Holdings Limited

       5.950%            BBB–         10,187,606   
  412,734     

Axis Capital Holdings Limited

       6.875%            BBB         10,801,249   
  56,900     

Delphi Financial Group, Inc., (11)

       7.376%            BB+         1,406,500   
  223,900     

Endurance Specialty Holdings Limited, (3)

       7.500%            BBB–         5,749,752   
  168,000     

Endurance Specialty Holdings Limited

       6.350%            BBB–         4,410,000   
  42,470     

Hanover Insurance Group

       6.350%            BB+         1,077,464   
  138,124     

Hartford Financial Services Group Inc.

       7.875%            BBB–         4,240,407   
  535,700     

Kemper Corporation

       7.375%            Ba1         14,426,401   
  298,139     

Maiden Holdings Limited, (3)

       8.250%            BB         7,850,000   
  233,932     

Maiden Holdings NA Limited

       8.000%            BBB–         6,126,679   
  291,133     

Maiden Holdings NA Limited

       7.750%            BBB–         7,802,364   
  100,195     

National General Holding Company

       7.625%            N/R         2,405,682   
  76,400     

National General Holding Company

       7.500%            N/R         1,948,964   
  153,954     

National General Holding Company

       7.500%            N/R         3,930,446   
  310,872     

Reinsurance Group of America Inc.

         6.200%              BBB         8,890,939   
 

Total Insurance

                                113,932,899   
      Oil, Gas & Consumable Fuels – 0.8%              
  206,105     

Nustar Logistics Limited Partnership

       7.625%            Ba2         4,177,748   
  93,775     

Scorpio Tankers Inc.

       7.500%            N/R         2,208,401   
  76,005     

Scorpio Tankers Inc.

         6.750%              N/R         1,444,855   
 

Total Oil, Gas & Consumable Fuels

                                7,831,004   
      Real Estate Investment Trust – 11.6%              
  152,377     

AG Mortgage Investment Trust, (3)

       8.000%            N/R         3,306,581   
  24,296     

Apartment Investment & Management Company

     7.000%            BB         616,147   
  57,165     

Apartment Investment & Management Company

     6.875%            BB         1,484,003   
  133,250     

Apollo Commercial Real Estate Finance

       8.625%            N/R         3,293,940   
  183,953     

Apollo Residential Mortgage Inc.

       8.000%            N/R         3,991,780   
  141,555     

Arbor Realty Trust Incorporated

       7.375%            N/R         3,193,481   
  133,192     

Ashford Hospitality Trust Inc.

       9.000%            N/R         3,179,293   
  37,399     

Ashford Hospitality Trust Inc.

       8.450%            N/R         827,640   
  98,157     

Capstead Mortgage Corporation

       7.500%            N/R         2,299,819   
  186,579     

Cedar Shopping Centers Inc., Series A

       7.250%            N/R         4,664,475   

 

  28      Nuveen Investments


Shares     Description (1)         Coupon             Ratings (4)      Value  
      Real Estate Investment Trust (continued)               
  208,314     

Chesapeake Lodging Trust

       7.750%           N/R       $ 5,307,841   
  122,020     

Colony Financial Inc.

       7.125%           N/R         2,403,794   
  23,967     

Colony Financial Inc.

       8.500%           N/R         578,803   
  97,795     

Colony Financial Inc.

       7.500%           N/R         2,074,232   
  50,000     

Coresite Realty Corporation

       7.250%           N/R         1,302,500   
  270,925     

DDR Corporation

       6.500%           Baa3         6,897,751   
  182,479     

Digital Realty Trust Inc.

       7.375%           Baa3         4,884,963   
  59,270     

Digital Realty Trust Inc.

       7.000%           Baa3         1,520,276   
  214,845     

Dupont Fabros Technology

       7.875%           Ba2         5,472,102   
  160,999     

First Potomac Realty Trust

       7.750%           N/R         4,092,595   
  70,136     

Hospitality Properties Trust

       7.125%           BB         1,820,731   
  175,177     

Inland Real Estate Corporation

       8.125%           N/R         4,398,694   
  22,200     

Inland Real Estate Corporation

       6.950%           N/R         558,330   
  10,344     

Invesco Mortgage Capital Inc.

       7.750%           N/R         222,396   
  122,164     

Invesco Mortgage Capital Inc.

       7.750%           N/R         2,614,310   
  177,094     

MFA Financial Inc.

       8.000%           N/R         4,452,143   
  182,859     

Northstar Realty Finance Corporation

       8.875%           N/R         3,797,981   
  51,926     

Northstar Realty Finance Corporation

       8.750%           N/R         1,038,001   
  128,783     

Northstar Realty Finance Corporation

       8.250%           N/R         2,489,375   
  72,400     

Penn Real Estate Investment Trust

       7.375%           N/R         1,828,100   
  200,000     

Penn Real Estate Investment Trust

       8.250%           N/R         5,152,000   
  81,043     

Rait Financial Trust

       7.625%           N/R         1,503,348   
  149,039     

Regency Centers Corporation

       6.625%           Baa2         3,888,428   
  144,521     

Senior Housing Properties Trust

       5.625%           BBB–         3,602,909   
  7,474     

Summit Hotel Properties Inc.

       7.875%           N/R         193,577   
  149,300     

Urstadt Biddle Properties

       7.125%           N/R         3,829,545   
  269,495     

VEREIT, Inc.

       6.700%           N/R         6,521,779   
  107,000     

Wells Fargo REIT

         6.375%                 BBB+         2,844,060   
 

Total Real Estate Investment Trust

                                   112,147,723   
      Real Estate Management & Development – 0.3%               
  110,000     

Kennedy-Wilson Inc.

         7.750%                 BB–         2,794,000   
      Specialty Retail – 1.0%               
  260,674     

TravelCenters of America LLC

       8.000%           N/R         6,256,176   
  125,000     

TravelCenters of America LLC

         8.000%                 N/R         2,960,000   
 

Total Specialty Retail

                                   9,216,176   
      Thrifts & Mortgage Finance – 1.0%               
  52,102     

Everbank Financial Corporation

       6.750%           N/R         1,287,440   
  160,700     

Federal Agricultural Mortgage Corporation

       6.875%           N/R         4,338,900   
  143,400     

Federal Agricultural Mortgage Corporation

         6.000%                 N/R         3,686,814   
 

Total Thrifts & Mortgage Finance

                                   9,313,154   
      U.S. Agency – 2.9%               
  260,300     

Farm Credit Bank of Texas, 144A, (11)

         6.750%                 Baa1         27,770,754   
      Wireless Telecommunication Services – 1.0%               
  393,596     

United States Cellular Corporation

         7.250%                 Ba1         9,997,337   
 

Total $25 Par (or similar) Preferred Securities (cost $593,505,795)

  

             608,775,041   
Shares     Description (1)         Coupon      Maturity     Ratings (4)      Value  
 

CONVERTIBLE PREFERRED SECURITIES – 1.1% (0.9% of Total Investments)

  

    
      Banks – 0.6%                               
  5,525     

Wells Fargo & Company

         7.500%         N/A (5)      BBB       $ 6,475,300   
      Diversified Telecommunication Services – 0.5%               
  58,300     

Frontier Communications Corporation

         11.125%         6/29/18        N/R         5,210,854   
 

Total Convertible Preferred Securities (cost $12,349,714)

                               11,686,154   

 

Nuveen Investments     29   


JPC    Nuveen Preferred Income Opportunities Fund   
   Portfolio of Investments (continued)    January 31, 2016 (Unaudited)

 

Principal
Amount (000)
    Description (1)         Coupon      Maturity      Ratings (4)      Value  
 

CORPORATE BONDS – 9.8% (6.7% of Total Investments)

  

     
      Banks – 3.9%                
$ 6,000     

Bank of America Corporation

       6.250%         3/05/65         BB+       $ 6,000,000   
  7,165     

Citigroup Inc.

       5.875%         12/29/49         BB+         6,959,006   
  8,570     

Citigroup Inc.

       5.950%         12/31/49         BB+         8,315,471   
  3,950     

Credit Agricole, SA, 144A

       6.625%         12/23/64         BB+         3,716,610   
  5,055     

ING Groep N.V.

       6.500%         10/16/65         Ba1         4,897,031   
  4,460     

JPMorgan Chase & Company

       5.300%         11/01/65         BBB–         4,420,975   
  3,550     

Standard Chartered PLC, 144A

         6.500%                  BBB–         3,348,964   
  38,750     

Total Banks

                                    37,658,057   
      Beverages – 0.5%                
  1,100     

Cott Beverages Inc.

       6.750%         1/01/20         B–         1,133,000   
  3,450     

Cott Beverages Inc.

         5.375%         7/01/22         B–         3,346,500   
  4,550     

Total Beverages

                                    4,479,500   
      Biotechnology – 0.3%                
  3,500     

AMAG Pharmaceuticals Inc., 144A

         7.875%         9/01/23         B+         3,176,250   
      Capital Markets – 1.4%                
  2,200     

BGC Partners Inc.

       5.375%         12/09/19         BBB–         2,270,294   
  11,100     

Goldman Sachs Group Inc.

         5.375%         11/10/65         Ba1         10,836,375   
  13,300     

Total Capital Markets

                                    13,106,669   
      Commercial Services & Supplies – 0.5%                
  3,295     

GFL Environmental Corporation, 144A

       7.875%         4/01/20         B         3,278,525   
  1,255     

R.R. Donnelley & Sons Company, (3)

         6.500%         11/15/23         BB–         1,104,400   
  4,550     

Total Commercial Services & Supplies

                                4,382,925   
      Diversified Consumer Services – 0.1%                
  1,885     

Gibson Brands Inc., 144A

         8.875%         8/01/18         CCC+         1,074,450   
      Diversified Telecommunication Services – 0.7%                
  6,900     

Frontier Communications Corporation, 144A

         11.000%         9/15/25         BB         6,649,875   
      Food Products – 0.1%                
  1,010     

Land O’ Lakes Capital Trust I, 144A, (3)

     7.450%         3/15/28         BB         1,050,400   
      Health Care Providers & Services – 0.3%                
  3,040     

Kindred Healthcare Inc., (3)

         6.375%         4/15/22         B2         2,473,800   
      Insurance – 0.2%                
  1,835     

Security Benefit Life Insurance Company, 144A

     7.450%         10/01/33         BBB         2,294,357   
      Media – 0.3%                
  1,925     

Altice SA, 144A

       7.625%         2/15/25         B         1,713,250   
  1,470     

Dish DBS Corporation

         5.875%         11/15/24         BB–         1,308,300   
  3,395     

Total Media

                                    3,021,550   
      Real Estate Investment Trust – 0.5%                
  3,525     

Communications Sales & Leasing Inc., (3)

       8.250%         10/15/23         BB         3,110,813   
  1,640     

Select Income REIT

         4.500%         2/01/25         Baa2         1,516,662   
  5,165     

Total Real Estate Investment Trust

                                    4,627,475   
      Real Estate Management & Development – 0.7%                
  4,100     

Forestar USA Real Estate Group Inc., 144A, (3)

     8.500%         6/01/22         B+         3,761,750   
  2,140     

Greystar Real Estate Partners, LLC, 144A

       8.250%         12/01/22         BB–         2,198,850   
  850     

Kennedy-Wilson Holdings Incorporated

         5.875%         4/01/24         BB–         811,750   
  7,090     

Total Real Estate Management & Development

                                6,772,350   

 

  30      Nuveen Investments


Principal
Amount (000)
    Description (1)         Coupon      Maturity      Ratings (4)      Value  
      Specialty Retail – 0.3%                
$ 3,250     

L Brands, Inc., 144A, (3)

         6.875%         11/01/35         BB+       $ 3,359,688   
$ 98,220     

Total Corporate Bonds (cost $97,773,523)

  

              94,127,346   
Principal
Amount (000)/
Shares
    Description (1)         Coupon      Maturity      Ratings (4)      Value  
 

$1,000 PAR (OR SIMILAR) INSTITUTIONAL PREFERRED – 59.9% (42.0% of Total Investments)

  

      Banks – 20.9%                
  600     

Banco Santander SA, Reg S

       6.375%         N/A (5)         Ba1       $ 553,997   
  885     

Bank of America Corporation

       8.125%         N/A (5)         BB+         897,726   
  3,265     

Bank of America Corporation

       8.000%         N/A (5)         BB+         3,296,605   
  18,795     

Bank of America Corporation (2)

       6.500%         N/A (5)         BB+         19,599,426   
  4,200     

Bank of America Corporation

       6.100%         N/A (5)         BB+         4,270,140   
  3,575     

Barclays Bank PLC, 144A, (3)

       10.180%         6/12/21         A–         4,756,877   
  17,935     

Barclays PLC

       8.250%         N/A (5)         BB+         18,785,137   
  5,000     

Citigroup Inc.

       6.250%         N/A (5)         BB+         5,029,650   
  1,000     

Citigroup Inc.

       8.400%         N/A (5)         BB+         1,096,250   
  7,538     

Citigroup Inc. (2)

       5.800%         N/A (5)         BB+         7,330,705   
  7,214     

Citizens Financial Group Inc., 144A

       5.500%         N/A (5)         BB+         6,970,528   
  3,960     

Commerzbank AG, 144A

       8.125%         9/19/23         BBB–         4,448,347   
  1,025     

Credit Agricole SA, 144A

       8.125%         N/A (5)         BB+         1,024,385   
  1,000     

HSBC Bank PLC

       1.125%         N/A (5)         A3         590,358   
  500     

HSBC Bank PLC

       0.975%         N/A (5)         A3         295,375   
  4,204     

HSBC Capital Funding LP, 144A

       10.176%         N/A (5)         Baa1         6,253,450   
  3,745     

HSBC Holdings PLC

       6.375%         N/A (5)         BBB         3,595,200   
  2,250     

HSBC Holdings PLC

       6.375%         N/A (5)         BBB         2,168,123   
  10,175     

Intesa Sanpaolo Spa, 144A

       7.700%         N/A (5)         Ba3         9,818,875   
  8,759     

JPMorgan Chase & Company

       7.900%         N/A (5)         BBB–         8,841,116   
  19,265     

JPMorgan Chase & Company

       6.750%         N/A (5)         BBB–         20,854,362   
  125     

JP Morgan Chase & Company

       6.100%         N/A (5)         BBB–         125,625   
  17,970     

Lloyd’s Banking Group PLC

       7.500%         N/A (5)         BB+         18,598,950   
  1,960     

M&T Bank Corporation

       6.450%         N/A (5)         Baa2         2,077,600   
  4,000     

Nordea Bank AB, 144A

       6.125%         N/A (5)         BBB         3,801,280   
  10,695     

PNC Financial Services Inc.

       6.750%         N/A (5)         Baa2         11,483,756   
  4,050     

Royal Bank of Scotland Group PLC

       7.500%         N/A (5)         BB–         4,110,750   
  4,883     

Royal Bank of Scotland Group PLC

       7.648%         N/A (5)         BB         6,030,505   
  13,906     

Societe Generale, 144A

       7.875%         N/A (5)         BB+         13,401,908   
  4,995     

SunTrust Bank Inc.

       5.625%         N/A (5)         Baa3         4,963,781   
  250     

U.S. Bancorp.

       5.125%         N/A (5)         A3         251,900   
  6,290     

Zions Bancorporation

         7.200%         N/A (5)         BB–         6,604,500   
 

Total Banks

                                    201,927,187   
      Capital Markets – 2.4%                
  3,270     

Bank of New York Mellon Corporation

       4.950%         N/A (5)         Baa1         3,226,182   
  6,705     

Credit Suisse Group AG, 144A

       7.500%         N/A (5)         BB+         6,883,219   
  5,880     

Morgan Stanley

       5.550%         N/A (5)         Ba1         5,817,525   
  1,975     

State Street Corporation

       5.250%         N/A (5)         Baa1         1,984,875   
  5,375     

UBS Group AG, Reg S

         7.125%         N/A (5)         BB+         5,542,157   
 

Total Capital Markets

                                    23,453,958   
      Consumer Finance – 2.1%                
  5,271     

American Express Company

       5.200%         N/A (5)         Baa2         5,020,628   
  1,900     

American Express Company

       4.900%         N/A (5)         Baa2         1,771,750   
  13,730     

Capital One Financial Corporation

         5.550%         N/A (5)         Baa3         13,652,769   
 

Total Consumer Finance

                                    20,445,147   
      Diversified Financial Services – 5.4%                
  16     

Agstar Financial Services Inc., 144A

       6.750%         N/A (5)         BB         17,896,500   
  5,670     

BNP Paribas, 144A

       7.195%         N/A (5)         BBB         6,378,750   
  4,065     

BNP Paribas, 144A

       7.375%         N/A (5)         BBB–         3,988,781   

 

Nuveen Investments     31   


JPC    Nuveen Preferred Income Opportunities Fund   
   Portfolio of Investments (continued)    January 31, 2016 (Unaudited)

 

Principal
Amount (000)/
Shares
    Description (1)         Coupon      Maturity      Ratings (4)      Value  
      Diversified Financial Services (continued)                
  4,250     

Depository Trust & Clearing Corporation, 144A

     4.875%         N/A (5)         A+       $ 4,230,875   
  15,183     

Rabobank Nederland, 144A

       11.000%         N/A (5)         Baa2         18,450,382   
  1,530     

Voya Financial Inc., (3)

         5.650%         5/15/53         Baa3         1,484,100   
 

Total Diversified Financial Services

                                    52,429,388   
      Food Products – 2.3%                
  21,870     

Land O’ Lakes Incorporated, 144A

         8.000%         N/A (5)         BB         22,717,462   
      Industrial Conglomerates – 4.2%                
  39,281,000     

General Electric Company

         5.000%         N/A (5)         AA–         40,361,224   
      Insurance – 16.1%                
  7,365     

Aviva PLC, Reg S

       8.250%         N/A (5)         BBB         7,888,512   
  905     

AXA SA, (3)

       8.600%         12/15/30         A3         1,210,754   
  4,784     

Catlin Insurance Company Limited, 144A

       7.249%         N/A (5)         BBB+         3,731,520   
  2,460     

Cloverie PLC Zurich Insurance, Reg S

       8.250%         N/A (5)         A         2,682,192   
  2,300     

CNP Assurances, Reg S

       7.500%         N/A (5)         BBB+         2,474,434   
  29,045     

Financial Security Assurance Holdings, 144A, (3)

     6.400%         12/15/66         BBB+         20,839,787   
  1,755     

Friends Life Holdings PLC, Reg S

       7.875%         N/A (5)         A–         1,929,907   
  2,108     

La Mondiale SAM, Reg S

       7.625%         N/A (5)         BBB         2,223,358   
  6,590     

Liberty Mutual Group, 144A, (3)

       7.800%         3/07/87         Baa3         7,512,600   
  9,335     

MetLife Capital Trust IV, 144A, (3)

       7.875%         12/15/67         BBB         11,202,000   
  5,285     

MetLife Capital Trust X, 144A, (3)

       9.250%         4/08/68         BBB         7,081,900   
  3,425     

MetLife Inc.

