|
|
|
Financial
|
|
|
|
Highlights
(Unaudited) (continued)
|
|
|
|
|
|
|
|
Selected data for a share outstanding throughout each period:
|
|
|
|
|
|
|
Investment Operations
|
|
Less Distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
Net Asset
Value
|
|
Net
Investment
Income
(Loss)
|
|
Net
Realized/
Unrealized
Gain (Loss)
|
|
Total
|
|
From
Net
Investment
Income
|
|
From
Accumulated
Net
Realized
Gains
|
|
Total
|
|
Offering
Costs
|
|
Premium
from
Shares
Sold
through
Shelf
Offering
|
|
Ending
Net
Asset
Value
|
|
Ending
Market
Value
|
|
|
Municipal Income (NMI)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended 10/31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013(d)
|
|
$
|
11.66
|
|
$
|
.27
|
|
$
|
.11
|
|
$
|
.38
|
|
$
|
(.29
|
)
|
$
|
—
|
|
$
|
(.29
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
11.75
|
|
$
|
12.41
|
|
|
2012
|
|
|
10.75
|
|
|
.57
|
|
|
.91
|
|
|
1.48
|
|
|
(.57
|
)
|
|
—
|
|
|
(.57
|
)
|
|
—
|
|
|
—
|
|
|
11.66
|
|
|
12.66
|
|
|
2011
|
|
|
10.84
|
|
|
.58
|
|
|
(.10
|
)
|
|
.48
|
|
|
(.57
|
)
|
|
—
|
|
|
(.57
|
)
|
|
—
|
|
|
—
|
|
|
10.75
|
|
|
11.13
|
|
|
2010
|
|
|
10.38
|
|
|
.58
|
|
|
.45
|
|
|
1.03
|
|
|
(.57
|
)
|
|
—
|
|
|
(.57
|
)
|
|
—
|
|
|
—
|
|
|
10.84
|
|
|
11.24
|
|
|
2009
|
|
|
9.28
|
|
|
.57
|
|
|
1.06
|
|
|
1.63
|
|
|
(.53
|
)
|
|
—
|
|
|
(.53
|
)
|
|
—
|
|
|
—
|
|
|
10.38
|
|
|
10.66
|
|
|
2008
|
|
|
10.77
|
|
|
.53
|
|
|
(1.52
|
)
|
|
(.99
|
)
|
|
(.50
|
)
|
|
—
|
|
|
(.50
|
)
|
|
—
|
|
|
—
|
|
|
9.28
|
|
|
9.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Municipal Value (NEV)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended 10/31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013(d)
|
|
|
15.82
|
|
|
.47
|
|
|
.16
|
|
|
.63
|
|
|
(.48
|
)
|
|
—
|
|
|
(.48
|
)
|
|
(.01
|
)
|
|
.08
|
|
|
16.04
|
|
|
16.24
|
|
|
2012
|
|
|
13.97
|
|
|
1.01
|
|
|
1.80
|
|
|
2.81
|
|
|
(.96
|
)
|
|
—
|
|
|
(.96
|
)
|
|
—
|
|
|
—
|
|
|
15.82
|
|
|
16.16
|
|
|
2011
|
|
|
14.78
|
|
|
1.01
|
|
|
(.89
|
)
|
|
.12
|
|
|
(.93
|
)
|
|
—
|
|
|
(.93
|
)
|
|
—
|
|
|
—
|
|
|
13.97
|
|
|
13.70
|
|
|
2010
|
|
|
13.73
|
|
|
.94
|
|
|
1.02
|
|
|
1.96
|
|
|
(.91
|
)
|
|
—
|
**
|
|
(.91
|
)
|
|
—
|
**
|
|
—
|
|
|
14.78
|
|
|
14.56
|
|
|
2009(c)
|
|
|
14.33
|
|
|
.04
|
|
|
(.61
|
)
|
|
(.57
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(.03
|
)
|
|
—
|
|
|
13.73
|
|
|
15.00
|
|
|
|
|
|
Ratios/Supplemental Data
|
|
|
Total Returns
|
|
|
|
|
|
Ratios to Average Net Assets
|
|
|
|
|
|
|
|
|
|
Based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based
|
|
|
on
|
|
|
Ending
|
|
|
|
|
|
|
|
|
|
|
|
|
on
|
|
|
Net
|
|
|
Net
|
|
|
|
|
|
Net
|
|
|
Portfolio
|
|
|
|
Market
|
|
|
Asset
|
|
|
Assets
|
|
|
|
|
|
Investment
|
|
|
Turnover
|
|
|
|
Value
|
(a)
|
|
Value
|
(a)
|
|
(000
|
)
|
|
Expenses
|
(b)
|
|
Income (Loss
|
)
|
|
Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
.41
|
%
|
|
3.26
|
%
|
$
|
97,211
|
|
|
.73
|
%*
|
|
4.66
|
%*
|
|
8
|
%
|
|
|
19.51
|
|
|
14.05
|
|
|
96,298
|
|
|
.78
|
|
|
5.09
|
|
|
15
|
|
|
|
4.62
|
|
|
4.73
|
|
|
88,488
|
|
|
.77
|
|
|
5.61
|
|
|
16
|
|
|
|
11.14
|
|
|
10.12
|
|
|
89,008
|
|
|
.77
|
|
|
5.47
|
|
|
14
|
|
|
|
13.72
|
|
|
18.06
|
|
|
84,883
|
|
|
.81
|
|
|
5.85
|
|
|
10
|
|
|
|
(1.01
|
)
|
|
(9.53
|
)
|
|
75,553
|
|
|
.86
|
|
|
5.08
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.56
|
|
|
4.49
|
|
|
334,390
|
|
|
1.05
|
*
|
|
6.13
|
*
|
|
2
|
|
|
|
25.68
|
|
|
20.67
|
|
|
305,341
|
|
|
1.12
|
|
|
6.73
|
|
|
11
|
|
|
|
1.02
|
|
|
1.28
|
|
|
269,050
|
|
|
1.17
|
|
|
7.47
|
|
|
33
|
|
|
|
3.52
|
|
|
14.73
|
|
|
284,682
|
|
|
1.07
|
|
|
6.64
|
|
|
28
|
|
|
|
—
|
|
|
(4.15
|
)
|
|
244,558
|
|
|
1.02
|
*
|
|
3.25
|
*
|
|
1
|
|
|
(a)
|
Total Return Based on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized.
