As filed with the Securities and Exchange Commission on December 16, 2022
File No. 333-268294
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
☒ Pre-Effective Amendment No. 1
☐ Post-Effective Amendment No.
NUVEEN MUNICIPAL CREDIT INCOME FUND
(Exact Name of Registrant as Specified in Charter)
333 West
Wacker Drive
Chicago, Illinois 60606
(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
(312) 257-8787
(Area Code and Telephone Number)
Mark L.
Winget
Vice President and Secretary
Nuveen Investments
333
West Wacker Drive
Chicago, Illinois 60606
(Name and Address of Agent for Service)
Copies to:
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| Deborah Bielicke Eades
Vedder Price P.C. 222
North LaSalle Street Chicago, Illinois 60601 |
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Eric F. Fess
Chapman and Cutler LLP
320 South Canal Street, 27th Floor
Chicago, Illinois 60606 |
Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
IMPORTANT NOTICE TO SHAREHOLDERS OF
NUVEEN GEORGIA QUALITY MUNICIPAL INCOME FUND (NKG)
NUVEEN OHIO QUALITY MUNICIPAL INCOME FUND (NUO)
AND
NUVEEN MUNICIPAL
CREDIT INCOME FUND (NZF)
(EACH, A “FUND” AND TOGETHER, THE “FUNDS”)
[●], 2022
Although we recommend that you read the complete Joint Proxy Statement/Prospectus, for your convenience, we have provided a brief overview of
the proposals to be voted on.
| Q. |
Why am I receiving the enclosed Joint Proxy Statement/Prospectus? |
| A. |
You are receiving the Joint Proxy Statement/Prospectus as a holder of common shares of Nuveen Georgia Quality
Municipal Income Fund (“Georgia Municipal” or a “Target Fund”) or Nuveen Ohio Quality Municipal Income Fund (“Ohio Municipal” or a “Target Fund”) or as a holder of preferred shares of Nuveen Municipal Credit
Income Fund (the “Acquiring Fund” and together with the Target Funds, the “Funds” or each individually, a “Fund”) in connection with the solicitation of proxies by each Fund’s Board of Trustees (each, a
“Board” and each Trustee, a “Board Member”) for use at the annual meeting of shareholders of Georgia Municipal and at special meetings of shareholders of Ohio Municipal and the Acquiring Fund (each, a “Meeting” and
together, the “Meetings”). |
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At the Meetings, shareholders of the Funds will be asked to vote on the following proposals:
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(Common and preferred shareholders of each Target Fund) to approve an Agreement and Plan of Merger (the
“Agreement”) pursuant to which the proposed combination of the Target Fund and the Acquiring Fund (each, a “Merger” and together, the “Mergers”) will be effected; |
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(Preferred shareholders of the Acquiring Fund) to approve the Agreement with respect to each Merger; and
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(Common and preferred shareholders of Georgia Municipal) to elect members of the Board. (The list of specific
nominees is contained in the enclosed Joint Proxy Statement/Prospectus.) |
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Shareholders of Georgia Municipal are being solicited to vote on the election of six (6) Board Members who
have been nominated for election at the Meeting. These Board Members would continue in office in the event the Merger of Georgia Municipal into the Acquiring Fund is not consummated in a timely manner. |
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Each Fund’s Board unanimously recommends that you vote FOR each proposal that is applicable to your
Fund. |
Proposal Regarding the Mergers
| Q. |
Why has each Fund’s Board recommended the Merger proposal? |
| A. |
Nuveen Fund Advisors, LLC (“Nuveen Fund Advisors”), a subsidiary of Nuveen, LLC (“Nuveen”)
and the Funds’ investment adviser, recommended the Merger proposal as part of an ongoing initiative to streamline Nuveen’s municipal closed-end fund line-up and eliminate overlapping products. Each Fund’s Board considered its
Fund’s |
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Merger(s) and determined that the Merger(s) would be in the best interests of its Fund. Based on information provided by Nuveen Fund Advisors, each Target Fund’s Board believes that its
Fund’s proposed Merger may benefit the common shareholders of its Fund in a number of ways, including, among other things: |
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The potential for higher common share net earnings and distribution levels following the Mergers, due in part to
the Acquiring Fund’s ability to invest to a greater degree in lower rated securities and a geographically diverse national portfolio, as well as operating economies from the combined fund’s greater scale; |
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Greater secondary market liquidity and improved secondary market trading for common shares as a result of the
combined fund’s greater share volume, which may lead to narrower bid-ask spreads and smaller trade-to-trade price movements;
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The potential for a narrower trading discount as a result of the Acquiring Fund’s common shares trading at a
discount that historically has been lower than that of each Target Fund’s common shares; |
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Increased portfolio and leverage management flexibility due to the significantly larger asset base of the
combined fund and the Acquiring Fund’s national mandate with greater flexibility to invest in lower rated securities; and |
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Lower net operating expenses, excluding the costs of leverage, as certain fixed costs are spread over a larger
asset base. |
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Each Target Fund’s Board considered that a greater percentage of the Acquiring Fund’s portfolio may
be allocated to lower rated municipal securities relative to the amount permitted by the policies of the Target Fund, and recognized that investments in lower rated securities are subject to higher risks than investments in higher rated securities.
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With respect to holders of preferred shares of each Target Fund, the Target Fund’s Board considered that,
upon the closing of the applicable Merger, holders of any preferred shares outstanding immediately prior to the closing will receive, on a one-for-one basis, newly
issued preferred shares of the Acquiring Fund having substantially similar terms, immediately prior to the closing of the Merger, to those of the preferred shares of the applicable Target Fund. |
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Based on information provided by Nuveen Fund Advisors, the Acquiring Fund’s Board considered that the
Acquiring Fund may benefit in the near term from a modest increase in operating efficiencies and over the long term from increased investment capital, which allows the Acquiring Fund to pursue additional investment opportunities. With respect to
holders of preferred shares of the Acquiring Fund, the Acquiring Fund’s Board considered that the outstanding preferred shares of the Acquiring Fund and any preferred shares of the Acquiring Fund to be issued in the Mergers would have equal
priority with each other as to payment of dividends and distributions of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. |
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For these reasons, each Fund’s Board has determined that its Fund’s Merger(s) are in the best
interest of its Fund and has approved such Merger(s). |
| Q. |
How will preferred shareholders be affected by the Mergers? |
| A. |
The Acquiring Fund has three series of MuniFund Preferred Shares (“MFP Shares”) outstanding and three
series of Variable Rate Demand Preferred Shares (“VRDP Shares”) outstanding, and these shares are expected to remain outstanding following the Mergers. Georgia Municipal has one series of Adjustable Rate
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MuniFund Term Preferred Shares (“AMTP Shares”) outstanding and Ohio Municipal has one series of VRDP Shares outstanding. Upon the closing of each Merger, holders of any outstanding AMTP
Shares of Georgia Municipal and holders of any outstanding VRDP Shares of Ohio Municipal will receive, on a one-for-one basis, newly issued AMTP Shares and VRDP Shares,
respectively, of the Acquiring Fund having substantially similar terms, immediately prior to the closing of each Merger, to those of the AMTP Shares of Georgia Municipal or the VRDP Shares of Ohio Municipal, respectively. The outstanding preferred
shares of the Acquiring Fund and any preferred shares to be issued by the Acquiring Fund in the Mergers will have equal priority with each other and with any other preferred shares that the Acquiring Fund may issue in the future as to the payment of
dividends and the distribution of assets upon the dissolution, liquidation or winding up of the affairs of the Acquiring Fund. |
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Following the Mergers, to the extent the Acquiring Fund issues any new preferred shares in the Mergers, holders
of preferred shares of the combined fund may hold a smaller percentage of the outstanding preferred shares of the combined fund as compared to their percentage holdings of their respective Fund prior to the Mergers. Additionally, the combined fund
will have multiple series and types of preferred shares outstanding. The different types of preferred shares have different characteristics and features, which are described in more detail in the Joint Proxy Statement/Prospectus. See “Proposal
No. 1—C. Information About the Mergers—Description of AMTP Shares to Be Issued by the Acquiring Fund” beginning on page 55, “Proposal No. 1—C. Information About the Mergers—Description of VRDP Shares to Be Issued
by the Acquiring Fund” beginning on page 56, “Additional Information About the Acquiring Fund—Description of Outstanding Acquiring Fund MFP Shares” beginning on page 104 and “Additional Information About the
Acquiring Fund—Description of Outstanding Acquiring Fund VRDP Shares” beginning on page 106. |
| Q. |
Do the Funds have similar investment objectives, policies and risks? |
| A. |
The Funds have similar investment objectives, policies and risks, but there are differences. Each Fund seeks to
provide tax-exempt current income by investing primarily in municipal securities. However, there are differences between the investment objectives, policies and risks of the Funds. The principal similarities
and differences between the Funds’ investment objectives, policies and risks are as follows: |
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The Target Funds are state-specific municipal funds that seek to provide current income exempt from both regular
federal income taxes and state income tax, while the Acquiring Fund is a national municipal fund that seeks to provide current income exempt from regular federal income tax. |
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Under normal circumstances, the Target Funds invest primarily in municipal bonds of a specific state and are
subject to economic, political and other risks of a single state, while the Acquiring Fund may invest in municipal obligations of any U.S. state or territory. |
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Under normal circumstances, each Target Fund invests primarily in investment grade securities, while the
Acquiring Fund may invest up to 55% of its managed assets in securities that, at the time of investment, are rated below the three highest grades (Baa or BBB or lower) by at least one nationally recognized statistical rating organization
(“NRSRO”). A security is considered investment grade if it is rated within the four highest letter grades by at least one NRSRO that rates such security (even if rated lower by another), or if it is unrated but judged to be of comparable
quality by the Fund’s investment adviser or sub-adviser. As discussed on page 19 of the Joint Proxy Statement/Prospectus, investments in lower rated securities are subject to higher risks than
investments in higher rated securities, including a higher risk that the issuer will be unable to pay interest or principal when due. |
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Each Fund is a diversified, closed-end management investment company and
currently employs leverage through the issuance of preferred shares and the use of inverse floating rate securities. |
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See “Proposal No. 1—A. Synopsis—Comparison of the Acquiring Fund and the Target
Funds—Investment Objectives and Policies” and “Proposal No. 1—A. Synopsis—Comparative Risk Information” for more information. |
| Q. |
How will the Mergers impact fees and expenses of the Target Funds? |
| A. |
As discussed above, each Target Fund’s Board considered that, due to the greater asset base of the
combined fund, its Merger is expected to result in economies of scale and a resulting reduction in certain operating expenses. Based on information in the Comparative Fee Table, the pro forma expense ratio, excluding the costs of leverage, of the
combined fund following the Mergers is estimated to decline up to 5 basis points (0.05%) compared to the total expense ratio of Georgia Municipal and Ohio Municipal. Based on information in the Comparative Fee Table, the pro forma expense ratio,
including the costs of leverage, of the combined fund following the Mergers is estimated to be 8 basis points (0.08%) higher than the total expense ratio of Georgia Municipal and 41 basis points (0.41%) lower than the total expense ratio of Ohio
Municipal. Leverage costs reflect the forms and sources of leverage in effect for each specified period and such costs will vary over time. |
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See the Comparative Fee Table on page 15 of the enclosed Joint Proxy Statement/Prospectus for more
detailed information regarding fees and expenses. See also “Additional Information About the Acquiring Fund” on page 100. |
| Q. |
Will the Mergers impact distributions to common shareholders of the Target Funds? |
| A. |
In considering the Mergers, each Target Fund’s Board took into account potential future distribution
levels as well as information from Nuveen Fund Advisors indicating that the Acquiring Fund has historically paid higher distributions per common share than each Target Fund. The most recent monthly distribution per common share was $0.0330 for
Georgia Municipal, $0.0325 for Ohio Municipal and $0.0505 for the Acquiring Fund. The annualized distribution rate (expressed as a percentage of net asset value as of September 30, 2022) was 3.61% for Georgia Municipal, 2.84% for Ohio Municipal
and 4.81% for the Acquiring Fund. The differences in historical distribution rates were primarily attributable to certain lower expenses per common share and the Acquiring Fund’s greater investment flexibility to invest in diverse geographic
regions and to invest to a greater degree in lower rated municipal securities. However, distributions for Georgia Municipal are exempt from federal and Georgia income taxes and distributions for Ohio Municipal are exempt from federal and Ohio
personal income taxes, while distributions for the Acquiring Fund are exempt from federal income tax only. Assuming the highest marginal federal tax rate for the Acquiring Fund and the highest marginal state and federal tax rates for the Target
Funds, the taxable equivalent yield as of September 30, 2022 was 8.95% for Georgia Municipal, 7.00% for Ohio Municipal and 10.43% for the Acquiring Fund. The taxable equivalent yield generally represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax basis. There is no assurance that distribution rates of the Funds will continue at historical levels. While distributions from the
combined fund following the Mergers are generally expected to be exempt from federal income tax, such distributions may be subject to state and local income tax, including without limitation Georgia or Ohio income tax, as applicable.
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Will shareholders of the Funds have to pay any fees or expenses in connection with the Mergers?
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| A. |
Yes. The Funds, and indirectly their common shareholders, will bear the costs of the Mergers, whether or not
the Mergers are consummated. The allocation of the costs of the Mergers to the Funds is based on the expected benefits of the Mergers to Fund common shareholders following the Mergers, including operating expense savings, improvements in the
secondary trading market for common shares and the impact on common share net earnings. Preferred shareholders will not bear any costs of the Mergers. |
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The costs of the Mergers are estimated to be $1,215,000, but the actual costs may be higher or lower than that
amount. These costs represent the estimated nonrecurring expenses of the Funds in carrying out their |
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obligations under the Agreement and consist of management’s estimate of professional service fees, printing costs and mailing charges related to the proposed Mergers. Based on the expected
benefits of the Mergers to each Fund, each of Georgia Municipal, Ohio Municipal and the Acquiring Fund is expected to be allocated $280,000, $930,000 and $5,000, respectively, of the estimated expenses in connection with the Mergers (0.20%, 0.30%
and 0.00%, respectively, of Georgia Municipal’s, Ohio Municipal’s and the Acquiring Fund’s average net assets applicable to common shares for the six months ended April 30, 2022). If one or both Mergers is not consummated for any
reason, including because the requisite shareholder approvals are not obtained, each of the Funds, and common shareholders of each of the Funds indirectly, will still bear the costs of the Mergers. |
| Q. |
Will the Mergers constitute a taxable event for a Target Fund’s shareholders?
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No. As a non-waivable condition to closing, each Fund participating in
a Merger will receive an opinion of counsel, subject to certain representations, assumptions and conditions, substantially to the effect that the proposed Merger will qualify as a “reorganization” within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended. It is expected that shareholders of a Target Fund who receive Acquiring Fund shares pursuant to a Merger will recognize no gain or loss for federal income tax purposes as a direct result of the
Merger, except to the extent that a Target Fund common shareholder receives cash in lieu of a fractional Acquiring Fund common share. Prior to the closing of its Merger, each Target Fund expects to declare a distribution of all of its net investment
income and net capital gains, if any. All or a portion of such distribution made by a Target Fund may be taxable to that Target Fund’s shareholders for federal income tax purposes. In addition, if the Mergers had occurred as of
September 30, 2022, it is estimated that approximately 70% of Georgia Municipal’s investment portfolio and approximately 57% of Ohio Municipal’s investment portfolio would have been sold by the Acquiring Fund following the Mergers. To
the extent the Acquiring Fund sells securities received from a Target Fund following the Mergers, the Acquiring Fund may recognize gains or losses, which may result in taxable distributions to Acquiring Fund shareholders (including former
shareholders of a Target Fund who hold shares of the Acquiring Fund following the Mergers). If such repositioning had been completed as of September 30, 2022, the repositioning would not have generated net capital gain, taking into account capital
loss carry forwards. Following the Mergers, the Acquiring Fund’s ability to use capital loss carry forwards may be limited. |
| Q. |
As a result of the Mergers, will common shareholders of a Target Fund receive new shares of the Acquiring
Fund? |
| A. |
Yes. Upon the closing of each Merger, Target Fund common shareholders will become common shareholders of the
Acquiring Fund. Holders of common shares of each Target Fund will receive newly issued common shares of the Acquiring Fund, with cash being distributed in lieu of fractional common shares. The aggregate net asset value, as of the close of trading on
the business day immediately prior to the closing of each Merger, of the Acquiring Fund common shares received by each Target Fund’s common shareholders (including, for this purpose, fractional Acquiring Fund common shares to which common
shareholders would be entitled) will be equal to the aggregate net asset value of the common shares of such Target Fund held by its shareholders as of such time. Fractional Acquiring Fund common shares due to Target Fund common shareholders will be
aggregated and sold on the open market, and Target Fund common shareholders will receive cash in lieu of such fractional shares. |
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Following the Mergers, common shareholders of each Fund will hold a smaller percentage of the outstanding
common shares of the combined fund as compared to their percentage holdings of their respective Fund prior to the Mergers. |
| Q. |
What will happen if the required shareholder approvals are not obtained? |
| A. |
The closing of each Merger is subject to the satisfaction or waiver of certain closing conditions, which
include customary closing conditions. In order for a Merger to occur, all requisite shareholder approvals |
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must be obtained at the applicable Fund’s shareholder meeting and certain other consents, confirmations and/or waivers from various third parties, including the liquidity providers and/or
the initial purchasers with respect to outstanding preferred shares of the Acquiring Fund, must also be obtained. Because the closing of each Merger is contingent upon the applicable Target Fund and the Acquiring Fund obtaining such shareholder
approvals and satisfying (or obtaining the waiver of) other closing conditions, it is possible that a Merger will not occur even if shareholders of a Fund entitled to vote approve the Merger and a Fund satisfies all of its closing conditions if the
other Fund does not obtain its requisite shareholder approvals or satisfy (or obtain the waiver of) its closing conditions. If a Merger is not consummated, the Board of the Target Fund involved in that Merger may take such actions as it deems in the
best interests of the Fund, including conducting additional solicitations with respect to the Merger proposal or continuing to operate the Target Fund as a standalone fund. The closing of each Merger is not contingent on the closing of the other
Merger. |
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Each series of preferred shares was issued on a private placement basis to one or a small number of
institutional holders. To the extent that one or more preferred shareholders of a Fund owns, holds or controls, individually or in the aggregate, all or a significant portion of a Fund’s outstanding preferred shares, the approval by a
Fund’s preferred shareholders required for a Merger to occur may turn on the exercise of voting or consent rights by such particular shareholder(s) and its or their determination as to the favorable view of the Merger with respect to its or
their interests. The Funds exercise no influence or control over the determinations of such shareholders with respect to the Mergers; there is no guarantee that such shareholders will vote to approve a Merger proposal. |
| Q. |
What is the timetable for the Mergers? |
| A. |
If the shareholder approvals and other conditions to closing are satisfied (or waived), the Mergers are
expected to take effect on or about March 6, 2023, or such other date as the parties may agree. |
| Q. |
How does each Board recommend that shareholders vote on the Merger proposal? |
| A. |
After careful consideration, each Board has determined that its Merger proposal is in the best interests of its
Fund and recommends that you vote FOR such proposal. |
General
| Q. |
Who do I call if I have questions? |
| A. |
If you need any assistance, or have any questions regarding the proposals or how to vote your shares,
please call Computershare Fund Services, the proxy solicitor hired by your Fund, at 1-877-520-8548 on weekdays during its business hours of 9:00 a.m. to 11:00 p.m. and Saturdays 12:00 p.m. to 6:00 p.m. Eastern Time. Please have your proxy materials
available when you call. |
| Q. |
How do I vote my shares? |
| A. |
You may vote by attending the Meetings, or by mail, by telephone or over the Internet:
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To vote at the Meetings, please follow the instructions below for attending the Meetings, which will be
held virtually. |
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To vote by mail, please mark, sign, date and mail the enclosed proxy card. No postage is required if
mailed in the United States. |
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To vote by telephone, please call the toll-free number located on your proxy card and follow the recorded
instructions, using your proxy card as a guide. |
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To vote over the Internet prior to the Meetings, go to the Internet address provided on your proxy card
and follow the instructions, using your proxy card as a guide. |
| Q. |
How can I attend the Meetings? |
| A. |
The Meetings will be completely virtual meetings of shareholders, which will be conducted exclusively by
webcast. You are entitled to participate in the Meetings only if you were a shareholder of record as of the close of business on November 10, 2022, or if you hold a valid proxy for the Meetings. There will be no physical location for the Meetings.