       5.250%         N/A (5)         BBB         3,345,797   
  13,770     

National Financial Services Inc., (3)

       6.750%         5/15/67         Baa2         13,770,000   
  1,150     

Nationwide Financial Services Capital Trust

       7.899%         3/01/37         Baa2         1,297,824   
  6,855     

Provident Financing Trust I, (3)

       7.405%         3/15/38         Baa3         7,751,970   
  3,315     

Prudential Financial Inc., (3)

       5.875%         9/15/42         BBB+         3,476,606   
  13,335     

QBE Capital Funding III Limited, 144A, (3)

       7.250%         5/24/41         BBB         14,668,500   
  2,340     

QBE Insurance Group Limited, Reg S

       6.750%         12/2/44         BBB         2,409,662   
  17,355     

Sirius International Grp Limited, 144A

       7.506%         N/A (5)         BBB–         17,379,297   
  20,553     

Symetra Financial Corporation, 144A, (3)

       8.300%         10/15/37         Baa2         20,655,765   
  2,600     

ZFS Finance USA Trust II 144A

         6.450%         12/15/65         A         2,603,250   
 

Total Insurance

                                    156,135,635   
      Machinery – 0.2%                
  2,215     

Stanley Black & Decker Inc.

         5.750%         12/15/53         BBB+         2,308,030   
      Metals & Mining – 0.6%                
  5,825,000     

BHP Billiton Finance USA Limited, 144A

         6.250%         10/19/75         A3         5,548,313   
      Pharmaceuticals – 0.2%                
  1,775     

Teva Pharmaceutical Industries Limited, Convertible Preferred

     7.000%         12/15/18         N/R         1,732,400   
      Real Estate Investment Trust – 4.4%                
  12     

Sovereign Real Estate Investment Trust, 144A

       12.000%         N/A (5)         Ba1         14,631,250   
  12,975     

Wells Fargo & Company, (2)

       5.875%         N/A (5)         BBB         13,647,884   
  13,691     

Wells Fargo & Company, (2)

         7.980%         N/A (5)         BBB         14,307,095   
 

Total Real Estate Investment Trust

                                    42,586,229   
      Specialty Retail – 0.9%                
  2,650     

Aquarius & Investments PLC fbo SwissRe, Reg S

     8.250%         N/A (5)         N/R         2,828,875   
  5,644     

Swiss Re Capital I, 144A

         6.854%         N/A (5)         A         5,686,331   
 

Total Specialty Retail

                                    8,515,206   
      U.S. Agency – 0.2%                
  1,700     

Farm Credit Bank of Texas, 144A

         10.000%         N/A (5)         Baa1         2,123,939   
 

Total $1,000 Par (or similar) Institutional Preferred (cost $563,878,215)

  

                       580,284,118   
 

Total Long-Term Investments (cost $1,324,511,617)

  

                       1,347,215,535   

 

  32      Nuveen Investments


Principal
Amount (000)
    Description (1)               Coupon      Maturity      Value  
 

SHORT-TERM INVESTMENTS – 3.8% (2.7% of Total Investments)

  

     
      REPURCHASE AGREEMENTS – 3.8% (2.7% of Total Investments)                
$ 9,760     

Repurchase Agreement with Fixed Income Clearing Corporation,
dated 1/29/16, repurchase price $9,760,104,
collateralized by $7,135,000 U.S. Treasury Bonds,
4.750%, due 2/15/37, value $9,962,030

     0.030%         2/01/16       $ 9,760,080   
  27,328     

Repurchase Agreement with Fixed Income Clearing Corporation,
dated 1/29/16, repurchase price $27,328,619,
collateralized by $20,350,000 U.S. Treasury Bonds,
5.250%, due 2/15/29, value $27,880,431

     0.030%         2/01/16         27,328,551   
$ 37,088     

Total Short-Term Investments (cost $37,088,631)

  

              37,088,631   
 

Total Investments (cost $1,361,600,248) – 143.1%

  

              1,384,304,166   
 

Borrowings – (41.8)% (6), (7)

                                (404,100,000
 

Other Assets Less Liabilities – (1.3)% (8)

                                (12,573,852
 

Net Assets Applicable to Common Shares – 100%

  

            $ 967,630,314   

Investments in Derivatives as of January 31, 2016

Call Options Written outstanding:

 

Number of
Contracts
       Description      Notional
Amount (9)
       Expiration
Date
       Strike
Price
       Value  
  (2,322     

Ford Motor Company

     $ (3,483,000        4/15/16         $ 15.0         $ (6,966
  (513     

National CineMedia Inc.

       (897,750        3/18/16           17.5           (5,130
  (390     

Viacom Inc., Class B

       (1,755,000        2/19/16           45.0           (110,175
  (3,225     

Total Call Options Written (premium received $128,238)

     $ (6,135,750                            $ (122,271

Interest Rate Swaps outstanding:

 

Counterparty   Notional
Amount
    Fund
Pay/Receive
Floating
Rate
    Floating Rate Index     Fixed Rate
(Annualized)
    Fixed Rate
Payment
Frequency
    Effective
Date (10)
    Optional
Termination
Date
    Termination
Date
    Value     Unrealized
Appreciation
(Depreciation)
 

JPMorgan Chase Bank, N.A.

  $ 114,296,000        Receive        1-Month USD-LIBOR-ICE        1.462     Monthly        6/01/16        12/01/18        12/01/20      $ (2,799,122   $ (3,385,631

JPMorgan Chase Bank, N.A.

    114,296,000        Receive        1-Month USD-LIBOR-ICE        1.842        Monthly        6/01/16        12/01/20        12/01/22        (4,833,888     (5,687,290
    $ 228,592,000                                                              $ (7,633,010   $ (9,072,921

 

Nuveen Investments     33   


JPC    Nuveen Preferred Income Opportunities Fund   
   Portfolio of Investments (continued)    January 31, 2016 (Unaudited)

 

 

For Fund portfolio compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications into sectors for reporting ease.

 

(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to common shares unless otherwise noted.

 

(2) Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in derivatives.

 

(3) Investment, or a portion of investment, is hypothecated as described in the Notes to Financial Statements, Note 8 – Borrowing Arrangements, Rehypothecation. The total value of investments hypothecated as of the end of the reporting period was $631,656,387.

 

(4) Ratings: Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor 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.

 

(5) Perpetual security. Maturity date is not applicable.

 

(6) The Fund may pledge up to 100% of its eligible investments (excluding any investments separately pledged as collateral for specific investments in derivatives, when applicable) as collateral for borrowings. As of the end of the reporting period, investments with a value of $897,141,032 have been pledged as collateral for borrowings.

 

(7) Borrowings as a percentage of Total Investments is 29.2%.

 

(8) Other assets less liabilities includes the unrealized appreciation (depreciation) of certain over-the-counter derivatives as presented on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) of exchange-cleared and exchange-traded derivatives is recognized as part of the cash collateral at brokers and/or the receivable or payable for variation margin as presented on the Statement of Assets and Liabilities, when applicable. Other assets less liabilities also includes the value of options as presented on the Statement of Assets and Liabilities.

 

(9) For disclosure purposes, Notional Amount is calculated by multiplying the Number of Contracts by the Strike Price by 100.

 

(10) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each contract.

 

(11) For fair value measurement disclosure purposes, investment classified as Level 2. See Notes to Financial Statements, Note 2 – Investment Valuation and Fair Value Measurements 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.

 

Reg S Regulation S allows U.S. companies to sell securities to persons or entities located outside of the United States without registering those securities with the Securities and Exchange Commission. Specifically, Regulation S provides a safe harbor from the registration requirements of the Securities Act for the offers and sales of securities by both foreign and domestic issuers that are made outside the United States.

 

ADR American Depositary Receipt

 

REIT Real Estate Investment Trust

 

USD-LIBOR-ICE United States Dollar – London Inter-Bank Offered Rate – Intercontinental Exchange

 

See accompanying notes to financial statements.

 

  34      Nuveen Investments


JPI

 

Nuveen Preferred and Income Term Fund

  

Portfolio of Investments

   January 31, 2016 (Unaudited)

 

Shares     Description (1)   Coupon            Ratings (2)      Value  
 

LONG-TERM INVESTMENTS – 140.2% (99.7% of Total Investments)

  

        
 

$25 PAR (OR SIMILAR) RETAIL PREFERRED – 44.3% (31.6% of Total Investments)

     
      Banks – 15.0%                         
  143,400     

AgriBank FCB, (9)

    6.875%            BBB+       $ 15,433,425   
  355,166     

Citigroup Inc.

    7.125%            BB+         9,685,377   
  44,969     

Citigroup Inc.

    6.875%            BB+         1,235,298   
  163,800     

Cobank Agricultural Credit Bank, 144A, (9)

    6.250%            BBB+         16,943,063   
  37,800     

Cobank Agricultural Credit Bank, (9)

    6.200%            BBB+         3,805,988   
  15,100     

Countrywide Capital Trust III

    7.000%            BBB–         383,540   
  121,300     

Fifth Third Bancorp.

    6.625%            Baa3         3,402,465   
  38,600     

PNC Financial Services

    6.125%            Baa2         1,076,168   
  124,753     

Private Bancorp Incorporated

    7.125%            N/R         3,277,261   
  87,100     

Regions Financial Corporation

    6.375%            BB         2,271,568   
  331,800     

Regions Financial Corporation

    6.375%            BB         8,772,792   
  80,500     

Royal Bank of Canada

    6.750%            Baa2         2,419,025   
  84,273     

Texas Capital Bancshares Inc.

    6.500%            Ba2         2,045,306   
  19,600     

U.S. Bancorp.

    6.500%            A3         559,188   
  182,100     

Wells Fargo & Company

    6.625%            BBB         5,215,344   
  209,179     

Zions Bancorporation

    6.300%              BB–         5,488,857   
 

Total Banks

                           82,014,665   
      Capital Markets – 4.3%  
  94,900     

Goldman Sachs Group, Inc.

    5.500%            Ba1         2,369,653   
  511,800     

Morgan Stanley

    7.125%            Ba1         14,550,474   
  235,300     

Morgan Stanley

    6.875%              Ba1         6,597,812   
 

Total Capital Markets

                           23,517,939   
      Consumer Finance – 1.0%  
  51,300     

Capital One Financial Corporation

    6.700%            Baa3         1,396,386   
  149,800     

Discover Financial Services

    6.500%              BB–         3,887,310   
 

Total Consumer Finance

                           5,283,696   
      Diversified Financial Services – 0.4%         
  76,800     

KKR Financial Holdings LLC

    7.375%              BBB         2,029,056   
      Diversified Telecommunication Services – 0.3%         
  62,000     

Verizon Communications Inc.

    5.900%              A–         1,644,240   
      Electric Utilities – 0.4%                         
  81,000     

Entergy Arkansas Inc., (9)

    6.450%              BB+         2,040,188   
      Food Products – 3.7%                         
  267,600     

CHS Inc.

    7.875%            N/R         7,586,460   
  161,100     

CHS Inc.

    7.100%            N/R         4,294,926   
  141,800     

CHS Inc.

    6.750%            N/R         3,659,858   
  24,000     

Dairy Farmers of America Inc., 144A, (9)

    7.875%            Baa3         2,553,751   
  20,500     

Dairy Farmers of America Inc., 144A, (9)

    7.875%              Baa3         2,089,079   
 

Total Food Products

                           20,184,074   
      Insurance – 11.3%  
  15,000     

Aegon N.V

    8.000%            Baa1         405,000   
  168,500     

Arch Capital Group Limited

    6.750%            BBB+         4,381,000   
  59,200     

Aspen Insurance Holdings Limited

    7.250%            BBB–         1,559,328   
  432,500     

Aspen Insurance Holdings Limited

    5.950%            BBB–         11,188,775   
  177,623     

Axis Capital Holdings Limited

    6.875%            BBB         4,648,394   
  61,100     

Delphi Financial Group, Inc., (9)

    7.376%            BB+         1,510,319   

 

Nuveen Investments     35   


JPI    Nuveen Preferred and Income Term Fund   
   Portfolio of Investments (continued)    January 31, 2016 (Unaudited)

 

Shares     Description (1)   Coupon              Ratings (2)      Value  
      Insurance (continued)  
  174,000     

Endurance Specialty Holdings Limited

    7.500%            BBB–       $ 4,468,320   
  147,600     

Hartford Financial Services Group Inc.

    7.875%            BBB–         4,531,320   
  372,300     

Kemper Corporation

    7.375%            Ba1         10,026,039   
  323,546     

Maiden Holdings Limited

    8.250%            BB         8,518,966   
  163,333     

Maiden Holdings Limited

    7.750%            BBB–         4,377,324   
  205,000     

Reinsurance Group of America Inc.

    6.200%                  BBB         5,863,000   
 

Total Insurance

                               61,477,785   
      Oil, Gas & Consumable Fuels – 0.8%         
  219,800     

Nustar Logistics Limited Partnership

    7.625%                  Ba2         4,455,346   
      Real Estate Investment Trust – 0.6%         
  114,600     

Wells Fargo REIT

    6.375%                  BBB+         3,046,068   
      Thrifts & Mortgage Finance – 1.5%         
  172,400     

Federal Agricultural Mortgage Corporation

    6.875%            N/R         4,654,800   
  146,600     

Federal Agricultural Mortgage Corporation

    6.000%                  N/R         3,769,086   
 

Total Thrifts & Mortgage Finance

                               8,423,886   
      U.S. Agency – 5.0%                           
  255,100     

Farm Credit Bank of Texas, 144A, (9)

    6.750%                  Baa1         27,215,980   
 

Total $25 Par (or similar) Retail Preferred (cost $230,744,037)

  

                       241,332,923   
Principal
Amount (000)
    Description (1)   Coupon      Maturity      Ratings (2)      Value  
 

CORPORATE BONDS – 10.4% (7.3% of Total Investments)

  

        
      Banks – 6.4%                           
$ 8,975     

Bank of America Corporation

    6.250%         3/05/65         BB+       $ 8,975,000   
  5,390     

ING Groep N.V.

    6.500%         10/16/65         Ba1         5,221,563   
  12,505     

JPMorgan Chase & Company

    6.750%         12/31/49         BBB–         13,536,663   
  4,760     

JPMorgan Chase & Company

    5.300%         11/01/65         BBB–         4,718,350   
  2,110     

M&T Bank Corporation

    6.450%         12/31/49         Baa2         2,236,600   
  33,740     

Total Banks

                               34,688,176   
      Capital Markets – 2.1%                           
  11,735     

Goldman Sachs Group Inc.

    5.375%         11/10/65         Ba1         11,456,294   
      Food Products – 0.2%                           
  1,090     

Land O’ Lakes Capital Trust I, 144A

    7.450%         3/15/28         BB         1,133,600   
      Insurance – 1.7%                           
  4,430     

Nationwide Mutual Insurance Company, 144A, (3)

    9.375%         8/15/39         A–         6,556,338   
  1,965     

Security Benefit Life Insurance Company, 144A

    7.450%         10/01/33         BBB         2,456,900   
  6,395     

Total Insurance

                               9,013,238   
$ 52,960     

Total Corporate Bonds (cost $55,057,238)

                               56,291,308   
Principal
Amount (000)/
Shares
    Description (1)   Coupon      Maturity      Ratings (2)      Value  
 

$1,000 PAR (OR SIMILAR) INSTITUTIONAL PREFERRED – 85.5% (60.8% of Total Investments)

  

  
      Banks – 29.1%                           
  600     

Banco Santander SA, Reg S

    6.375%         N/A (4)         Ba1       $ 553,997   
  975     

Bank of America Corporation

    8.125%         N/A (4)         BB+         989,021   
  6,980     

Bank of America Corporation

    8.000%         N/A (4)         BB+         7,047,566   
  8,915     

Bank of America Corporation

    6.500%         N/A (4)         BB+         9,296,562   
  4,000     

Barclays Bank PLC, 144A

    10.180%         6/12/21         A–         5,322,380   
  16,330     

Barclays PLC

    8.250%         N/A (4)         BB+         17,104,058   

 

  36      Nuveen Investments


Principal
Amount (000)/
Shares
    Description (1)   Coupon      Maturity      Ratings (2)      Value  
      Banks (continued)                           
  7,665     

Citigroup Inc.