|
|
|
Total Return Based on Net Asset Value is the combination of changes in net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending net asset value. The actual reinvest price for the last dividend declared in the period may often be based on the Fund’s market price (and not its net asset value), and therefore may be different from the price used in the calculation. Total returns are not annualized.
|
|
(b)
|
The expense ratios reflect, among other things, the interest expense deemed to have been paid by the Fund on the floating rate certificates issued by the special purpose trusts for the self-deposited inverse floaters held by the Fund and/or the effect of the interest expense and fees paid on borrowings, where applicable, each as described in Footnote 1 – General Information and Significant Accounting Policies, Inverse Floating Rate Securities and Footnote 8 – Borrowing Arrangements, respectively, as follows:
|
|
Municipal Income (NMI)
|
|
|
|
|
|
Year Ended 10/31:
|
|
|
|
|
|
2013(d)
|
|
|
.01
|
%*
|
|
2012
|
|
|
.01
|
|
|
2011
|
|
|
.01
|
|
|
2010
|
|
|
.02
|
|
|
2009
|
|
|
.03
|
|
|
2008
|
|
|
.10
|
|
|
|
|
|
|
|
|
Enhanced Municipal Value (NEV)
|
|
|
|
|
|
Year Ended 10/31:
|
|
|
|
|
|
2013(d)
|
|
|
.08
|
*
|
|
2012
|
|
|
.09
|
|
|
2011
|
|
|
.08
|
|
|
2010
|
|
|
.04
|
|
|
2009(c)
|
|
|
—
|
|
|
(c)
|
For the period September 25, 2009 (commencement of operations) through October 31, 2009.
|
|
(d)
|
For the six months ended April 30, 2013.
|
|
*
|
Annualized.
|
|
**
|
Rounds to less than $.01 per share.
|
See accompanying notes to financial statements.
|
|
|
Notes to
|
|
|
|
Financial Statements
(Unaudited)
|
1. General Information and Significant Accounting Policies
General Information
The funds covered in this report and their corresponding New York Stock Exchange symbols are Nuveen Municipal Value Fund, Inc. (NUV), Nuveen AMT-Free Municipal Value Fund (NUW), Nuveen Municipal Income Fund, Inc. (NMI) and Nuveen Enhanced Municipal Value Fund (NEV) (each a “Fund” and collectively, the “Funds”). The Funds are registered under the Investment Company Act of 1940, as amended, as diversified closed-end registered investment companies.
On December 31, 2012, the Funds’ investment adviser converted from a Delaware corporation to a Delaware limited liability company. As a result, Nuveen Fund Advisers, Inc., a wholly-owned subsidiary of Nuveen Investments, Inc. (“Nuveen”), changed its name to Nuveen Fund Advisers, LLC (the “Adviser”). There were no changes to the identities or roles of any personnel as a result of the change.
Each Fund’s primary investment objective is to provide current income exempt from regular federal income tax by investing primarily in a portfolio of municipal obligations issued by state and local government authorities or certain U.S. territories.
Significant Accounting Policies
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 Valuation
Prices of municipal bonds, other fixed income securities and forward swap contracts are provided by a pricing service approved by the Funds’ Board of Directors/Trustees. These securities are generally classified as Level 2 for fair value measurement purposes. 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. 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.
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 Funds’ Board of Directors/Trustees or its designee 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 net asset value (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 Funds’ Board of Directors/Trustees or its designee.
Refer to Footnote 2 – Fair Value Measurements for further details on the leveling of securities held by the Funds as of the end of the reporting period.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and losses from 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 instructed the custodian to earmark securities in the Funds’ portfolios with a current value at least equal to the amount of the when-issued/delayed delivery purchase commitments. As of April 30, 2013, Municipal Value (NUV) and Municipal Income (NMI) had outstanding when-issued/delayed delivery purchase commitments of $9,662,905 and $112,275. There were no such outstanding purchase commitments in any of the other Funds.
Investment Income
Investment income, which reflects the amortization of premiums and includes accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Investment income also includes paydown gains and losses, if any.
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. Legal fee refund presented in the Statement of Operations reflects a refund of workout expenditures paid in a prior reporting period, when applicable.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all of its net investment income and net capital gains 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. Furthermore, each Fund intends to satisfy conditions that will enable interest from municipal securities, which is exempt from regular federal income tax, to retain such tax-exempt status when distributed to shareholders of the Funds. Net realized capital gains and ordinary income distributions paid by the Funds are subject to federal taxation.
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.
Dividends and Distributions to Shareholders
Dividends from net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders at least annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards.
Distributions to shareholders of net investment income, net realized capital gains and/or market discount, if any, 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.
Inverse Floating Rate Securities
Each Fund is authorized to invest in inverse floating rate securities. An inverse floating rate security is created by depositing a municipal bond, typically with a fixed interest rate, into a special purpose trust created by a broker-dealer. In turn, this trust (a) issues floating rate certificates, in face amounts equal to some fraction of the deposited bond’s par amount or market value, that typically pay short-term tax-exempt interest rates to third parties, and (b) issues to a long-term investor (such as one of the Funds) an inverse floating rate certificate (sometimes referred to as an “inverse floater”) that represents all remaining or residual interest in the trust. The income received by the inverse floater holder varies inversely with the short-term rate paid to the floating rate certificates’ holders, and in most circumstances the inverse floater holder bears substantially all of the underlying bond’s downside investment risk and also benefits disproportionately from any potential appreciation of the underlying bond’s value. The price of an inverse floating rate security will be more volatile than that of the underlying bond because the interest rate is dependent on not only the fixed coupon rate of the underlying bond but also on the short-term interest paid on the floating rate certificates, and because the inverse floating rate security essentially bears the risk of loss of the greater face value of the underlying bond.