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You will be able to attend the Meetings online and submit your questions during the Meetings by visiting
meetnow.global/MXXWK2V. You also will be able to vote your shares online by attending the Meetings by webcast. To participate in the Meetings, you will need to log on using the control number from your proxy card or meeting notice. The control
number can be found in the shaded box. |
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If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using
the instructions below. |
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The online meeting will begin promptly at 2:00 p.m., Central Time, on February 8, 2023. We encourage you
to access the meeting prior to the start time leaving ample time for the check in. Please follow the access instructions as outlined herein. |
| Q. |
How do I register to attend the Meetings virtually on the Internet? |
| A. |
If your shares are registered in your name, you do not need to register to attend the Meetings virtually
on the Internet. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Meetings virtually on the Internet. |
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To register to attend the Meetings online by webcast you must submit proof of your proxy power (legal proxy)
reflecting your Fund holdings along with your name and email address to Computershare Fund Services. You must contact the bank or broker who holds your shares to obtain your legal proxy. Requests for registration must be labeled as “Legal
Proxy” and be received no later than 5:00 p.m., Eastern Time, three business days prior to the meeting date. |
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You will receive a confirmation of your registration by email after we receive your registration materials.
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Requests for registration should be directed to us by emailing an image of your legal proxy to
shareholdermeetings@computershare.com. |
| Q. |
Why hold virtual meetings? |
| A. |
In light of the public health concerns regarding the coronavirus outbreak
(COVID-19), we believe that hosting virtual meetings is in the best interests of the Funds and their respective shareholders. |
| Q. |
Will anyone contact me? |
| A. |
You may receive a call from Computershare Fund Services, the proxy solicitor hired by your Fund, to
verify that you received your proxy materials, to answer any questions you may have about the Mergers or the other proposal and to encourage you to vote your proxy. |
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We recognize the inconvenience of the proxy solicitation process and would not impose on you if we did not
believe that the matter being proposed was important. Once your vote has been registered with the proxy solicitor, your name will be removed from the solicitor’s follow-up contact list.
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Your vote is very important. We encourage you as a shareholder to participate in your Fund’s governance
by returning your vote as soon as possible. If enough shareholders fail to cast their votes, a Fund may not be able to hold its Meeting or the vote on the Merger or other proposal, and will be required to incur additional solicitation costs in order
to obtain sufficient shareholder participation. |
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[●], 2022
NUVEEN GEORGIA QUALITY MUNICIPAL INCOME FUND (NKG)
NUVEEN OHIO QUALITY MUNICIPAL INCOME FUND (NUO)
NUVEEN MUNICIPAL CREDIT INCOME FUND (NZF)
(EACH, A “FUND” AND TOGETHER, THE “FUNDS”)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS (NKG) AND
SPECIAL MEETING OF SHAREHOLDERS (NZF AND NUO)
TO BE HELD ON FEBRUARY 8, 2023
To
the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Nuveen Georgia Quality Municipal Income Fund
(“Georgia Municipal” or a “Target Fund”) and a Special Meeting of Shareholders of Nuveen Ohio Quality Municipal Income Fund (“Ohio Municipal” or a “Target Fund”) and Nuveen Municipal Credit Income Fund (the
“Acquiring Fund” and together with the Target Funds, the “Funds” or each individually, a “Fund”) (each, a “Meeting” and together, the “Meetings”) will be held on February 8, 2023 at 2:00 p.m.,
Central Time, for the following purposes:
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Agreement and Plan of Merger. For each Merger, shareholders of the Target Fund and the Acquiring Fund
voting as set forth below will vote on a proposal to approve an Agreement and Plan of Merger pursuant to which the Target Fund would be merged with and into NMCIF Merger Sub, LLC, a Massachusetts limited liability company and wholly-owned subsidiary
of the Acquiring Fund, with the issued and outstanding common and preferred shares of the Target Fund being converted into newly issued common and preferred shares of the Acquiring Fund. |
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(a) For |
each Target Fund: |
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(i) |
The common and preferred shareholders voting together as a single class to approve the Agreement and Plan of
Merger. |
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(ii) |
The preferred shareholders voting separately as a single class to approve the Agreement and Plan of Merger.
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(b) |
For the Acquiring Fund (preferred shareholders only): The preferred shareholders voting together as a
single class to approve the Agreement and Plan of Merger. |
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2. |
Election of Board Members of Georgia Municipal. |
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(a) |
One (1) Class I Georgia Municipal Board member and three (3) Class II Georgia Municipal Board members
are to be elected by the common and preferred shareholders of Georgia Municipal voting together as a single class. Board members Lancellotta, Nelson, Toth and Young are nominees for election by Georgia Municipal common and preferred shareholders.
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(b) |
Two (2) Georgia Municipal Board members are to be elected by the preferred shareholders of Georgia
Municipal. Board members Hunter and Moschner are nominees for election by Georgia Municipal’s preferred shareholders. |
To transact such other business as may properly come before the Meetings.
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Shareholders of Georgia Municipal are being solicited to vote on the election of six
(6) Board Members who have been nominated for election at the Meeting. These Board Members would continue in office in the event the Merger of Georgia Municipal is not consummated in a timely manner.
In light of the public health concerns regarding the coronavirus outbreak (COVID-19), the Meetings
will be held in a virtual meeting format only, which will be conducted online via live webcast. Shareholders may attend and vote at the virtual Meetings by following the instructions included in the Q&A and the Joint Proxy Statement/Prospectus.
Only shareholders of record of each Fund as of the close of business on November 10, 2022 are entitled to notice of and to vote at
the Meetings and any and all adjournments or postponements thereof. The preferred shareholders of each Target Fund are being solicited to vote on the proposals described above by means of one or more separate proxy statements.
All Fund shareholders entitled to vote at the Meetings are cordially invited to attend the virtual Meetings. In order to avoid delay and
additional expense for the Funds and to assure that your shares are represented, please vote as promptly as possible, regardless of whether or not you plan to attend your virtual Meeting. You may vote by attending your Fund’s Meeting or by
mail, by telephone or over the Internet.
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To vote at the Meetings, please follow the instructions below for attending the Meetings, which will be
held virtually. |
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To vote by mail, please mark, sign, date and mail the enclosed proxy card. No postage is required if
mailed in the United States. |
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To vote by telephone, please call the toll-free number located on your proxy card and follow the recorded
instructions, using your proxy card as a guide. |
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To vote over the Internet prior to the Meetings, go to the Internet address provided on your proxy card
and follow the instructions, using your proxy card as a guide. |
You will be able to attend and participate in the
Meetings online, vote your shares electronically and submit your questions during the Meetings by visiting: meetnow.global/MXXWK2V at the Meeting date and time described in the enclosed Joint Proxy Statement/Prospectus. To participate in the
Meetings, you will need to log on using the control number from your proxy card or meeting notice. The control number can be found in the shaded box. There is no physical location for the Meetings.
If you hold your shares through an intermediary, you will need to register at least three business days prior to the Meetings by following the
instructions in the enclosed Joint Proxy Statement/Prospectus.
Mark L. Winget
Vice President and Secretary
The Nuveen Closed-End Funds
2
The information contained in this Joint Proxy Statement/Prospectus is not complete and
may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Joint Proxy Statement/Prospectus is not an offer to sell these securities, and it is not a
solicitation of an offer to buy these securities, in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION,
DATED DECEMBER 16, 2022
NUVEEN FUNDS
333 WEST
WACKER DRIVE CHICAGO, ILLINOIS 60606
(800) 257-8787
JOINT PROXY STATEMENT/PROSPECTUS
NUVEEN GEORGIA QUALITY MUNICIPAL INCOME FUND (NKG)
NUVEEN OHIO QUALITY MUNICIPAL INCOME FUND (NUO)
AND
NUVEEN MUNICIPAL
CREDIT INCOME FUND (NZF)
(EACH, A “FUND” AND TOGETHER, THE “FUNDS”)
[●], 2022
This Joint Proxy Statement/Prospectus is being furnished to common shareholders of Nuveen Georgia Quality Municipal Income Fund (“Georgia
Municipal” or a “Target Fund”) and Nuveen Ohio Quality Municipal Income Fund (“Ohio Municipal” or a “Target Fund”) and to holders of preferred shares of Nuveen Municipal Credit Income Fund (the “Acquiring
Fund” and together with the Target Funds, the “Funds” or each individually, a “Fund”), each a closed-end management investment company, in connection with the solicitation of proxies
by each Fund’s Board of Trustees (each a “Board” and together, the “Boards” and each trustee a “Board Member”) for use at the Annual Meeting of Shareholders of Georgia Municipal and at Special Meetings of
Shareholders of Ohio Municipal and the Acquiring Fund to be held on February 8, 2023, at 2:00 p.m., Central Time, and at any and all adjournments or postponements thereof (each, a “Meeting” and together, the “Meetings”), to
consider the proposals described below and discussed in greater detail elsewhere in this Joint Proxy Statement/Prospectus. Each Fund is organized as a Massachusetts business trust. The enclosed proxy card and this Joint Proxy Statement/Prospectus
are first being sent to shareholders of the Funds on or about [●], 2022. Shareholders of record of each Fund as of the close of business on November 10, 2022 are entitled to notice of and to vote at the Meetings and any and all adjournments or
postponements thereof.
The Meetings will be held in a virtual meeting format only, which will be conducted online via live webcast. There
is no physical location for the Meetings. If your shares are registered in your name, you will be able to attend and participate in the Meetings online, vote your shares electronically and submit your questions during the meeting by visiting:
meetnow.global/MXXWK2V at the Meeting date and time. To participate in the Meetings, you will need to log on using the control number from your proxy card or meeting notice. The control number can be found in the shaded box.
If your shares are held through an intermediary, you must register to participate in the virtual Meetings. To register to attend the Meetings
online by webcast, you must submit proof of your proxy power (legal proxy) reflecting your Fund holdings along with your name and email address to Computershare. You must contact the bank or broker who holds your shares to obtain your legal proxy.
Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, three business days prior to the meeting date. You will receive a confirmation of your registration by email after we
receive your registration materials. Requests for registration should be directed to us by emailing an image of your legal proxy to shareholdermeetings@computershare.com.
This Joint Proxy Statement/Prospectus explains concisely what you should know before voting on the proposals described in this Joint Proxy
Statement/Prospectus or investing in the Acquiring Fund. Please read it carefully and keep it for future reference.
The securities offered by this Joint Proxy Statement/Prospectus have not been approved or
disapproved by the Securities and Exchange Commission (“SEC”), nor has the SEC passed upon the accuracy or adequacy of this Joint Proxy Statement/Prospectus. Any representation to the contrary is a criminal offense.
On the matters coming before each Meeting as to which a choice has been specified by shareholders on the accompanying proxy card, the shares
will be voted accordingly where such proxy card is properly executed, timely received and not properly revoked (pursuant to the instructions below). If a proxy is returned and no choice is specified, the shares will be voted FOR each proposal.
Shareholders of a Fund who execute proxies or provide voting instructions by telephone or by Internet may revoke them at any time before a vote is taken on a proposal by filing with that Fund a written notice of revocation, by delivering a duly
executed proxy bearing a later date or by attending and voting at the virtual Meeting. A prior proxy can also be revoked by voting again through the toll-free number or the Internet address listed in the proxy card. However, merely attending a
virtual Meeting will not revoke any previously submitted proxy.
The shareholders of the Target Funds and Acquiring Fund voting as set
forth below will vote on the following proposals:
|
|
|
| Proposal No. 1. |
|
(For each Merger, Target Fund and Acquiring Fund) To approve an Agreement and Plan of Merger that provides for: (i) the merger of the Target Fund with and into NMCIF Merger Sub, LLC, a Massachusetts limited liability company
and a wholly-owned subsidiary of the Acquiring Fund (the “Merger Sub”), and (ii) the conversion of the issued and outstanding common and preferred shares of beneficial interest of the Target Fund into newly issued common and preferred
shares of beneficial interest, par value $0.01 per share, of the Acquiring Fund (the “Merger”). |
|
|
| Proposal No. 2. |
|
(Georgia Municipal only) To elect (i) one (1) Class I Board Member and three (3) Class II Board Members by Georgia Municipal’s common and preferred shareholders, voting together as a single class, and (ii) two (2)
Board Members by the holders of Georgia Municipal’s preferred shareholders voting as a single class. Board members Lancellotta, Nelson, Toth and Young are nominees for election by Georgia Municipal common and preferred shareholders. Board
members Hunter and Moschner are nominees for election by Georgia Municipal preferred shareholders. |
In addition to common shares, Georgia Municipal has one series of Adjustable Rate MuniFund Term
Preferred Shares (“AMTP Shares”) outstanding and Ohio Municipal has one series of Variable Rate Demand Preferred Shares (“VRDP Shares”) outstanding. The Acquiring Fund has three series of MuniFund Preferred Shares (“MFP
Shares”) outstanding and three series of VRDP Shares outstanding.
Shareholders of Georgia Municipal are being solicited to vote
on the election of Board Members who have been nominated for election at the Meeting. These Board Members would continue in office in the event the Merger of Georgia Municipal into the Acquiring Fund is not consummated in a timely manner. Only the
common shareholders of Georgia Municipal, common shareholders of Ohio Municipal (with respect to Proposal No. 1 only) and preferred shareholders of the Acquiring Fund are being solicited to vote on the proposals described above pursuant to this
Joint Proxy Statement/Prospectus. The preferred shareholders of each Target Fund are being solicited to vote on the proposals described above by means of one or more separate proxy statements.
A quorum of shareholders is required to take action at each Meeting. A majority (more than 50%) of the shares entitled to vote at a Meeting,
represented in person (through participation by means of remote or “virtual” communication) or by proxy, will constitute a quorum of shareholders at that Meeting, except that for the election of the two Board Member nominees by holders of
AMTP Shares of Georgia Municipal, 33 1/3% of the
ii
AMTP Shares entitled to vote and represented in person (including participation by means of remote or “virtual” communication) or by proxy will constitute a quorum. Votes cast in person
(through participation by means of remote or “virtual” communication) or by proxy at each Meeting will be tabulated by the inspectors of election appointed for that Meeting. The inspectors of election will determine whether or not a quorum
is present at the Meeting. “Broker non-votes” are shares held by brokers or nominees, typically in “street name,” for which the broker or nominee properly submits a proxy but that are not
voted because instructions have not been received from beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary authority to vote such shares on a particular matter. For purposes of holding a meeting, all
properly submitted proxies, including abstentions and broker non-votes, if any, will be counted as present for purposes of determining whether a quorum is present.
To be approved, the proposals must be approved by the Funds’ common and preferred shareholders present and entitled to vote at a Meeting
as follows:
|
|
|
| Proposal No. 1. |
|
(Each Fund) With respect to the proposal regarding the Merger: |
| |
• |
|
With respect to each Target Fund, a majority (more than 50%) of the Target Fund’s outstanding common and
preferred shares voting together as a single class, and by the Target Fund’s preferred shareholders voting separately; and |
| |
• |
|
With respect to the Acquiring Fund, a majority (more than 50%) of the Acquiring Fund’s preferred shares,
voting together as a single class. |
|
|
|
| Proposal No. 2. |
|
(Georgia Municipal only) With respect to the proposal regarding the election of Georgia Municipal Board Members: |
| |
• |
|
With respect to the one (1) Class I Board Member and three (3) Class II Board Members, the affirmative
vote of a plurality (the greatest number of affirmative votes) of Georgia Municipal’s common and preferred shares, voting together as a single class. |
| |
• |
|
With respect to the two (2) Board Members, the affirmative vote of a plurality of Georgia Municipal’s
preferred shares voting separately. |
Broker-dealer firms holding shares of a Fund in “street name” for
the benefit of their customers and clients are generally required to request the instructions of such customers and clients on how to vote their shares before the Fund’s Meeting. The Funds understand that, under the rules of the New York Stock
Exchange (the “NYSE”), such broker-dealer firms may, for certain “routine” matters, grant discretionary authority to the proxies designated by each Board to vote without instructions from their customers and clients if no
instructions have been received prior to the date specified in the broker-dealer firm’s request for voting instructions. Broker non-votes typically occur when both routine and non-routine proposals are being considered at a meeting. Proposal No. 1 with respect to the Mergers is considered a “non-routine” matter for which, under the
rules of the NYSE, uninstructed shares may not be voted by broker-dealers, but Proposal No. 2 with respect to the election of Board Members is considered a “routine” matter, and beneficial owners who do not provide proxy instructions
or who do not return a proxy card may have their shares voted by broker-dealer firms on Proposal No. 2 in the discretion of such broker-dealer firms. As a result, because Georgia Municipal’s common and preferred shareholders are being
asked to vote on both Proposals Nos. 1 and 2, there may be broker non-votes received with respect to Proposal No. 1 at Georgia Municipal’s Meeting. Because Proposal No. 1 is a non-routine matter and the sole proposal at the Ohio Municipal Meeting and at the Acquiring Fund Meeting, it is expected that there will be no broker non-votes at those
Meetings.
Because the approval of Proposal No. 1 requires the approval by the holders of at least 50% of each Target Fund’s
outstanding shares and by the holders of at least 50% of each Fund’s outstanding preferred shares voting separately, abstentions and broker non-votes, if any, will have the same effect as a vote against
the proposal. Because the election of Board Members does not require that a minimum percentage of Georgia Municipal’s outstanding shares be voted in favor of any nominee, assuming the presence of a quorum, abstentions will have no effect on the
outcome of the vote on Proposal No. 2.
iii
Pursuant to Rule 452 of the NYSE, certain preferred shares held in “street name”
as to which voting instructions have not been received from the beneficial owners or persons otherwise entitled to vote as of one business day before a Fund’s Meeting, or, if adjourned or postponed, one business day before the day to which the
Meeting is adjourned or postponed, may be voted by the broker on a proposal in the same proportion as the votes cast by all holders of such preferred shares who have voted on a proposal. Rule 452 permits proportionate voting of the Acquiring
Fund’s Series 3 VRDP Shares (but not any other series of a Target Fund’s or the Acquiring Fund’s outstanding preferred shares) with respect to a particular item if, among other things, (1) a minimum of 30% of that series of
preferred shares has been voted by the holders of such shares with respect to such item, (2) less than 10% of that series of preferred shares has been voted by the holders of such shares against such item and (3) for any proposal as to
which holders of common shares and preferred shares vote as a single class, holders of common shares approve a proposal. For the purpose of meeting the 30% test, abstentions will be treated as shares “voted,” and for the purpose of meeting
the 10% test, abstentions will not be treated as shares “voted” against the item.
Broker-dealers who are not members of the
NYSE may be subject to other rules, which may or may not permit them to vote your shares without instruction. We urge you to provide instructions to your broker or nominee so that your votes may be counted.
Those persons who were shareholders of record of a Fund as of the close of business on November 10, 2022 and entitled to vote at the
Fund’s Meeting will be entitled to one vote for each share held and, with respect to holders of common shares, a proportionate fractional vote for each fractional common share held.
As of November 10, 2022 for each Fund, the shares of the Funds issued and outstanding are as follows:
|
|
|
|
|
|
|
|
|
|
|
| Fund
(Ticker Symbol) |
|
Common
Shares(1) |
|
|
MFP
Shares(1) |
|
VRDP
Shares(1) |
|
AMTP
Shares(1) |
| Georgia Municipal (NKG) |
|
|
10,399,813 |
|
|
N/A |
|
N/A |
|
585 (Series 2028) |
| Ohio Municipal (NUO) |
|
|
18,254,255 |
|
|
N/A |
|
1,480 (Series 1) |
|
N/A |
| Acquiring Fund (NZF) |
|
|
165,390,401 |
|
|
1,500 (Series A)
1,550 (Series B) 3,360 (Series
C) |
|
2,688 (Series 1)
2,622 (Series 2) 1,960 (Series
3) |
|
N/A |
| (1) |
The common shares of each Target Fund and the Acquiring Fund are listed on the NYSE. Upon the closing of the
Mergers, it is expected that the common shares of the Acquiring Fund will continue to be listed on the NYSE. None of the preferred shares are currently listed on any exchange. |
The following documents have been filed with the SEC and are incorporated into this Joint Proxy Statement/Prospectus by reference:
| |
(1) |
the Statement of Additional Information relating to the proposed Mergers, dated [•], 2022 (the
“Merger SAI”); |
iv
No other parts of the Funds’ Annual or Semi-Annual Reports are incorporated by reference herein.