    5.875%         N/A (4)         BB+       $ 7,444,631   
  4,425     

Citigroup Inc.

    5.800%         N/A (4)         BB+         4,303,313   
  5,100     

Citigroup Inc.

    6.250%         N/A (4)         BB+         5,130,243   
  4,540     

Citizens Financial Group Inc., 144A

    5.500%         N/A (4)         BB+         4,386,775   
  4,265     

Commerzbank AG, 144A

    8.125%         9/19/23         BBB–         4,790,960   
  1,050     

Credit Agricole SA, 144A

    8.125%         N/A (4)         BB+         1,049,370   
  4,250     

Credit Agricole, S.A, 144A

    6.625%         N/A (4)         BB+         3,998,885   
  4,351     

HSBC Capital Funding LP, Debt, 144A

    10.176%         N/A (4)         Baa1         6,472,113   
  4,005     

HSBC Holdings PLC

    6.375%         N/A (4)         BBB         3,844,800   
  2,400     

HSBC Holdings PLC

    6.375%         N/A (4)         BBB         2,312,664   
  5,485     

Intesa Sanpaolo Spa, 144A

    7.700%         N/A (4)         Ba3         5,293,025   
  4,040     

JPMorgan Chase & Company

    7.900%         N/A (4)         BBB–         4,077,875   
  18,920     

Lloyd’s Banking Group PLC

    7.500%         N/A (4)         BB+         19,582,200   
  4,390     

Nordea Bank AB, 144A

    6.125%         N/A (4)         BBB         4,171,905   
  4,855     

PNC Financial Services Inc.

    6.750%         N/A (4)         Baa2         5,213,056   
  4,285     

Royal Bank of Scotland Group PLC

    7.500%         N/A (4)         BB–         4,349,275   
  5,473     

Royal Bank of Scotland Group PLC

    7.648%         N/A (4)         BB         6,759,155   
  14,900     

Societe Generale, 144A

    7.875%         N/A (4)         BB+         14,359,875   
  3,790     

Standard Chartered PLC, 144A

    6.500%         N/A (4)         BBB–         3,575,372   
  2,695     

SunTrust Bank Inc.

    5.625%         N/A (4)         Baa3         2,678,156   
  270     

U.S. Bancorp.

    5.125%         N/A (4)         A3         272,052   
  4,017     

Zions Bancorporation

    7.200%         N/A (4)         BB–         4,217,850   
 

Total Banks

                               158,597,134   
      Capital Markets – 4.0%  
  3,500     

Bank of New York Mellon Corporation

    4.950%         N/A (4)         Baa1         3,453,100   
  7,227     

Credit Suisse Group AG, 144A

    7.500%         N/A (4)         BB+         7,419,094   
  3,100     

Morgan Stanley

    5.550%         N/A (4)         Ba1         3,067,063   
  2,105     

State Street Corporation

    5.250%         N/A (4)         Baa1         2,115,525   
  5,735     

UBS Group AG, Reg S

    7.125%         N/A (4)         BB+         5,913,353   
 

Total Capital Markets

                               21,968,135   
      Consumer Finance – 2.4%  
  2,000     

American Express Company

    4.900%         N/A (4)         Baa2         1,865,000   
  3,635     

American Express Company

    5.200%         N/A (4)         Baa2         3,462,338   
  7,600     

Capital One Financial Corporation

    5.550%         N/A (4)         Baa3         7,557,250   
 

Total Consumer Finance

                               12,884,588   
      Diversified Financial Services – 9.9%  
  15,700     

Agstar Financial Services Inc., 144A

    6.750%         N/A (4)         BB         17,132,625   
  6,040     

BNP Paribas, 144A

    7.195%         N/A (4)         BBB         6,795,000   
  4,330     

BNP Paribas, 144A

    7.375%         N/A (4)         BBB–         4,248,813   
  4,500     

Depository Trust & Clearing Corporation, 144A

    4.875%         N/A (4)         A+         4,479,750   
  16,188     

Rabobank Nederland, 144A

    11.000%         N/A (4)         Baa2         19,671,049   
  1,697     

Voya Financial Inc.

    5.650%         5/15/53         Baa3         1,646,090   
 

Total Diversified Financial Services

                               53,973,327   
      Food Products – 1.7%                           
  8,895     

Land O’ Lakes Incorporated, 144A

    8.000%         N/A (4)         BB         9,239,681   
      Industrial Conglomerates – 4.5%         
  24,127     

General Electric Company

    5.000%         N/A (4)         AA–         24,790,492   
      Insurance – 24.1%                           
  7,215     

Aviva PLC, Reg S

    8.250%         N/A (4)         BBB         7,727,849   
  1,265     

AXA SA

    8.600%         12/15/30         A3         1,692,380   
  5,010     

Catlin Insurance Company Limited, 144A

    7.249%         N/A (4)         BBB+         3,907,800   
  2,640     

Cloverie PLC Zurich Insurance, Reg S

    8.250%         N/A (4)         A         2,878,450   
  2,500     

CNP Assurances, Reg S

    7.500%         N/A (4)         BBB+         2,689,603   
  30,995     

Financial Security Assurance Holdings, 144A, (3)

    6.400%         12/15/66         BBB+         22,238,912   

 

Nuveen Investments     37   


JPI    Nuveen Preferred and Income Term Fund   
   Portfolio of Investments (continued)    January 31, 2016 (Unaudited)

 

Principal
Amount (000)/
Shares
    Description (1)   Coupon      Maturity      Ratings (2)      Value  
      Insurance (continued)                           
  2,424     

Friends Life Holdings PLC, Reg S

    7.875%         N/A (4)         A–       $ 2,665,581   
  2,299     

La Mondiale SAM, Reg S

    7.625%         N/A (4)         BBB         2,424,810   
  5,430     

MetLife Capital Trust X, 144A, (3)

    9.250%         4/08/68         BBB         7,276,200   
  3,655     

MetLife Inc.

    5.250%         N/A (4)         BBB         3,570,478   
  7,703     

Provident Financing Trust I, (3)

    7.405%         3/15/38         Baa3         8,710,930   
  3,325     

Prudential Financial Inc., (3)

    5.875%         9/15/42         BBB+         3,487,094   
  14,600     

QBE Capital Funding III Limited, 144A

    7.250%         5/24/41         BBB         16,060,000   
  1,935     

QBE Insurance Group Limited, Reg S

    6.750%         12/2/41         BBB         1,992,605   
  18,620     

Sirius International Group Limited, 144A

    7.506%         N/A (4)         BBB–         18,646,068   
  25,226     

Symetra Financial Corporation, 144A, (3)

    8.300%         10/15/37         Baa2         25,352,129   
 

Total Insurance

                               131,320,889   
      Machinery – 0.4%                           
  2,345     

Stanley Black & Decker Inc.

    5.750%         12/15/53         BBB+         2,443,490   
      Metals & Mining – 1.1%                           
  6,170     

BHP Billiton Finance USA Limited, 144A

    6.250%         10/19/75         A3         5,876,925   
      Real Estate Investment Trust – 7.6%  
  15,298     

Sovereign Real Estate Investment Trust, 144A

    12.000%         N/A (4)         Ba1         19,122,500   
  6,820     

Wells Fargo & Company

    5.875%         N/A (4)         BBB         7,173,685   
  14,652     

Wells Fargo & Company

    7.980%         N/A (4)         BBB         15,311,340   
 

Total Real Estate Investment Trust

                               41,607,525   
      Specialty Retail – 0.5%                           
  2,850     

Aquarius & Investments PLC fbo SwissRe, Reg S

    8.250%         N/A (4)         N/R         3,042,375   
      U.S. Agency – 0.2%                           
  752     

Farm Credit Bank of Texas, 144A

    10.000%         N/A (4)         Baa1         939,530   
 

Total $1,000 Par (or similar) Institutional Preferred (cost $464,364,588)

  

              466,684,091   
 

Total Long-Term Investments (cost $750,165,863)

                               764,308,322   
Principal
Amount (000)
    Description (1)   Coupon      Maturity              Value  
 

SHORT-TERM INVESTMENTS – 0.4% (0.3% of Total Investments)

  

  
      REPURCHASE AGREEMENTS – 0.4% (0.3% of Total Investments)         
$ 2,370     

Repurchase Agreement with Fixed Income Clearing Corporation,
dated 1/29/16, repurchase price $2,370,323,
collateralized by $2,370,000 U.S. Treasury Notes,
2.125%, due 5/15/25, value $2,420,363

    0.030%         2/01/16                $ 2,370,317   
 

Total Short-Term Investments (cost $2,370,317)

                               2,370,317   
 

Total Investments (cost $752,536,180) – 140.6%

                               766,678,639   
 

Borrowings – (41.3)% (5), (6)

                               (225,000,000
 

Other Assets Less Liabilities – 0.7% (7)

                               3,443,780   
 

Net Assets Applicable to Common Shares – 100%

                             $ 545,122,419   

 

  38      Nuveen Investments


Investments in Derivatives as of January 31, 2016

Interest Rate Swaps outstanding:

 

Counterparty   Notional
Amount
    Fund
Pay/Receive
Floating
Rate
    Floating Rate Index     Fixed Rate
(Annualized)
    Fixed Rate
Payment
Frequency
    Effective
Date (8)
    Optional
Termination
Date
    Termination
Date
    Value     Unrealized
Appreciation
(Depreciation)
 

JPMorgan Chase Bank, N.A.

  $ 84,375,000        Receive        1-Month USD-LIBOR-ICE        1.735     Monthly        6/01/16        12/01/18        12/01/20      $ (2,883,208   $ (3,410,906

JPMorgan Chase Bank, N.A.

    84,375,000        Receive        1-Month USD-LIBOR-ICE        2.188        Monthly        6/01/16        12/01/20        12/01/22        (5,182,182     (5,901,529
    $ 168,750,000                                                              $ (8,065,390   $ (9,312,435

For Fund portfolio compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications into sectors for reporting ease.

 

(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to common shares unless otherwise noted.

 

(2) 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.

 

(3) Investment, or a portion of investment, is hypothecated as described in the Notes to Financial Statements, Note 8 – Borrowing Arrangements, Rehypothecation. The value of investments hypothecated as of the end of the reporting period was $61,568,407.

 

(4) Perpetual security. Maturity date is not applicable.

 

(5) The Fund may pledge up to 100% of its eligible investments (excluding any investments separately pledged as collateral for specific investments in derivatives, when applicable) as collateral for borrowings. As of the end of the reporting period, investments with a value of $537,634,757 have been pledged as collateral for borrowings.

 

(6) Borrowings as a percentage of Total Investments is 29.3%.

 

(7) Other assets less liabilities includes the unrealized appreciation (depreciation) of certain over-the-counter derivatives as presented on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) of exchange-cleared and exchange-traded derivatives is recognized as part of the cash collateral at brokers and/or the receivable or payable for variation margin as presented on the Statement of Assets and Liabilities, when applicable.

 

(8) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each contract.

 

(9) For fair value measurement disclosure purposes, investment classified as Level 2. See Notes to Financial Statements, Note 2 – Investment Valuation and Fair Value Measurements 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.

 

Reg S Regulation S allows U.S. companies to sell securities to persons or entities located outside of the United States without registering those securities with the Securities and Exchange Commission. Specifically, Regulation S provides a safe harbor from the registration requirements of the Securities Act for the offers and sales of securities by both foreign and domestic issuers that are made outside the United States.

 

REIT Real Estate Investment Trust

 

USD-LIBOR-ICE United States Dollar – London Inter-Bank Offered Rate – Intercontinental Exchange

 

See accompanying notes to financial statements.

 

Nuveen Investments     39   


JPW

 

Nuveen Flexible Investment Income Fund

  

Portfolio of Investments

   January 31, 2016 (Unaudited)

 

Shares     Description (1)                     Value  
 

LONG-TERM INVESTMENTS – 136.9% (95.0% of Total Investments)

  
 

COMMON STOCKS – 25.6% (17.8% of Total Investments)

     
      Air Freight & Logistics – 1.8%       
  12,000     

United Parcel Service, Inc., Class B

                 $ 1,118,400   
      Automobiles – 1.4%       
  70,100     

Ford Motor Company

                   836,994   
      Banks – 0.7%       
  15,100     

CIT Group Inc.

                   443,185   
      Biotechnology – 2.7%       
  19,600     

Gilead Sciences, Inc.

                   1,626,800   
      Capital Markets – 2.8%                     
  58,775     

Ares Capital Corporation

             816,973   
  41,038     

Hercules Technology Growth Capital, Inc.

             450,597   
  27,895     

TPG Specialty Lending, Inc.

                   446,599   
 

Total Capital Markets

                   1,714,169   
      Chemicals – 0.5%       
  56,900     

CVR Partners LP

                   309,536   
      Diversified Consumer Services – 1.6%       
  33,200     

Stonemor Partners LP

                   974,752   
      Industrial Conglomerates – 1.6%       
  36,300     

Philips Electronics

                   968,484   
      Insurance – 1.3%       
  27,800     

Unum Group

                   796,192   
      Media – 1.6%       
  30,132     

National CineMedia, Inc., (2)

             471,264   
  10,900     

Viacom Inc., Class B

                   497,476   
 

Total Media

                   968,740   
      Pharmaceuticals – 4.6%                     
  43,900     

AstraZeneca PLC, Sponsored ADR

             1,414,458   
  33,000     

GlaxoSmithKline PLC, Sponsored ADR

                   1,362,570   
 

Total Pharmaceuticals

                   2,777,028   
      Real Estate Investment Trust – 1.5%       
  52,300     

National Storage Affiliates Trust

                   909,497   
      Software – 0.8%       
  12,900     

Oracle Corporation, (2)

                   468,399   
      Technology Hardware, Storage & Peripherals – 0.6%       
  13,300     

Seagate Technology

                   386,365   
      Tobacco – 2.1%       
  53,487     

Vector Group Ltd.

                   1,247,317   
 

Total Common Stocks (cost $16,846,502)

                   15,545,858   

 

  40      Nuveen Investments


Shares     Description (1)   Coupon            Ratings (3)      Value  
 

$25 PAR (OR SIMILAR) RETAIL PREFERRED – 39.3% (27.3% of Total Investments)

  

  
      Asset Backed Securities – 0.9%         
  6,850     

Oxford Lane Capital Corporation

    8.125%            N/R       $ 160,907   
  15,783     

Oxford Lane Capital Corporation

    7.500%              N/R         360,642   
 

Total Asset Backed Securities

                           521,549   
      Banks – 4.5%         
  19,045     

Boston Private Financial Holdings Inc.

    6.950%            N/R         487,552   
  13,800     

Citigroup Inc.

    6.875%            BB+         379,086   
  19,300     

Cowen Group, Inc.

    8.250%            N/R         445,251   
  18,676     

FNB Corporation

    7.250%            Ba2         541,604   
  36,000     

RBS Capital Trust

    6.080%              BB–         896,400   
 

Total Banks

                           2,749,893   
      Capital Markets – 6.1%         
  19,500     

Charles Schwab Corporation

    6.000%            BBB         510,315   
  18,900     

Hercules Technology Growth Capital, Inc.

    6.250%            N/R         478,359   
  42,470     

Ladenburg Thalmann Financial Services Inc.

    8.000%            N/R         1,012,060   
  34,328     

Morgan Stanley

    7.125%            Ba1         975,945   
  18,213     

Solar Capital Limited

    6.750%            BBB–         443,122   
  12,975     

THL Credit Inc.

    6.750%              N/R         321,002   
 

Total Capital Markets

                           3,740,803   
      Consumer Finance – 0.8%         
  1,000     

HSBC Finance Corporation

    6.360%            BBB–         25,650   
  10,165     

SLM Corporation, Series A

    6.970%              Ba3         443,906   
 

Total Consumer Finance

                           469,556   
      Diversified Financial Services – 0.3%         
  1,400     

Main Street Capital Corporation

    6.125%            N/R         35,000   
  5,415     

PennantPark Investment Corporation

    6.250%              BBB–         129,419   
 

Total Diversified Financial Services

                           164,419   
      Electric Utilities – 0.8%         
  18,375     

Entergy Arkansas Inc., (9)

    6.450%              BB+         462,820   
      Food Products – 2.9%         
  30,300     

CHS Inc.

    7.100%            N/R         807,798   
  37,675     

CHS Inc.

    6.750%              N/R         972,392   
 

Total Food Products

                           1,780,190   
      Insurance – 5.5%         
  21,038     

Argo Group US Inc.

    6.500%            BBB–         535,838   
  18,925     

Endurance Specialty Holdings Limited

    6.350%            BBB–         496,781   
  26,051     

Kemper Corporation

    7.375%            Ba1         701,553   
  5,227     

Maiden Holdings Limited

    8.000%            BBB–         136,895   
  19,325     

Maiden Holdings Limited

    7.750%            BBB–         517,910   
  39,300     

National General Holding Company

    7.625%              N/R         943,593   
 

Total Insurance

                           3,332,570   
      Oil, Gas & Consumable Fuels – 1.4%         
  21,798     

Scorpio Tankers Inc.

    7.500%            N/R         513,343   
  17,500     

Scorpio Tankers Inc.

    6.750%              N/R         332,675   
 

Total Oil, Gas & Consumable Fuels

                           846,018   
      Real Estate Investment Trust – 11.3%         
  19,954     

Apollo Residential Mortgage Inc.

    8.000%            N/R         433,002   
  19,082     

Arbor Realty Trust Incorporated

    7.375%            N/R         430,490   
  9,213     

Ashford Hospitality Trust Inc.