A Fund may purchase an inverse floating rate security in a secondary market transaction without first owning the underlying bond (referred to as an “externally-deposited inverse floater”), or instead by first selling a fixed-rate bond to a broker-dealer for deposit into the special purpose trust and receiving in turn the residual interest in the trust (referred to as a “self-deposited inverse floater”). The inverse floater held by a Fund gives the Fund the right (a) to cause the holders of the floating rate certificates to tender their notes at par, and (b) to have the broker transfer the fixed-rate bond held by the trust to the Fund, thereby collapsing the trust. An investment in an externally-deposited inverse floater is identified in the Portfolio of Investments as “(IF) – Inverse floating rate investment.” An investment in a self-deposited inverse floater is accounted for as a financing transaction. In such instances, a fixed-rate bond deposited into a special purpose trust is identified in the Portfolio of Investments as “(UB) – Underlying bond of an inverse floating rate trust reflected as a financing transaction,” with the Fund accounting for the short-term floating rate certificates issued by the trust,
|
|
|
Notes to
|
|
|
|
Financial Statements
(Unaudited) (continued)
|
at their liquidation value as “Floating rate obligations” on the Statement of Assets and Liabilities. In addition, the Fund reflects in “Investment Income” the entire earnings of the underlying bond and recognizes the related interest paid to the holders of the short-term floating rate certificates as a component of “Interest expense” on the Statement of Operations.
During the six months ended April 30, 2013, each Fund invested in externally-deposited inverse floaters and/or self-deposited inverse floaters.
Each Fund may also enter into shortfall and forbearance agreements (sometimes referred to as a “recourse trust” or “credit recovery swap”) (such agreements referred to herein as “Recourse Trusts”) with a broker-dealer by which a Fund agrees to reimburse the broker-dealer, in certain circumstances, for the difference between the liquidation value of the fixed-rate bond held by the trust and the liquidation value of the floating rate certificates issued by the trust plus any shortfalls in interest cash flows. Under these agreements, a Fund’s potential exposure to losses related to or on inverse floaters may increase beyond the value of a Fund’s inverse floater investments as a Fund may potentially be liable to fulfill all amounts owed to holders of the floating rate certificates. At period end, any such shortfall is recognized as “Unrealized depreciation on Recourse Trusts” on the Statement of Assets and Liabilities.
As of April 30, 2013, each Fund’s maximum exposure to the floating rate obligations issued by externally-deposited Recourse Trusts was as follows:
|
|
|
|
|
|
|
AMT-Free
|
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Value (NUV
|
)
|
|
Value (NUW
|
)
|
|
Income (NMI
|
)
|
|
Value (NEV
|
)
|
|
Maximum exposure to Recourse Trusts
|
|
$
|
7,500,000
|
|
$
|
17,665,000
|
|
$
|
6,005,000
|
|
$
|
135,025,000
|
|
The average floating rate obligations outstanding and average annual interest rate and fees related to self-deposited inverse floaters during the six months ended April 30, 2013, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Value (NUV
|
)
|
|
Income (NMI
|
)
|
|
Value (NEV
|
)
|
|
Average floating rate obligations outstanding
|
|
$
|
14,380,000
|
|
$
|
3,335,000
|
|
$
|
18,00,000
|
|
|
Average annual interest rate and fees
|
|
|
.70
|
%
|
|
.32
|
%
|
|
.64
|
%
|
Forward Swap Contracts
Each Fund is authorized to enter into forward interest rate swap contracts consistent with their investment objectives and policies to reduce, increase or otherwise alter its risk profile or to alter its portfolio characteristics (i.e. duration, yield curve positioning and credit quality).
Each Fund’s use of forward interest rate swap transactions is intended to help the Fund manage its overall interest rate sensitivity, either shorter or longer, generally to more closely align the Fund’s interest rate sensitivity with that of the broader market. Forward interest rate swap transactions 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 is based on the notional amount of the swap contract and the termination date of the swap (which is akin to a bond’s maturity). The value of a Fund’s swap commitment would increase or decrease based primarily on the extent to which long-term interest rates for bonds having a maturity of the swap’s termination date increases or decreases. Forward interest rate swap contracts are valued daily. 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 forward swaps (,net)” with the change during the reporting period recognized on the Statement of Operations as a component of “Change in net unrealized appreciation (depreciation) of forward swaps.”
Each Fund may terminate a swap contract prior to the effective date, at which point a realized gain or loss is recognized. When a forward swap is terminated, it ordinarily does not involve the delivery of securities or other underlying assets or principal, but rather is settled in cash on a net basis. Net realized gains and losses during the reporting period are recognized on the Statement of Operations as a component of “Net realized gain (loss) from forward swaps.” Each Fund intends, but is not obligated, to terminate its forward swaps before the effective date. Accordingly, the risk of loss with respect to the swap counterparty on such transactions is limited to the credit risk associated with a counterparty failing to honor its commitment to pay any realized gain to the Fund upon termination.
During the six months ended April 30, 2013, Enhanced Municipal Value (NEV) continued to invest in forward interest rate swap contracts to reduce the duration of its portfolio. The average notional amount of forward interest rate swap contracts outstanding during the six months ended April 30, 2013, was as follows:
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
|
|
|
Value (NEV
|
)
|
|
Average notional amount of forward interest rate swap contracts outstanding*
|
|
$
|
10,200,000
|
|
|
*
|
The average notional amount is calculated based on the outstanding notional at the beginning of the fiscal year and at the end of each fiscal quarter within the current fiscal year.
|
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. Futures contracts, when applicable, expose a Fund to minimal counterparty credit risk as they are exchange traded and the exchange’s clearinghouse, which is counterparty to all exchange traded futures, guarantees the futures contracts against default.
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 predetermined threshold amount.
Zero Coupon Securities
Each Fund is authorized to invest in zero coupon securities. A zero coupon security does not pay a regular interest coupon to its holders during the life of the security. Tax-exempt 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.