Copies of the foregoing may be obtained without charge by calling (800) 257-8787 or writing the Funds
at 333 West Wacker Drive, Chicago, Illinois 60606. If you wish to request a copy of the Merger SAI, please ask for the “Nuveen Municipal Credit Income Merger SAI.” In addition, each Fund will furnish, without charge, a copy of its most
recent Annual Report or Semi-Annual Report to a shareholder upon request. Any such request should be directed to the Funds by calling (800) 257-8787 or by writing the Funds at 333 West Wacker Drive, Chicago,
Illinois 60606.
The Funds are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the
“1934 Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”), and in accordance therewith file reports and other information with the SEC. Reports, proxy statements, registration statements and other
information filed by the Funds, including the Registration Statement on Form N-14 relating to the common shares of the Acquiring Fund of which this Joint Proxy Statement/Prospectus is a part, may be obtained
through the EDGAR database on the SEC’s website at http://www.sec.gov. You may obtain copies of this information, with payment of a duplication fee, by electronic request at the following email address: publicinfo@sec.gov.
Reports, proxy statements and other information concerning the Funds can be inspected at the offices of the NYSE, 11 Wall Street, New York,
New York 10005.
This Joint Proxy Statement/Prospectus serves as a prospectus of the Acquiring Fund in connection with the issuance of the
Acquiring Fund common shares in the Mergers. In this connection, no person has been authorized to give any information or make any representation not contained in this Joint Proxy Statement/Prospectus and, if so given or made, such information or
representation must not be relied upon as having been authorized. This Joint Proxy Statement/ Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which, or to any person to whom,
it is unlawful to make such offer or solicitation.
v
JOINT PROXY STATEMENT/PROSPECTUS
[●], 2022
NUVEEN GEORGIA QUALITY MUNICIPAL INCOME FUND (NKG)
NUVEEN OHIO QUALITY MUNICIPAL INCOME FUND (NUO)
AND
NUVEEN MUNICIPAL
CREDIT INCOME FUND (NZF)
TABLE OF CONTENTS
vi
vii
PROPOSAL NO. 1—MERGER OF EACH TARGET FUND INTO THE
ACQUIRING FUND
The following is a summary of certain information contained elsewhere in this Joint Proxy Statement/Prospectus with respect to the proposed
Mergers. More complete information is contained elsewhere in this Joint Proxy Statement/Prospectus and in the Merger SAI and the appendices hereto and thereto. Shareholders should read the entire Joint Proxy Statement/Prospectus carefully.
Background and Reasons for the Mergers
Nuveen Fund Advisors, LLC (“Nuveen Fund Advisors” or the “Adviser”), a subsidiary of Nuveen, LLC and the Funds’
investment adviser, recommended the Merger proposal as part of an ongoing initiative to streamline Nuveen’s municipal closed-end fund line-up and eliminate overlapping products. Each Fund’s Board considered its Fund’s Merger(s) and
determined that the Merger(s) would be in the best interests of its Fund. Based on information provided by Nuveen Fund Advisors, each Target Fund’s Board believes that its Fund’s proposed Merger may benefit the common shareholders of its
Fund in a number of ways, including, among other things:
| |
• |
|
The potential for higher common share net earnings and distribution levels following the Mergers, due in part to
the Acquiring Fund’s ability to invest to a greater degree in lower rated securities and a geographically diverse national portfolio, as well as operating economies from the combined fund’s greater scale; |
| |
• |
|
Greater secondary market liquidity and improved secondary market trading for common shares as a result of the
combined fund’s greater share volume, which may lead to narrower bid-ask spreads and smaller trade-to-trade price movements;
|
| |
• |
|
The potential for a narrower trading discount as a result of the Acquiring Fund’s common shares trading at a
discount that historically has been lower than that of each Target Fund’s common shares; |
| |
• |
|
Increased portfolio and leverage management flexibility due to the significantly larger asset base of the
combined fund and the Acquiring Fund’s national mandate with greater flexibility to invest in lower rated securities; and |
| |
• |
|
Lower net operating expenses, excluding the costs of leverage, as certain fixed costs are spread over a larger
asset base. |
Each Target Fund’s Board considered that a greater percentage of the Acquiring Fund’s
portfolio may be allocated to lower rated municipal securities relative to the amount permitted by the policies of the Target Fund, and recognized that investments in lower rated securities are subject to higher risks than investments in higher
rated securities.
With respect to holders of preferred shares of each Target Fund, the Target Fund’s Board considered that, upon the
closing of the applicable Merger, holders of any preferred shares outstanding immediately prior to the closing will receive, on a one-for-one basis, newly issued
preferred shares of the Acquiring Fund having substantially similar terms, immediately prior to the closing of the Merger, to those of the preferred shares of the applicable Target Fund.
Based on information provided by Nuveen Fund Advisors, the Acquiring Fund’s Board considered that the Acquiring Fund may benefit in the
near term from a modest increase in operating efficiencies and over the
1
long term from increased investment capital, which allows the Acquiring Fund to pursue additional investment opportunities. With respect to holders of preferred shares of the Acquiring Fund, the
Acquiring Fund’s Board considered that the outstanding preferred shares of the Acquiring Fund and any preferred shares of the Acquiring Fund to be issued in the Mergers would have equal priority with each other as to payment of dividends and
distributions of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund.
For these reasons, each
Fund’s Board has determined that its Fund’s Merger(s) are in the best interest of its Fund and has approved such Merger(s).
The
closing of each Merger is subject to the satisfaction or waiver of certain closing conditions, which include customary closing conditions. In order for a Merger to occur, all requisite shareholder approvals must be obtained at the Meetings, and
certain other consents, confirmations and/or waivers from various third parties, including the liquidity providers and/or the initial purchasers with respect to outstanding preferred shares of the Acquiring Fund, must also be obtained. Because the
closing of each Merger is contingent upon the applicable Target Fund and the Acquiring Fund obtaining such shareholder approvals and satisfying (or obtaining the waiver of) other closing conditions, it is possible that a Merger will not occur even
if shareholders of a Fund entitled to vote approve the Merger and a Fund satisfies all of its closing conditions if the other Fund does not obtain its requisite shareholder approvals or satisfy (or obtain the waiver of) its closing conditions. If a
Merger is not consummated, the Board of the Target Fund involved in that Merger may take such actions as it deems in the best interests of the Fund, including conducting additional solicitations with respect to the Merger proposal or continuing to
operate the Target Fund as a standalone fund. The closing of each Merger is not contingent on the closing of the other Merger.
Each
series of preferred shares was issued on a private placement basis to one or a small number of institutional holders. To the extent that one or more preferred shareholders of a Fund owns, holds or controls, individually or in the aggregate, all or a
significant portion of a Fund’s outstanding preferred shares, the approval by a Fund’s preferred shareholders required for a Merger to occur may turn on the exercise of voting or consent rights by such particular shareholder(s) and its or
their determination as to the favorable view of the Merger with respect to its or their interests. The Funds exercise no influence or control over the determinations of such shareholders with respect to the Mergers; there is no guarantee that such
shareholders will vote to approve a Merger proposal. For a fuller discussion of the Boards’ considerations regarding the approval of the Mergers, see “C. Information About the Mergers—Reasons for the Mergers.”
Material Federal Income Tax Consequences of the Mergers
As a non-waivable condition to closing, each Fund will receive an opinion of Vedder Price P.C.,
subject to certain representations, assumptions and conditions, substantially to the effect that each proposed Merger will qualify as a “reorganization” under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
“Code”). Accordingly, it is expected that none of the Funds will generally recognize gain or loss for federal income tax purposes as a direct result of the Mergers. It is also expected that shareholders of a Target Fund who receive
Acquiring Fund shares pursuant to a Merger will recognize no gain or loss for federal income tax purposes as a result of such exchange, except to the extent a common shareholder of a Target Fund receives cash in lieu of a fractional Acquiring Fund
common share. Prior to the closing of its Merger, each Target Fund expects to declare a distribution to common shareholders of all of its net investment income and net capital gains, if any. All or a portion of such a distribution may be taxable to
the Target Fund’s common shareholders for federal income tax purposes. In addition, to the extent that portfolio securities of a Target Fund are sold prior to the closing of its Merger, such Target Fund may recognize gains or losses, which may
increase or decrease the net capital gains or net investment income to be distributed by such Target Fund. If the Mergers had occurred as of September 30, 2022, it is estimated that approximately 70% of Georgia Municipal’s investment
portfolio and approximately 57% of Ohio Municipal’s investment portfolio would have been sold by the Acquiring Fund following the Mergers. To the extent the Acquiring Fund sells securities received from a Target Fund following the Mergers, the
Acquiring Fund may recognize gains or losses, which may result in taxable distributions to
2
Acquiring Fund shareholders (including former shareholders of a Target Fund who hold shares of the Acquiring Fund following the Mergers). If such repositioning had been completed as of September
30, 2022, the repositioning would not have generated net capital gain, taking into account capital loss carry forwards. Following the Mergers, the Acquiring Fund’s ability to use capital loss carry forwards may be limited. Securities held by
the Funds are purchased and sold on a principal rather than agency basis, and such transactions are not subject to separate brokerage commissions.
The foregoing discussion and the tax opinion discussed above to be received by the Funds regarding certain aspects of the Mergers, including
that the Mergers will qualify as reorganizations under Section 368(a) of the Code, will rely on the position that the Acquiring Fund preferred shares to be issued in the Mergers, if any, will constitute equity of the Acquiring Fund for federal
income tax purposes. See “C. Information About the Mergers—Material Federal Income Tax Consequences of the Mergers.”
Comparison of the Acquiring Fund and the Target Funds
General. The Acquiring Fund and the Target Funds are diversified, closed-end management investment companies organized as Massachusetts business trusts. Set forth below is certain comparative information about the organization, capitalization and operation of the Funds.
|
|
|
|
|
|
|
|
|
|
|
| Organization |
|
| Fund |
|
Organization
Date |
|
State of
Organization |
|
|
Entity Type |
|
| Georgia Municipal |
|
October 26, 2001 |
|
|
Commonwealth of Massachusetts |
|
|
|
Business Trust |
|
| Ohio Municipal |
|
April 8, 2013(1) |
|
|
Commonwealth of Massachusetts |
|
|
|
Business Trust |
|
| Acquiring Fund |
|
March 21, 2001 |
|
|
Commonwealth of Massachusetts |
|
|
|
Business Trust |
|
| (1) |
Previously organized as a Minnesota corporation on October 17, 1991. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capitalization—Common Shares(2) |
|
| Fund |
|
Authorized
Shares |
|
|
Shares
Outstanding(1) |
|
|
Par Value
Per Share |
|
|
Preemptive,
Conversion
or Exchange
Rights |
|
|
Rights to
Cumulative
Voting |
|
|
Exchange
on which
Common
Shares are
Listed |
|
| Georgia Municipal |
|
|
Unlimited |
|
|
|
10,399,813 |
|
|
$ |
0.01 |
|
|
|
None |
|
|
|
None |
|
|
|
NYSE |
|
| Ohio Municipal |
|
|
Unlimited |
|
|
|
18,254,255 |
|
|
$ |
0.01 |
|
|
|
None |
|
|
|
None |
|
|
|
NYSE |
|
| Acquiring Fund |
|
|
Unlimited |
|
|
|
165,390,401 |
|
|
$ |
0.01 |
|
|
|
None |
|
|
|
None |
|
|
|
NYSE |
|
| (2) |
As of November 30, 2022. |
As of November 30, 2022, the Funds had outstanding the following series of preferred shares, with the Acquiring Fund’s MFP Shares and
VRDP Shares expected to remain outstanding following the completion of the Mergers:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Georgia Municipal—Preferred
Shares |
|
| Series |
|
Shares Outstanding |
|
|
Par Value Per Share |
|
|
Liquidation
Preference Per
Share |
|
| Series 2028 AMTP Shares |
|
|
585 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ohio Municipal—Preferred
Shares |
|
| Series |
|
Shares Outstanding |
|
|
Par Value Per Share |
|
|
Liquidation
Preference Per
Share |
|
| Series 1 VRDP Shares |
|
|
1,480 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquiring Fund—Preferred
Shares |
|
| Series |
|
Shares Outstanding |
|
|
Par Value Per Share |
|
|
Liquidation
Preference Per
Share |
|
| Series A MFP Shares |
|
|
1,500 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
| Series B MFP Shares |
|
|
1,550 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
| Series C MFP Shares |
|
|
3,360 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
| Series 1 VRDP Shares |
|
|
2,688 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
| Series 2 VRDP Shares |
|
|
2,622 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
| Series 3 VRDP Shares |
|
|
1,460 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
Each Fund’s preferred shares are entitled to one vote per share. The AMTP Shares and VRDP Shares of
the Acquiring Fund to be issued in connection with the Mergers, if any, will have equal priority with each other and with the Acquiring Fund’s other outstanding preferred shares as to the payment of dividends and the distribution of assets upon
dissolution, liquidation or winding up of the affairs of the Acquiring Fund. In addition, the preferred shares of the Acquiring Fund, including any preferred shares of the Acquiring Fund to be issued in connection with the Mergers, will be senior in
priority to the Acquiring Fund’s common shares as to payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. Any preferred shares of the Acquiring Fund to be issued
in connection with the Mergers will have rights and preferences, including liquidation preferences, that are substantially similar to those of the corresponding Target Fund preferred shares. The number of preferred shares currently outstanding may
change due to market or other conditions.
Investment Objectives and Policies. The Funds have similar investment objectives,
policies and risks, but there are differences. Each Target Fund is a state-specific municipal fund that seeks to provide current income exempt from regular federal income tax and the income tax of a single state. In contrast, the Acquiring Fund is a
national municipal fund that seeks to provide current income exempt from regular federal income tax. Because Georgia Municipal and Ohio Municipal invest primarily in Georgia and Ohio municipal securities, respectively, they are subject to economic,
political and other risks of a single state, while the Acquiring Fund, which may invest in municipal securities of any U.S. state or territory, is not subject to similar single state risk.
Georgia Municipal’s investment objectives are current income exempt from regular federal and Georgia income tax and the enhancement of
portfolio value relative to the municipal bond market by investing in tax-exempt municipal bonds that the Fund’s investment adviser or sub-adviser believes are
underrated or undervalued or that represent municipal market sectors that are undervalued.
Ohio Municipal’s primary investment
objective is current income exempt from both regular federal income taxes and Ohio personal income taxes, and its secondary investment objective is the enhancement of portfolio value relative to the Ohio municipal bond market through investments in tax-exempt Ohio municipal obligations that, in the opinion of the Fund’s investment adviser or sub-adviser are underrated or undervalued or that represent municipal
market sectors that are undervalued.
The Acquiring Fund’s investment objectives are to provide current income exempt from regular
federal income tax and to enhance portfolio value relative to the municipal bond market by investing in tax-exempt municipal bonds that the Fund’s investment adviser or
sub-adviser believes are underrated or undervalued or that represent municipal market sectors that are undervalued.
Each Target Fund invests primarily in investment grade securities, while the Acquiring Fund is permitted to allocate a greater percentage of
its portfolio to lower rated municipal securities. Investments in lower rated securities are subject to higher risks than investments in higher rated securities, including a higher risk that the issuer will be unable to pay interest or principal
when due.
4
Each Fund is a diversified, closed-end management
investment company and currently employs leverage through the issuance of preferred shares and the use of inverse floating rate securities.
The following summary compares the current principal investment policies and strategies of the Acquiring Fund to the current principal
investment policies and strategies of each Target Fund as of the date of this Joint Proxy Statement/Prospectus.
|
|
|
|
|
|
|
| Georgia Municipal |
|
Ohio Municipal |
|
Acquiring Fund |
|
Differences |
| Principal Investment Strategy: |
|
Principal Investment Strategy: |
|
Principal Investment Strategy: |
|
|
|
|
|
|
| As a fundamental policy, under normal circumstances, the Fund will invest at least 80% of its Assets(1) in municipal securities and other related investments, the income from
which is exempt from regular federal and Georgia income taxes. |
|
As a fundamental policy, under normal circumstances, the Fund will invest at least 80% of its Assets(1) in municipal securities and other related investments, the income from
which is exempt from regular federal and Ohio income taxes. |
|
As a fundamental policy, under normal circumstances, the Fund will invest at least 80% of its Assets(1) in municipal securities and other related investments, the income from
which is exempt from regular federal income taxes. |
|
The Acquiring Fund is a national municipal fund, while the Target Funds are state-specific municipal Funds. |
|
|
|
|
| Alternative Minimum Tax Policy: |
|
Alternative Minimum Tax Policy: |
|
Alternative Minimum Tax Policy: |
|
|
|
|
|
|
| Under normal circumstances, the Fund may invest up to 20% of its Managed Assets(2) in municipal securities that pay interest that is taxable under the federal alternative minimum
tax applicable to individuals (“AMT Bonds”). |
|
Under normal circumstances, the Fund may invest up to 20% of its Managed Assets(2) in AMT Bonds. |
|
The Fund may invest up to 20% of its Managed Assets(2) in AMT Bonds. |
|
Identical. |
|
|
|
|
| Credit Quality: |
|
Credit Quality: |
|
Credit Quality: |
|
|
|
|
|
|
| Under normal circumstances, the Fund will invest at least 80% of its Managed Assets in municipal securities that at the time of investment are investment grade quality. A security is considered investment grade quality if it is
rated within the four highest letter grades (Baa or BBB or better) by at least one nationally recognized statistical ratings organization (“NRSRO”) |
|
Under normal circumstances, the Fund will invest at least 80% of its Managed Assets in investment grade municipal securities that, at the time of investment, are rated within the four highest grades (Baa or BBB or better) by at
least one NRSRO or are unrated but judged to be of comparable quality by the Fund’s investment adviser. |
|
Under normal circumstances, the Fund may invest up to 55% of its Managed Assets in securities that, at the time of investment, are rated below the three highest grades (Baa or BBB or lower) by at least one NRSRO or are unrated but
judged to be of comparable quality by the Fund’s sub-adviser. |
|
The Acquiring Fund is permitted to allocate a greater percentage of its portfolio to lower rated municipal securities than the Target Funds. |
5
|
|
|
|
|
|
|
| Georgia Municipal |
|
Ohio Municipal |
|
Acquiring Fund |
|
Differences |
| that rate such security (even if it is rated lower by another), or if it is unrated by any NRSRO but judged to be of comparable quality by
the Fund’s sub-adviser. Under normal
circumstances, the Fund may invest up to 20% of its Managed Assets in municipal securities that at the time of investment are rated below investment grade or are unrated by any NRSRO but judged to be of comparable quality by the Fund’s sub-adviser. Under normal circumstances, no more
than 10% of the Fund’s Managed Assets may be invested in municipal securities rated below B-/B3 or that are unrated but judged to be of comparable quality by the Fund’s
sub-adviser. |
|
Under normal circumstances, the Fund may invest up to 20% of its
Managed Assets in municipal securities that at the time of investment are rated below investment grade (Ba or BB or lower) or are unrated but judged to be of comparable quality by the Fund’s investment adviser.
Under normal circumstances, no more than 10% of the Fund’s Managed Assets may be
invested in municipal securities rated below B3/B- or that are unrated but judged to be of comparable quality by the Fund’s investment adviser. |
|
|
|
|
|
|
|
|
| Leverage: |
|
Leverage: |
|
Leverage: |
|
|
|
|
|
|
| The Fund may use leverage to the extent permitted by the 1940 Act. The Fund may source leverage through a number of methods including the issuance of preferred shares and investments in inverse floating rate securities. As a
fundamental policy, the Fund may not issue debt securities or preferred shares that rank senior to any outstanding preferred shares issued by the Fund. In addition, the Fund may also use certain derivatives that have the economic effect of leverage
by creating additional investment exposure. The |
|
The Fund may use leverage to the extent permitted by the 1940 Act. The Fund may source leverage through a number of methods including the issuance of preferred shares, investments in inverse floating rate securities and reverse
repurchase agreements. In addition, the Fund may also use certain derivatives that have the economic effect of leverage by creating additional investment exposure. The amount and sources of leverage will vary depending on market conditions. The Fund
may |
|
The Fund may use leverage to the extent permitted by the 1940 Act. The Fund may source leverage through a number of methods including the issuance of preferred shares, investments in inverse floating rate securities and borrowings.