    9.000%            N/R         219,914   
  14,400     

Cedar Shopping Centers Inc., Series A

    7.250%            N/R         360,000   

 

Nuveen Investments     41   


JPW    Nuveen Flexible Investment Income Fund   
   Portfolio of Investments (continued)    January 31, 2016 (Unaudited)

 

Shares     Description (1)   Coupon              Ratings (3)      Value  
      Real Estate Investment Trust (continued)         
  18,225     

Colony Financial Inc.

    7.500%            N/R       $ 386,552   
  14,000     

Coresite Realty Corporation

    7.250%            N/R         364,700   
  27,300     

Digital Realty Trust Inc.

    7.375%            Baa3         730,821   
  5,271     

Dupont Fabros Technology

    7.875%            Ba2         134,252   
  20,430     

Northstar Realty Finance Corporation

    8.875%            N/R         424,331   
  19,000     

Northstar Realty Finance Corporation

    8.750%            N/R         379,810   
  17,725     

Penn Real Estate Investment Trust

    8.250%            N/R         456,596   
  8,844     

Penn Real Estate Investment Trust

    7.375%            N/R         223,311   
  11,522     

Rait Financial Trust

    7.625%            N/R         213,733   
  10,976     

Retail Properties of America

    7.000%            BB         276,046   
  10,000     

STAG Industrial Inc.

    6.625%            BB+         248,800   
  18,719     

Summit Hotel Properties Inc.

    7.875%            N/R         484,822   
  9,453     

Urstadt Biddle Properties

    7.125%            N/R         242,469   
  36,440     

VEREIT, Inc.

    6.700%                  N/R         881,848   
 

Total Real Estate Investment Trust

                               6,891,497   
      Real Estate Management & Development – 0.7%         
  17,670     

Kennedy-Wilson Inc.

    7.750%                  BB–         448,818   
      Specialty Retail – 2.1%         
  54,075     

TravelCenters of America LLC

    8.000%                  N/R         1,297,800   
      Wireless Telecommunication Services – 2.0%         
  48,273     

United States Cellular Corporation

    7.250%                  Ba1         1,226,134   
 

Total $25 Par (or similar) Retail Preferred (cost $23,923,660)

  

                       23,932,067   
Shares     Description (1)   Coupon      Maturity      Ratings (3)      Value  
 

CONVERTIBLE PREFERRED SECURITIES – 3.9% (2.7% of Total Investments)

  

  
      Banks – 1.6%                           
  825     

Wells Fargo & Company

    7.500%         N/A (4)         BBB       $ 966,900   
      Diversified Telecommunication Services – 2.3%         
  15,800     

Frontier Communications Corporation

    11.125%         6/29/2018         N/R         1,412,204   
 

Total Convertible Preferred Securities (cost $2,548,545)

                               2,379,104   
Principal
Amount (000)
    Description (1)   Coupon      Maturity      Ratings (3)      Value  
 

CORPORATE BONDS – 57.3% (39.7% of Total Investments)

  

  
      Banks – 3.0%         
$ 850     

Citigroup Inc.

    5.950%         12/31/49         BB+       $ 824,755   
  900     

JPMorgan Chase & Company

    6.750%         12/31/49         BBB–         974,250   
  1,750     

Total Banks

                               1,799,005   
      Beverages – 3.0%                           
  850     

Anheuser Busch InBev Finance Inc.

    4.900%         2/01/46         A         880,523   
  635     

Cott Beverages Inc.

    6.750%         1/01/20         B–         654,050   
  325     

Cott Beverages Inc.

    5.375%         7/01/22         B–         315,250   
  1,810     

Total Beverages

                               1,849,823   
      Biotechnology – 1.3%                           
  875     

AMAG Pharmaceuticals Inc., 144A

    7.875%         9/01/23         B+         794,063   
      Building Products – 0.1%                       
  75     

GCP Applied Technologies, 144A

    9.500%         2/01/23         B+         79,313   
      Capital Markets – 0.6%                           
  325     

BGC Partners Inc.

    5.375%         12/09/19         BBB–         335,384   

 

  42      Nuveen Investments


Principal
Amount (000)
    Description (1)   Coupon      Maturity      Ratings (3)      Value  
      Chemicals – 4.2%                           
$ 925     

A Schulman Inc., 144A

    6.875%         6/01/23         B+       $ 832,500   
  900     

Trinseo Materials Operating, 144A

    6.750%         5/01/22         B–         855,000   
  1,000     

Univar Inc., 144A

    6.750%         7/15/23         B         885,000   
  2,825     

Total Chemicals

                               2,572,500   
      Commercial Services & Supplies – 2.9%                       
  950     

GFL Environmental Corporation, 144A

    7.875%         4/01/20         B         945,250   
  515     

R.R. Donnelley & Sons Company

    6.500%         11/15/23         BB–         453,200   
  450     

R.R. Donnelley & Sons Company

    6.000%         4/01/24         BB–         380,250   
  1,915     

Total Commercial Services & Supplies

                               1,778,700   
      Consumer Finance – 2.5%                           
  825     

Ally Financial Inc.

    5.750%         11/20/25         BB         822,938   
  675     

Navient Corporation

    8.000%         3/25/20         BB         664,875   
  1,500     

Total Consumer Finance

                               1,487,813   
      Diversified Consumer Services – 0.9%                           
  940     

Gibson Brands Inc., 144A

    8.875%         8/01/18         CCC+         535,800   
      Diversified Telecommunication Services – 7.3%         
  1,150     

CenturyLink Inc.

    7.650%         3/15/42         BB+         862,500   
  1,870     

Frontier Communications Corporation, 144A

    11.000%         9/15/25         BB         1,802,213   
  1,085     

GCI Inc.

    6.875%         4/15/25         BB–         1,063,300   
  735     

US West Communications Company

    6.875%         9/15/33         BBB–         695,849   
  4,840     

Total Diversified Telecommunication Services

                               4,423,862   
      Electric Utilities – 0.6%                           
  565     

Talen Energy Supply LLC

    6.500%         6/01/25         Ba3         384,200   
      Food & Staples Retailing – 1.8%                           
  425     

Rite Aid Corporation, 144A

    6.125%         4/01/23         B         448,375   
  675     

Whole Foods Market Inc., 144A

    5.200%         12/03/25         BBB–         676,281   
  1,100     

Total Food & Staples Retailing

                               1,124,656   
      Health Care Providers & Services – 2.9%                           
  1,000     

Kindred Healthcare Inc.

    6.375%         4/15/22         B2         813,750   
  950     

Molina Healthcare Inc., 144A

    5.375%         11/15/22         BB         950,000   
  1,950     

Total Health Care Providers & Services

                               1,763,750   
      Hotels, Restaurants & Leisure – 1.9%                           
  1,125     

McDonald’s Corporation

    4.875%         12/09/45         BBB+         1,138,244   
      Machinery – 3.7%                           
  950     

Automation Tooling Systems, Inc., 144A

    6.500%         6/15/23         B+         966,625   
  1,450     

Terex Corporation

    6.000%         5/15/21         BB         1,305,000   
  2,400     

Total Machinery

                               2,271,625   
      Media – 3.9%                           
  1,100     

Altice SA, 144A

    7.625%         2/15/25         B         979,000   
  1,550     

Dish DBS Corporation

    5.875%         11/15/24         BB–         1,379,500   
  2,650     

Total Media

                               2,358,500   
      Metals & Mining – 1.2%                           
  75     

ArcelorMittal

    6.125%         6/01/25         BB+         54,375   
  950     

ArcelorMittal

    7.750%         10/15/39         BB+         669,750   
  1,025     

Total Metals & Mining

                               724,125   

 

Nuveen Investments     43   


JPW    Nuveen Flexible Investment Income Fund   
   Portfolio of Investments (continued)    January 31, 2016 (Unaudited)

 

Principal
Amount (000)
    Description (1)   Coupon      Maturity      Ratings (3)      Value  
      Real Estate Investment Trust – 3.8%         
$ 1,025     

Communications Sales & Leasing Inc.

    8.250%         10/15/23         BB       $ 904,563   
  250     

Iron Mountain Inc.

    6.000%         8/15/23         Ba3         260,000   
  250     

Iron Mountain Inc.

    5.750%         8/15/24         B2         246,875   
  950     

Select Income REIT

    4.500%         2/01/25         Baa2         878,554   
  2,475     

Total Real Estate Investment Trust

                               2,289,992   
      Real Estate Management & Development – 3.7%         
  1,205     

Forestar USA Real Estate Group Inc., 144A

    8.500%         6/01/22         B+         1,105,588   
  925     

Greystar Real Estate Partners, LLC, 144A

    8.250%         12/01/22         BB–         950,438   
  225     

Kennedy-Wilson Holdings Incorporated

    5.875%         4/01/24         BB–         214,875   
  2,355     

Total Real Estate Management & Development

                               2,270,901   
      Semiconductors & Semiconductor Equipment – 3.6%         
  425     

Amkor Technology Inc.

    6.625%         6/01/21         BB         409,063   
  1,150     

Micron Technology, Inc., 144A

    5.625%         1/15/26         BB         891,250   
  925     

Qorvo Inc., 144A

    7.000%         12/01/25         BB+         918,063   
  2,500     

Total Semiconductors & Semiconductor Equipment

                               2,218,376   
      Specialty Retail – 1.6%                           
  925     

L Brands, Inc., 144A

    6.875%         11/01/35         BB+         956,219   
      Technology Hardware, Storage & Peripherals – 2.8%         
  950     

Hewlett Packard Enterprise Co, 144A

    6.350%         10/15/45         A–         860,377   
  1,100     

Seagate HDD Cayman, 144A

    4.875%         6/01/27         BBB–         828,830   
  2,050     

Total Tech Hardware, Storage & Peripherals

                               1,689,207   
$ 37,975     

Total Corporate Bonds (cost $37,794,251)

                               34,846,058   
Principal
Amount (000)/
Shares
    Description (1)   Coupon      Maturity      Ratings (3)      Value  
 

$1,000 PAR (OR SIMILAR) INSTITUTIONAL PREFERRED – 10.8% (7.5% of Total Investments)

  

  
      Banks – 5.1%                           
  900     

Bank of America Corporation

    6.500%         N/A (4)         BB+       $ 938,520   
  700     

Citigroup Inc.

    5.800%         N/A (4)         BB+         680,750   
  425     

PNC Financial Services Inc.

    6.750%         N/A (4)         Baa2         456,344   
  1,000     

Zions Bancorporation

    7.200%         N/A (4)         BB–         1,050,000   
 

Total Banks

                               3,125,614   
      Consumer Finance – 0.8%         
  475     

Capital One Financial Corporation

    5.550%         N/A (4)         Baa3         472,328   
      Food Products – 2.6%         
  1,495     

Land O’ Lakes Incorporated, 144A

    8.000%         N/A (4)         BB         1,552,931   
      Insurance – 0.7%         
  400     

Liberty Mutual Group, 144A

    7.800%         3/15/37         Baa3         456,000   
      Pharmaceuticals – 0.8%         
  500     

Teva Pharmaceutical Industries Limited, Convertible Preferred

    7.000%         12/15/18         N/R         488,000   
      Real Estate Investment Trust – 0.8%         
  450     

Wells Fargo & Company

    5.875%         N/A (4)         BBB         473,338   
 

Total $1,000 Par (or similar) Institutional Preferred (cost $6,438,366)

  

                       6,568,211   
 

Total Long-Term Investments (cost $87,551,325)

                               83,271,298   

 

  44      Nuveen Investments


Principal
Amount (000)
    Description (1)   Coupon      Maturity            Value  
      SHORT-TERM INVESTMENTS – 7.3% (5.0% of Total Investments)       
      REPURCHASE AGREEMENTS – 7.3% (5.0% of Total Investments)       
$ 4,426     

Repurchase Agreement with Fixed Income Clearing Corporation,
dated 1/29/16, repurchase price $4,425,512,
collateralized by $3,235,000 U.S. Treasury Bonds,
4.750%, due 2/15/37, value $4,516,772

    0.030%         2/01/16            $ 4,425,501   
 

Total Short-Term Investments (cost $4,425,501)

                           4,425,501   
 

Total Investments (cost $91,976,826) – 144.2%

                           87,696,799   
 

Borrowings – (43.6)% (5), (6)

                           (26,500,000
 

Other Assets Less Liabilities – (0.6)% (7)

                           (359,302
 

Net Assets Applicable to Common Shares – 100%

                         $ 60,837,497   

Investments in Derivatives as of January 31, 2016

Call Options Written outstanding:

 

Number of
Contracts
       Description      Notional
Amount (8)
       Expiration
Date
       Strike
Price
       Value  
  (41     

CVR Partners LP

     $ (51,250 )        2/19/16         $ 12.5        $ (307
  (663     

Ford Motor Company

       (994,500        4/15/16           15.0           (1,989
  (145     

National CineMedia Inc.

       (253,750        3/18/16           17.5           (1,450
  (109     

Viacom Inc., Class B

       (490,500        2/19/16           45.0           (30,793
  (958     

Total Call Options Written (premiums received $37,991)

     $ (1,790,000 )                            $ (34,539

For Fund portfolio compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications into sectors for reporting ease.

 

(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to common shares unless otherwise noted.

 

(2) Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in derivatives.

 

(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) Perpetual security. Maturity date is not applicable.

 

(5) The Fund may pledge up to 100% of its eligible investments (excluding any investments separately pledged as collateral for specific investments in derivatives, when applicable) as collateral for borrowings. As of the end of the reporting period, investments with a value of $56,729,679 have been pledged as collateral for borrowings.

 

(6) Borrowings as a percentage of Total Investments is 30.2%.

 

(7) Other assets less liabilities includes the unrealized appreciation (depreciation) of certain over-the-counter derivatives as presented on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) of exchange-cleared and exchange-traded derivatives is recognized as part of the cash collateral at brokers and/or the receivable or payable for variation margin as presented on the Statement of Assets and Liabilities, when applicable. Other assets less liabilities also includes the value of options as presented on the Statement of Assets and Liabilities.

 

(8) For disclosure purposes, Notional Amount is calculated by multiplying the Number of Contracts by the Strike Price by 100.

 

(9) For fair value measurement disclosure purposes, investment classified as Level 2. See Notes to Financial Statements, Note 2 – Investment Valuation and Fair Value Measurements 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.

 

ADR American Depositary Receipt

 

REIT Real Estate Investment Trust

 

See accompanying notes to financial statements.

 

Nuveen Investments     45   


Statement of

Assets and Liabilities

  

January 31, 2016 (Unaudited)

 

      Preferred
Income
Opportunities
(JPC)
       Preferred
and Income
Term
(JPI)
       Flexible
Investment
Income
(JPW)
 

Assets

            

Long-term investments, at value (cost $1,324,511,617, $750,165,863 and $87,551,325, respectively)

   $ 1,347,215,535         $ 764,308,322         $ 83,271,298   

Short-term investments, at value (cost approximates value)

     37,088,631           2,370,317           4,425,501   

Cash

     38,156                     10,880   

Cash collateral at brokers(1)

               7,478,161             

Interest rate swaps premiums paid

     1,389,911           1,247,045             

Receivable for:

            

Dividends

     1,509,325           461,893           89,335   

Interest

     9,832,912           7,580,769           794,084   

Investments sold

     1,156,176           185,064           424,814   

Reclaims

     189,419           170,295             

Other assets

     236,423           37,112           842   

Total assets

     1,398,656,488           783,838,978           89,016,754   

Liabilities

            

Borrowings

     404,100,000           225,000,000           26,500,000   

Options written, at value (premiums received $128,238, $— and $37,991, respectively)

     122,271                     34,539   

Unrealized depreciation on interest rate swaps

     9,072,921           9,312,435             

Payable for:

            

Dividends

     6,395,654           3,661,745           431,749   

Investments purchased

     9,849,484                     1,085,222   

Accrued expenses:

            

Interest on borrowings

     57,198           31,848           25,696   

Management fees

     959,041           561,065           64,277   

Trustees fees

     227,863           31,928           204   

Other

     241,742           117,538           37,570   

Total liabilities

     431,026,174           238,716,559           28,179,257   

Net assets applicable to common shares

   $ 967,630,314         $ 545,122,419         $ 60,837,497   

Common shares outstanding

     96,888,528           22,752,777           3,698,750   

Net asset value (“NAV”) per common share outstanding

   $ 9.99         $ 23.96         $ 16.45   

Net assets applicable to common shares consist of:

                              

Common shares, $0.01 par value per share

   $ 968,885         $ 227,528         $ 36,988   

Paid-in surplus

     1,285,026,585           541,809,644           70,492,251   

Undistributed (Over-distribution of) net investment income

     1,542,648           528,959           (697,542

Accumulated net realized gain (loss)

     (333,540,768        (2,273,736        (4,717,625

Net unrealized appreciation (depreciation)

     13,632,964           4,830,024           (4,276,575

Net assets applicable to common shares

   $ 967,630,314         $ 545,122,419         $ 60,837,497   

Authorized shares:

            

Common

     Unlimited           Unlimited           Unlimited   

Preferred

     Unlimited           Unlimited           Unlimited   
(1) Cash pledged to collateralize the net payment obligations for investments in derivatives.

 

See accompanying notes to financial statements.