Common Shares Shelf Offering and Shelf Offering Costs
Municipal Value (NUV), AMT-Free Municipal Value (NUW) and Enhanced Municipal Value (NEV) have each filed registration statements with the Securities and Exchange Commission (“SEC”) authorizing each Fund to issue additional shares through their equity shelf programs (“Shelf Offering”). Under the Shelf Offering, the Funds, subject to market conditions, may raise additional equity capital from time to time in varying amounts and offering methods at a net price at or above the Fund’s net asset value (“NAV”) per Common share.
|
|
|
|
|
|
|
AMT-Free
|
|
|
Enhanced
|
|
|
|
|
|
Municipal Value (NUV)
|
|
|
Municipal Value (NUW)
|
|
|
Municipal Value (NEV)
|
|
|
|
|
|
Six Months
|
|
|
Six Months
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended
|
|
|
Year Ended
|
|
|
Ended
|
|
|
Year Ended
|
|
|
Ended
|
|
|
Year Ended
|
|
|
|
|
|
4/30/13
|
|
|
10/31/12
|
|
|
4/30/13
|
|
|
10/31/12
|
|
|
4/30/13
|
|
|
10/31/12
|
|
|
Authorized shares
|
|
|
19,600,000
|
|
|
19,600,000
|
|
|
1,200,000
|
|
|
—
|
|
|
1,900,000
|
|
|
—
|
|
|
Shares issued
|
|
|
1,027,916
|
|
|
4,724,522
|
|
|
163,893
|
|
|
—
|
|
|
1,535,527
|
|
|
—
|
|
|
Offering proceeds, net of offering costs
|
|
$
|
10,670,833
|
|
|
47,880,152
|
|
$
|
2,924,759
|
|
|
—
|
|
$
|
24,797,013
|
|
|
—
|
|
Costs incurred by the Fund in connection with its initial Shelf Offering are recorded as a deferred charge, which will be amortized over the period such additional Common shares are sold not to exceed the one-year life of the Shelf Offering period. Ongoing Shelf Offering costs, and any additional costs the Fund may incur in connection with this Shelf Offering, are expensed as incurred.
Indemnifications
Under the Funds’ organizational documents, their officers and directors/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.
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 from operations during the reporting period. Actual results may differ from those estimates.
|
|
|
Notes to
|
|
|
|
Financial Statements
(Unaudited) (continued)
|
2. Fair Value Measurements
Fair value is defined as the price that the Funds would receive 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).
|
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:
|
Municipal Value (NUV)
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Long-Term Investments*:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Bonds
|
|
$
|
—
|
|
$
|
2,099,485,044
|
|
$
|
—
|
|
$
|
2,099,485,044
|
|
|
Corporate Bonds
|
|
|
—
|
|
|
—
|
|
|
235,819
|
|
|
235,819
|
|
|
Total
|
|
$
|
—
|
|
$
|
2,099,485,044
|
|
$
|
235,819
|
|
$
|
2,099,720,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMT-Free Municipal Value (NUW)
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Long-Term Investments*:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Bonds
|
|
$
|
—
|
|
$
|
231,657,326
|
|
$
|
—
|
|
$
|
231,657,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Income (NMI)
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Long-Term Investments*:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Bonds
|
|
$
|
—
|
|
$
|
98,996,599
|
|
$
|
—
|
|
$
|
98,996,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Municipal Value (NEV)
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Long-Term Investments*:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Bonds
|
|
$
|
—
|
|
$
|
347,767,985
|
|
$
|
38,267
|
|
$
|
347,806,252
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Swaps**
|
|
|
—
|
|
|
(546,776
|
)
|
|
—
|
|
|
(546,776
|
)
|
|
Total
|
|
$
|
—
|
|
$
|
347,221,209
|
|
$
|
38,267
|
|
$
|
347,259,476
|
|
|
*
|
Refer to the Fund’s Portfolio of Investments for state classifications of Municipal Bonds and a breakdown of Municipal and Corporate Bonds classified as Level 3, where applicable.
|
|
**
|
Represents net unrealized appreciation (depreciation) as reported in the Fund’s Portfolio of Investments.
|
The Nuveen funds’ Board of Directors/Trustees is responsible for the valuation process and has delegated 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 of Directors/Trustees, is responsible for making fair value determinations, evaluating the effectiveness of the funds’ pricing policies and reporting to the Board of Directors/Trustees. 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 of Directors/Trustees, 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 of Directors/Trustees.
3. Derivative Instruments and Hedging Activities
Each Fund is authorized to invest in certain derivative instruments, including futures, options and swap contracts. 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. For additional information on the derivative instruments in which each Fund was invested during and at the end of the reporting period, refer to the Portfolios of Investments, Financial Statements and Footnote 1 - General Information and Significant Accounting Policies.
The following table presents the fair value of all derivative instruments held by the Funds as of April 30, 2013, the location of these instruments on the Statement of Assets and Liabilities and the primary underlying risk exposure. The following Fund invested in derivative instruments during the six months ended April 30, 2013.
|
Enhanced Municipal Value (NEV)
|
|
|
|
|
|
|
|
|
|
|
Location on the Statement of Assets and Liabilities
|
|
|
Underlying
|
|
|
Derivative
|
|
|
Asset Derivatives
|
|
|
Liability Derivatives
|
|
|
Risk Exposure
|
|
|
Instrument
|
|
|
Location
|
|
|
Value
|
|
|
Location
|
|
|
Value
|
|
|
Interest Rate
|
|
|
Forward Swaps
|
|
|
|
|
|
|
|
|
Unrealized depreciation
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
$
|
—
|
|
|
on forward swaps
|
|
$
|
546,776
|
|
The following tables present the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized for the six months ended April 30, 2013, on derivative instruments, as well as the primary risk exposure associated with each.
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
|
|
|
Value
|
|
|
Net Realized Gain (Loss) from Forward Swaps
|
|
|
(NEV
|
)
|
|
Risk Exposure
|
|
|
|
|
|
Interest Rate
|
|
$
|
(105,000
|
)
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
|
|
|
Value
|
|
|
Change in Net Unrealized Appreciation (Depreciation) of Forward Swaps
|
|
|
(NEV
|
)
|
|
Risk Exposure
|
|
|
|
|
|
Interest Rate
|
|
$
|
544,570
|
|
4. Fund Shares
Since the inception of the Funds’ repurchase programs, the Funds have not repurchased any of their outstanding shares.