In addition, the Fund may use certain derivatives that have the economic effect of leverage by creating additional investment exposure. The amount and sources of leverage will vary depending on market conditions. The Fund may invest up to 15% of
its |
|
Substantially similar, but Georgia Municipal does not have a stated percentage limit on investments in inverse floating rate securities. Ohio Municipal may enter into reverse repurchase
agreements. |
6
|
|
|
|
|
|
|
| Georgia Municipal |
|
Ohio Municipal |
|
Acquiring Fund |
|
Differences |
| amount and sources of leverage will vary depending on market conditions. |
|
invest up to 15% of its Managed Assets in inverse floating rate securities. |
|
Managed Assets in inverse floating rate securities. |
|
|
|
|
|
|
| Illiquid Securities: |
|
Illiquid Securities: |
|
Illiquid Securities: |
|
|
|
|
|
|
| The Fund may invest in illiquid securities (i.e., securities that are not readily marketable), including, but not limited to, restricted securities (securities the disposition of which is restricted under the federal securities
laws), securities that may be resold only pursuant to Rule 144A under the Securities Act of 1933, as amended (the “1933 Act”), and repurchase agreements with maturities in excess of seven days. |
|
The Fund may invest in illiquid securities (i.e., securities that are not readily marketable), including, but not limited to, restricted securities (securities the disposition of which is restricted under the federal securities
laws), securities that may be resold only pursuant to Rule 144A under the 1933 Act, and repurchase agreements with maturities in excess of seven days. |
|
The Fund may invest in illiquid securities (i.e., securities that are not readily marketable), including, but not limited to, restricted securities (securities the disposition of which is restricted under the federal securities
laws), securities that may be resold only pursuant to Rule 144A under the 1933 Act, and repurchase agreements with maturities in excess of seven days. |
|
Identical. |
|
|
|
|
| Other Investment Companies: |
|
Other Investment Companies: |
|
Other Investment Companies: |
|
|
|
|
|
|
| The Fund may also invest in securities of other open- or closed-end investment companies (including exchange-traded funds (“ETFs”)) that invest primarily in municipal securities of
the types in which the Fund may invest directly, to the extent permitted by the 1940 Act, the rules and regulations issued thereunder and applicable exemptive orders issued by the SEC. |
|
The Fund may also invest in securities of other open- or closed-end investment companies (including ETFs) that invest primarily in municipal securities of the types in which the Fund may
invest directly, to the extent permitted by the 1940 Act, the rules and regulations issued thereunder and applicable exemptive orders issued by the SEC. In addition, the Fund may invest a portion of its Managed Assets in pooled investment vehicles
(other than investment companies) that invest primarily in municipal securities of the types in which the Fund may invest directly. |
|
The Fund may invest in securities of other open- or closed-end investment companies (including ETFs) that invest primarily in municipal securities of the types in which the Fund may invest
directly, to the extent permitted by the 1940 Act, the rules and regulations issued thereunder and applicable exemptive orders issued by the SEC. In addition, the Fund may invest a portion of its Managed Assets in pooled investment vehicles (other
than investment companies) that invest primarily in municipal securities of the types in which the Fund may invest directly. |
|
Substantially similar, but Ohio Municipal has a stated percentage limit on investments in other investment companies. |
7
|
|
|
|
|
|
|
| Georgia Municipal |
|
Ohio Municipal |
|
Acquiring Fund |
|
Differences |
|
|
The Fund may invest up to 10% of its Managed Assets in securities of
other open- or closed-end investment companies (including ETFs) that invest primarily in municipal securities of the types in which the Fund may invest directly. |
|
|
|
|
|
|
|
|
| Weighted Average Maturity Policy: |
|
Weighted Average Maturity Policy |
|
Weighted Average Maturity Policy: |
|
|
|
|
|
|
| The Fund emphasizes investments in municipal securities with long- or intermediate-term maturities. The Fund buys municipal securities with different maturities and intends to maintain an average portfolio maturity of 15 to 30
years, although this may be shortened depending on market conditions. |
|
The Fund emphasizes investments in municipal securities with long- or intermediate-term maturities. The Fund generally invests in municipal securities with different maturities to maintain an average portfolio maturity of 15 to 30
years, although this may be shortened depending on market conditions. |
|
The Fund generally invests in municipal securities with long-term maturities in order to maintain an average effective maturity of 15 to 30 years, including the effects of leverage, but the average effective maturity of obligations
held by the Fund may be lengthened or shortened depending on market conditions. |
|
Substantially similar. |
|
|
|
|
| Use of Derivatives: |
|
Use of Derivatives: |
|
Use of Derivatives: |
|
|
|
|
|
|
| The Fund may enter into certain derivative instruments in pursuit of its investment objectives, including to seek to enhance return, to hedge certain risks of its investments in municipal securities or as a substitute for a position
in the underlying asset. Such instruments include financial futures contracts, swap contracts (including interest rate swaps, credit default swaps and municipal market date rate (“MMD Rate Locks”)), options on financial futures, options on
swap contracts or other derivative instruments. |
|
The Fund may enter into certain derivative instruments in pursuit of its investment objectives, including to seek to enhance return, to hedge certain risks of its investments in municipal securities or as a substitute for a position
in the underlying asset. Such instruments include financial futures contracts, swap contracts (including interest rate swaps, credit default swaps and MMD Rate Locks), options on financial futures, options on swap contracts or other derivative
instruments. |
|
The Fund may enter into certain derivative instruments in pursuit of its investment objectives, including to seek to enhance return, to hedge certain risks of its investments in fixed-income securities or as a substitute for a
position in the underlying asset. Such instruments include financial futures contracts, swap contracts (including interest rate swaps, credit default swaps and MMD Rate Locks), options on financial futures, options on swap contracts or other
derivative instruments. |
|
Identical. |
8
|
|
|
|
|
|
|
| Georgia Municipal |
|
Ohio Municipal |
|
Acquiring Fund |
|
Differences |
|
|
|
|
| Temporary Defensive Periods: |
|
Temporary Defensive Periods: |
|
Temporary Defensive Periods: |
|
|
|
|
|
|
| During temporary defensive periods (e.g., times when, in the Fund’s investment adviser’s and/or the Fund’s sub-adviser’s opinion, temporary imbalances of supply and demand
or other temporary dislocations in the tax-exempt bond market adversely affect the price at which intermediate-term municipal securities are available), the Fund may invest up to 100% of its net assets in cash
or cash equivalents, short-term investments or municipal bonds and deviate from its investment policies including the Fund’s 80% names rule policy. |
|
During temporary defensive periods (e.g., times when, in the Fund’s investment adviser’s and/or the Fund’s sub-adviser’s opinion, temporary imbalances of supply and demand
or other temporary dislocations in the tax-exempt bond market adversely affect the price at which long-term or intermediate-term municipal securities are available), the Fund may invest up to 100% of its net
assets in cash or cash equivalents, short-term investments or municipal bonds and deviate from its investment policies including the Fund’s 80% names rule policy. |
|
During temporary defensive periods (e.g., times when, in the Fund’s investment adviser’s and/or the Fund’s sub-adviser’s opinion, temporary imbalances of supply and demand
or other temporary dislocations in the tax-exempt bond market adversely affect the price at which long-term or intermediate-term municipal securities are available), and in order to keep the Fund’s cash
fully invested, the Fund may invest any percentage of its Managed Assets in short-term investments including high quality, short-term debt securities that may be either tax-exempt or taxable. |
|
Substantially similar. |
| (1) |
Each Fund defines “Assets” as the net assets of the Fund plus the amount of any borrowings for
investment purposes. |
| (2) |
Each Fund defines “Managed Assets” as the total assets of the Fund, minus the sum of its accrued
liabilities (other than Fund liabilities incurred for the express purpose of creating leverage). Total assets for this purpose shall include assets attributable to the Fund’s use of leverage (whether or not those assets are reflected in the
Fund’s financial statements for purposes of generally accepted accounting principles), and derivatives will be valued at their market value. |
9
Credit Quality. A comparison of the credit quality (as a percentage of total investment
exposure, which includes the leveraged effect of the Funds’ investments in inverse floating rate securities of tender option bond trusts) of the portfolios of each Target Fund and the Acquiring Fund, as of September 30, 2022, is set forth
below.
| (1) |
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 Ratings, Inc. Credit ratings are subject to change. AAA, AA, A, and BBB are investment-grade ratings; BB or lower 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. |
| (2) |
Ratings shown are the lowest rating given by one of the following national rating agencies: Standard &
Poor’s Group, Moody’s Investors Service, Inc. or Fitch Ratings, Inc. Credit ratings are subject to change. AAA, AA, A, and BBB are investment-grade ratings; BB or lower 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. |
State Allocation. A comparison of the state allocation (as a percentage of total investment exposure, which includes the leveraged
effect of the Funds’ investments in inverse floating rate securities of tender option bond trusts) of the respective portfolios of each Target Fund and the Acquiring Fund, as of September 30, 2022, is set forth below.
Leverage. Each Fund may issue preferred shares and may utilize inverse floating rate
securities, reverse repurchase agreements (effectively, a secured borrowing) and borrowings (subject to investment restrictions). Each Fund currently employs leverage through the issuance of preferred shares and the use of inverse floaters. In
addition, each Fund may use derivatives and other portfolio instruments that have the economic effect of leverage. Certain important ratios related to each Fund’s use of leverage for the last three fiscal years for which published financial
statements are available are set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Georgia Municipal |
|
2022 |
|
|
2021 |
|
|
2020 |
|
| Asset Coverage Ratio(1) |
|
|
318.58 |
% |
|
|
356.24 |
% |
|
|
348.06 |
% |
| Regulatory Leverage Ratio(2) |
|
|
31.39 |
% |
|
|
28.07 |
% |
|
|
28.73 |
% |
| Effective Leverage Ratio(3) |
|
|
39.10 |
% |
|
|
34.25 |
% |
|
|
34.99 |
% |
10
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ohio Municipal |
|
2022 |
|
|
2021 |
|
|
2020 |
|
| Asset Coverage Ratio(1) |
|
|
305.29 |
% |
|
|
314.96 |
% |
|
|
320.46 |
% |
| Regulatory Leverage Ratio(2) |
|
|
32.76 |
% |
|
|
31.75 |
% |
|
|
31.20 |
% |
| Effective Leverage Ratio(3) |
|
|
35.61 |
% |
|
|
35.16 |
% |
|
|
34.58 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquiring Fund |
|
2021 |
|
|
2020 |
|
|
2019 |
|
| Asset Coverage Ratio(1) |
|
|
276.47 |
% |
|
|
265.79 |
% |
|
|
272.81 |
% |
| Regulatory Leverage Ratio(2) |
|
|
36.17 |
% |
|
|
37.62 |
% |
|
|
36.66 |
% |
| Effective Leverage Ratio(3) |
|
|
36.50 |
% |
|
|
38.09 |
% |
|
|
37.24 |
% |
| (1) |
A Fund’s asset coverage ratio is defined under the 1940 Act as the ratio that the value of the total assets
of the Fund, less all liabilities and indebtedness not represented by preferred shares or senior securities representing indebtedness, bears to the aggregate amount of preferred shares and senior securities representing indebtedness issued by the
Fund. |
| (2) |
Regulatory leverage consists of preferred shares issued by or borrowings of a Fund. Both of these are part of a
Fund’s capital structure. A Fund, however, may from time to time borrow on a typically transient basis in connection with its day-to-day operations, primarily in
connection with the need to settle portfolio trades. Such incidental borrowings are excluded from the calculation of a Fund’s regulatory leverage and effective leverage ratios. Regulatory leverage is subject to asset coverage limits set forth
in the 1940 Act. |
| (3) |
Effective leverage is a Fund’s effective economic leverage, and includes both regulatory leverage and the
leverage effects of certain derivative and other investments in a Fund’s portfolio that increase the Fund’s investment exposure. Currently, the leverage effects of Tender Option Bond (TOB) inverse floater holdings are included in effective
leverage values, in addition to any regulatory leverage. |
Board Members and Officers. The Acquiring Fund and the
Target Funds have the same Board Members and officers. The management of each Fund, including general oversight of the duties performed by the Fund’s investment adviser under an investment management agreement between the investment adviser and
such Fund (each, an “Investment Management Agreement”), is the responsibility of its Board. Each Fund currently has twelve (12) Board Members, each of whom is not considered an “interested person,” as defined in the 1940
Act.
Pursuant to each Fund’s by-laws, the Board of the Fund is divided into three classes
(Class I, Class II and Class III) with staggered multi-year terms, such that only the members of one of the three classes stand for election each year; provided, however, that holders of preferred shares are entitled as a class to
elect two Board Members at all times. The staggered board structure could delay for up to two years the election of a majority of the Board of each Fund. To the extent that one or more preferred shareholders owns, holds or controls, individually or
in aggregate, all or a significant portion of a series of a Fund’s outstanding preferred shares, a few holders could exert influence on the selection of the Board as a result of the requirement that holders of preferred shares be entitled to
elect two Board Members at all times. The Acquiring Fund’s board structure will remain in place following the closing of the Mergers.
Investment Adviser. Nuveen Fund Advisors, LLC (previously defined as “Nuveen Fund Advisors” or the “Adviser”) is
the investment adviser to each Fund and is responsible for overseeing each Fund’s overall investment strategy, including the use of leverage, and its implementation. Nuveen Fund Advisors also is responsible for the ongoing monitoring of any sub-adviser to the Funds, managing each Fund’s business affairs and providing certain clerical, bookkeeping and other administrative services to the Funds. Nuveen Fund Advisors is located at 333 West Wacker
Drive, Chicago, Illinois 60606.
Nuveen Fund Advisors, a registered investment adviser, is a subsidiary of Nuveen, LLC
(“Nuveen”), the investment management arm of Teachers Insurance and Annuity Association of America (“TIAA”). TIAA is a life insurance company founded in 1918 by the Carnegie Foundation for the Advancement of Teaching and is the
companion organization of College Retirement Equities Fund. As of September 30, 2022, Nuveen managed approximately $1.1 trillion in assets, of which approximately $149.2 billion was managed by Nuveen Fund Advisors.
Unless earlier terminated as described below, each Fund’s Investment Management Agreement with Nuveen Fund Advisors will remain in effect
until August 1, 2023. Each Investment Management Agreement continues in effect from year to year so long as such continuation is approved at least annually by: (1) the Board or the vote of a majority of the outstanding voting securities of
the Fund; and (2) a majority of the Board
11
Members who are not interested persons of any party to the Investment Management Agreement, cast in person at a meeting called for the purpose of voting on such approval. Each Investment
Management Agreement may be terminated at any time, without penalty, by either the Fund or Nuveen Fund Advisors upon 60 days’ written notice and is automatically terminated in the event of its assignment, as defined in the 1940 Act.
Pursuant to each Investment Management Agreement, each Fund has agreed to pay an annual management fee for the overall advisory and
administrative services and general office facilities provided by Nuveen Fund Advisors. Each Fund’s management fee consists of two components—a complex-level fee, based on the aggregate amount of all eligible fund assets of Nuveen-branded
closed- and open-end registered investment companies organized in the United States, and a specific fund-level fee, based only on the amount of assets of such Fund. This pricing structure enables the
Funds’ shareholders to benefit from growth in assets within each individual Fund as well as from growth of complex-wide assets managed by Nuveen Fund Advisors.
For Georgia Municipal’s fiscal year ended May 31, 2022, Ohio Municipal’s fiscal year ended February 28, 2022 and the
Acquiring Fund’s fiscal year ended October 31, 2021, the effective management fee rates, expressed as a percentage of average total daily managed assets (including assets attributable to leverage), were 0.60%, 0.59% and 0.60%,
respectively.
The annual fund-level fee rate for each Fund, payable monthly, is calculated according to the following schedules:
Current Fund-Level Fee Schedules for the Funds
|
|
|
|
|
| Target Funds |
|
| Average Total Daily Managed Assets* |
|
Annual Fee
Rate |
|
| For the first $125 million |
|
|
0.4500 |
% |
| For the next $125 million |
|
|
0.4375 |
% |
| For the next $250 million |
|
|
0.4250 |
% |
| For the next $500 million |
|
|
0.4125 |
% |
| For the next $1 billion |
|
|
0.4000 |
% |
| For the next $3 billion |
|
|
0.3750 |
% |
| For managed assets over $5 billion |
|
|
0.3625 |
% |
|
|
|
|
|
| Acquiring Fund |
|
| Average Total Daily Managed Assets* |
|
Annual Fee
Rate |
|
| For the first $125 million |
|
|
0.5000 |
% |
| For the next $125 million |
|
|
0.4875 |
% |
| For the next $250 million |
|
|
0.4750 |
% |
| For the next $500 million |
|
|
0.4625 |
% |
| For the next $1 billion |
|
|
0.4500 |
% |
| For the next $3 billion |
|
|
0.4250 |
% |
| For managed assets over $5 billion |
|
|
0.4125 |
% |
| * |
For this purpose, managed assets means the total assets of the Fund, minus the sum of its accrued liabilities
(other than Fund liabilities incurred for the express purpose of creating leverage). Total assets for this purpose shall include assets attributable to the Fund’s use of effective leverage (whether or not those assets are reflected in the
Fund’s financial statements for purposes of U.S. generally accepted accounting principles). |
The management fee
compensates the Adviser for overall investment advisory and administrative services and general office facilities. Each Fund pays all of its other costs and expenses of its operations, including compensation of its Board Members (other than those
affiliated with the Adviser), custodian, transfer agency and dividend disbursing expenses, legal fees, expenses of independent auditors, expenses of repurchasing
12
shares, expenses of issuing any preferred shares, expenses of preparing, printing and distributing shareholder reports, notices, proxy statements and reports to governmental agencies, listing
fees and taxes, if any.
Each Fund also pays a complex-level fee to Nuveen Fund Advisors, which is payable monthly and is in addition to
the fund-level fee. The complex-level fee is based on the aggregate daily amount of eligible assets for all Nuveen-branded closed- and open-end registered investment companies organized in the United States,
as stated in the table below. As of September 30, 2022, the complex-level fee rate for each Fund was 0.1587%.
The annual
complex-level fee for each Fund, payable monthly, is calculated by multiplying the current complex-wide fee rate, determined according to the following schedule by a Fund’s daily managed assets:
Complex-Level Fee Rates
|
|
|
|
|
| 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 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
open-end and closed-end funds that constitute “eligible assets.” Eligible assets do not include assets attributable to investments in other Nuveen funds or
assets in excess of a determined amount (originally $2 billion) added to the Nuveen fund complex in connection with the Adviser’s assumption of the management of the former First American Funds effective January 1, 2011, but do
include certain assets of certain Nuveen funds that were reorganized into funds advised by an affiliate of the Adviser during the 2019 calendar year. |
Sub-Adviser. Nuveen Fund Advisors has selected its wholly owned subsidiary, Nuveen Asset
Management, LLC (“Nuveen Asset Management” or the “Sub-Adviser”), located at 333 West Wacker Drive, Chicago, Illinois 60606, to serve as the
sub-adviser to each of the Funds pursuant to a sub-advisory agreement between Nuveen Fund Advisors and Nuveen Asset Management (the
“Sub-Advisory Agreement”). Nuveen Asset Management, a registered investment adviser, oversees day-to-day operations and
manages the investment of the Funds’ assets on a discretionary basis, subject to the supervision of Nuveen Fund Advisors. Pursuant to each Sub-Advisory Agreement, Nuveen Asset Management is compensated
for the services it provides to the Funds with a portion of the management fee Nuveen Fund Advisors receives from each Fund. Nuveen Fund Advisors and Nuveen Asset Management retain the right to reallocate investment advisory responsibilities and
fees between themselves in the future.
For the services provided pursuant to Georgia Municipal’s, Ohio Municipal’s and the
Acquiring Fund’s Sub-Advisory Agreements, Nuveen Fund Advisors pays Nuveen Asset Management a portfolio management fee,
13
payable monthly, equal to 38.4615%, 38.4615% and 42.8572%, respectively, of the management fee (net of applicable breakpoints, waivers and reimbursements) paid by the Funds to Nuveen Fund
Advisors.