 

  46      Nuveen Investments


Statement of

Operations

  

Six Months Ended January 31, 2016 (Unaudited)

 

      Preferred
Income
Opportunities
(JPC)
       Preferred
and Income
Term
(JPI)
       Flexible
Investment
Income
(JPW)
 

Investment Income

            

Dividends (net of tax withheld of $12,693, $5,094 and $—, respectively)

   $ 25,251,039         $ 9,283,483         $ 1,710,722   

Interest

     21,727,876           16,883,297           1,431,910   

Other

     308,126           172,500             

Total investment income

     47,287,041           26,339,280           3,142,632   

Expenses

            

Management fees

     5,758,154           3,363,100           403,973   

Interest expense on borrowings

     2,302,534           1,282,035           137,086   

Custodian fees

     95,524           49,340           29,348   

Trustees fees

     20,090           10,258           1,333   

Professional fees

     65,867           34,076           24,648   

Shareholder reporting expenses

     104,027           42,905           8,976   

Shareholder servicing agent fees

     1,861           74           66   

Stock exchange listing fees

     15,519           4,004           4,004   

Investor relations expenses

     48,769           29,221           18,331   

Other

     20,602           13,819           4,288   

Total expenses

     8,432,947           4,828,832           632,053   

Net investment income (loss)

     38,854,094           21,510,448           2,510,579   

Realized and Unrealized Gain (Loss)

            

Net realized gain (loss) from:

            

Investments and foreign currency

     (9,425,381        (2,314,034        (2,692,031

Options written

     411,453                     118,428   

Change in net unrealized appreciation (depreciation) of:

            

Investments and foreign currency

     (29,852,184        (9,111,275        (5,219,627

Options written

     (36,351                  (8,251

Swaps

     (6,138,043        (4,706,622          

Net realized and unrealized gain (loss)

     (45,040,506        (16,131,931        (7,801,481

Net increase (decrease) in net assets applicable to common shares from operations

   $ (6,186,412      $ 5,378,517         $ (5,290,902

 

See accompanying notes to financial statements.

 

Nuveen Investments     47   


Statement of

Changes in Net Assets

   (Unaudited)

 

     Preferred Income Opportunities (JPC)        Preferred and Income Term (JPI)  
     

Six Months
Ended
1/31/16

    

Year
Ended
7/31/15

      

Six Months
Ended
1/31/16

      

Year
Ended
7/31/15

 

Operations

               

Net investment income (loss)

   $ 38,854,094       $ 77,143,927         $ 21,510,448         $ 44,685,722   

Net realized gain (loss) from:

               

Investments and foreign currency

     (9,425,381      11,902,076           (2,314,034        6,053,459   

Options written

     411,453         802,961                       

Securities sold short

                                   

Swaps

             (2,050,447                    

Change in net unrealized appreciation (depreciation) of:

               

Investments and foreign currency

     (29,852,184      (28,008,403        (9,111,275        (14,799,658

Options written

     (36,351      42,318                       

Swaps

     (6,138,043      (6,433,583        (4,706,622        (6,203,119

Net increase (decrease) in net assets applicable to common shares from operations

     (6,186,412      53,398,849           5,378,517           29,736,404   

Distributions to Common Shareholders

               

From net investment income

     (38,949,188      (74,952,966        (22,243,115        (44,115,359

From accumulated net realized gains

                       (4,150,107          

Decrease in net assets applicable to common shares from distributions to common shareholders

     (38,949,188      (74,952,966        (26,393,222        (44,115,359

Capital Share Transactions

               

Cost of shares repurchased and retired

             (825,508                    

Net increase (decrease) in net assets applicable to common shares from capital share transactions

             (825,508                    

Net increase (decrease) in net assets applicable to common shares

     (45,135,600      (22,379,625        (21,014,705        (14,378,955

Net assets applicable to common shares at the beginning of period

     1,012,765,914         1,035,145,539           566,137,124           580,516,079   

Net assets applicable to common shares at the end of period

   $ 967,630,314       $ 1,012,765,914         $ 545,122,419         $ 566,137,124   

Undistributed (Over-distribution of) net investment income at the end of period

   $ 1,542,648       $ 1,637,742         $ 528,959         $ 1,261,626   

 

See accompanying notes to financial statements.

 

  48      Nuveen Investments


     Flexible Investment Income (JPW)  
     

Six Months
Ended
1/31/16

      

Year
Ended
7/31/15

 

Operations

       

Net investment income (loss)

   $ 2,510,579         $ 5,071,834   

Net realized gain (loss) from:

       

Investments and foreign currency

     (2,692,031        (1,921,095

Options written

     118,428           236,521   

Securities sold short

               2,461   

Swaps

                 

Change in net unrealized appreciation (depreciation) of:

       

Investments and foreign currency

     (5,219,627        (1,213,518

Options written

     (8,251        11,703   

Swaps

                 

Net increase (decrease) in net assets applicable to common shares from operations

     (5,290,902        2,187,906   

Distributions to Common Shareholders

       

From net investment income

     (2,652,133        (5,478,707

From accumulated net realized gains

               (1,783,583

Decrease in net assets applicable to common shares from distributions to
common shareholders

     (2,652,133        (7,262,290

Capital Share Transactions

       

Cost of shares repurchased and retired

     (92,957          

Net increase (decrease) in net assets applicable to common shares from
capital share transactions

     (92,957          

Net increase (decrease) in net assets applicable to common shares

     (8,035,992        (5,074,384

Net assets applicable to common shares at the beginning of period

     68,873,489           73,947,873   

Net assets applicable to common shares at the end of period

   $ 60,837,497         $ 68,873,489   

Undistributed (Over-distribution of) net investment income at the end of
period

   $ (697,542      $ (555,988

 

See accompanying notes to financial statements.

 

Nuveen Investments     49   


Statement of

Cash Flows

   Six Months Ended January 31, 2016 (Unaudited)

 

      Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
    

Flexible
Investment
Income

(JPW)

 

Cash Flows from Operating Activities:

        

Net Increase (Decrease) In Net Assets Applicable to Common Shares from Operations

   $ (6,186,412    $ 5,378,517       $ (5,290,902

Adjustments to reconcile the net increase (decrease) in net assets applicable to common shares from operations to net cash provided by (used in) operating activities:

        

Purchases of investments

     (157,478,116      (74,728,873      (29,515,884

Proceeds from sales and maturities of investments

     179,333,879         84,840,559         35,923,391   

Proceeds from (Purchases of) short-term investments, net

     (24,095,698      2,307,313         (1,773,065

Premiums received for options written

     787,206                 227,060   

Cash paid for terminated options written

     (474,084              (136,379

Premiums received (paid) for interest rate swaps

     (1,389,911      (1,247,045        

Amortization (Accretion) of premiums and discounts, net

     115,231         142,828         (7,317

(Increase) Decrease in:

        

Cash collateral at brokers

             (4,598,161        

Receivable for dividends

     (221,506      (10,772      18,377   

Receivable for interest

     (632,944      (242,873      (70,729

Receivable for investments sold

     2,467,296         141,493         (424,814

Receivable for reclaims

     (76,810      (88,228      2,364   

Other assets

     12,331         (3,885      3,245   

Increase (Decrease) in:

        

Payable for investments purchased

     270,150         (3,138,977      (468,406

Accrued interest on borrowings

     33,926         18,890         2,751   

Accrued management fees

     (26,731      (12,980      (8,168

Accrued Trustees fees

     (5,386      2,981         3   

Accrued other expenses

     17,693         106         (1,895

Net realized (gain) loss from:

        

Investments and foreign currency

     9,425,381         2,314,034         2,692,031   

Options written

     (411,453              (118,428

Change in net unrealized appreciation (depreciation) of:

        

Investments and foreign currency

     29,852,184         9,111,275         5,219,627   

Options written

     36,351                 8,251   

Swaps

     6,138,043         4,706,622           

Net cash provided by (used in) operating activities

     37,490,620         24,892,824         6,281,113   

Cash Flows from Financing Activities

        

Repayments of borrowings

                     (3,500,000

Cash distributions paid to common shareholders

     (38,933,553      (26,373,913      (2,677,276

Cost of common shares repurchased and retired

                     (92,957

Net cash provided by (used in) financing activities

     (38,933,553      (26,373,913      (6,270,233

Net Increase (Decrease) in Cash

     (1,442,933      (1,481,089      10,880   

Cash at beginning of period

     1,481,089         1,481,089           

Cash at end of period

   $ 38,156       $       $ 10,880   
Supplemental Disclosure of Cash Flow Information    Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

Cash paid for interest on borrowings (excluding borrowing costs)

   $ 2,268,608       $ 1,263,145       $ 134,335   

 

See accompanying notes to financial statements.

 

  50      Nuveen Investments


THIS PAGE INTENTIONALLY LEFT BLANK

 

Nuveen Investments     51   


Financial

Highlights (Unaudited)

 

Selected data for a common share outstanding throughout each period:

 

              
    
    
Investment Operations
    Less Distributions to
Common Shareholders
    Common Share  
     Beginning
Common
Share
NAV
    Net
Investment
Income
(Loss)(a)
    Net
Realized/
Unrealized
Gain (Loss)
    Total     From
Net
Investment
Income
    From
Accumulated
Net
Realized
Gains
    Return of
Capital
    Total     Discount
per
Share
Repurchased
and Retired
    Ending
NAV
    Ending
Share
Price
 

Preferred Income Opportunities (JPC)

  

                                               

Year Ended 7/31:

  

                 

2016(h)

  $ 10.45      $ 0.40      $ (0.46   $ (0.06   $ (0.40   $   —      $      $ (0.40   $      $ 9.99      $ 9.34   

2015

    10.67        0.80        (0.25     0.55        (0.77                   (0.77         10.45        9.19   

2014

    10.26        0.79        0.38        1.17        (0.76                   (0.76         10.67        9.34   

2013(g)

    10.28        0.46        (0.04     0.42        (0.44                   (0.44            10.26        9.35   

Year Ended 12/31:

  

                 

2012

    8.67        0.76        1.61        2.37        (0.76                   (0.76            10.28        9.71   

2011

    9.62        0.51        (0.72     (0.21     (0.75                (0.75     0.01        8.67        8.01   

2010

    8.56        0.50        1.23        1.73        (0.57            (0.11     (0.68     0.01        9.62        8.35   

 

    Borrowings at the End of Period  
Preferred Income Opportunities (JPC)   Aggregate
Amount
Outstanding
(000)
       Asset
Coverage
Per $1,000
 

Year Ended 7/31:

  

2016(h)

  $ 404,100         $ 3,395   

2015

    404,100           3,506   

2014

    402,500           3,572   

2013(g)

    402,500           3,473   

Year Ended 12/31:

  

2012

    383,750           3,599   

2011

    348,000           3,416   

2010

    270,000           4,477   

 

(a) Per share Net Investment Income (Loss) is calculated using the average daily shares method.
(b) Total Return Based on Common Share NAV is the combination of changes in common share NAV, reinvested dividend income at NAV and reinvested capital gains distributions at NAV, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending NAV. The actual reinvest price for the last dividend declared in the period may often be based on the Fund’s market price (and not its NAV), and therefore may be different from the price used in the calculation. Total returns are not annualized.
   Total Return Based on Common Share Price 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.

 

  52      Nuveen Investments


            Common Share Supplemental Data/
Ratios Applicable to Common Shares
 
Common Share
Total Returns
          Ratios to Average Net Assets
Before Reimbursement(c)
    Ratios to Average Net Assets
After Reimbursement(c)(d)
       
Based
on
NAV(b)
        
Based
on
Share
Price(b)
    Ending
Net
Assets (000)
    Expenses     Net
Investment
Income (Loss)
    Expenses     Net
Investment
Income (Loss)
    Portfolio
Turnover
Rate(f)
 
                                                             
             
  (0.57 )%      6.17   $ 967,630        1.69 %***      7.80 %***      N/A        N/A        7
  5.36        6.76        1,012,766        1.63        7.55        N/A        N/A        44   
  11.97        8.50        1,035,146        1.67        7.73        N/A        N/A        41   
  4.09        0.63        995,460        1.67 ***      7.47 ***      N/A        N/A        27   
             
  28.17        31.44        997,484        1.79        7.85        N/A        N/A        123   
  (2.23     4.95        840,643        1.73        5.40        1.70     5.43     34   
  21.06        21.28        938,844        1.67        5.39        1.54        5.52        49   

 

(c)     • Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to borrowings, where applicable, as described in Note 8 – Borrowing Arrangements.
  Each ratio includes the effect of dividends expense on securities sold short and all interest expense paid and other costs related to borrowings, where applicable, as follows:

 

Preferred Income Opportunities (JPC)   Ratios of Dividends Expense on
Securities Sold Short
to Average Net Assets
Applicable to
Common Shares(e)
    Ratios of Interest Expense
to Average Net Assets
Applicable to Common Shares
 

Year Ended 7/31:

  

2016(h)

        0.46 %*** 

2015

           0.41   

2014

           0.43   

2013(g)

           0.45 *** 

Year Ended 12/31:

  

2012

           0.52   

2011

    **      0.43   

2010

    **      0.40   

 

(d) After expense reimbursement from the Adviser, where applicable. As of March 31, 2011, the Adviser is no longer reimbursing the Fund for any fees or expenses.
(e) Effective for periods beginning after December 31, 2011, the Fund no longer makes short sales of securities.
(f) 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.
(g) For the seven months ended July 31, 2013.
(h) For the six months ended January 31, 2016.
N/A The Fund no longer has a contractual reimbursement agreement with the Adviser.
* Rounds to less than $0.01 per share.
** Rounds to less than 0.01%.
*** Annualized.

 

See accompanying notes to financial statements.

 

Nuveen Investments     53   


Financial Highlights (Unaudited) (continued)

 

Selected data for a common share outstanding throughout each period:

 

       Investment Operations      Less Distributions to
Common Shareholders
    Common Share  
     Beginning
Common
Share
NAV
     Net
Investment
Income
(Loss)(a)
     Net
Realized/
Unrealized
Gain (Loss)
     Total      From
Net
Investment
Income
     From
Accumulated
Net Realized
Gains
     Total    

Discount

per Share
Repurchased
and Retired

     Offering
Costs
     Ending
NAV
     Ending
Share
Price
 

Preferred and Income Term (JPI)

  

Year Ended 7/31:

  

2016(i)

  $ 24.88       $ 0.95       $ (0.71    $ 0.24       $ (0.98    $ (0.18    $ (1.16   $   —       $       $ 23.96       $ 23.64   

2015

    25.51         1.96         (0.65      1.31         (1.94              (1.94                     24.88         22.28   

2014

    25.06         1.98         0.93         2.91         (1.97      (0.49      (2.46                     25.51         23.11   

2013

    23.81         1.89         1.32         3.21         (1.86      (0.10      (1.96                  25.06         23.68   

2012(d)

    23.88              (0.02      (0.02                                     (0.05      23.81         25.50   

Flexible Investment Income (JPW)

  

Year Ended 7/31:

  

2016(i)

    18.59         0.68         (2.10      (1.42      (0.72              (0.72                  16.45         14.20   

2015

    19.96         1.37         (0.78      0.59         (1.47      (0.49      (1.96                     18.59         16.30   

2014

    18.91         1.42         1.14         2.56         (1.51              (1.51                  19.96         18.28   

2013(h)

    19.10         0.03         (0.18      (0.15                                     (0.04      18.91         19.80   

 

    Borrowings at End of Period(e)  
Preferred and Income Term (JPI)   Aggregate
Amount
Outstanding
(000)
       Asset
Coverage
Per $1,000
 

Year Ended 7/31:

  

2016(i)

  $ 225,000         $ 3,423   

2015

    225,000           3,516   

2014

    225,000           3,580   

2013

    225,000           3,535   

Flexible Investment Income (JPW)

                  

Year Ended 7/31:

      

2016(i)

    26,500           3,296   

2015

    30,000           3,296   

2014

    30,000           3,465   

 

  54      Nuveen Investments


            Common Share Supplemental Data/
Ratios Applicable to Common Shares
 
Common Share
Total Returns
          Ratios to Average Net Assets(c)        
Based
on
NAV(b)
    Based
on
Share
Price(b)
    Ending
Net
Assets (000)
    Expenses     Net
Investment
Income (Loss)
    Portfolio
Turnover
Rate(f)
 
                                             
         
  0.97     11.59   $ 545,122        1.72 %**      7.68 %**      10
  5.30        4.83        566,137        1.66        7.80        26   
  12.34        8.71        580,516        1.73        7.96        37   
  13.69        0.41        570,298        1.72        7.51        57   
  (0.23     2.00        476,252        0.97 **      (0.96 )**        
                                             
         
  (7.81     (8.65     60,837        1.93 **      7.68 **      33   
  3.19        (0.02     68,873        1.82        7.15        122   
  14.26        0.80        73,948        1.70        7.51        71   
  (0.99     (1.00     66,297        1.40 **      1.93 **      3   

 

(a) Per share Net Investment Income (Loss) is calculated using the average daily shares method.
(b) Total Return Based on Common Share NAV is the combination of changes in common share NAV, reinvested dividend income at NAV and reinvested capital gains distributions at NAV, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending NAV. The actual reinvest price for the last dividend declared in the period may often be based on the Fund’s market price (and not its NAV), and therefore may be different from the price used in the calculation. Total returns are not annualized.
   Total Return Based on Common Share Price is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized.
(c)     • Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to borrowings, where applicable, as described in Note 8 – Borrowing Arrangements.
  Each ratio includes the effect of all interest expense paid and other costs related to borrowings as follows:

 

Preferred and Income Term (JPI)   Ratios of Interest Expense
to Average Net Assets
Applicable to Common Shares(e)
 

Year Ended 7/31:

  

2016(i)

    0.46 %** 

2015

    0.41   

2014

    0.45   

2013(g)

    0.48 ** 

Flexible Investment Income (JPW)

       

Year Ended 7/31:

  

2016(i)

    0.42 %** 

2015

    0.37   

2014(j)

    0.33 ** 

 

(d) For the period July 26, 2012 (commencement of operations) through July 31, 2012.
(e) Preferred and Income Term (JPI) and Flexible Investment Income (JPW) did not utilize borrowings prior to the fiscal years ended July 31, 2013 and July 31, 2014, respectively.
(f) 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.
(g) For the period August 29, 2012 (first utilization date of borrowings) through July 31, 2013.
(h) For the period June 25, 2013 (commencement of operations) through July 31, 2013.
(i) For the six months ended January 31, 2016.
(j) For the period August 13, 2013 (first utilization date of borrowings) through July 31, 2014.
* Rounds to less than $0.01 per share.
** Annualized.