Transactions in shares were as follows:
|
|
|
|
|
|
|
AMT-Free
|
|
|
|
|
|
Municipal Value (NUV)
|
|
|
Municipal Value (NUW)
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
Ended
|
|
|
Year Ended
|
|
|
Ended
|
|
|
Year Ended
|
|
|
|
|
|
4/30/13
|
|
|
10/31/12
|
|
|
4/30/13
|
|
|
10/31/12
|
|
|
Shares sold through shelf offering
|
|
|
1,027,916
|
|
|
4,724,522
|
|
|
163,893
|
|
|
—
|
|
|
Shares issued to shareholders due to reinvestment of distributions
|
|
|
318,695
|
|
|
1,048,793
|
|
|
30,207
|
|
|
79,018
|
|
|
Weighted average premium per shelf offering share sold
|
|
|
1.18
|
%
|
|
1.60
|
%
|
|
1.71
|
%
|
|
—
|
%
|
|
|
|
Notes to
|
|
|
|
Financial Statements
(Unaudited) (continued)
|
|
|
|
|
|
|
|
Enhanced Municipal
|
|
|
|
|
|
Municipal Income (NMI)
|
|
|
Value (NEV)
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
Ended
|
|
|
Year Ended
|
|
|
Ended
|
|
|
Year Ended
|
|
|
|
|
|
4/30/13
|
|
|
10/31/12
|
|
|
4/30/13
|
|
|
10/31/12
|
|
|
Shares sold through shelf offering*
|
|
|
—
|
|
|
—
|
|
|
1,535,527
|
|
|
—
|
|
|
Shares issued to shareholders due to reinvestment of distributions
|
|
|
13,330
|
|
|
31,313
|
|
|
19,039
|
|
|
41,066
|
|
|
Weighted average premium per shelf offering share sold*
|
|
|
—
%
|
|
|
—
%
|
|
|
2.74
%
|
|
|
—
%
|
|
|
*
|
Municipal Income (NMI) is not authorized to issue additional shares through a shelf offering at the end of the reporting period.
|
5. Investment Transactions
Purchases and sales (including maturities but excluding short-term investments and derivative transactions, where applicable) during the six months ended April 30, 2013, were as follows:
|
|
|
|
|
|
|
AMT-Free
|
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Value
|
|
|
Value
|
|
|
Income
|
|
|
Value
|
|
|
|
|
|
(NUV
|
)
|
|
(NUW
|
)
|
|
(NMI
|
)
|
|
(NEV
|
)
|
|
Purchases
|
|
$
|
129,480,858
|
|
$
|
9,458,910
|
|
$
|
8,317,004
|
|
$
|
31,396,761
|
|
|
Sales and maturities
|
|
|
148,626,545
|
|
|
6,052,069
|
|
|
7,417,538
|
|
|
7,300,747
|
|
6. Income Tax Information
The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to timing differences in recognizing taxable market discount, timing differences in recognizing certain gains and losses on investment transactions and the treatment of investments in inverse floating rate securities reflected as financing transactions, if any. 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 net asset values of the Funds.
As of April 30, 2013, 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:
|
`
|
|
|
|
|
|
AMT-Free
|
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Value
|
|
|
Value
|
|
|
Income
|
|
|
Value
|
|
|
|
|
|
(NUV
|
)
|
|
(NUW
|
)
|
|
(NMI
|
)
|
|
(NEV
|
)
|
|
Cost of investments
|
|
$
|
1,877,283,211
|
|
$
|
186,261,260
|
|
$
|
84,028,554
|
|
$
|
275,162,221
|
|
|
Gross unrealized:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Appreciation
|
|
$
|
231,466,845
|
|
$
|
45,538,426
|
|
$
|
11,783,879
|
|
$
|
58,547,587
|
|
|
Depreciation
|
|
|
(23,409,366
|
)
|
|
(142,360
|
)
|
|
(150,484
|
)
|
|
(3,903,559
|
)
|
|
Net unrealized appreciation (depreciation) of investments
|
|
$
|
208,057,479
|
|
$
|
45,396,066
|
|
$
|
11,633,395
|
|
$
|
54,644,028
|
|
Permanent differences, primarily due to expiration of capital loss carryforwards, federal taxes paid, taxable market discount and distribution character reclassifications, resulted in reclassifications among the Funds’ components of net assets as of October 31, 2012, the Funds’ last tax year end, as follows:
|
|
|
|
|
|
|
AMT-Free
|
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Value
|
|
|
Value
|
|
|
Income
|
|
|
Value
|
|
|
|
|
|
(NUV
|
)
|
|
(NUW
|
)
|
|
(NMI
|
)
|
|
(NEV
|
)
|
|
Paid-in-surplus
|
|
$
|
5,062
|
|
$
|
42
|
|
$
|
(662,788
|
)
|
$
|
—
|
|
|
Undistributed (Over-distribution of) net investment income
|
|
|
(426,083
|
)
|
|
(202,742
|
)
|
|
(5,094
|
)
|
|
(1,900
|
)
|
|
Accumulated net realized gain (loss)
|
|
|
421,021
|
|
|
202,700
|
|
|
667,882
|
|
|
1,900
|
|
The tax components of undistributed net tax-exempt income, net ordinary income and net long-term capital gains as of October 31, 2012, the Funds’ last tax year end, were as follows:
|
|
|
|
|
|
|
AMT-Free
|
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Value
|
|
|
Value
|
|
|
Income
|
|
|
Value
|
|
|
|
|
|
(NUV
|
)
|
|
(NUW
|
)
|
|
(NMI
|
)
|
|
(NEV
|
)
|
|
Undistributed net tax-exempt income *
|
|
$
|
13,285,954
|
|
$
|
271,049
|
|
$
|
1,190,603
|
|
$
|
4,711,161
|
|
|
Undistributed net ordinary income **
|
|
|
724,419
|
|
|
—
|
|
|
12,943
|
|
|
59,986
|
|
|
Undistributed net long-term capital gains
|
|
|
—
|
|
|
116,431
|
|
|
—
|
|
|
—
|
|
|
*
|
Undistributed net tax-exempt income (on a tax basis) has not been reduced for the dividend declared on October 1, 2012, paid on November 1, 2012.