A discussion of the basis for the Board’s most recent approval of the current Investment Management Agreement and Sub-Advisory Agreement for Georgia Municipal is included in Georgia Municipal’s Annual Report for the fiscal year ended May 31, 2022. A discussion of the basis for the Board’s most recent approval of
the current Investment Management Agreement for and Sub-Advisory Agreement for Ohio Municipal is included in Ohio Municipal’s Semi-Annual Report for the semi-annual period ended August 31, 2022. A
discussion of the basis for the Board’s most recent approval of the current Investment Management Agreement and Sub-Advisory Agreement for the Acquiring Fund will be included in the Acquiring Fund’s
Annual Report for the fiscal year ended October 31, 2022.
Portfolio Management. Subject to the supervision of Nuveen Fund
Advisors, Nuveen Asset Management is responsible for execution of specific investment strategies and day-to-day investment operations. Nuveen Asset Management manages
the portfolio of each Fund using a team of analysts and a portfolio manager that focuses on a specific group of funds. Daniel J. Close is the portfolio manager of each Target Fund and Scott R. Romans, PhD, is the portfolio manager of the
Acquiring Fund. Additional information regarding the portfolio managers’ compensation, other accounts managed and ownership of securities is contained in the Merger SAI. Mr. Close assumed portfolio management responsibility for Georgia
Municipal and Ohio Municipal in 2007. Mr. Romans assumed portfolio management responsibility for the Acquiring Fund in 2016. Scott R. Romans, PhD, will manage the combined fund upon completion of the Mergers.
Daniel J. Close, CFA, Managing Director at Nuveen Asset Management, is a portfolio manager on the municipal fixed income team and the
head of taxable municipals. He serves as lead portfolio manager and manages a team dedicated to taxable municipal fixed income strategies, which encompasses customized institutional portfolios and closed-end
funds. In addition, Daniel also manages a number of intermediate and long duration tax-exempt state and national strategies for both open-end and closed-end funds. He also serves on the Custom Fixed Income Solutions team, which sets asset allocation across multi-sector portfolios. Prior to his current role, he served as a municipal fixed income research
analyst covering the corporate-backed, energy, transportation and utility sectors. He received his BS in Business from Miami University and his MBA from Northwestern University’s Kellogg School of Management. Mr. Close has earned the
Chartered Financial Analyst designation and is a member of the CFA Institute and the CFA Society of Chicago.
Scott R. Romans, PhD,
Managing Director of Nuveen Asset Management, is responsible for managing several state-specific, tax-exempt portfolios, including the California Municipal Bond and the New York Municipal Bond Strategies. He
also serves as portfolio manager for a number of closed-end funds. Before moving to his portfolio management role in 2003, he was a senior research analyst in the firm’s
tax-exempt fixed income department, specializing in the education sector. He holds an undergraduate degree from the University of Pennsylvania, an M.S.F. in Finance from the Illinois Institute of Technology
Stuart School of Business and an MA and PhD in Theology from the University of Chicago.
Comparative Risk Information
Risk is inherent in all investing. Investing in the Funds involves risk, including the risk that you may receive little or no return
on your investment or that you may even lose part or all of your investment. An investment in the Funds is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Before
you invest in a Fund, you should consider its principal risks.
Because each Fund invests primarily in municipal securities and other
investments the income from which is exempt from regular federal income tax, the principal risks of an investment in each Fund are similar. However, there are differences between the Funds’ investment policies that may affect their comparative
risk profiles. The Target Funds are subject to single-state risk, while the Acquiring Fund is not. Due to differences between the Target Funds’ policies on credit quality and those of the Acquiring Fund, an investment in the
14
Acquiring Fund may be subject to credit risk and below investment grade risk to a greater degree than an investment in a Target Fund.
The principal risks of investing in the Acquiring Fund are described in more detail below. See “B. Risk Factors.”
Comparative Expense Information
The purpose of the Comparative Fee Table is to assist you in understanding the various costs and expenses of investing in common shares of the
Funds. The information in the table reflects the fees and expenses of Georgia Municipal for the fiscal year ended May 31, 2022, Ohio Municipal for the semi-annual period ended August 31, 2022 (annualized), the Acquiring Fund for the
semi-annual period ended April 30, 2022 (annualized) and the pro forma fees and expenses of the combined fund following the Mergers for the six months ended April 30, 2022 (annualized) assuming both Mergers are completed and for each
Merger separately.
The assets of the Funds will vary based on market conditions and other factors and may vary significantly during
volatile market conditions. The figures in the Example are not necessarily indicative of past or future expenses, and actual expenses may be greater or less than those shown. The Funds’ actual rates of return may be greater or less than the
hypothetical 5% annual return shown in the Example.
1. Comparative Fee
Table(1)—Mergers of Both Georgia Municipal and Ohio Municipal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Georgia
Municipal |
|
|
Ohio
Municipal |
|
|
Acquiring
Fund(2) |
|
|
Combined
Fund Pro
Forma(3) |
|
| Annual Expenses (as a percentage of net assets attributable to common shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Management Fees |
|
|
0.93 |
% |
|
|
0.95 |
% |
|
|
0.94 |
% |
|
|
0.93 |
% |
| Fees on Preferred Shares and Interest and Related Expenses from Inverse Floaters(4) |
|
|
0.51 |
% |
|
|
1.00 |
% |
|
|
0.64 |
% |
|
|
0.64 |
% |
| Other Expenses |
|
|
0.10 |
%(5) |
|
|
0.08 |
%(5) |
|
|
0.05 |
%(6) |
|
|
0.05 |
% |
| Total Annual Expenses |
|
|
1.54 |
% |
|
|
2.03 |
% |
|
|
1.63 |
% |
|
|
1.62 |
% |
| (1) |
The table presented above estimates what the annual expenses of the combined fund following the Mergers would be
stated as a percentage of the combined fund’s net assets attributable to common shares including the costs of leverage for the six month semi-annual period ended April 30, 2022 (annualized). Please see “Additional Information About
the Acquiring Fund—Annual Expenses Excluding the Costs of Leverage” at page 100 for additional information. |
| (2) |
Information for the Acquiring Fund has been adjusted to reflect the effects of the acquisition of another Nuveen
Fund subsequent to the date of its most recent published financial statements and the redemption of $50 million of VRDP shares in November 2022. |
| (3) |
Assumes the issuance of preferred shares in the amounts set forth in the capitalization table. Such amounts may
change prior to the closing date. Please see “C. Information About the Mergers—Capitalization” at page 42. |
| (4) |
Fees on preferred shares assume annual dividends paid and amortization of offering costs for AMTP, MFP and VRDP
Shares, where applicable, and annual liquidity and remarketing fees for Series 3 VRDP Shares for the Acquiring Fund. The MFP Shares of the Acquiring Fund, the AMTP Shares of Georgia Municipal, the Series 1 VRDP Shares of Ohio Municipal and the
Series 1 and Series 2 VRDP Shares of the Acquiring Fund, which currently are in a Special Rate Period, currently do not incur liquidity or remarketing fees. Interest and Related Expenses from Inverse Floaters include interest expense attributable to
inverse floating rate securities regardless of how such securities are treated for financial statement purposes. The actual fees on preferred shares and interest and related expenses from inverse floaters incurred in the future may be higher or
lower. If short-term market interest rates rise in the future, and if the Funds continue to maintain leverage, the cost of which is tied to short-term interest rates, the Funds’ interest expense can be expected to rise in tandem. The
Funds’ use of leverage will increase the amount of management fees paid to the Adviser and the Sub-Adviser. |
| (5) |
Other Expenses are estimated based on actual expenses from the prior fiscal reporting period.
|
| (6) |
Other Expenses have been adjusted to reflect the effect of the acquisition of another Nuveen Fund in June 2022,
excluding one-time expenses related to the acquisition of the Nuveen Fund. |
Example: The following examples illustrate the expenses that a common shareholder would pay on a $1,000 investment that is held for the
time periods provided in the table. The examples assume that all dividends and other distributions are reinvested and that Total Annual Expenses remain the same. The examples also
15
assume a 5% annual return. The examples should not be considered a representation of future expenses. Actual expenses may be greater or lesser than those shown.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
| Georgia Municipal |
|
$ |
16 |
|
|
$ |
49 |
|
|
$ |
84 |
|
|
$ |
183 |
|
| Ohio Municipal |
|
$ |
21 |
|
|
$ |
64 |
|
|
$ |
109 |
|
|
$ |
236 |
|
| Acquiring Fund |
|
$ |
17 |
|
|
$ |
51 |
|
|
$ |
89 |
|
|
$ |
193 |
|
| Combined Fund Pro Forma |
|
$ |
16 |
|
|
$ |
51 |
|
|
$ |
88 |
|
|
$ |
192 |
|
2. Comparative Fee Table(1)—Merger of Georgia
Municipal Only
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Georgia
Municipal |
|
|
Acquiring
Fund(2) |
|
|
Combined
Fund Pro
Forma(3) |
|
| Annual Expenses (as a percentage of net assets attributable to common shares) |
|
|
|
|
|
|
|
|
|
|
|
|
| Management Fees |
|
|
0.93 |
% |
|
|
0.94 |
% |
|
|
0.94 |
% |
| Fees on Preferred Shares and Interest and Related Expenses from Inverse Floaters(4) |
|
|
0.51 |
% |
|
|
0.64 |
% |
|
|
0.64 |
% |
| Other Expenses |
|
|
0.10 |
%(5) |
|
|
0.05 |
%(6) |
|
|
0.04 |
% |
| Total Annual Expenses |
|
|
1.54 |
% |
|
|
1.63 |
% |
|
|
1.62 |
% |
| (1) |
The table presented above estimates what the annual expenses of the combined fund following the Merger would be
stated as a percentage of the combined fund’s net assets attributable to common shares including the costs of leverage for the six month semi-annual period ended April 30, 2022 (annualized). Please see “Additional Information About
the Acquiring Fund—Annual Expenses Excluding the Costs of Leverage” at page 100 for additional information. |
| (2) |
Information for the Acquiring Fund has been adjusted to reflect the effects of the acquisition of another Nuveen
Fund subsequent to the date of its most recent published financial statements and the redemption of $50 million of VRDP shares in November 2022. |
| (3) |
Assumes the issuance of preferred shares in the amounts set forth in the capitalization table. Such amounts may
change prior to the closing date. Please see “C. Information About the Mergers—Capitalization” at page 42. |
| (4) |
Fees on preferred shares assume annual dividends paid and amortization of offering costs for AMTP, MFP and VRDP
Shares, where applicable, and annual liquidity and remarketing fees for Series 3 VRDP Shares for the Acquiring Fund. The MFP Shares of the Acquiring Fund and the Series 1 and Series 2 VRDP Shares of the Acquiring Fund, which currently are in a
Special Rate Period, currently do not incur liquidity or remarketing fees. Interest and Related Expenses from Inverse Floaters include interest expense attributable to inverse floating rate securities regardless of how such securities are treated
for financial statement purposes. The actual fees on preferred shares and interest and related expenses from inverse floaters incurred in the future may be higher or lower. If short-term market interest rates rise in the future, and if the Funds
continue to maintain leverage, the cost of which is tied to short-term interest rates, the Funds’ interest expense can be expected to rise in tandem. The Funds’ use of leverage will increase the amount of management fees paid to the
Adviser and the Sub-Adviser. |
| (5) |
Other Expenses are estimated based on actual expenses from the prior fiscal reporting period.
|
| (6) |
Other Expenses have been adjusted to reflect the effect of the acquisition of another Nuveen Fund in June 2022,
excluding one-time expenses related to the acquisition of the Nuveen Fund. |
Example: The following examples illustrate the expenses that a common shareholder would pay on a $1,000 investment that is held for the
time periods provided in the table. The examples assume that all dividends and other distributions are reinvested and that Total Annual Expenses remain the same. The examples also assume a 5% annual return. The examples should not be considered a
representation of future expenses. Actual expenses may be greater or lesser than those shown.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
| Georgia Municipal |
|
$ |
16 |
|
|
$ |
49 |
|
|
$ |
84 |
|
|
$ |
183 |
|
| Acquiring Fund |
|
$ |
17 |
|
|
$ |
51 |
|
|
$ |
89 |
|
|
$ |
193 |
|
| Combined Fund Pro Forma |
|
$ |
16 |
|
|
$ |
51 |
|
|
$ |
88 |
|
|
$ |
192 |
|
16
3. Comparative Fee Table(1)—Merger of
Ohio Municipal Only
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Ohio
Municipal |
|
|
Acquiring
Fund(2) |
|
|
Combined
Fund Pro
Forma |
|
| Annual Expenses (as a percentage of net assets attributable to common shares) |
|
|
|
|
|
|
|
|
|
|
|
|
| Management Fees |
|
|
0.95 |
% |
|
|
0.94 |
% |
|
|
0.94 |
% |
| Fees on Preferred Shares and Interest and Related Expenses from Inverse Floaters(4) |
|
|
1.00 |
% |
|
|
0.64 |
% |
|
|
0.65 |
% |
| Other Expenses |
|
|
0.08 |
%(5) |
|
|
0.05 |
%(6) |
|
|
0.04 |
% |
| Total Annual Expenses |
|
|
2.03 |
% |
|
|
1.63 |
% |
|
|
1.63 |
% |
| (1) |
The table presented above estimates what the annual expenses of the combined fund following the Merger would be
stated as a percentage of the combined fund’s net assets attributable to common shares including the costs of leverage for the six month semi-annual period ended April 30, 2022 (annualized). Please see “Additional Information About
the Acquiring Fund—Annual Expenses Excluding the Costs of Leverage” at page 100 for additional information. |
| (2) |
Information for the Acquiring Fund has been adjusted to reflect the effects of the acquisition of another Nuveen
Fund subsequent to the date of its most recent published financial statements and the redemption of $50 million of VRDP shares in November 2022. |
| (3) |
Assumes the issuance of preferred shares in the amounts set forth in the capitalization table. Such amounts may
change prior to the closing date. Please see “C. Information About the Mergers—Capitalization” at page 42. |
| (4) |
Fees on preferred shares assume annual dividends paid and amortization of offering costs for MFP and VRDP
Shares, where applicable, and annual liquidity and remarketing fees for Series 3 VRDP Shares for the Acquiring Fund. The MFP Shares of the Acquiring Fund, the Series 1 VRDP Shares of Ohio Municipal and the Series 1 and Series 2 VRDP Shares of the
Acquiring Fund, which currently are in a Special Rate Period, currently do not incur liquidity or remarketing fees. Interest and Related Expenses from Inverse Floaters include interest expense attributable to inverse floating rate securities
regardless of how such securities are treated for financial statement purposes. The actual fees on preferred shares and interest and related expenses from inverse floaters incurred in the future may be higher or lower. If short-term market interest
rates rise in the future, and if the Funds continue to maintain leverage, the cost of which is tied to short-term interest rates, the Funds’ interest expense can be expected to rise in tandem. The Funds’ use of leverage will increase the
amount of management fees paid to the Adviser and the Sub-Adviser. |
| (5) |
Other Expenses are estimated based on actual expenses from the prior fiscal reporting period.
|
| (6) |
Other Expenses have been adjusted to reflect the effect of the acquisition of another Nuveen Fund in
June 2022, excluding one-time expenses related to the acquisition of the Nuveen Fund. |
Example: The following examples illustrate the expenses that a common shareholder would pay on a $1,000 investment that is held for the
time periods provided in the table. The examples assume that all dividends and other distributions are reinvested and that Total Annual Expenses remain the same. The examples also assume a 5% annual return. The examples should not be considered a
representation of future expenses. Actual expenses may be greater or lesser than those shown.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
| Ohio Municipal |
|
$ |
21 |
|
|
$ |
64 |
|
|
$ |
109 |
|
|
$ |
236 |
|
| Acquiring Fund |
|
$ |
17 |
|
|
$ |
51 |
|
|
$ |
89 |
|
|
$ |
193 |
|
| Combined Fund Pro Forma |
|
$ |
17 |
|
|
$ |
51 |
|
|
$ |
89 |
|
|
$ |
193 |
|
Comparative Performance Information
Comparative total return performance for the Funds for periods ended September 30, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Average Annual Total Return
on Net Asset Value |
|
|
Average Annual Total Return
on Market Value |
|
| |
|
One
Year |
|
|
Five
Years |
|
|
Ten
Years |
|
|
One
Year |
|
|
Five
Years |
|
|
Ten
Years |
|
| Georgia Municipal |
|
|
-19.50 |
% |
|
|
-0.87 |
% |
|
|
0.92 |
% |
|
|
-26.40 |
% |
|
|
-2.31 |
% |
|
|
0.00 |
% |
| Ohio Municipal |
|
|
-18.33 |
% |
|
|
-0.29 |
% |
|
|
1.99 |
% |
|
|
-22.85 |
% |
|
|
-0.96 |
% |
|
|
0.02 |
% |
| Acquiring Fund |
|
|
-22.33 |
% |
|
|
0.01 |
% |
|
|
2.69 |
% |
|
|
-28.38 |
% |
|
|
-0.61 |
% |
|
|
2.18 |
% |
17
Average Annual Total Return on Net Asset Value is the combination of changes in common share 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 reinvestment 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. Average Annual Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the
average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place over several days, and in some instances it may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Past
performance information is not necessarily indicative of future results.
An investment in the Acquiring Fund may not be appropriate for all investors. The Acquiring Fund is not intended to be a complete investment
program and, due to the uncertainty inherent in all investments, there can be no assurance that the Acquiring Fund will achieve its investment objectives. Investors should consider their long-term investment goals and financial needs when making an
investment decision with respect to shares of the Acquiring Fund. An investment in the Acquiring Fund is intended to be a long-term investment, and you should not view the Fund as a trading vehicle. Your shares at any point in time may be worth less
than your original investment, even after taking into account the reinvestment of Fund dividends and distributions, if applicable.
The
principal risks of investing in the Acquiring Fund are described below. The risks and special considerations listed below should be considered by common shareholders of a Target Fund in their evaluation of the applicable Merger. While investment in
the Target Funds is also generally subject to each of these principal risks, the shareholders of a Target Fund should also consider the following differences between the Funds’ investment policies that may affect the comparative risk profile:
(i) the Acquiring Fund may invest in municipal obligations of any U.S. state or territory, whereas each Target Fund invests primarily in municipal bonds of a specific state and are subject to economic, political and other risks of a single
state, and (ii) a greater percentage of the Acquiring Fund’s portfolio may be allocated to lower rated municipal securities relative to the amount permitted by the policies of each Target Fund, and investments in lower rated securities are
subject to higher risks than investments in higher rated securities, including a higher risk that the issuer will be unable to pay interest or principal when due.
General Risks of Investing in the Acquiring Fund
Investment and Market Risk. An investment in the Fund’s shares is subject to investment risk, including the possible loss of the
entire principal amount that you invest. Your investment in the shares of the Fund represents an indirect investment in the municipal securities owned by the Fund, which generally trade in the over-the-counter markets. Your shares at any point in time may be worth less than your original investment, even after taking into account the reinvestment of dividends and distributions, if applicable. In
addition, the ability of municipalities to collect revenue and service their obligations could be materially and adversely affected by an economic downturn or prolonged recession.
Market Discount from Net Asset Value. The market price of shares of closed-end investment
companies may fluctuate and during certain periods trade at prices lower than net asset value. The Fund cannot predict whether its common shares will trade at, above or below net asset value. This characteristic is a risk separate and distinct from
the risk that the Fund’s net asset value could decrease as a result of investment activities. Investors bear a risk of loss to the extent that the price at which they sell their shares is lower in relation to the Fund’s net asset value
than at the time of purchase, assuming a stable net asset value. The common shares are designed primarily for long-term investors, and you should not view the Fund as a vehicle for trading purposes.
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Credit Risk. Credit risk is the risk that one or more municipal securities in the
Fund’s portfolio will decline in price, or the issuer thereof will fail to pay interest or principal when due, because the issuer of the security experiences a decline in its financial status. In general, lower-rated municipal securities carry
a greater degree of risk that the issuer will lose its ability to make interest and principal payments, which could have a negative impact on the Fund’s net asset value or dividends. Credit risk is increased when a portfolio security is
downgraded or the perceived creditworthiness of the issuer deteriorates. If a municipal security satisfies the rating requirements described above at the time of investment and is subsequently downgraded below that rating, the Fund will not be
required to dispose of the security. If a downgrade occurs, the Sub-Adviser will consider what action, including the sale of the security, is in the best interests of the Fund and its shareholders. This means
that the Fund may invest in municipal securities that are involved in bankruptcy or insolvency proceedings or are experiencing other financial difficulties at the time of acquisition (such securities are commonly referred to as distressed
securities).