 

See accompanying notes to financial statements.

 

Nuveen Investments     55   


Notes to

Financial Statements (Unaudited)

 

1. General Information and Significant Accounting Policies

General Information

Fund Information

The funds covered in this report and their corresponding New York Stock Exchange (“NYSE”) symbols are as follows (each a “Fund” and collectively, the “Funds”):

 

    Nuveen Preferred Income Opportunities Fund (JPC) (“Preferred Income Opportunities (JPC)”)

 

    Nuveen Preferred and Income Term Fund (JPI) (“Preferred and Income Term (JPI)”)

 

    Nuveen Flexible Investment Income Fund (JPW) (“Flexible Investment Income (JPW)”)

The Funds are registered under the Investment Company Act of 1940, as amended, as diversified closed-end management investment companies. Preferred Income Opportunities (JPC), Preferred and Income Term (JPI) and Flexible Investment Income (JPW) were each organized as Massachusetts business trusts on January 27, 2003, April 18, 2012 and March 28, 2013, respectively.

The end of the reporting period for the Funds is January 31, 2016, and the period covered by these Notes to Financial Statements is the six months ended January 31, 2016 (the “current fiscal period”).

Investment Adviser

The Funds’ investment adviser is Nuveen Fund Advisors, LLC (the “Adviser”), a wholly-owned subsidiary of Nuveen Investments, Inc. (“Nuveen”). The Adviser is responsible for each Fund’s overall investment strategy and asset allocation decisions. The Adviser has entered into sub-advisory agreements with NWQ Investment Management Company, LLC (“NWQ”) and/or Nuveen Asset Management LLC (“NAM”), a subsidiary of the Adviser, (each a “Sub-Adviser” and collectively, the “Sub-Advisers”). NWQ and NAM are each responsible for approximately half of Preferred Income Opportunities’ (JPC) portfolio. NAM manages the investment portfolio of Preferred and Income Term (JPI), while NWQ manages the investment portfolio of Flexible Investment Income (JPW). The Adviser is responsible for managing Preferred Income Opportunities’ (JPC) and Preferred and Income Term’s (JPI) investments in swap contracts.

Investment Objectives and Principal Investment Strategies

Preferred Income Opportunities’ (JPC) investment objective is to provide high current income and total return by investing at least 80% of its managed assets (as defined in Note 7 – Management Fees and Other Transactions with Affiliates) in preferred securities, and up to 20% opportunistically over the market cycle in other types of securities, primarily income-oriented securities such as corporate and taxable municipal debt and common equity. At least 60% of its managed assets are rated investment grade (BBB/Baa or better by S&P, Moody’s, or Fitch) at the time of investment. Up to 40% of the portion of the Fund’s portfolio managed by NAM can be invested in U.S. dollar-denominated preferred securities issued by non-U.S. companies and up to 5% in preferred securities issued by companies located in emerging market countries.

Preferred and Income Term’s (JPI) investment objective is to provide a high level of current income and total return. The Fund seeks to achieve its investment objective by investing in preferred securities and other income producing securities. Under normal market conditions, the Fund will invest at least 80% of its managed assets in preferred and other income producing securities. The Fund will invest at least 50% of its managed assets in securities rated investment grade (BBB-/Baa3 or higher) at the time of purchase. The Fund will invest 100% of its managed assets in U.S. dollar denominated securities. The Fund will also invest up to 40% of its managed assets in securities issued by non-U.S. domiciled companies.

Flexible Investment Income’s (JPW) investment objectives are to provide high current income and, secondarily, capital appreciation. Under normal circumstances, the Fund will invest at least 80% of its managed assets in income producing securities issued by companies located anywhere in the world. The Fund will invest in income producing securities across the capital structure – in any type of debt, preferred or equity securities offered by a particular company, or debt securities issued by a government. The Fund will invest 100% of its managed assets in U.S. dollar-denominated securities, and may invest up to 50% of its managed assets in securities of non-U.S. companies. The Fund may invest up to 40% of its managed assets in equity securities (other than preferred securities). At least 25% of the aggregate market value of the Fund’s investments in debt and preferred securities that are of a type customarily rated by a credit rating agency will be rated investment grade, or if unrated, will be judged to be of comparable quality by NWQ The Fund will invest at least 25% of its managed assets in securities issued by financial services companies. The Fund may invest up to 15% of its managed assets in securities and other instruments that, at the time of purchase, are illiquid. The Fund may opportunistically write (sell) covered call options on the Fund’s portfolio of equity securities for the purpose of enhancing the Fund’s risk-adjusted total return over time. The Fund anticipates using leverage to help

 

  56      Nuveen Investments


 

achieve its investment objectives. The Fund may utilize leverage in the form of borrowings from a financial institution or the issuance of preferred shares or other senior securities, such as commercial paper or notes.

Significant Accounting Policies

Each Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946 “Financial Services – Investment Companies.” The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Investment Transactions

Investment transactions are recorded on a trade date basis. Realized gains and losses from investment transactions are determined on the specific identification method, which is the same basis used for federal income tax purposes. Investments purchased on a when-issued/delayed delivery basis may have extended settlement periods. Any investments so purchased are subject to market fluctuation during this period. The Funds have earmarked securities in their portfolios with a current value at least equal to the amount of the when-issued/delayed delivery purchase commitments.

As of the end of the reporting period, the Funds’ did not have any outstanding when-issued/delayed delivery purchase commitments.

Investment Income

Dividend income is recorded on the ex-dividend date or, for foreign securities, when information is available. Interest income, which reflects the amortization of premiums and includes accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Interest income also reflects paydown gains and losses, if any. Other income is comprised of fees earned in connection with the rehypothecation of pledged collateral as further described in Note 8 – Borrowing Arrangements.

Professional Fees

Professional fees presented on the Statement of Operations consist of legal fees incurred in the normal course of operations, audit fees, tax consulting fees and, in some cases, workout expenditures. Workout expenditures are incurred in an attempt to protect or enhance an investment or to pursue other claims or legal actions on behalf of Fund shareholders. If a refund is received for workout expenditures paid in a prior reporting period, such amounts will be recognized as “Legal fee refund” on the Statement of Operations.

Dividends and Distributions to Common Shareholders

Distributions to common shareholders are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.

Dividends to common shareholders are declared monthly. For Preferred Income Opportunities (JPC) and Preferred and Income Term (JPI) net realized capital gains from investment transactions, if any, are declared and distributed to shareholders at least annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards.

Subject to approval and oversight by the Funds’ Board of Trustees (the “Board”), Flexible Investment Income (JPW) seeks to establish a distribution rate that roughly corresponds to the cash flows from its investment strategies through regular distributions (a “Cash Flow-Based Distribution Program”). The Fund seeks to establish a relatively stable common share distribution rate that roughly corresponds to the Fund’s net cash flows after expense from its investments over an extended period of time. Actual net cash flows the Fund receives may differ from the Fund’s distribution rate over shorter time periods over a specific timeframe. The portion of distributions paid attributed to net unrealized gains, if any, is distributed from the Fund’s assets and is treated by shareholders as a non-taxable distribution (“Return of Capital”) for tax purposes. In the event that total distributions during a calendar year exceed the Fund’s total return on net asset value (“NAV”), the difference will reduce NAV per share. If the Fund’s total return on NAV exceeds total distributions during a calendar year, the excess will be reflected as an increase in NAV per share. The final determination of the source and character of all distributions for the fiscal year is made after the end of the fiscal year and is reflected in the financial statements contained in the annual report as of July 31 each year.

Indemnifications

Under the Funds’ organizational documents, their officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.

Netting Agreements

In the ordinary course of business, the Funds may enter into transactions subject to enforceable master repurchase agreements, International Swaps and Derivative Association, Inc. (“ISDA”) master agreements or other similar arrangements (“netting agreements”). Generally, the right to offset in netting

 

Nuveen Investments     57   


Notes to Financial Statements (Unaudited) (continued)

 

agreements allows each Fund to offset certain securities and derivatives with a specific counterparty as well as any collateral received or delivered to that counterparty based on the terms of the agreements. Generally, each Fund manages its cash collateral and securities collateral on a counterparty basis.

The Funds’ investments subject to netting agreements as of the end of the reporting period, if any, are further described in Note 3 – Portfolio Securities and Investments in Derivatives.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to common shares from operations during the reporting period. Actual results may differ from those estimates.

2. Investment Valuation and Fair Value Measurements

The fair valuation input levels as described below are for fair value measurement purposes.

Fair value is defined as the price that would be received upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The following is a summary of the three-tiered hierarchy of valuation input levels.

 

Level 1 –   Inputs are 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).

Common stocks and other equity-type securities are valued at the last sales price on the securities exchange on which such securities are primarily traded and are generally classified as Level 1. Securities primarily traded on the NASDAQ National Market (“NASDAQ”) are valued at the NASDAQ Official Closing Price and are generally classified as Level 1. However, securities traded on a securities exchange or NASDAQ for which there were no transactions on a given day or securities not listed on a securities exchange or NASDAQ are valued at the quoted bid price and are generally classified as Level 2. Prices of certain American Depositary Receipts (“ADR”) held by the Funds that trade in the United States are valued based on the last traded price, official closing price or the most recent bid price of the underlying non- U.S.-traded stock, adjusted as appropriate for the underlying-to-ADR conversion ratio and foreign exchange rate, and from time-to-time may also be adjusted further to take into account material events that may take place after the close of the local non-U.S. market but before the close of the NYSE, which may represent a transfer from a Level 1 to a Level 2 security.

Prices of fixed-income securities are provided by a pricing service approved by the Board. The pricing service establishes a security’s fair value using methods that may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor’s credit characteristics considered relevant. These securities are generally classified as Level 2. In pricing certain securities, particularly less liquid and lower quality securities, the pricing service may consider information about a security, its issuer or market activity, provided by the Adviser. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs.

Prices of swap contracts are also provided by a pricing service approved by the Board using the same methods as described above, and are generally classified as Level 2.

The value of exchange-traded options are based on the mean of the closing bid and ask prices. Exchange-traded options are generally classified as Level 1. Options traded in the over-the-counter (“OTC”) market are valued using an evaluated mean price and are generally classified as Level 2.

Repurchase agreements are valued at contract amount plus accrued interest, which approximates market value. These securities are generally classified as Level 2.

Investments initially valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from pricing services. As a result, the NAV of the Funds’ shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of securities traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and an investor is not able to purchase, redeem or exchange shares. If significant market events occur between the time of determination of the closing price of a foreign security on an exchange and the time that the Funds’ NAV is determined, or if under the Funds’ procedures, the closing price of a

 

  58      Nuveen Investments


 

foreign security is not deemed to be reliable, the security would be valued at fair value as determined in accordance with procedures established in good faith by the Board. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs.

Certain securities may not be able to be priced by the pre-established pricing methods as described above. Such securities may be valued by the Board and/or its appointee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; debt securities that have gone into default and for which there is no current market quotation; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of a Fund’s NAV (as may be the case in non-U.S. markets on which the security is primarily traded) or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, is not deemed to reflect the security’s fair value. As a general principle, the fair value of a security would appear to be the amount that the owner might reasonably expect to receive for it in a current sale. A variety of factors may be considered in determining the fair value of such securities, which may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor’s credit characteristics considered relevant. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs. Regardless of the method employed to value a particular security, all valuations are subject to review by the Board and/or its appointee.

The inputs or methodologies used for valuing securities are not an indication of the risks associated with investing in those securities. The following is a summary of each Fund’s fair value measurements as of the end of the reporting period:

 

Preferred Income Opportunities (JPC)    Level 1      Level 2      Level 3      Total  

Long-Term Investments*:

           

Common Stocks

   $ 52,342,876       $       $       $ 52,342,876   

$25 Par (or similar) Retail Preferred

     531,521,758         77,253,283 **               608,775,041   

Convertible Preferred Securities

     11,686,154                         11,686,154   

Corporate Bonds

             94,127,346                 94,127,346   

$1,000 Par (or similar) Institutional Preferred

             580,284,118                 580,284,118   

Short-Term Investments:

           

Repurchase Agreements

             37,088,631                 37,088,631   

Investments in Derivatives:

           

Options Written

     (122,271                      (122,271

Interest Rate Swaps***

             (9,072,921              (9,072,921

Total

   $ 595,428,517       $ 779,680,457       $       $ 1,375,108,974   
Preferred and Income Term (JPI)                                

Long-Term Investments*:

           

$25 Par (or similar) Retail Preferred

   $ 169,741,130       $ 71,591,793 **     $       $ 241,332,923   

Corporate Bonds

             56,291,308                 56,291,308   

$1,000 Par (or similar) Institutional Preferred

             466,684,091                 466,684,091   

Short-Term Investments:

           

Repurchase Agreements

             2,370,317                 2,370,317   

Investments in Derivatives:

           

Interest Rate Swaps***

             (9,312,435              (9,312,435

Total

   $ 169,741,130       $ 587,625,074       $       $ 757,366,204   

 

 

Nuveen Investments     59   


Notes to Financial Statements (Unaudited) (continued)

 

Flexible Investment Income (JPW)    Level 1      Level 2      Level 3      Total  

Long-Term Investments*:

           

Common Stocks

   $ 15,545,858       $       $       $ 15,545,858   

$25 Par (or similar) Retail Preferred

     23,469,247         462,820 **               23,932,067   

Convertible Preferred Securities

     2,379,104                         2,379,104   

Corporate Bonds

             34,846,058                 34,846,058   

$1,000 Par (or similar) Institutional Preferred

             6,568,211                 6,568,211   

Short-Term Investments:

           

Repurchase Agreements

             4,425,501                 4,425,501   

Investments in Derivatives:

           

Options Written

     (34,539                      (34,539

Total

   $ 41,359,670       $ 46,302,590       $       $ 87,662,260   
* Refer to the Fund’s Portfolio of Investments for industry classifications.
** Refer to the Fund’s Portfolio of Investments for securities classified as Level 2.
*** Represents net unrealized appreciation (depreciation) as reported in the Fund’s Portfolio of Investments.

The Board is responsible for the valuation process and has appointed the oversight of the daily valuation process to the Adviser’s Valuation Committee. The Valuation Committee, pursuant to the valuation policies and procedures adopted by the Board, is responsible for making fair value determinations, evaluating the effectiveness of the Funds’ pricing policies and reporting to the Board. The Valuation Committee is aided in its efforts by the Adviser’s dedicated Securities Valuation Team, which is responsible for administering the daily valuation process and applying fair value methodologies as approved by the Valuation Committee. When determining the reliability of independent pricing services for investments owned by the Funds, the Valuation Committee, among other things, conducts due diligence reviews of the pricing services and monitors the quality of security prices received through various testing reports conducted by the Securities Valuation Team.

The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making a fair value determination, based on the facts and circumstances specific to the portfolio instrument. Fair value determinations generally will be derived as follows, using public or private market information:

 

  (i) If available, fair value determinations shall be derived by extrapolating from recent transactions or quoted prices for identical or comparable securities.

 

  (ii) If such information is not available, an analytical valuation methodology may be used based on other available information including, but not limited to: analyst appraisals, research reports, corporate action information, issuer financial statements and shelf registration statements. Such analytical valuation methodologies may include, but are not limited to: multiple of earnings, discount from market value of a similar freely-traded security, discounted cash flow analysis, book value or a multiple thereof, risk premium/yield analysis, yield to maturity and/or fundamental investment analysis.

The purchase price of a portfolio instrument will be used to fair value the instrument only if no other valuation methodology is available or deemed appropriate, and it is determined that the purchase price fairly reflects the instrument’s current value.

For each portfolio security that has been fair valued pursuant to the policies adopted by the Board, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such testing and fair valuation occurrences are reported to the Board.

3. Portfolio Securities and Investments in Derivatives

Portfolio Securities

Foreign Currency Transactions

To the extent that a Fund may invest in securities and/or contracts that are denominated in a currency other than U.S. dollars, the Fund will be subject to currency risk, which is the risk that an increase in the U.S. dollar relative to the foreign currency will reduce returns or portfolio value. Generally, when the U.S. dollar rises in value against a foreign currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative value. Investments and other assets and liabilities denominated in foreign currencies are converted into U.S. dollars on a spot (i.e. cash) basis at the spot rate prevailing in the foreign currency exchange market at the time of valuation. Purchases and sales of investments and income denominated in foreign currencies are translated into U.S. dollars on the respective dates of such transactions.

 

  60      Nuveen Investments


 

The books and records of the Funds are maintained in U.S. dollars. Foreign currencies, assets and liabilities are translated into U.S. dollars at 4:00 p.m. Eastern Time. Investment transactions, income and expenses are translated on the respective dates of such transactions. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date of the transactions, foreign currency transactions and the difference between the amounts of interest and dividends recorded on the books of a Fund and the amounts actually received.

The realized gains and losses resulting from changes in foreign currency exchange rates and changes in foreign exchange rates associated with (i) foreign currency, (ii) investments, (iii) investments in derivatives and (iv) other assets and liabilities are recognized as a component of “Net realized gain (loss) from investments and foreign currency” on the Statement of Operations, when applicable.