|
|
**
|
Net ordinary income consists of taxable market discount income and net short-term capital gains, if any.
|
The tax character of distributions paid during the Funds’ last tax year ended October 31, 2012, was designated for purposes of the dividends paid deduction as follows:
|
|
|
|
|
|
|
AMT-Free
|
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Value
|
|
|
Value
|
|
|
Income
|
|
|
Value
|
|
|
|
|
|
(NUV
|
)
|
|
(NUW
|
)
|
|
(NMI
|
)
|
|
(NEV
|
)
|
|
Distributions from net tax-exempt income
|
|
$
|
93,396,470
|
|
$
|
10,782,724
|
|
$
|
4,698,473
|
|
$
|
18,504,251
|
|
|
Distributions from net ordinary income*
|
|
|
2,233,875
|
|
|
114
|
|
|
—
|
|
|
40,449
|
|
|
Distributions from net long-term capital gains
|
|
|
10,779,851
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
Net ordinary income consists of taxable market discount income and net short-term capital gains, if any.
|
As of October 31, 2012, the Funds’ last tax year end, the following Funds 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 follows:
|
|
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Income
|
|
|
Value
|
|
|
|
|
|
(NMI
|
)
|
|
(NEV
|
)
|
|
Expiration:
|
|
|
|
|
|
|
|
|
October 31, 2013
|
|
$
|
165,764
|
|
$
|
—
|
|
|
October 31, 2016
|
|
|
164,175
|
|
|
—
|
|
|
October 31, 2017
|
|
|
289,822
|
|
|
—
|
|
|
October 31, 2018
|
|
|
—
|
|
|
2,946,811
|
|
|
October 31, 2019
|
|
|
—
|
|
|
16,146,849
|
|
|
Total
|
|
$
|
619,761
|
|
$
|
19,093,660
|
|
During the Funds’ last tax year ended October 31, 2012, the following Funds utilized capital loss carryforwards as follows:
|
|
|
|
AMT-Free
|
|
|
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Value
|
|
|
Income
|
|
|
|
|
|
(NUW
|
)
|
|
(NMI
|
)
|
|
Utilized capital loss carryforwards
|
|
$
|
241,126
|
|
$
|
249,645
|
|
During the Funds’ last tax year ended October 31, 2012, the following Fund had capital loss carryforwards expire as follows:
|
|
|
|
Municipal
|
|
|
|
|
|
Income
|
|
|
|
|
|
(NMI
|
)
|
|
Expired capital loss carryforwards
|
|
$
|
667,114
|
|
|
|
|
Notes to
|
|
|
|
Financial Statements
(Unaudited) (continued)
|
Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by a Fund after December 31, 2010, will not be subject to expiration. During the Funds’ last tax year ended October 31, 2012, the following funds generated post-enactment capital losses as follows:
|
|
|
|
|
|
|
Enhanced
|
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
|
Value
|
|
|
Value
|
|
|
|
|
|
(NUV
|
)
|
|
(NEV
|
)
|
|
Post-enactment losses:
|
|
|
|
|
|
|
|
|
Short-term
|
|
$
|
—
|
|
$
|
—
|
|
|
Long-term
|
|
|
20,892,275
|
|
|
5,358,888
|
|
7. Management Fees and Other Transactions with Affiliates
Each Fund’s management fee consists of two components – a fund-level fee, based only on the amount of assets within the Fund, and a complex-level fee, based on the aggregate amount of all eligible fund assets managed by the Adviser. This pricing structure enables Fund 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 for Municipal Value (NUV), payable monthly, is calculated according to the following schedule:
|
|
|
|
Municipal Value (NUV
)
|
|
Average Daily Net Assets
|
|
|
Fund-Level Fee Rate
|
|
For the first $500 million
|
|
|
.1500
|
%
|
|
For the next $500 million
|
|
|
.1250
|
|
|
For net assets over $1 billion
|
|
|
.1000
|
|
In addition, Municipal Value (NUV) pays an annual management fee, payable monthly, based on gross interest income (excluding interest on bonds underlying a “self-deposited inverse floater” trust that is attributed to the Fund over and above the net interest earned on the inverse floater itself) as follows:
|
|
|
|
Municipal Value (NUV
)
|
|
Gross Interest Income
|
|
|
Gross Income Fee Rate
|
|
For the first $50 million
|
|
|
4.125
|
%
|
|
For the next $50 million
|
|
|
4.000
|
|
|
For gross income over $100 million
|
|
|
3.875
|
|
The annual fund-level fee for AMT-Free Municipal Value (NUW), Municipal Income (NMI) and Enhanced Municipal Value (NEV), payable monthly, is calculated according to the following schedules:
|
|
|
|
AMT-Free Municipal Value (NUW
)
|
|
Average Daily Managed Assets*
|
|
|
Fund-Level Fee Rate
|
|
For the first $125 million
|
|
|
.4000
|
%
|
|
For the next $125 million
|
|
|
.3875
|
|
|
For the next $250 million
|
|
|
.3750
|
|
|
For the next $500 million
|
|
|
.3625
|
|
|
For the next $1 billion
|
|
|
.3500
|
|
|
For managed assets over $2 billion
|
|
|
.3375
|
|
|
|
|
|
Municipal Income (NMI
)
|
|
Average Daily Net Assets
|
|
|
Fund-Level Fee Rate
|
|
For the first $125 million
|
|
|
.4500
|
%
|
|
For the next $125 million
|
|
|
.4375
|
|
|
For the next $250 million
|
|
|
.4250
|
|
|
For the next $500 million
|
|
|
.4125
|
|
|
For the next $1 billion
|
|
|
.4000
|
|
|
For the next $3 billion
|
|
|
.3875
|
|
|
For net assets over $5 billion
|
|
|
.3750
|
|
|
|
|
|
Enhanced Municipal Value (NEV
)
|
|
Average Daily Managed Assets*
|
|
|
Fund-Level Fee Rate
|
|
For the first $125 million
|
|
|
.4500
|
%
|
|
For the next $125 million
|
|
|
.4375
|
|
|
For the next $250 million
|
|
|
.4250
|
|
|
For the next $500 million
|
|
|
.4125
|
|
|
For the next $1 billion
|
|
|
.4000
|
|
|
For managed assets over $2 billion
|
|
|
.3875
|
|
The annual complex-level fee for each Fund, payable monthly, is calculated according to the following schedule:
|
Complex-Level Managed Asset Breakpoint Level*
|
|
|
Effective Rate at Breakpoint Level
|
|
$55 billion
|
|
|
.2000
|
%
|
|
$56 billion
|
|
|
.1996
|
|
|
$57 billion
|
|
|
.1989
|
|
|
$60 billion
|
|
|
.1961
|
|
|
$63 billion
|
|
|
.1931
|
|
|
$66 billion
|
|
|
.1900
|
|
|
$71 billion
|
|
|
.1851
|
|
|
$76 billion
|
|
|
.1806
|
|
|
$80 billion
|
|
|
.1773
|
|
|
$91 billion
|
|
|
.1691
|
|
|
$125 billion
|
|
|
.1599
|
|
|
$200 billion
|
|
|
.1505
|
|
|
$250 billion
|
|
|
.1469
|
|
|