Credit Spread Risk. Credit spread risk is the risk that credit spreads (i.e., the difference in yield between
securities that is due to differences in their credit quality) may increase when the market believes that municipal securities generally have a greater risk of default. Increasing credit spreads may reduce the market values of the Fund’s
securities. Credit spreads often increase more for lower rated and unrated securities than for investment grade securities. In addition, when credit spreads increase, reductions in market value will generally be greater for longer-maturity
securities.
Below Investment Grade Risk. Municipal securities of below investment grade quality, commonly referred to as junk
bonds, are regarded as having predominately speculative characteristics with respect to capacity to pay interest and repay principal when due, and are susceptible to default or decline in market value due to adverse economic and business
developments. Also, to the extent that the rating assigned to a municipal security in the Fund’s portfolio is downgraded by any NRSRO, the market price and liquidity of such security may be adversely affected. The market values for municipal
securities of below investment grade quality tend to be volatile, and these securities are less liquid than investment grade municipal securities. For these reasons, an investment in the Fund, compared with a portfolio consisting solely of
investment grade securities, may experience the following:
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increased price sensitivity resulting from changing interest rates and/or a deteriorating economic environment;
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greater risk of loss due to default or declining credit quality; |
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adverse issuer specific events that are more likely to render the issuer unable to make interest and/or principal
payments; and |
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the possibility that a negative perception of the below investment grade market develops, resulting in the price
and liquidity of below investment grade securities becoming depressed, and this negative perception could last for a significant period of time. |
Adverse changes in economic conditions are more likely to lead to a weakened capacity of a below investment grade issuer to make principal
payments and interest payments compared to an investment grade issuer. The principal amount of below investment grade securities outstanding has proliferated in the past decade as an increasing number of issuers have used below investment grade
securities for financing. The current downturn may severely affect the ability of highly leveraged issuers to service their debt obligations or to repay their obligations upon maturity. As the national economy experiences the current economic
downturn, resulting in decreased tax and other revenue streams of municipal issuers, or in the event interest rates rise sharply, increasing the interest cost on variable rate instruments and negatively impacting economic activity, the
number of defaults by below investment grade municipal issuers is likely to increase. Similarly, downturns in profitability in specific industries could adversely affect private activity bonds. The market values of lower
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quality debt securities tend to reflect individual developments of the issuer to a greater extent than do higher quality securities, which react primarily to fluctuations in the general level of
interest rates. Factors having an adverse impact on the market value of lower quality securities may have an adverse impact on the Fund’s net asset value and the market value of its common shares. In addition, the Fund may incur additional
expenses to the extent it is required to seek recovery upon a default in payment of principal or interest on its portfolio holdings. In certain circumstances, the Fund may be required to foreclose on an issuer’s assets and take possession of
its property or operations. In such circumstances, the Fund would incur additional costs in disposing of such assets and potential liabilities from operating any business acquired.
The secondary market for below investment grade securities may not be as liquid as the secondary market for more highly rated securities, a
factor that may have an adverse effect on the Fund’s ability to dispose of a particular security. There are fewer dealers in the market for below investment grade municipal securities than the market for investment grade municipal securities.
The prices quoted by different dealers for below investment grade municipal securities may vary significantly, and the spread between the bid and ask price is generally much larger for below investment grade municipal securities than for higher
quality instruments. Under adverse market or economic conditions, the secondary market for below investment grade securities could contract further, independent of any specific adverse changes in the condition of a particular issuer, and these
instruments may become illiquid. As a result, the Fund could find it more difficult to sell these securities or may be able to sell the securities only at prices lower than if such securities were widely traded. Prices realized upon the sale of such
lower rated or unrated securities, under these circumstances, may be less than the prices used in calculating the Fund’s net asset value.
Issuers of below investment grade securities are highly leveraged and may not have available to them more traditional methods of financing.
Therefore, the risk associated with acquiring the securities of such issuers generally is greater than is the case with higher rated securities. For example, during an economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of below investment grade securities may experience financial stress. During such periods, such issuers may not have sufficient revenues to meet their interest payment obligations. The issuer’s ability to service its debt
obligations also may be adversely affected by specific developments, the issuer’s inability to meet specific projected forecasts or the unavailability of additional financing. The risk of loss from default by the issuer is significantly greater
for the holders of below investment grade securities because such securities are generally unsecured and are often subordinated to other creditors of the issuer. Prices and yields of below investment grade securities will fluctuate over time and,
during periods of economic uncertainty, volatility of below investment grade securities may adversely affect the Fund’s net asset value. In addition, investments in below investment grade zero coupon bonds rather than income-bearing below
investment grade securities may be more speculative and may be subject to greater fluctuations in value due to changes in interest rates.
Investments in lower rated or unrated securities may present special tax issues for the Fund to the extent that the issuers of these
securities default on their obligations pertaining thereto, and the federal income tax consequences to the Fund as a holder of such distressed securities may not be clear.
Municipal Securities Market Risk. Investing in the municipal securities market involves certain risks. The municipal market is one in
which dealer firms make markets in bonds on a principal basis using their proprietary capital, and during the 2008-2009 market turmoil these firms’ capital was severely constrained. As a result, some firms were unwilling to commit their capital
to purchase and to serve as a dealer for municipal securities. The amount of public information available about the municipal securities in the Fund’s portfolio is generally less than that for corporate equities or bonds, and the investment
performance of the Fund may therefore be more dependent on the analytical abilities of the Sub-Adviser than if the Fund were a stock fund or taxable bond fund. The secondary market for municipal securities,
particularly the below investment grade bonds in which the Fund may invest, also tends to be less well-developed or liquid than many other securities markets, which may adversely affect the Fund’s ability to sell its municipal securities at
attractive prices or at prices approximating those at which the Fund currently values them. Municipal securities may contain redemption provisions, which
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may allow the securities to be called or redeemed prior to their stated maturity, potentially resulting in the distribution of principal and a reduction in subsequent interest distributions.
The ability of municipal issuers to make timely payments of interest and principal may be diminished during general economic downturns and as
governmental cost burdens are reallocated among federal, state and local governments. In addition, laws enacted in the future by Congress or state legislatures or referenda could extend the time for payment of principal and/or interest, or impose
other constraints on enforcement of such obligations, or on the ability of municipalities to levy taxes. Issuers of municipal securities might seek protection under the bankruptcy laws. In the event of bankruptcy of such an issuer, the Fund could
experience delays in collecting principal and interest and the Fund may not, in all circumstances, be able to collect all principal and interest to which it is entitled. To enforce its rights in the event of a default in the payment of interest or
repayment of principal, or both, the Fund may take possession of and manage the assets securing the issuer’s obligations on such securities, which may increase the Fund’s operating expenses. Any income derived from the Fund’s
ownership or operation of such assets may not be tax-exempt and may not be of the type that would allow the Fund to continue to qualify as a regulated investment company (“RIC”) for federal income
tax purposes.
Revenue bonds issued by state or local agencies to finance the development of
low-income, multi-family housing involve special risks in addition to those associated with municipal securities generally, including that the underlying properties may not generate sufficient income to pay
expenses and interest costs. These bonds are generally non-recourse against the property owner, may be junior to the rights of others with an interest in the properties, may pay interest that changes based in
part on the financial performance of the property, may be prepayable without penalty and may be used to finance the construction of housing developments which, until completed and rented, do not generate income to pay interest. Additionally,
unusually high rates of default on the underlying mortgage loans may reduce revenues available for the payment of principal or interest on such mortgage revenue bonds.
Special Risks Related to Certain Municipal Obligations. The Fund may invest in municipal leases and certificates of participation in
such leases. Municipal leases and certificates of participation involve special risks not normally associated with general obligations or revenue bonds. Leases and installment purchase or conditional sale contracts (which normally provide for title
to the leased asset to pass eventually to the governmental issuer) have evolved as a means for governmental issuers to acquire property and equipment without meeting the constitutional and statutory requirements for the issuance of debt. The debt
issuance limitations are deemed to be inapplicable because of the inclusion in many leases or contracts of “non-appropriation” clauses that relieve the governmental issuer of any obligation to
make future payments under the lease or contract unless money is appropriated for such purpose by the appropriate legislative body on a yearly or other periodic basis. In addition, such leases or contracts may be subject to the temporary abatement
of payments in the event the governmental issuer is prevented from maintaining occupancy of the leased premises or utilizing the leased equipment. Although the obligations may be secured by the leased equipment or facilities, the disposition of the
property in the event of non-appropriation or foreclosure might prove difficult, time consuming and costly, and may result in a delay in recovering or the failure to fully recover the Fund’s original
investment. In the event of non-appropriation, the issuer would be in default and taking ownership of the assets may be a remedy available to the Fund, although the Fund does not anticipate that such a remedy
would normally be pursued. To the extent that the Fund invests in unrated municipal leases or participates in such leases, the credit quality rating and risk of cancellation of such unrated leases will be monitored on an ongoing basis. Certificates
of participation, which represent interests in unmanaged pools of municipal leases or installment contracts, involve the same risks as the underlying municipal leases. In addition, the Fund may be dependent upon the municipal authority issuing the
certificates of participation to exercise remedies with respect to the underlying securities. Certificates of participation also entail a risk of default or bankruptcy, both of the issuer of the municipal lease and also the municipal agency issuing
the certificate of participation.
Tobacco Settlement Bond Risk. Tobacco settlement bonds are municipal securities that are backed
solely by expected revenues to be derived from lawsuits involving tobacco related deaths and illnesses which were
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settled between certain states and American tobacco companies. Tobacco settlement bonds are secured by an issuing state’s proportionate share in the Master Settlement Agreement
(“MSA”). The MSA is an agreement reached out of court in November 1998 between 46 states and nearly all of the U.S. tobacco manufacturers. Under the terms of the MSA, the actual amount of future settlement payments by tobacco
manufacturers is dependent on many factors, including, but not limited to, annual domestic cigarette shipments, reduced cigarette consumption, increased taxes on cigarettes, inflation, financial capability of tobacco companies, continuing litigation
and the possibility of tobacco manufacturer bankruptcy. If the volume of cigarettes shipped in the U.S. by manufacturers participating in the settlement decreases significantly, payments due from them will also decrease. Demand for cigarettes in the
United States could continue to decline due to price increases needed to recoup the cost of payments by tobacco companies. Demand could also be affected by anti-smoking campaigns, tax increases, reduced advertising, and enforcement of laws
prohibiting sales to minors; elimination of certain sales venues such as vending machines; and the spread of local ordinances restricting smoking in public places. As a result, payments made by tobacco manufacturers could be negatively impacted if
the decrease in tobacco consumption is significantly greater than the forecasted decline. A market share loss by the MSA companies to non-MSA participating tobacco manufacturers would cause a downward
adjustment in the payment amounts. A participating manufacturer filing for bankruptcy also could cause delays or reductions in bond payments. The MSA itself has been subject to legal challenges and has, to date, withstood those challenges.
Zero Coupon Bonds Risk. Because interest on zero coupon bonds is not paid on a current basis, the values of zero coupon bonds will be
more volatile in response to interest rate changes than the values of bonds that distribute income regularly. Although zero coupon bonds generate income for accounting purposes, they do not produce cash flow, and thus the Fund could be forced to
liquidate securities at an inopportune time in order to generate cash to distribute to shareholders as required by federal income tax law.
Interest Rate Risk. Generally, when market interest rates rise, bond prices fall, and vice versa. Interest rate risk is the risk that
the municipal securities in the Fund’s portfolio will decline in value because of increases in market interest rates. As interest rates decline, issuers of municipal securities may prepay principal earlier than scheduled, forcing the Fund to
reinvest in lower-yielding securities and potentially reducing the Fund’s income. As interest rates increase, slower than expected principal payments may extend the average life of securities, potentially locking in a below-market interest rate
and reducing the Fund’s value. In typical market interest rate environments, the prices of longer-term municipal securities generally fluctuate more than prices of shorter-term municipal securities as interest rates change. Because the Fund
will invest in long-term municipal securities, the common share net asset value and market price per share will fluctuate more in response to changes in market interest rates than if the Fund invested primarily in shorter-term municipal securities.
In comparison to maturity (which is the date on which a debt instrument ceases and the issuer is obligated to repay the principal amount), duration is a measure of the price volatility of a debt instrument as a result of changes in market rates of
interest, based on the weighted average timing of the instrument’s expected principal and interest payments. Duration differs from maturity in that it considers a security’s yield, coupon payments, principal payments and call features in
addition to the amount of time until the security finally matures. As the value of a security changes over time, so will its duration.
Prices of securities with longer durations tend to be more sensitive to interest rate changes than securities with shorter durations. In
general, a portfolio of securities with a longer duration can be expected to be more sensitive to interest rate changes than a portfolio with a shorter duration. For example, the price of a bond with an effective duration of two years will rise
(fall) two percent for every one percent decrease (increase) in its yield, and the price of a five-year duration bond will rise (fall) five percent for a one percent decrease (increase) in its yield. Greater sensitivity to changes in interest rates
typically corresponds to higher volatility and higher risk.
Yield curve risk is the risk associated with either a flattening or
steepening of the yield curve, which is a result of changing yields among comparable bonds with different maturities. When market interest rates, or yields, increase, the price of a bond will decrease and vice versa. When the yield curve shifts, the
price of the bond, which was initially priced based on the initial yield curve, will change in price. If the yield curve flattens,
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then the yield spread between long- and short-term interest rates narrows, and the price of the bond will change accordingly. If the bond is short-term and the yield decreases, the price of this
bond will increase. If the yield curve steepens, this means that the spread between long- and short-term interest rates increases. Therefore, long-term bond prices, like the ones held by the Fund, will decrease relative to short-term bonds. Changes
in the yield curve are based on bond risk premiums and expectations of future interest rates.
Because the values of lower-rated and
comparable unrated debt securities are affected both by credit risk and interest rate risk, the price movements of such lower grade securities typically have not been highly correlated to the fluctuations of the prices of investment grade quality
securities in response to changes in market interest rates. The Fund’s investments in inverse floating rate securities, as described herein under “Inverse Floating Rate Securities Risk” and “Leverage Risk,” will tend to
increase common share interest rate risk.
London Interbank Offered Rate (“LIBOR”) Replacement Risk. LIBOR is an
index rate that historically has been widely used in lending transactions and remains a common reference rate for setting the floating interest rate on private loans. The use of the LIBOR is being phased out, which may adversely affect the
Fund’s investments whose value is tied to LIBOR. While the Secured Overnight Financing Rate (“SOFR”) has been recommended as the replacement rate for LIBOR, and some product markets have adopted the use of SOFR, LIBOR may still be
used as a reference rate until such time that private markets have fully transitioned to using SOFR or other alternative reference rates recommended by applicable market regulators. The transition process away from LIBOR may involve, among other
things, increased volatility or illiquidity in markets for instruments that currently rely on LIBOR. The potential effect of a discontinuation of LIBOR on the Fund’s investments will vary depending on, among other things: (1) existing
fallback provisions that provide a replacement reference rate if LIBOR is no longer available; (2) termination provisions in individual contracts; and (3) how, and when industry participants develop and adopt new reference rates and
fallbacks for both legacy and new products and instruments held by the Fund. Accordingly, it is difficult to predict the full impact of the transition away from LIBOR until it is clearer how the Fund’s products and instruments will be impacted
by this transition.
Distressed Securities Risk. The Fund may invest to a limited extent in securities rated CCC+/Caa1 or
lower, or unrated but judged by the Sub-Adviser to be of comparable quality. Some or many of these low-rated securities, although not in default, may be
“distressed,” meaning that the issuer is experiencing financial difficulties or distress at the time of acquisition. Such securities would present a substantial risk of future default which may cause the Fund to incur losses, including
additional expenses, to the extent it is required to seek recovery upon a default in the payment of principal or interest on those securities. In any reorganization or liquidation proceeding relating to a portfolio security, the Fund may lose its
entire investment or may be required to accept cash or securities with a value less than its original investment. Distressed securities may be subject to restrictions on resale.
Puerto Rico Municipal Securities Market Risk. To the extent that the Fund invests a significant portion of its assets in the securities
issued by the Commonwealth of Puerto Rico or its political subdivisions, agencies, instrumentalities, or public corporations (collectively referred to in this prospectus as “Puerto Rico” or the “Commonwealth”), it will be
disproportionally affected by political, social and economic conditions and developments in the Commonwealth. In addition, economic, political or regulatory changes in that territory could adversely affect the value of the Fund’s investment
portfolio.
Puerto Rico currently is experiencing significant fiscal and economic challenges, including substantial debt service
obligations, high levels of unemployment, underfunded public retirement systems, and persistent government budget deficits. These challenges may negatively affect the value of the Fund’s investments in Puerto Rican municipal securities. Major
ratings agencies have downgraded the general obligation debt of Puerto Rico to below investment grade and continue to maintain a negative outlook for this debt, which increases the likelihood that the rating will be lowered further. In both
August 2015 and January 2016, Puerto Rico defaulted on its debt by failing to make full payment due on its outstanding bonds, and there can be no assurance that
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Puerto Rico will be able to satisfy its future debt obligations. Further downgrades or defaults may place additional strain on the Puerto Rico economy and may negatively affect the value,
liquidity, and volatility of the Fund’s investments in Puerto Rican municipal securities. Legislation, including legislation that would allow Puerto Rico to restructure its municipal debt obligations, thus increasing the risk that Puerto Rico
may never pay off municipal indebtedness, or may pay only a small fraction of the amount owed, could also impact the value of the Fund’s investments in Puerto Rican municipal securities.
These challenges and uncertainties have been exacerbated by Hurricane Maria and the resulting natural disaster in Puerto Rico. In
September 2017, Hurricane Maria struck Puerto Rico, causing major damage across the Commonwealth, including damage to its water, power, and telecommunications infrastructure. The length of time needed to rebuild Puerto Rico’s
infrastructure is unclear, but could amount to years, during which the Commonwealth is likely to be in an uncertain economic state. The full extent of the natural disaster’s impact on Puerto Rico’s economy and foreign investment in Puerto
Rico is difficult to estimate.
Puerto Rico’s political and economic conditions could have a negative impact on the liquidity or
value of Puerto Rican municipal securities, and consequently may affect the Fund’s investments and its performance if the Fund invests a significant portion of its assets in Puerto Rican municipal securities.
Economic and Political Events Risk. The Fund may be more sensitive to adverse economic, business or political developments if it
invests a substantial portion of its assets in the bonds of similar projects (such as those relating to the education, health care, housing, transportation, or utilities industries), industrial development bonds, or in particular types of municipal
securities (such as general obligation bonds, private activity bonds or moral obligation bonds). Such developments may adversely affect a specific industry or local political and economic conditions, and thus may lead to declines in the bonds’
creditworthiness and value.
Global Economic Risk. National and regional economies and financial markets are becoming
increasingly interconnected, which increases the possibilities that conditions in one country, region or market might adversely impact issuers in a different country, region or market. Changes in legal, political, regulatory, tax and economic
conditions may cause fluctuations in markets and investments prices around the world, which could negatively impact the value of the Fund’s investments. Major economic or political disruptions, particularly in large economies like China’s,
may have global negative economic and market repercussions. Additionally, instability in various countries, such as Afghanistan and Syria, natural and environmental disasters and the spread of infectious illnesses or other public health emergencies,
possible terrorist attacks in the United States and around the world, continued tensions between North Korea and the United States and the international community generally, growing social and political discord in the United States, the European
debt crisis, the response of the international community—through economic sanctions and otherwise—further downgrade of U.S. government securities, the change in the U.S. president and the new administration and other similar events may
adversely affect the global economy and the markets and issuers in which the Fund invests. Recent examples of such events include the outbreak of a novel coronavirus known as COVID-19 that was first detected
in China in December 2019 and heightened concerns regarding North Korea’s nuclear weapons and long-range ballistic missile programs. In addition, Russia’s recent invasion of Ukraine in February 2022 has resulted in sanctions
imposed by several nations, such as the United States, United Kingdom, European Union and Canada. The current sanctions and potential further sanctions may negatively impact certain sectors of Russia’s economy, but also may negatively impact
the value of the Fund’s investments that do not have direct exposure to Russia. These events could reduce consumer demand or economic output, result in market closure, travel restrictions or quarantines, and generally have a significant impact
on the economy. These events could also impair the information technology and other operational systems upon which the Fund’s service providers, including the Adviser and the Sub-Adviser, rely, and could
otherwise disrupt the ability of employees of the Fund’s service providers to perform essential tasks on behalf of the Fund.