The unrealized gains and losses resulting from changes in foreign currency exchange rates and changes in foreign exchange rates associated with (i) investments and (ii) other assets and liabilities are recognized as a component of “Change in net unrealized appreciation (depreciation) of investments and foreign currency” on the Statement of Operations, when applicable. The unrealized gains and losses resulting from changes in foreign exchange rates associated with investments in derivatives are recognized as a component of the respective derivative’s related “Change in net unrealized appreciation (depreciation)” on the Statement of Operations, when applicable.

Repurchase Agreements

In connection with transactions in repurchase agreements, it is each Fund’s policy that its custodian take possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest, at all times. If the counterparty defaults, and the fair value of the collateral declines, realization of the collateral may be delayed or limited.

The following table presents the repurchase agreements for the Funds that are subject to netting agreements as of the end of the reporting period, and the collateral delivered related to those repurchase agreements.

 

Fund    Counterparty    Short-Term
Investments, at Value
       Collateral
Pledged (From)
Counterparty*
       Net
Exposure
 
Preferred Income Opportunities (JPC)   

Fixed Income Clearing Corporation

   $ 37,088,631         $ (37,088,631      $   
Preferred and Income Term (JPI)   

Fixed Income Clearing Corporation

     2,370,317           (2,370,317          
Flexible Investment Income (JPW)   

Fixed Income Clearing Corporation

     4,425,501           (4,425,501          
* As of the end of the reporting period, 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.

Zero Coupon Securities

A zero coupon security does not pay a regular interest coupon to its holders during the life of the security. Income to the holder of the security comes from accretion of the difference between the original purchase price of the security at issuance and the par value of the security at maturity and is effectively paid at maturity. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically.

Investments in Derivatives

Each Fund is authorized to invest in certain derivative instruments, such as futures, options and swap contracts. Each Fund limits its investments in futures, options on futures and swap contracts to the extent necessary for the Adviser to claim the exclusion from registration by the Commodity Futures Trading Commission as a commodity pool operator with respect to the Fund. The Funds record derivative instruments at fair value, with changes in fair value recognized on the Statement of Operations, when applicable. Even though the Funds’ investments in derivatives may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes.

Options Transactions

The purchase of options involves the risk of loss of all or a part of the cash paid for the options (the premium). The market risk associated with purchasing options is limited to the premium paid. The counterparty credit risk of purchasing options, however, needs also to take into account the current value of the option, as this is the performance expected from the counterparty. When a Fund purchases an option, an amount equal to the premium paid (the premium plus commission) is recognized as a component of “Options purchased, at value” on the Statement of Assets and Liabilities. When a Fund writes an option, an amount equal to the net premium received (the premium less commission) is recognized as a component of “Options written, at value” on the Statement of Assets and Liabilities and is subsequently adjusted to reflect the current value of the written option until the option is exercised or expires or the Fund enters into a closing purchase transaction. The changes in the value of options purchased and/or written during the fiscal period are recognized as a component of “Change in net unrealized appreciation (depreciation) of options purchased and/or written” on the Statement of Operations. When an option is exercised or expires or the Fund enters into a closing purchase transaction, the difference between the net premium

 

Nuveen Investments     61   


Notes to Financial Statements (Unaudited) (continued)

 

received and any amount paid at expiration or on executing a closing purchase transaction, including commission, is recognized as a component of “Net realized gain (loss) from options purchased and/or written” on the Statement of Operations. The Fund, as a writer of an option has no control over whether the underlying instrument may be sold (called) or purchased (put) and as a result bears the risk of an unfavorable change in the market value of the instrument underlying the written option. There is also the risk the Fund may not be able to enter into a closing transaction because of an illiquid market.

During the current fiscal period, Preferred Income Opportunities (JPC) and Flexible Investment Income (JPW) wrote covered call options on common stocks to hedge equity exposure.

The average notional amount of outstanding options written during the current fiscal period, was as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Flexible
Investment
Income
(JPW)
 

Average notional amount of outstanding options written*

     $ (9,595,869    $ (2,810,333
* The average notional amount is calculated based on the outstanding notional at the beginning of the fiscal period and at the end of each fiscal quarter within the current fiscal period.

The following table presents the fair value of all options written by the Funds as of the end of the reporting period, the location of these instruments on the Statement of Assets and Liabilities and the primary underlying risk exposure.

 

        

Location on the Statement of Assets and Liabilities

 
Underlying
Risk Exposure
  

Derivative

Instrument

 

Asset Derivatives

       

(Liability) Derivatives

 
     Location    Value          Location    Value  
Preferred Income Opportunities (JPC)   
Equity price    Options      $          Options written, at value    $ (122,271
Flexible Investment Income (JPW)   
Equity price    Options      $          Options written, at value    $ (34,539

The following table presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized on options written on the Statement of Operations during the current fiscal period, and the primary underlying risk exposure.

 

Fund      Underlying
Risk Exposure
     Derivative
Instrument
     Net Realized Gain (Loss) from
Options Written
       Change in Net Unrealized
Appreciation (Depreciation) of
Options Written
 
Preferred Income Opportunities (JPC)      Equity price      Options      $ 411,453         $ (36,351
Flexible Investment Income (JPW)      Equity price      Options        118,428           (8,251

Interest Rate Swap Contracts

Interest rate swap contracts involve a Fund’s agreement with the counterparty to pay or receive a fixed rate payment in exchange for the counterparty receiving or paying a variable rate payment. Forward interest rate swap contracts involve a Fund’s agreement with a counterparty to pay, in the future, a fixed or variable rate payment in exchange for the counterparty paying the Fund a variable or fixed rate payment, the accruals for which would begin at a specified date in the future (the “effective date”).

The amount of the payment obligation for an interest rate swap is based on the notional amount and termination date of the contract. Interest rate swap contracts do not involve the delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to the swap counterparty on such transactions is limited to the net amount of interest payments that the Fund is to receive.

Interest rate swap contracts are valued daily. Upon entering into an interest rate swap contract (and beginning on the effective date for a forward interest rate swap contract), a Fund accrues the fixed rate payment expected to be paid or received and the variable rate payment expected to be received or paid on the interest rate swap contracts on a daily basis, and recognizes the daily change in the fair value of the Fund’s contractual rights and obligations under the contracts. For an OTC swap that is not cleared through a clearing house (“OTC Uncleared”), the net amount recorded on these transactions, for each counterparty, is recognized on the Statement of Assets and Liabilities as a component of “Unrealized appreciation or depreciation on interest rate swaps (, net).”

 

  62      Nuveen Investments


 

Upon the execution of an OTC swap cleared through a clearing house (“OTC Cleared”), a Fund is obligated to deposit cash or eligible securities, also known as “initial margin,” into an account at its clearing broker equal to a specified percentage of the contract amount. Cash deposited by a Fund to cover initial margin requirements on open swap contracts, if any, is recognized as a component of “Cash collateral at brokers” on the Statement of Assets and Liabilities. Investments in OTC Cleared swaps obligate a Fund and the clearing broker to settle monies on a daily basis representing changes in the prior day’s “mark-to-market” of the swap contract. If a Fund has unrealized appreciation, the clearing broker will credit the Fund’s account with an amount equal to the appreciation. Conversely, if the Fund has unrealized depreciation, the clearing broker will debit the Fund’s account with an amount equal to the depreciation. These daily cash settlements are also known as “variation margin.” Variation margin for OTC Cleared swaps is recognized as a receivable and/or payable for “Variation margin on swap contracts” on the Statement of Assets and Liabilities. Upon the execution of an OTC Uncleared swap, neither the Fund nor the counterparty is required to deposit initial margin as the trades are recorded bilaterally between both parties to the swap contract, and the terms of the variation margin are subject to a predetermined threshold negotiated by the Fund and the counterparty. Variation margin for OTC Uncleared swaps is recognized as a component of “Unrealized appreciation or depreciation on interest rate swaps (, net)” as described in the preceding paragraph.

The net amount of periodic payments settled in cash are recognized as a component of “Net realized gain (loss) from swaps” on the Statement of Operations, in addition to the net realized gain or loss recorded upon the termination of the swap contract. For tax purposes, payments expected to be received or paid on the swap contacts are treated as ordinary income or expense, respectively. Changes in the value of the swap contracts during the fiscal period are recognized as a component of “Change in net unrealized appreciation (depreciation) of swaps” on the Statement of Operations. In certain instances, payments are made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap agreements and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). Payments received or made at the beginning of the measurement period, if any, are recognized as “Interest rate swaps premiums paid and/or received” on the Statement of Assets and Liabilities.

During the current fiscal period, Preferred Income Opportunities (JPC) and Preferred and Income Term (JPI) used cancellable interest rate swaps in which the Fund received payments based upon floating (one-month) LIBOR rate, and paid a fixed rate of interest. After a non-callable period, the swap counterparty owns the right on future monthly dates to terminate the swap at par. The purpose of the cancellable interest rate swaps is to convert some portion of the Fund’s floating rate leverage (bank borrowings) to fixed rate through at least the cancellation dates of the swap, or, if not called by the swap counterparty, to the maturity date of the swap.

The average notional amount of interest rate swap contracts outstanding during the current fiscal period was as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
 

Average notional amount of interest rate swap contracts outstanding*

     $ 228,592,000       $ 168,750,000   
* The average notional amount is calculated based on the outstanding notional at the beginning of the fiscal period and at the end of each fiscal quarter within the current fiscal period.

The following table presents the fair value of all swap contracts held by the Funds as of the end of the reporting period, the location of these instruments on the Statement of Assets and Liabilities and the primary underlying risk exposure.

 

        

Location on the Statement of Assets and Liabilities

 

Underlying

Risk Exposure

  

Derivative

Instrument

 

Asset Derivatives

       

(Liability) Derivatives

 
     Location    Value          Location    Value  
Preferred Income Opportunities (JPC)   
Interest rate    Swaps      $          Unrealized depreciation on interest rate swaps*    $ (9,072,921
Preferred and Income Term (JPI)   
Interest rate    Swaps      $          Unrealized depreciation on interest rate swaps*    $ (9,312,435
* Some swap contracts require a counterparty to pay or receive a premium, which is disclosed on the Statement of Assets and Liabilities and is not reflected in the cumulative unrealized appreciation (depreciation) presented above.

 

Nuveen Investments     63   


Notes to Financial Statements (Unaudited) (continued)

 

The following table presents the swap contracts subject to netting agreements and the collateral delivered related to those swap contracts as of the end of the reporting period.

 

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
 
Preferred Income Opportunities (JPC)  

JPMorgan Chase Bank, N.A.

  $      $ (9,072,921   $      $ (9,072,921   $ 7,232,352      $ (1,840,569
Preferred and Income Term (JPI)  

JPMorgan Chase Bank, N.A.

  $      $ (9,312,435   $      $ (9,312,435   $ 7,478,160      $ (1,834,275
* Represents gross unrealized appreciation (depreciation) for the counterparty as reported in the Fund’s Portfolio of Investments.

The following table presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized on swap contracts on the Statement of Operations during the current fiscal period, and the primary underlying risk exposure.

 

Fund      Underlying
Risk Exposure
     Derivative
Instrument
     Net Realized
Gain (Loss) from
Swaps
       Change in Net Unrealized
Appreciation (Depreciation) of
Swaps
 
Preferred Income Opportunities (JPC)      Interest rate      Swaps      $         $ (6,138,043
Preferred and Income Term (JPI)      Interest rate      Swaps                  (4,706,622

Market and Counterparty Credit Risk

In the normal course of business each Fund may invest in financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to the transaction to perform (counterparty credit risk). The potential loss could exceed the value of the financial assets recorded on the financial statements. Financial assets, which potentially expose each Fund to counterparty credit risk, consist principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of each Fund’s exposure to counterparty credit risk in respect to these financial assets approximates their carrying value as recorded on the Statement of Assets and Liabilities.

Each Fund helps manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations and by having the Adviser monitor the financial stability of the counterparties. Additionally, counterparties may be required to pledge collateral daily (based on the daily valuation of the financial asset) on behalf of each Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when each Fund has an unrealized loss, the Funds have instructed the custodian to pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the valuations fluctuate, either up or down, by at least the pre-determined threshold amount.

4. Fund Shares

Common Share Transactions

Transactions in common shares during the Funds’ current and prior fiscal periods were as follows:

 

       Preferred Income
Opportunities (JPC)
 
        Six Months Ended
1/31/16
     Year Ended
7/31/15
 

Common shares repurchased and retired

               (88,813

Weighted average:

       

Price per common share repurchased and retired

     $   —       $ 9.27   

Discount per common share repurchased and retired

            12.73

 

    Preferred and Income
Term (JPI)
        Flexible Investment
Income (JPW)
 
     Six Months Ended
1/31/16
    

Year Ended

7/31/15

        

Six Months Ended

1/31/16

    

Year Ended

7/31/15

 

Common shares repurchased and retired

                       (6,500        

Weighted average:

           

Price per common share repurchased and retired

  $   —       $   —        $ 14.28       $   —   

Discount per common share repurchased and retired

                 15.28     

 

  64      Nuveen Investments


 

5. Investment Transactions

Long-term purchases and sales (including maturities but excluding derivative transactions, where applicable) during the current fiscal period, were as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

Purchases

     $ 157,478,116       $ 74,728,373       $ 29,515,884   

Sales and maturities

       179,333,879         84,840,559         35,923,391   

Transactions in options written for the following Funds during the current fiscal period were as follows:

 

    Preferred Income
Opportunities (JPC)
           Flexible Investment
Income (JPW)
 
     Number of
Contracts
       Premiums
Received
            Number of
Contracts
       Premiums
Received
 

Options outstanding, beginning of period

    4,219         $ 226,569             1,249         $ 65,738   

Options written

    10,945           787,206             3,185           227,060   

Options terminated in closing purchase transactions

    (10,100        (692,791          (2,941        (198,752

Options exercised

    (208        (34,935          (59        (9,909

Options expired

    (1,631        (157,811            (476        (46,146

Options outstanding, end of period

    3,225         $ 128,238               958         $ 37,991   

6. Income Tax Information

Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all of its investment company taxable income to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income tax provision is required.

For all open tax years and all major taxing jurisdictions, management of the Funds has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). Furthermore, management of the Funds is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to recognition of premium amortization, timing differences in the recognition of income on REIT investments and timing differences in recognizing certain gains and losses on investment transactions. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts as detailed below. Temporary differences do not require reclassification. Temporary and permanent differences do not impact the NAVs of the Funds.

As of January 31, 2016, the cost and unrealized appreciation (depreciation) of investments (excluding investments in derivatives, where applicable), as determined on a federal income tax basis, were as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

Cost of investments

     $ 1,363,212,107       $ 751,786,985       $ 91,956,892   

Gross unrealized:

          

Appreciation

     $ 49,302,222       $ 26,372,584       $ 1,622,607   

Depreciation

       (28,210,163      (11,480,930      (5,882,700

Net unrealized appreciation (depreciation) of investments

     $ 21,092,059       $ 14,891,654       $ (4,260,093

 

Nuveen Investments     65   


Notes to Financial Statements (Unaudited) (continued)

 

Permanent differences, primarily due to bond premium amortization adjustments, complex securities character adjustments, distribution reallocation, federal taxes paid, investments in partnerships, REIT adjustments and treatment of notional principal contracts, resulted in reclassifications among the Funds’ components of common share net assets as of July 31, 2015, the Funds’ last tax year end, as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

Paid-in-surplus

     $ 185,913       $ (27,940    $ (121,843

Undistributed (Over-distribution of) net investment income

       (135,142      22,613         253,028   

Accumulated net realized gain (loss)

       (50,771      5,327         (131,185

The tax components of undistributed net ordinary income and net long-term capital gains as of July 31, 2015, the Funds’ last tax year end, were as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

Undistributed net ordinary income1

     $ 9,895,527       $ 4,174,184       $   

Undistributed net long-term capital gains

               4,142,913           

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 July 1, 2015 and paid on August 3, 2015.

 

          

The tax character of distributions paid during the Funds’ last tax year ended July 31, 2015, was designated for purposes of the dividends paid deduction as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

Distributions from net ordinary income2

     $ 74,600,924       $ 44,012,972       $ 6,521,833   

Distributions from net long-term capital gains

                       740,458   

 

2  Net ordinary income consists of net taxable income derived from dividends, interest, net short-term capital gains and current year earnings and profits attributable to realized gains, if any.

As of July 31, 2015, the Funds’ last tax year end, the following Fund had unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as shown in the following table. The losses not subject to expiration will be utilized first by the Fund.

 

      Preferred
Income
Opportunities
(JPC)
 

Expiration:

  

July 31, 2016

   $ 99,309,437   

July 31, 2017

     204,895,930   

July 31, 2018

     9,385,427   

Not subject to expiration

       

Total

   $ 313,590,794   

During the Funds’ last tax year ended July 31, 2015, the following Funds utilized capital loss carryforwards as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
 

Utilized capital loss carryforwards

     $ 20,636,896       $ 1,026,079   

 

  66      Nuveen Investments


 

The Funds have elected to defer late-year losses in accordance with federal income tax rules. These losses are treated as having arisen on the first day of the current fiscal year. The following Funds have elected to defer losses as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Flexible
Investment
Income
(JPW)
 

Post-October capital losses3

     $ 11,314,470       $ 2,257,795   

Late-year ordinary losses4

                 

 

3  Capital losses incurred from November 1, 2014 through July 31, 2015, the Fund’s last tax year ended.
4  Ordinary losses incurred from January 1, 2015 through July 31, 2015 and/or specified losses incurred from November 1, 2014 through July 31, 2015.