$300 billion
|
|
|
.1445
|
|
|
*
|
For the fund-level and complex-level fees, managed assets include closed-end fund assets managed by the Adviser that are attributable to financial leverage. For these purposes, financial leverage includes the funds’ use of preferred stock and borrowings and certain investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by a TOB trust that has been effectively financed by the trust’s issuance of floating rate securities, subject to an agreement by the Adviser as to certain funds to limit the amount of such assets for determining managed assets in certain circumstances. The complex-level fee is calculated based upon the aggregate daily managed assets of all Nuveen Funds that constitute “eligible assets.” Eligible assets do not include assets attributable to investments in other Nuveen Funds or assets in excess of $2 billion added to the Nuveen Fund complex in connection with the Adviser’s assumption of the management of the former First American Funds effective January 1, 2011. As of April 30, 2013, the complex-level fee rate for these Funds was .1661%.
|
The management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Adviser is responsible for each Fund’s overall strategy and asset allocation decisions. The Adviser has entered into sub-advisory agreements with Nuveen Asset Management, LLC, (the “Sub-Adviser”), a wholly-owned subsidiary of the Adviser, under which the Sub-Adviser manages the investment portfolios of the Funds. The Sub-Adviser is compensated for its services to the Funds from the management fees paid to the Adviser.
The Funds pay no compensation directly to those of its directors/trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board of Directors/Trustees has adopted a deferred compensation plan for independent directors/trustees that enables directors/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.
8. Borrowing Arrangements
As part of its investment strategy, Enhanced Municipal Value (NEV) may use borrowings as a means of financial leverage. The Fund has entered into a $100 million (maximum commitment amount) committed, unsecured, 364-day line of credit (“Borrowings”) with its custodian bank. Interest charged on the used portion of the Borrowings is calculated at a rate per annum equal to the higher of (i) the overnight Federal Funds rate plus 1.25% or (ii) the overnight London Inter-bank Offered Rate (“LIBOR”) plus 1.25%. In addition, the Fund accrues a commitment fee of .15% per annum on the unused portion of the Borrowings.
On June 14, 2013 (subsequent to the close of this reporting period), the Enhanced Municipal Value (NEV) renewed its Borrowings, at which time the termination date was extended through June 13, 2014. All the terms of the Borrowings remained unchanged.
|
|
|
Notes to
|
|
|
|
Financial Statements
(Unaudited) (continued)
|
Borrowings outstanding are recognized as “Borrowings” on the Statement of Assets and Liabilities. Interest expense incurred on the borrowed amount and undrawn balance is recognized as a component of “Interest expense” on the Statement of Operations.
During the six months ended April 30, 2013, the Fund did not utilize its Borrowings.
9. New Accounting Pronouncements
Financial Accounting Standards Board (“FASB”) Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities
In January 2013, Accounting Standards Update (“ASU”) 2013-01,
Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
, replaced ASU 2011-11,
Disclosures about Offsetting Assets and Liabilities
. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013. ASU 2011-11 was intended to enhance disclosure requirements on the offsetting of financial assets and liabilities. ASU 2013-01 limits the scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements and securities lending transactions to the extent that they are (1) offset in the financial statements or (2) subject to an enforceable master netting arrangement or similar agreement. Management is currently evaluating the application of ASU 2013-01 and its impact to the financial statements and footnote disclosures, if any.
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 month 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
Reinvest Automatically
Easily and Conveniently
(continued)
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.
Glossary of Terms
Used in this Report
|
■
|
Auction Rate Bond:
An auction rate bond is a security whose interest payments are adjusted periodically through an auction process, which process typically also serves as a means for buying and selling the bond. Auctions that fail to attract enough buyers for all the shares offered for sale are deemed to have “failed,” with current holders receiving a formula-based interest rate until the next scheduled auction.
|
|
|
|
|
■
|
Average Annual Total Return:
This is a commonly used method to express an investment’s performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment’s actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered.
|
|
|
|
|
■
|
Duration:
Duration is a measure of the expected period over which a bond’s principal and interest will be paid, and consequently is a measure of the sensitivity of a bond’s or bond Fund’s value to changes when market interest rates change. Generally, the longer a bond’s or Fund’s duration, the more the price of the bond or Fund will change as interest rates change.
|
|
|
|
|
■
|
Effective Leverage:
Effective leverage is a Fund’s effective economic leverage, and includes both regulatory leverage (see Leverage) and the leverage effects of certain derivative investments in the Fund’s portfolio. Currently, the leverage effects of Tender Option Bond (TOB) inverse floater holdings are included in effective leverage values, in addition to any regulatory leverage.