The
Fund does not know and cannot predict how long the securities markets may be affected by these events and the effects of these and similar events in the future on the U.S. economy and securities markets. The
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Fund may be adversely affected by abrogation of international agreements and national laws which have created the market instruments in which the Fund may invest, failure of the designated
national and international authorities to enforce compliance with the same laws and agreements, failure of local, national and international organizations to carry out the duties prescribed to them under the relevant agreements, revisions of these
laws and agreements which dilute their effectiveness or conflicting interpretation of provisions of the same laws and agreements.
Governmental and quasi-governmental authorities and regulators throughout the world have in the past responded to major economic disruptions
with a variety of significant fiscal and monetary policy changes, including but not limited to, direct capital infusions into companies, new monetary programs and dramatically lower interest rates. An unexpected or quick reversal of these policies,
or the ineffectiveness of these policies, could increase volatility in securities markets, which could adversely affect the Fund’s investments. See “—Recent Market Conditions” below.
Recent Market Conditions. Periods of unusually high financial market volatility and restrictive credit conditions, at times limited to
a particular sector or geographic area, have occurred in the past and may be expected to recur in the future. Some countries, including the United States, have adopted or have signaled protectionist trade measures, relaxation of the financial
industry regulations that followed the financial crisis, and/or reductions to corporate taxes. The scope of these policy changes is still developing, but the equity and debt markets may react strongly to expectations of change, which could increase
volatility, particularly if a resulting policy runs counter to the market’s expectations. The outcome of such changes cannot be foreseen at the present time. In addition, geopolitical and other risks, including environmental and public health
risks, may add to instability in the world economy and markets generally. As a result of increasingly interconnected global economies and financial markets, the value and liquidity of the Fund’s investments may be negatively affected by events
impacting a country or region, regardless of whether the Fund invests in issuers located in or with significant exposure to such country or region.
The current outbreak of COVID-19 has resulted in instances of market closures and dislocations,
extreme volatility, liquidity constraints and increased trading costs. Efforts to contain the spread of COVID-19 have resulted in travel restrictions, closed international borders, disruptions of healthcare
systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, defaults and credit downgrades, among other significant economic impacts, all of which have disrupted global
economic activity across many industries and may exacerbate other pre-existing political, social and economic risks, locally or globally and cause general concern and uncertainty. The full economic impact and
ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s
performance. To the extent the impacts of COVID-19 continue, the Fund may experience negative impacts to its business that could exacerbate other risks to which the Fund is subject, including:
(1) operational impacts on and availability of key personnel of Nuveen Fund Advisors, Nuveen Asset Management, and/or any of the Fund’s other service providers, vendors and counterparties as they face changed circumstances and/or illness
related to the pandemic and (2) limitations on the Fund’s ability to make distributions or dividends, as applicable, to Common Shareholders.
Governmental authorities and regulators throughout the world, such as the U.S. Federal Reserve, have in the past responded to major economic
disruptions with changes to fiscal and monetary policy, including but not limited to, direct capital infusions, new monetary programs, and dramatically lower interest rates. Certain of those policy changes are being implemented or considered in
response to the COVID-19 outbreak. Such policy changes may adversely affect the value, volatility and liquidity of instruments in which the Fund invests.
On June 23, 2016, the UK held a referendum on whether to remain a member state of the EU, in which voters favored the UK’s
withdrawal from the EU, an event widely referred to as “Brexit.” On January 31, 2020, the UK formally withdrew from the EU. The transition period concluded on December 31, 2020, and EU law no
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longer applies in the UK. On December 30, 2020, the UK and EU signed the UK/EU Trade Agreement, which went into effect on January 1, 2021 and sets out the foundation of the economic and
legal framework for trade between the UK and EU. As the UK/EU Trade Agreement is a new legal framework, the implementation of the UK/EU Trade Agreement may result in uncertainty in its application and periods of volatility in both the UK and wider
European markets. The longer term economic, legal, political and social framework to be put in place between the UK and the EU are unclear at this stage, remain subject to negotiation and are likely to lead to ongoing political and economic
uncertainty and periods of exacerbated volatility in both the UK and in wider European markets for some time. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade
agreements, and the UK and European economies, as well as the broader global economy for some time. Additionally, a number of countries in Europe have suffered terror attacks, and additional attacks may occur in the future. Ukraine has experienced
ongoing military conflict, most recently in February 2022 when Russia invaded Ukraine; this conflict may expand and military attacks could occur elsewhere in Europe. Europe has also been struggling with mass migration from the Middle East and
Africa. The ultimate effects of these events and other socio-political or geographical issues are not known but could profoundly affect global economies and markets.
The ongoing trade war between China and the United States, including the imposition of tariffs by each country on the other country’s
products, has created a tense political environment. These actions may trigger a significant reduction in international trade, the oversupply of certain manufactured goods, substantial price reductions of goods and possible failure of individual
companies and/or large segments of China’s export industry, which could have a negative impact on the Fund’s performance. U.S. companies that source material and goods from China and those that make large amounts of sales in China would be
particularly vulnerable to an escalation of trade tensions. Uncertainty regarding the outcome of the trade tensions and the potential for a trade war could cause the U.S. dollar to decline against safe haven currencies, such as the Japanese yen and
the euro. Events such as these and their consequences are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be taken in the future.
The impact of these developments in the near- and long-term is unknown and could have additional adverse effects on economies, financial
markets and asset valuations around the world.
Inverse Floating Rate Securities Risk. The Fund may invest in inverse floating rate
securities. Typically, inverse floating rate securities represent beneficial interests in a special purpose trust (sometimes called a “tender option bond trust”) formed by a third party sponsor for the purpose of holding municipal bonds.
In general, income on inverse floating rate securities will decrease when interest rates increase and increase when interest rates decrease. Thus, distributions paid to the Fund on its inverse floaters will be reduced or even eliminated as
short-term municipal interest rates rise and will increase when short-term municipal rates fall. Inverse floating rate securities generally will underperform the market for fixed rate municipal bonds in a rising interest rate environment.
Investments in inverse floating rate securities may subject the Fund to the risks of reduced or eliminated interest payments and losses of principal.
The Fund may invest in inverse floating rate securities issued by special purpose trusts that have recourse to the Fund. In the Adviser and/or
the Sub-Adviser’s discretion, the Fund may enter into a separate shortfall and forbearance agreement with the third party sponsor of a special purpose trust. The Fund may enter into such recourse
agreements (i) when the liquidity provider to the special purpose trust requires such an agreement because the level of leverage in the trust exceeds the level that the liquidity provider is willing to support absent such an agreement; and/or
(ii) to seek to prevent the liquidity provider from collapsing the trust in the event that the municipal obligation held in the trust has declined in value. Such an agreement would require the Fund to reimburse the third party sponsor of the
trust, upon termination of the trust issuing the inverse floater, the difference between the liquidation value of the bonds held in the trust and the principal amount due to the holders of floating rate interests. In such instances, the Fund may be
at risk of loss that exceeds its investment in the inverse floating rate securities.
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Because of the leveraged nature of such investments, inverse floating rate securities may
increase or decrease in value at a greater rate than the underlying fixed rate municipal bonds held by the tender option bond. As a result, the market value of such securities generally is more volatile than that of fixed rate securities.
The Fund’s investments in inverse floating rate securities issued by special purpose trusts that have recourse to the Fund may be highly
leveraged. The structure and degree to which the Fund’s inverse floating rate securities are highly leveraged will vary based upon a number of factors, including the size of the trust itself and the terms of the underlying municipal security.
An inverse floating rate security generally is considered highly leveraged if the principal amount of the short-term floating rate interests issued by the related special purpose trust has a three to one gearing to the principal amount of the
inverse floating rate securities owned by the trust. In the event of a significant decline in the value of an underlying security, the Fund may suffer losses in excess of the amount of its investment (up to an amount equal to the value of the
municipal securities underlying the inverse floating rate securities) as a result of liquidating special purpose trusts or other collateral in connection with managing the overall economic effect of leverage on the Fund.
The economic effect of leverage created through the Fund’s investments in inverse floating rate securities will create an opportunity for
increased common share net income and returns, but will also create the possibility that common share long-term returns will be diminished if the cost of leverage exceeds the return on the inverse floating rate securities purchased by the Fund.
Inverse floating rate securities have varying degrees of liquidity based, among other things, upon the liquidity of the underlying securities
deposited in a special purpose trust. The market price of inverse floating rate securities is more volatile than the underlying securities due to leverage. The leverage attributable to such inverse floating rate securities may be “called
away” on relatively short notice and therefore may be less permanent than more traditional forms of leverage. In certain circumstances, the likelihood of an increase in the volatility of net asset value and market price of the common shares may
be greater for a fund (like the Fund) that relies primarily on inverse floating rate securities to achieve the economic effect of leverage. The Fund may be required to sell its inverse floating rate securities at less than favorable prices, or
liquidate other Fund portfolio holdings in certain circumstances, including, but not limited to, the following:
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• |
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If the Fund has a need for cash and the securities in a special purpose trust are not actively trading due to
adverse market conditions; |
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• |
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If special purpose trust sponsors (as a collective group or individually) experience financial hardship and
consequently seek to terminate their respective outstanding trusts; and |
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• |
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If the value of an underlying security declines significantly (to a level below the notional value of the
floating rate securities issued by the trust) and if additional collateral has not been posted by the Fund. |
The amount
of fees paid to the Adviser (which in turn pays a portion of its fees to the Sub-Adviser) for investment advisory services will be higher if the Fund uses leverage because the fees will be calculated based on
the Fund’s net assets—this may create an incentive for the Adviser and/or the Sub-Adviser to leverage the Fund.
There is no assurance that the Fund’s strategy of investing in inverse floating rate securities will be successful.
Leverage Risk. The use of leverage creates special risks for common shareholders, including the likelihood of greater volatility
of net asset value and market price of, and distributions on, the common shares than a comparable portfolio without leverage. The use of leverage in a declining market will likely cause a greater decline in common share net asset value, which may
result in a greater decline of the common share price, than if the Fund were not to have used leverage.
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Leverage risk is the risk associated with the use of the Fund’s outstanding preferred
shares, use of tender option bonds or borrowings, if any, to leverage the common shares. There can be no assurance that the Fund’s leveraging strategy will be successful. Because the long-term municipal securities in which the Fund invests
generally pay fixed rates of interest while the Fund’s costs of leverage generally fluctuate with short- to intermediate-term yields, the incremental earnings from leverage will vary over time. However, the Fund may use derivatives, such as
interest rate swaps, to fix the effective rate paid on all or a portion of the Fund’s leverage in an effort to lower leverage costs over an extended period. Accordingly, the Fund cannot assure you that the use of leverage will result in a
higher yield or return to common shareholders. The income benefit from leverage will be reduced to the extent that the difference narrows between the net earnings on the Fund’s portfolio securities and its cost of leverage. The income benefit
from leverage will increase to the extent that the difference widens between the net earnings on the Fund’s portfolio securities and its cost of leverage. If short- or intermediate-term rates rise, the Fund’s cost of leverage could exceed
the fixed rate of return on longer-term bonds held by the Fund that were acquired during periods of lower interest rates, reducing returns to common shareholders. This could occur even if short- or intermediate-term and long-term municipal rates
rise.
The Fund will pay (and common shareholders will bear) any costs and expenses relating to the Fund’s use of leverage, which
will result in a reduction in the net asset value of and net income payable with respect to the common shares. Because of the costs of leverage, the Fund may incur losses even if the Fund has positive returns if they are not sufficient to cover the
costs of leverage. The Adviser, based on its assessment of market conditions, may increase or decrease the Fund’s level of leverage. Such changes may impact the Fund’s distributions and the valuation of the common shares in the secondary
market. There is no assurance that the Fund will continue to utilize leverage or that the Fund’s use of leverage will be successful. Furthermore, the amount of fees paid to the Adviser and the Sub-Adviser
for investment advisory services will be higher if the Fund uses leverage because the fees will be calculated based on the Fund’s Managed Assets, which may create an incentive for the Adviser and
Sub-Adviser to leverage the Fund or increase the Fund’s leverage.
Certain types of leverage
used by the Fund may result in the Fund being subject to certain covenants, asset coverage or other portfolio composition limits by its lenders, preferred share purchasers, liquidity providers, rating agencies that may rate the preferred securities,
or reverse repurchase counterparties. Such limitations may be more stringent than those imposed by the 1940 Act and may affect whether the Fund is able to maintain its desired amount of leverage. At this time, the Adviser does not believe that any
such potential investment limitations will impede it from managing the Fund’s portfolio in accordance with its investment objectives and policies.
The Fund is required to maintain certain regulatory and rating agency asset coverage requirements in connection with its use of leverage, in
order to be able to maintain the ability to declare and pay common share distributions. An NRSRO could downgrade its ratings on the Fund’s outstanding preferred shares. A ratings downgrade of the Fund’s preferred shares may result in
higher dividend rates and may also force the redemption of such preferred shares at what might be an inopportune time in the market. These factors may result in reduced net earnings or returns to common shareholders.
In order to maintain required asset coverage levels, the Fund may be required to alter the composition of its investment portfolio or take
other actions, such as redeeming preferred shares, or prepaying borrowings with the proceeds from portfolio transactions, at what might be an inopportune time in the market. Such actions could reduce the net earnings or returns to common
shareholders over time. NRSRO ratings of the Fund’s outstanding preferred shares neither eliminate nor mitigate the risks of investing in common shares.
The Fund may invest in the securities of other investment companies, which may themselves be leveraged and therefore present similar risks to
those described above and magnify the Fund’s leverage risk. The risk of loss attributable to the Fund’s use of leverage is borne by common shareholders.
Insurance Risk. The Fund may purchase municipal securities that are secured by insurance, bank credit agreements or escrow accounts.
The credit quality of the companies that provide such credit enhancements will
28
affect the value of those securities. Certain significant providers of insurance for municipal securities have incurred significant losses as a result of exposure to sub-prime mortgages and other lower credit quality investments that have experienced defaults or otherwise suffered extreme credit deterioration. As a result, such losses have reduced the insurers’ capital and
called into question their continued ability to perform their obligations under such insurance if they are called upon to do so in the future. While an insured municipal security will typically be deemed to have the rating of its insurer, if the
insurer of a municipal security suffers a downgrade in its credit rating or the market discounts the value of the insurance provided by the insurer, the rating of the underlying municipal security will be more relevant and the value of the municipal
security would more closely, if not entirely, reflect such rating. In such a case, the value of insurance associated with a municipal security would decline and may not add any value. The insurance feature of a municipal security does not guarantee
the full payment of principal and interest through the life of an insured obligation, the market value of the insured obligation or the net asset value of the common shares represented by such insured obligation.
Tax Risk. To qualify for the favorable federal income tax treatment generally accorded to a RIC, the Fund must, among other
requirements, derive in each taxable year at least 90% of its gross income from certain prescribed sources and satisfy a diversification test on a quarterly basis. If the Fund fails to satisfy the qualifying income or diversification requirements in
any taxable year, the Fund may be eligible for relief provisions if the failures are due to reasonable cause and not willful neglect and if a penalty tax is paid with respect to each failure to satisfy the applicable requirements. Additionally,
relief is provided for certain de minimis failures of the diversification requirements where the Fund corrects the failure within a specified period. In order to be eligible for the relief provisions with respect to a failure to meet the
diversification requirements, the Fund may be required to dispose of certain assets. If these relief provisions were not available to the Fund and it were to fail to qualify for treatment as a RIC for a taxable year, all of its taxable income
(including its net capital gain) would be subject to federal income tax at the 21% regular corporate rate without any deduction for distributions to shareholders, and such distributions would be taxable for federal income tax purposes as ordinary
dividends to the extent of the Fund’s current and accumulated earnings and profits.
To qualify to pay exempt-interest dividends,
which are treated as items of interest excludable from gross income for federal income tax purposes, at least 50% of the value of the total assets of the Fund must consist of obligations exempt from regular income tax as of the close of each quarter
of the Fund’s taxable year. If the proportion of taxable investments held by the Fund exceeded 50% of the Fund’s total assets as of the close of any quarter of the Fund’s taxable year, the Fund would not for that taxable year satisfy
the general eligibility test that would permit it to pay exempt-interest dividends for that taxable year.
The value of the Fund’s
investments and its net asset value may be adversely affected by changes in tax rates and policies. Because interest income from municipal securities is normally not subject to regular federal income taxation, the attractiveness of municipal
securities in relation to other investment alternatives is affected by changes in federal income tax rates or changes in the tax-exempt status of interest income from municipal securities. Any proposed or
actual changes in such rates or exempt status, therefore, can significantly affect the demand for and supply, liquidity and marketability of municipal securities. This could in turn affect the Fund’s net asset value and ability to acquire and
dispose of municipal securities at desirable yield and price levels. Additionally, the Fund is not a suitable investment for individual retirement accounts, for other tax-exempt or tax-advantaged accounts or for investors who are not sensitive to the federal income tax consequences of their investments.
Generally, the Fund’s investments in inverse floating rate securities do not generate taxable income for federal income tax purposes.
Alternative Minimum Tax Risk. The Fund may invest in AMT Bonds. Therefore, a portion of the Fund’s otherwise exempt-interest
dividends may be taxable to those shareholders subject to the federal alternative minimum tax.
29
Taxability Risk. The Fund will invest in municipal securities in reliance at the time
of purchase on an opinion of bond counsel to the issuer that the interest paid on those securities will be excludable from gross income for federal income tax purposes, and the Sub-Adviser will not
independently verify that opinion. Subsequent to the Fund’s acquisition of such a municipal security, however, the security may be determined to pay, or to have paid, taxable income. As a result, the treatment of dividends previously paid or to
be paid by the Fund as “exempt-interest dividends” could be adversely affected, subjecting the Fund’s shareholders to increased federal income tax liabilities.
Distributions of taxable ordinary income (including any net short-term capital gain) will be taxable to shareholders as ordinary income (and
not eligible for favorable taxation as “qualified dividend income”), and capital gain dividends will be taxable as long-term capital gains. See “Additional Information About the Acquiring Fund—Federal Income Tax Matters
Associated with Investment in the Acquiring Fund”
Borrowing Risk. The Fund may borrow for temporary or emergency purposes, or
to repurchase its shares. Borrowing may exaggerate changes in the net asset value of the Fund’s common shares and may affect the Fund’s net income. When the Fund borrows money, it must pay interest and other fees, which will reduce the
Fund’s returns if such costs exceed the returns on the portfolio securities purchased or retained with such borrowings. Any such borrowings are intended to be temporary. However, under certain market conditions, including periods of low demand
or decreased liquidity in the municipal bond market such borrowings might be outstanding for longer periods of time.
Inflation
Risk. Inflation risk is the risk that the value of assets or income from investment will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of common shares and the distributions
can decline. In addition, during any period of rising inflation, interest rates on borrowings would likely increase, which would tend to further reduce returns to common shareholders.
Deflation Risk. Deflation risk is the risk that prices throughout the economy decline over time, which may have an adverse effect on
the market valuation of companies, their assets and revenues. In addition, deflation may have an adverse effect on the creditworthiness of issuers and may make issuer default more likely, which may result in a decline in the value of the Fund’s
portfolio.
Derivatives Risk. The Fund’s use of derivatives involves risks different from, and possibly greater than, the
risks associated with investing directly in the investments underlying the derivatives. Whether the Fund’s use of derivatives is successful will depend on, among other things, if the Adviser and
Sub-Adviser correctly forecasts market values, interest rates and other applicable factors. If the Adviser and Sub-Adviser incorrectly forecasts these and other factors,
the investment performance of the Fund will be unfavorably affected. The derivatives market is subject to a changing regulatory environment. It is possible that regulatory or other developments in the derivatives market could adversely affect the
Fund’s ability to successfully use derivative instruments.