7. Management Fees and Other Transactions with Affiliates

Each Fund’s management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Sub-Advisers are compensated for their services to the Funds from the management fees paid to the Adviser.

Each Fund’s management fee consists of two components – a fund-level fee, based only on the amount of assets within each individual Fund, and a complex-level fee, based on the aggregate amount of all eligible fund assets managed by the Adviser. This pricing structure enables each Fund’s shareholders to benefit from growth in the assets within their respective Fund as well as from growth in the amount of complex-wide assets managed by the Adviser.

The annual Fund-level fee, payable monthly, for each Fund is calculated according to the following schedule:

 

Average Daily Managed Assets*      Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

For the first $500 million

       0.6800      0.7000      0.7000

For the next $500 million

       0.6500         0.6750         0.6750   

For the next $500 million

       0.6300         0.6500         0.6500   

For the next $500 million

       0.6050         0.6250         0.6250   

For managed assets over $2 billion

       0.5800         0.6000         0.6000   

The annual complex-level fee, payable monthly, for each Fund is calculated according to the following schedule:

 

Complex-Level Managed Asset Breakpoint Level*      Effective Rate at Breakpoint Level  

$55 billion

       0.2000

$56 billion

       0.1996   

$57 billion

       0.1989   

$60 billion

       0.1961   

$63 billion

       0.1931   

$66 billion

       0.1900   

$71 billion

       0.1851   

$76 billion

       0.1806   

$80 billion

       0.1773   

$91 billion

       0.1691   

$125 billion

       0.1599   

$200 billion

       0.1505   

$250 billion

       0.1469   

$300 billion

       0.1445   
* For the 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 and 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 January 31, 2016, the complex-level fee rate for each of the Funds was 0.1643%.

The Funds pays no compensation directly to those of their trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen-advised funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen-advised funds.

 

Nuveen Investments     67   


Notes to Financial Statements (Unaudited) (continued)

 

8. Borrowing Arrangements

Borrowings

Preferred Income Opportunities (JPC) and Preferred and Income Term (JPI) each entered into a committed financing agreement with BNP Paribas Prime Brokerage, Inc. (“BNP”) while Flexible Investment Income (JPW) entered in to a committed financing agreement with the Bank of Nova Scotia (collectively, “Borrowings”) which permit the Funds to borrow on a secured basis as a means of leverage. Each Fund’s maximum commitment amount under these Borrowings is as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

Maximum commitment amount

     $ 404,100,000       $ 225,000,000       $ 35,000,000   

On December 22, 2015, the following Funds amended their Borrowings and decreased their maximum commitment amount. For the period August 1, 2015 through December 21, 2015, the following Fund’s maximum commitment amount was as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
 

Maximum commitment amount

     $ 405,000,000       $ 250,000,000   

As of the end of the reporting period, each Fund’s outstanding balance on its Borrowings was as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

Outstanding balance on Borrowings

     $ 404,100,000       $ 225,000,000       $ 26,500,000   

For Preferred Income Opportunities (JPC) and Preferred and Income Term (JPI) interest is charged on these Borrowings at 1-Month LIBOR (London Inter-Bank Offered Rate) plus 0.85% per annum on the amounts borrowed and 0.50% per annum on the undrawn balance if the undrawn portion of the Borrowings on a particular day is more than 20% of the maximum commitment amount. Flexible Investment Income’s (JPW) interest is charged on the Borrowings at a rate equal to the 1-month LIBOR plus 0.70% per annum on the amount borrowed and 0.15% per annum on the undrawn balance if the undrawn portion of the Borrowings on a particular day is more than 40% of the maximum commitment amount.

During the current fiscal period, the average daily balance outstanding and average annual interest rate on each Fund’s Borrowings were as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
     Flexible
Investment
Income
(JPW)
 

Average daily balance outstanding

     $ 404,100,000       $ 225,000,000       $ 27,880,435   

Average annual interest rate

       1.11      1.11      0.96

In order to maintain these Borrowings, the Funds must meet certain collateral, asset coverage and other requirements. Borrowings outstanding are fully secured by securities held in each Fund’s portfolio of investments (“Pledged Collateral”).

Borrowings outstanding are recognized as “Borrowings” on the Statement of Assets and Liabilities. Interest expense incurred on the borrowed amount and undrawn balance are recognized as a component of “Interest expense on borrowings” on the Statement of Operations.

Rehypothecation

Preferred Income Opportunities (JPC) and Preferred and Income Term (JPI) entered into a Rehypothecation Side Letter (“Side Letter”) with BNP, allowing BNP to re-register the Pledged Collateral in its own name or in a name other than the Funds’ to pledge, repledge, hypothecate, rehypothecate, sell, lend or otherwise transfer or use the Pledged Collateral (the “Hypothecated Securities”) with all rights of ownership as described in the Side Letter. Subject to certain conditions, the total value of the outstanding Hypothecated Securities shall not exceed the lesser of (i) 98% of the outstanding balance on the Borrowings to which the Pledged Collateral relates and (ii) 33 13% of the Funds’ total assets. The Funds may designate any Pledged Collateral as ineligible for rehypothecation. The Funds may also recall Hypothecated Securities on demand.

 

  68      Nuveen Investments


 

The Funds also have the right to apply and set-off an amount equal to one-hundred percent (100%) of the then-current fair market value of such Pledged Collateral against the current Borrowings under the Side Letter in the event that BNP fails to timely return the Pledged Collateral and in certain other circumstances. In such circumstances, however, the Funds may not be able to obtain replacement financing required to purchase replacement securities and, consequently, the Funds’ income generating potential may decrease. Even if a Fund is able to obtain replacement financing, it might not be able to purchase replacement securities at favorable prices.

The Funds will receive a fee in connection with the Hypothecated Securities (“Rehypothecation Fees”) in addition to any principal, interest, dividends and other distributions paid on the Hypothecated Securities.

As of the end of the reporting period, Preferred Income Opportunities (JPC) and Preferred and Income Term (JPI) each had Hypothecated Securities as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
 

Hypothecated Securities

     $ 631,656,387       $ 61,568,407   

Preferred Income Opportunities (JPC) and Preferred and Income Term (JPI) earn Rehypothecation Fees, which are recognized as “Other income” on the Statement of Operations. During the current fiscal period, the Rehypothecation Fees earned by each Fund were as follows:

 

        Preferred
Income
Opportunities
(JPC)
     Preferred
and Income
Term
(JPI)
 

Rehypothecation Fees

     $ 308,126       $ 172,500   

9. Subsequent Events

Borrowings Arrangement

Subsequent to the current fiscal period, Flexible Investment Income (JPW) reduced the outstanding balance on its Borrowings to $24,500,000.

Investment Objective and Principal Investment Strategies

Subsequent to the current fiscal period, the 40% limit to non-U.S. issuers for Preferred Income Opportunities (JPC) and Preferred and Income Term (JPI) will be removed in order to allow for an increased number of contingent capital securities in each Fund’s portfolio.

 

Nuveen Investments     69   


Additional

Fund Information

 

Board of Trustees      
William Adams IV*   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

Nuveen Fund Advisors, LLC

333 West Wacker Drive

Chicago, IL 60606

 

Custodian

State Street Bank
& Trust Company

Boston, MA 02111

 

Legal Counsel

Chapman and Cutler LLP

Chicago, IL 60603

 

Independent Registered
Public Accounting Firm

KPMG LLP

Chicago, IL 60601

 

Transfer Agent and
Shareholder Services

State Street Bank
& Trust Company

Nuveen Funds

P.O. Box 43071

Providence, RI 02940-3071

(800) 257-8787

 

 

Quarterly Form N-Q Portfolio of Investments Information

Each Fund is required to file its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. You may obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov or in person at the SEC’s Public Reference Room in Washington, D.C. Call the SEC toll-free at (800) SEC-0330 for room hours and operation.

Nuveen Funds’ Proxy Voting Information

You may obtain (i) information regarding how each fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30, without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen’s website at www.nuveen.com and (ii) a description of the policies and procedures that each fund used to determine how to vote proxies relating to portfolio securities without charge, upon request, by calling Nuveen Investments toll free at (800) 257-8787. You may also obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov.

 

 

CEO Certification Disclosure

Each Fund’s Chief Executive Officer (CEO) has submitted to the New York Stock Exchange (NYSE) the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual.

Each Fund has filed with the SEC the certification of its CEO and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act.

 

 

Common Share Repurchases

Each Fund intends to repurchase, through its open market share repurchase program, shares of its own common stock at such times and in such amounts as is deemed advisable. During the period covered by this report, each Fund repurchased shares of its common stock, as shown in the accompanying table. Any future repurchases will be reported to shareholders in the next annual or semi-annual report.

 

     JPC        JPI        JPW  

Common shares repurchased

                        6,500   

FINRA BrokerCheck

The Financial Industry Regulatory Authority (FINRA) provides information regarding the disciplinary history of FINRA member firms and associated investment professionals. This information as well as an investor brochure describing FINRA BrokerCheck is available to the public by calling the FINRA BrokerCheck Hotline number at (800) 289-9999 or by visiting www.FINRA.org.

 

  70      Nuveen Investments


Glossary of Terms

Used in this Report

 

n   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 offer price and reinvested dividends and capital gains distributions, if any) over the time period being considered.

 

n   Barclays U.S. Aggregate Bond Index: An unmanaged index that includes all investment-grade, publicly issued, fixed-rate, dollar denominated, nonconvertible debt issues and commercial mortgage-backed securities with maturities of at least one year and outstanding par values of $150 million or more. Index returns assume reinvestment of distributions, but do not include the effects of any applicable sales charges or management fees.

 

n   Barclays USD Capital Securities Index: The Barclays USD Capital Securities component of the Barclays Global Capital Securities Index generally includes Tier 2/Lower Tier 2 bonds, perpetual step-up debt, step-up preferred securities, and term preferred securities. The index returns assume reinvestment of dividends, but do not include the effects of any sales charges or management fees.

 

n   Basel III: A comprehensive set of reform measures designed to improve the regulation, supervision and risk management within the banking sector. The Basel Committee on Banking Supervision published the first version of Basel III in late 2009, giving banks approximately three years to satisfy all requirements. Largely in response to the credit crisis, banks are required to maintain proper leverage ratios and meet certain capital requirements.

 

n   BofA/Merrill Lynch Preferred Securities Fixed Rate Index: An index that tracks the performance of fixed rate U.S. dollar denominated preferred securities issued in the U.S. domestic market. Qualifying securities must be rated investment grade (based on an average of Moody’s, S&P, and Fitch) and must have an investment grade rated country of risk (based on an average of Moody’s, S&P, and Fitch foreign currency long-term sovereign debt ratings). In addition, qualifying securities must be issued as public securities or through a 144A filing, must be issued in $25, $50 or $100 par/liquidation preference increments, must have a fixed coupon or dividend schedule, and must have a minimum amount outstanding of $100 million. The index returns assume reinvestment of dividends, but do not include the effects of any sales charges or management fees.

 

n   BofA/Merrill Lynch U.S. All Capital Securities Index: An index comprised of four sub-indexes that better represent the full breadth of the preferred and hybrid securities market, including investment grade and below investment grade exchange traded $25 par preferreds and investment grade and below investment grade rated $1,000 par capital securities. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.

 

n   BofA/Merrill Lynch U.S. High Yield Index: An index that tracks the performance of U.S. Dollar-denominated below investment grade corporate debt publicly issued in the U.S. domestic market. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.

 

n   Effective Leverage: Effective leverage is a fund’s effective economic leverage, and includes both regulatory leverage (see below) and the leverage effects of certain derivative investments in the fund’s portfolio.

 

n   JPC Blended Index (Comparative Benchmark): A blended return consisting of 82.5% of the BofA/Merrill Lynch Preferred Securities Fixed Rate Index and 17.5% of the Barclays USD Capital Securities Index. The index returns assume reinvestment of distributions, but do not include the effects of any sales charges or management fees.

 

n   JPI Blended Benchmark Index: A blended return consisting of the BofA/Merrill Lynch Preferred Securities Fixed Rate Index and the Barclays USD Capital Securities Index. The JPI Blended Benchmark Index is comprised of a 65% weighting in the BofA/Merrill Lynch Preferred Securities Fixed Rate Index, and a 35% weighting in the Barclays USD Capital Securities Index. Benchmark returns assume reinvestment of distributions, but do not include the effects of any sales charges or management fees.

 

Nuveen Investments     71   


Glossary of Terms Used in this Report (continued)

 

 

n   Leverage: Leverage is created whenever a fund has investment exposure (both reward and/or risk) equivalent to more than 100% of the investment capital.

 

n   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.

 

n   Option-adjusted spread (OAS): An option-adjusted spread is a more meaningful spread statistic for mortgage-backed securities, which experience cash flows over multiple time periods, and for which the borrower has the option to re-pay principal at any time. OAS is based on modeled forecasts for voluntary repayments, as well as discounted cash flows, to arrive at a market-weighted spread over a known Treasury benchmark.

 

n   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 forth in the Investment Company Act of 1940.

 

n   Russell 1000® Value Index: An index that measures the performance of those Russell 1000® Index companies with lower price-to-book- ratios and lower forecasted growth values. The Russell 1000® Value Index measures the performance of the 1,000 largest companies in the Russell 3000® Index. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.

 

  72      Nuveen Investments


Reinvest Automatically,

Easily and Conveniently

 

Nuveen makes reinvesting easy. A phone call is all it takes to set up your reinvestment account.

 

 

Nuveen Closed-End Funds Automatic Reinvestment Plan

Your Nuveen Closed-End Fund allows you to conveniently reinvest distributions in additional Fund shares.

By choosing to reinvest, you’ll be able to invest money regularly and automatically, and watch your investment grow through the power of compounding. Just like distributions in cash, there may be times when income or capital gains taxes may be payable on distributions that are reinvested.

It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market.

Easy and convenient

To make recordkeeping easy and convenient, each quarter you’ll receive a statement showing your total distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own.

How shares are purchased

The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the greater of the net asset value or 95% of the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. If the Plan Agent begins purchasing Fund shares on the open market while shares are trading below net asset value, but the Fund’s shares subsequently trade at or above their net asset value before the Plan Agent is able to complete its purchases, the Plan Agent may cease open-market purchases and may invest the uninvested portion of the distribution in newly-issued Fund shares at a price equal to the greater of the shares’ net asset value or 95% of the shares’ market value on the last business day immediately prior to the purchase date. Distributions received to purchase shares in the open market will normally be invested shortly after the distribution payment date. No interest will be paid on distributions awaiting reinvestment. Because the market price of the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions.

Flexible

You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change.

You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your investment advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan.

The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time.

Call today to start reinvesting distributions

For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787.

 

 

Nuveen Investments     73   


Notes

 

 

  74      Nuveen Investments


Notes

 

 

Nuveen Investments     75   


LOGO

 

    

 

     
           

 

           
  Nuveen Investments:   
     Serving Investors for Generations   
    

 

     Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions through continued adherence to proven, long-term investing principles. Today, we offer a range of high quality equity and fixed-income solutions designed to be integral components of a well-diversified core portfolio.   
       

 

       

Focused on meeting investor needs.

 

Nuveen Investments provides high-quality investment services designed to help secure the long-term goals of institutional and individual investors as well as the consultants and financial advisors who serve them. Nuveen Investments markets a wide range of specialized investment solutions which provide investors access to capabilities of its high-quality boutique investment affiliates—Nuveen Asset Management, Symphony Asset Management, NWQ Investment Management Company, Santa Barbara Asset Management, Tradewinds Global Investors, Winslow Capital Management and Gresham Investment Management. In total, Nuveen Investments managed approximately $225 billion as of December 31, 2015.

  
    

 

     
       

Find out how we can help you.

 

To learn more about how the products and services of Nuveen Investments may be able to help you meet your financial goals, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Investors should consider the investment objective and policies, risk considerations, charges and expenses of any investment carefully. Where applicable, be sure to obtain a prospectus, which contains this and other relevant information. To obtain a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money.

 

Learn more about Nuveen Funds at: www.nuveen.com/cef

  

 

                 

Distributed by    Nuveen Securities, LLC    |    333 West Wacker Drive    |    Chicago, IL 60606    |    www.nuveen.com/cef

 

ESA-C-0116D        14649-INV-B-03/17


Item 2. Code of Ethics.

Not applicable to this filing.

Item 3. Audit Committee Financial Expert.

Not applicable to this filing.

Item 4. Principal Accountant Fees and Services.

Not applicable to this filing.

Item 5. Audit Committee of Listed Registrants.

Not applicable to this filing.

Item 6. Schedule of Investments.

(a) See Portfolio of Investments in Item 1.

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to this filing.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to this filing.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board implemented after the registrant last provided disclosure in response to this item.

Item 11. Controls and Procedures.

 

(a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (17 CFR 240.13a-15(b) or 240.15d-15(b)).

 

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

File the exhibits listed below as part of this Form.

(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable to this filing.

(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: See EX-99.CERT attached hereto.

(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable.

(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2 (b) under the 1940 Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an Exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registration specifically incorporates it by reference: See EX-99.906 CERT attached hereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Nuveen Preferred and Income Term Fund

 

By (Signature and Title)   

/s/ Kevin J. McCarthy

  
   Kevin J. McCarthy   
   Vice President and Secretary   

Date: April 7, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)   

/s/ Gifford R. Zimmerman

  
   Gifford R. Zimmerman   
   Chief Administrative Officer   
   (principal executive officer)   

Date: April 7, 2016

 

By (Signature and Title)   

/s/ Stephen D. Foy

  
   Stephen D. Foy   
   Vice President and Controller   
   (principal financial officer)   

Date: April 7, 2016