|
|
|
|
|
■
|
Forward Interest Rate Swap:
A contractual agreement between two counterparties under which one party agrees to make periodic payments to the other for an agreed period of time based on a fixed rate, while the other party agrees to make periodic payments based on a floating rate of interest based on an underlying index. Alternatively, both series of cash flows to be exchanged could be calculated using floating rates of interest but floating rates that are based upon different underlying indexes.
|
|
|
|
|
■
|
Gross Domestic Product (GDP):
The total market value of all final goods and services produced in a country/region in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.
|
|
|
|
|
■
|
Inverse Floating Rate Securities:
Inverse floating rate securities, also known as inverse floaters or tender option bonds (TOBs), are created by depositing a municipal bond, typically with a fixed interest rate, into a special purpose trust created by a broker-dealer. This trust, in turn, (a) issues floating rate certificates typically paying short-term tax-exempt interest rates to third parties in amounts equal to some fraction of the deposited bond’s par amount or market value, and (b) issues an inverse
|
Glossary of Terms
Used in this Report
(continued)
|
|
floating rate certificate (sometimes referred to as an “inverse floater”) to an investor (such as a Fund) interested in gaining investment exposure to a long-term municipal bond. The income received by the holder of the inverse floater varies inversely with the short term rate paid to the floating rate certificates’ holders, and in most circumstances the holder of the inverse floater bears substantially all of the underlying bond’s downside investment risk. The holder of the inverse floater typically also benefits disproportionately from any potential appreciation of the underlying bond’s value. Hence, an inverse floater essentially represents an investment in the underlying bond on a leveraged basis.
|
|
|
|
|
■
|
Leverage:
Using borrowed money to invest in securities or other assets, seeking to increase the return of an investment or portfolio.
|
|
|
|
|
■
|
Lipper General & Insured Leveraged Municipal Debt Funds Classification Average:
Calculated using the returns of all closed-end funds in this category. Lipper returns account for the effects of management fees and assume reinvestment of distributions, but do not reflect any applicable sales charges.
|
|
|
|
|
■
|
Lipper General & Insured Unleveraged Municipal Debt Funds Classification Average:
Calculated using the returns of all closed-end funds in this category. Lipper returns account for the effects of management fees and assume reinvestment of distributions, but do not reflect any applicable sales charges.
|
|
|
|
|
■
|
Net Asset Value (NAV):
The net market value of all securities held in a portfolio.
|
|
|
|
|
■
|
Net Asset Value (NAV) Per Share:
The market value of one share of a mutual fund or closed-end fund. For a Fund, the NAV is calculated daily by taking the Fund’s total assets (securities, cash, and accrued earnings), subtracting the Fund’s liabilities, and dividing by the number of shares outstanding.
|
|
|
|
|
■
|
Pre-Refunding:
Pre-Refunding, also known as advanced refundings or refinancings, is a procedure used by state and local governments to refinance municipal bonds to lower interest expenses. The issuer sells new bonds with a lower yield and uses the proceeds to buy U.S. Treasury securities, the interest from which is used to make payments on the higher-yielding bonds. Because of this collateral, pre-refunding generally raises a bond’s credit rating and thus its value.
|
|
|
|
|
■
|
Regulatory Leverage:
Regulatory Leverage consists of preferred shares issued by or borrowings of a Fund. Both of these are part of a Fund’s capital structure. Regulatory leverage is sometimes referred to as “‘40 Act Leverage” and is subject to asset coverage limits set in the Investment Company Act of 1940.
|
|
|
|
|
■
|
S&P Municipal Bond Index:
An unleveraged, market value-weighted index designed to measure the performance of the tax-exempt, investment-grade U.S. municipal bond market. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.
|
|
|
|
|
■
|
Total Investment Exposure:
Total investment exposure is a Fund’s assets managed by the Adviser that are attributable to financial leverage. For these purposes, financial leverage includes a Fund’s use of preferred stock and borrowings and investments in
|
|
|
the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by a TOB trust that has been effectively financed by the trust’s issuance of floating rate securities.
|
|
|
|
|
■
|
Zero Coupon Bond:
A zero coupon bond does not pay a regular interest coupon to its holders during the life of the bond. Income to the holder of the bond comes from accretion of the difference between the original purchase price of the bond at issuance and the par value of the bond at maturity and is effectively paid at maturity. The market prices of zero coupon bonds generally are more volatile than the market prices of bonds that pay interest periodically.
|
Notes
Additional Fund Information
|
Board of
|
|
Directors/Trustees
|
|
John P. Amboian
|
|
Robert P. Bremner
|
|
Jack B. Evans
|
|
William C. Hunter
|
|
David J. Kundert
|
|
William J. Schneider
|
|
Judith M. Stockdale
|
|
Carole E. Stone
|
|
Virginia L. Stringer
|
|
Terence J. Toth
|
|
|
|
Fund Manager
|
|
Nuveen Fund Advisors, LLC
|
|
333 West Wacker Drive
|
|
Chicago, IL 60606
|
|
|
|
Custodian
|
|
State Street Bank
|
|
& Trust Company
|
|
Boston, MA
|
|
|
|
Transfer Agent and
|
|
Shareholder Services
|
|
State Street Bank & Trust
|
|
Company
|
|
Nuveen Funds
|
|
P.O. Box 43071
|
|
Providence, RI 02940-3071
|
|
(800) 257-8787
|
|
|
|
Legal Counsel
|
|
Chapman and Cutler LLP
|
|
Chicago, IL
|
|
|
|
Independent Registered
|
|
Public Accounting Firm
|
|
Ernst & Young LLP
|
|
Chicago, IL
|
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 Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act.
Share Information
Each Fund intends to repurchase shares of its own stock in the future at such times and in such amounts as is deemed advisable. During the period covered by this report, the Funds did not repurchase any of their shares.
Any future repurchases will be reported to shareholders in the next annual or semi-annual report.
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 $224 billion as of March 31, 2013.
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-A-0413D