Risk of Swaps and Swap Options. The Fund may enter into
debt-related derivatives instruments including credit default swap contracts and interest rate swaps. Like most derivative instruments, the use of swaps is a highly specialized activity that involves investment techniques and risks different from
those associated with ordinary portfolio securities transactions. In addition, the use of swaps requires an understanding by the Adviser and/or the Sub-Adviser not only of the referenced asset, rate or index,
but also of the swap itself. If the Adviser and/or the Sub-Adviser is incorrect in its forecasts of default risks, market spreads or other applicable factors or events, the investment performance of the Fund
would diminish compared with what it would have been if these techniques were not used. As the protection seller in a credit default swap, the Fund effectively adds economic leverage to its portfolio because, in addition to being subject to
investment exposure on its total net assets, the Fund is subject to investment exposure on the notional amount of the swap.
The Fund
generally may only close out a swap, cap, floor, collar or other two-party contract with its particular counterparty, and generally may only transfer a position with the consent of that counterparty. Because
30
they are two-party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. In addition, the
price at which the Fund may close out such a two-party contract may not correlate with the price change in the underlying reference asset. Moreover, the Fund bears the risk of loss of the amount expected to be
received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. If the counterparty defaults, the Fund will have contractual remedies, but there can be no assurance that the counterparty will be able to
meet its contractual obligations or that the Fund will succeed in enforcing its rights.
The Fund may write (sell) and purchase put and
call swap options. When the Fund purchases a swap option, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. When the Fund writes a swap option, upon exercise of the option the Fund
would become obligated according to the terms of the underlying agreement.
It is possible that regulatory or other developments in the
derivatives market, including the SEC’s recently adopted new Rule 18f-4 under the 1940 Act, which imposes limits on the amount of derivatives a fund can enter into, could adversely affect the Fund’s
ability to successfully use derivative instruments.
Legislation and Regulatory Risk. At any time after the date of this Joint
Proxy Statement/Prospectus, legislation or additional regulations may be enacted that could negatively affect the assets of the Fund, investments held by the Fund or the issuers of such investments. Changing approaches to regulation may have a
negative impact on the entities and/or investments in which the Fund invests. Legislation or regulation may also change the way in which the Fund itself is regulated. Fund shareholders may incur increased costs resulting from such legislation or
additional regulation. There can be no assurance that future legislation, regulation or deregulation will not have a material adverse effect on the Fund or will not impair the ability of the Fund to achieve its investment objective.
Additionally, the Fund is operated by persons who have claimed an exclusion, granted to operators of registered investment companies like the
Fund, from registration as a “commodity pool operator” under Rule 4.5 promulgated by the Commodity Futures Trading Commission (“CFTC”) pursuant to its authority under the Commodity Exchange Act (the “CEA”) and,
therefore, is not subject to registration or regulation as a “commodity pool operator.” As a result, the Fund is limited in its ability to use commodity futures (which include futures on broad-based securities indexes and interest rate
futures) or options on commodity futures, engage in swaps transactions or make certain other investments (whether directly or indirectly through investments in other investment vehicles) for purposes other than bona fide hedging. With respect to
transactions other than for bona fide hedging purposes, either: (1) the aggregate initial margin and premiums required to establish the Fund’s positions in such investments may not exceed 5% of the liquidation value of the Fund’s
portfolio (after accounting for unrealized profits and unrealized losses on any such investments); or (2) the aggregate net notional value of such instruments, determined at the time the most recent position was established, may not exceed 100%
of the liquidation value of the Fund’s portfolio (after accounting for unrealized profits and unrealized losses on any such positions). In addition to meeting one of the foregoing trading limitations, the Fund may not market itself as a
commodity pool or otherwise as a vehicle for trading in the futures, options or swaps markets. If the Fund does not continue to claim the exclusion, it would likely become subject to registration and regulation as a commodity pool operator. The Fund
may incur additional expenses as a result of the CFTC’s registration and regulatory requirements.
Clearing Broker and Central
Clearing Counterparty Risk. The CEA requires swaps and futures clearing brokers registered as “futures commission merchants” to segregate all funds received from customers with respect to any orders for the purchase or sale of U.S.
domestic futures contracts and cleared swaps from the brokers’ proprietary assets. Similarly, the CEA requires each futures commission merchant to hold in separate secure accounts all funds received from customers with respect to any orders for
the purchase or sale of foreign futures contracts and cleared swaps and segregate any such funds from the funds received with respect to domestic futures contracts. However, all funds and other property received by a clearing broker from its
31
customers are held by the clearing broker on a commingled basis in an omnibus account and may be invested in certain instruments permitted under applicable regulations. There is a risk that
assets deposited by the Fund with any swaps or futures clearing broker as margin for futures contracts or cleared swaps may, in certain circumstances, be used to satisfy losses of other clients of the Fund’s clearing broker. In addition, the
assets of the Fund might not be fully protected in the event of the Fund’s clearing broker’s bankruptcy, as the Fund would be limited to recovering only a pro rata share of all available funds segregated on behalf of the clearing
broker’s customers for the relevant account class. Similarly, the CEA requires a clearing organization approved by the CFTC as a derivatives clearing organization to segregate all funds and other property received from a clearing member’s
clients in connection with domestic cleared derivative contracts from any funds held at the clearing organization to support the clearing member’s proprietary trading. Nevertheless, all customer funds held at a clearing organization in
connection with any futures contracts are held in a commingled omnibus account and are not identified to the name of the clearing member’s individual customers. All customer funds held at a clearing organization with respect to cleared swaps of
customers of a clearing broker are also held in an omnibus account, but CFTC rules require that the clearing broker notify the clearing organization of the amount of the initial margin provided by the clearing broker to the clearing organization
that is attributable to each customer. With respect to futures and options contracts, a clearing organization may use assets of a non-defaulting customer held in an omnibus account at the clearing organization
to satisfy payment obligations of a defaulting customer of the clearing member to the clearing organization. With respect to cleared swaps, a clearing organization generally cannot do so, but may do so if the clearing member does not provide
accurate reporting to the clearing organization as to the attribution of margin among its clients. Also, since clearing brokers generally provide to clearing organizations the net amount of variation margin required for cleared swaps for all of its
customers in the aggregate, rather than the gross amount of each customer, the Fund is subject to the risk that a clearing organization will not make variation margin payments owed to the Fund if another customer of the clearing member has suffered
a loss and is in default. As a result, in the event of a default or the clearing broker’s other clients or the clearing broker’s failure to extend its own funds in connection with any such default, the Fund may not be able to recover the
full amount of assets deposited by the clearing broker on behalf of the Fund with the clearing organization.
Hedging Risk. The
Fund’s use of derivatives or other transactions to reduce risk involves costs and will be subject to the Adviser and Sub-Adviser’s ability to predict correctly changes in the relationships of such
hedge instruments to the Fund’s portfolio holdings or other factors. No assurance can be given that the Adviser and Sub-Adviser’s judgment in this respect will be correct. In addition, no assurance
can be given that the Fund will enter into hedging or other transactions at times or under circumstances in which it may be advisable to do so.
Other Investment Companies Risk. The Fund may invest in the securities of other investment companies. Such securities may be
leveraged. As a result, the Fund may be indirectly exposed to leverage through an investment in such securities. Utilization of leverage is a speculative investment technique and involves certain risks. An investment in securities of other
investment companies that are leveraged may expose the Fund to higher volatility in the market value of such securities and the possibility that the Fund’s long-term returns on such securities (and, indirectly, the long-term returns of the
common shares) will be diminished. Additionally, the Fund, as a holder of the securities of other investment companies, will bear its pro rata portion of other investment companies’ expenses, including advisory fees. These expenses are
in addition to the direct expenses of the Fund’s own operations. An ETF that is based on a specific index, whether stock or otherwise, may not be able to replicate and maintain exactly the composition and relative weighting of securities in the
index. An ETF also incurs certain expenses not incurred by its applicable index. The market value of shares of ETFs and closed-end funds may differ from their net asset value.
Counterparty Risk. Changes in the credit quality of the companies that serve as the Fund’s counterparties with respect to
derivatives, insured municipal securities or other transactions supported by another party’s credit will affect the value of those instruments. Certain entities that have served as counterparties in the markets for these transactions have
recently incurred significant financial hardships including bankruptcy and losses as a result of exposure to sub-prime mortgages and other lower quality credit investments that have experienced
32
recent defaults or otherwise suffered extreme credit deterioration. As a result, such hardships have reduced these entities’ capital and called into question their continued ability to
perform their obligations under such transactions. By using such derivatives or other transactions, the Fund assumes the risk that its counterparties could experience similar financial hardships.
Reverse Repurchase Agreement Risk. Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement to
repurchase the securities at an agreed-upon price and date, thereby establishing an effective interest rate. The Fund’s use of reverse repurchase agreements, in economic essence, constitute a secured borrowing by the Fund from the security
purchaser. The Fund may enter into reverse repurchase agreements for the purpose of creating a leveraged investment exposure and, as such, their usage involves essentially the same risks associated with a leveraging strategy generally since the
proceeds from these agreements may be invested in additional securities. Reverse repurchase agreements tend to be short-term in tenor, and there can be no assurances that the purchaser (lender) will commit to extend or “roll” a given
agreement upon its agreed-upon repurchase date or an alternative purchaser can be identified on similar terms.
Reverse repurchase
agreements also involve the risk that the purchaser fails to return the securities as agreed upon, files for bankruptcy or becomes insolvent. The Fund may be restricted from taking normal portfolio actions during such time, could be subject to loss
to the extent that the proceeds of the agreement are less than the value of securities subject to the agreement and may experience adverse tax consequences.
Illiquid Securities Risk. The Fund may invest in municipal securities and other instruments that, at the time of investment, are
illiquid. Illiquid securities are securities that are not readily marketable and may include some restricted securities, which are securities that may not be resold to the public without an effective registration statement under the 1933 Act, if
they are unregistered, may be sold only in a privately negotiated transaction or pursuant to an exemption from registration. Illiquid securities involve the risk that the securities will not be able to be sold at the time desired by the Fund or at
prices approximating the value at which the Fund is carrying the securities on its books.
Market Disruption Risk. Certain
events have a disruptive effect on the securities markets, such as terrorist attacks, war, pandemics and other geopolitical events. The Fund cannot predict the effects of similar events in the future on the U.S. economy. Below-investment-grade
securities tend to be more volatile than higher rated securities, meaning that these events and any actions resulting from them may have a greater impact on the prices and volatility of below-investment-grade securities than on higher rated
securities.
Municipal Bond Market Liquidity Risk. Inventories of municipal bonds held by brokers and dealers have decreased in
recent years, lessening their ability to make a market in these securities. This reduction in market making capacity has the potential to decrease the Fund’s ability to buy or sell bonds, and increase bond price volatility and trading costs,
particularly during periods of economic or market stress. In addition, recent changes to federal banking regulations may cause certain dealers to reduce their inventories of municipal bonds, which may further decrease the Fund’s ability to buy
or sell bonds. As a result, the Fund may be forced to accept a lower price to sell a security, to sell other securities to raise cash, or to give up an investment opportunity, any of which could have a negative effect on performance. If the Fund
needed to sell large blocks of bonds, those sales could further reduce the bonds’ prices and hurt performance.
Income Risk.
The Fund’s income is based primarily on the interest it earns from its investments, which can vary widely over the short-term and long-term. If interest rates drop, the Fund’s income available over time to make dividend payments could drop
as well if the Fund purchases securities with lower interest coupons.
Call Risk. During periods of declining interest rates or for
other purposes, issuers may exercise their option to prepay principal earlier than scheduled, forcing the Fund to reinvest in lower yielding instruments. This is known as prepayment or “call” risk. The Fund may invest in securities that
are subject to call risk. Debt and preferred instruments may be redeemed at the option of the issuer, or “called,” before their stated maturity or
33
redemption date. In general, an issuer will call its debt or preferred instruments if they can be refinanced by issuing new instruments which bear a lower interest or dividend rate. The Fund is
subject to the possibility that during periods of falling interest rates, an issuer will call its debt. The Fund would then be forced to invest the unanticipated proceeds at lower interest or dividend rates, resulting in a decline in the Fund’s
income.
Reinvestment Risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if and when the
Fund invests the proceeds from matured, traded or called bonds at market interest rates that are below the portfolio’s current earnings rate. A decline in income could affect the common hares’ market price or their overall returns.
Sector and Industry Risk. Subject to the concentration limits of the Fund’s investment policies and guidelines, the Fund may
invest a significant portion of its net assets in certain sectors of the municipal securities market, such as hospitals and other health care facilities, charter schools and other private educational facilities, special taxing districts and start-up utility districts, and private activity bonds including industrial development bonds on behalf of transportation companies such as airline companies, whose credit quality and performance may be more
susceptible to economic, business, political, regulatory and other developments than other sectors of municipal issuers. If the Fund invests a significant portion of its net assets in the sectors noted above, the Fund’s performance may be
subject to additional risk and variability. To the extent that the Fund focuses its net assets in the hospital and healthcare facilities sector, for example, the Fund will be subject to risks associated with such sector, including adverse government
regulation and reduction in reimbursement rates, as well as government approval of products and services and intense competition. Securities issued with respect to special taxing districts will be subject to various risks, including real-estate
development related risks and taxpayer concentration risk. Further, the fees, special taxes or tax allocations and other revenues established to secure the obligations of securities issued with respect to special taxing districts are generally
limited as to the rate or amount that may be levied or assessed and are not subject to increase pursuant to rate covenants or municipal or corporate guarantees. Charter schools and other private educational facilities are subject to various risks,
including the reversal of legislation authorizing or funding charter schools, the failure to renew or secure a charter, the failure of a funding entity to appropriate necessary funds and competition from alternatives such as voucher programs.
Issuers of municipal utility securities can be significantly affected by government regulation, financing difficulties, supply and demand of services or fuel and natural resource conservation. The transportation sector, including airports, airlines,
ports and other transportation facilities, can be significantly affected by changes in the economy, fuel prices, labor relations, insurance costs and government regulation.
Valuation Risk. The municipal securities in which the Fund invests typically are valued by a pricing service utilizing a range of
market-based inputs and assumptions, including readily available market quotations obtained from broker-dealers making markets in such instruments, cash flows and transactions for comparable instruments. There is no assurance that the Fund will be
able to sell a portfolio security at the price established by the pricing service, which could result in a loss to the Fund. Pricing services generally price municipal securities assuming orderly transactions of an institutional “round
lot” size, but some trades may occur in smaller, “odd lot” sizes, often at lower prices than institutional round lot trades. Different pricing services may incorporate different assumptions and inputs into their valuation
methodologies, potentially resulting in different values for the same securities. As a result, if the Fund were to change pricing services, or if the Fund’s pricing service were to change its valuation methodology, there could be a material
impact, either positive or negative, on the Fund’s net asset value.
Cybersecurity Risk. Technology, such as the Internet, has
become more prevalent in the course of business, and as such, the Fund and its service providers are susceptible to operational and information security risk resulting from cyber incidents. Cyber incidents refer to both intentional attacks and
unintentional events including: processing errors, human errors, technical errors including computer glitches and system malfunctions, inadequate or failed internal or external processes, market-wide technical-related disruptions, unauthorized
access to digital systems (through “hacking” or malicious software coding), computer viruses, and cyber-attacks which shut down, disable, slow or otherwise disrupt operations, business processes or website
34
access or functionality (including denial of service attacks). Cyber incidents could adversely impact the Fund and cause the Fund to incur financial loss and expense, as well as face exposure to
regulatory penalties, reputational damage, and additional compliance costs associated with corrective measures. Cyber incidents may cause the Fund or its service providers to lose proprietary information, suffer data corruption, lose operational
capacity or fail to comply with applicable privacy and other laws. Among other potentially harmful effects, cyber incidents also may result in theft, unauthorized monitoring and failures in the physical infrastructure or operating systems that
support the Fund and its service providers. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the Fund’s service providers have established business continuity plans in the event of, and
risk management systems to prevent, such cyber incidents, there are inherent limitations in such plans and systems including the possibility that certain risks have not been identified. Furthermore, the Fund cannot control the cybersecurity plans
and systems put in place by its service providers or any other third parties whose operations may affect the Fund.
Anti-Takeover
Provisions. The Fund’s Declaration of Trust and By-laws include provisions that could limit the ability of other entities or persons to acquire control of the Fund, change the composition of its Board
of Trustees or convert the Fund to open-end status. These provisions include, among others, staggered terms of office for the Trustees, advance notice requirements for shareholder proposals and super-majority
voting requirements for certain transactions. These provisions could have the effect of depriving the common shareholders of opportunities to sell their common shares at a premium over the then-current market price of the common shares by
discouraging a third party from seeking to obtain control of the Fund. See “Additional Information About the Acquiring Fund—Certain Provisions in the Acquiring Fund’s Declaration of Trust and
By-Laws.”
| C. |
INFORMATION ABOUT THE MERGERS |
General
Nuveen Fund Advisors, LLC, a subsidiary of Nuveen, LLC and the Funds’ investment adviser, recommended the Merger proposal as part of an
ongoing initiative to streamline Nuveen’s municipal closed-end fund line-up and eliminate overlapping products. Each Fund’s Board considered its Fund’s Merger(s) and determined that the Merger(s) would be in the best interests of its
Fund. Based on information provided by Nuveen Fund Advisors, each Target Fund’s Board believes that its Fund’s proposed Merger may benefit the common shareholders of its Fund in a number of ways, including, among other things:
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The potential for higher common share net earnings and distribution levels following the Mergers, due in part to
the Acquiring Fund’s ability to invest to a greater degree in lower rated securities and a geographically diverse national portfolio, as well as operating economies from the combined fund’s greater scale; |
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Greater secondary market liquidity and improved secondary market trading for common shares as a result of the
combined fund’s greater share volume, which may lead to narrower bid-ask spreads and smaller trade-to-trade price movements;
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The potential for a narrower trading discount as a result of the Acquiring Fund’s common shares trading at a
discount that historically has been lower than that of each Target Fund’s common shares; |
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Increased portfolio and leverage management flexibility due to the significantly larger asset base of the
combined fund and the Acquiring Fund’s national mandate with greater flexibility to invest in lower rated securities; and |
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Lower net operating expenses, excluding the costs of leverage, as certain fixed costs are spread over a larger
asset base. |
35
Each Target Fund’s Board considered that a greater percentage of the Acquiring Fund’s
portfolio may be allocated to lower rated municipal securities relative to the amount permitted by the policies of the Target Fund, and recognized that investments in lower rated securities are subject to higher risks than investments in higher
rated securities.
With respect to holders of preferred shares of each Target Fund, the Target Fund’s Board considered that, upon the
closing of the applicable Merger, holders of any preferred shares outstanding immediately prior to the closing will receive, on a one-for-one basis, newly issued
preferred shares of the Acquiring Fund having substantially similar terms, immediately prior to the closing of the Merger, to those of the preferred shares of the applicable Target Fund.
Based on information provided by Nuveen Fund Advisors, the Acquiring Fund’s Board considered that the Acquiring Fund may benefit in the
near term from a modest increase in operating efficiencies and over the long term from increased investment capital, which allows the Acquiring Fund to pursue additional investment opportunities. With respect to holders of preferred shares of the
Acquiring Fund, the Acquiring Fund’s Board considered that the outstanding preferred shares of the Acquiring Fund and any preferred shares of the Acquiring Fund to be issued in the Mergers would have equal priority with each other as to payment
of dividends and distributions of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund.
For these
reasons, each Fund’s Board has determined that its Fund’s Merger(s) are in the best interest of its Fund and has approved such Merger(s).
The closing of each Merger is subject to the satisfaction or waiver of certain closing conditions, which include customary closing conditions.
In order for a Merger to occur, all requisite shareholder approvals must be obtained at the applicable Fund’s shareholder meeting, and certain other consents, confirmations and/or waivers from various third parties, including the liquidity
providers and/or the initial purchasers with respect to outstanding preferred shares of the Acquiring Fund, must also be obtained. Because the closing of each Merger is contingent upon the applicable Target Fund and the Acquiring Fund obtaining such
shareholder approvals and satisfying (or obtaining the waiver of) other closing conditions, it is possible that a Merger will not occur even if shareholders of a Fund entitled to vote approve the Merger and a Fund satisfies all of its closing
conditions if the other Fund does not obtain its requisite shareholder approvals or satisfy (or obtain the waiver of) its closing conditions. If a Merger is not consummated, the Board of the Target Fund involved in that Merger may take such actions
as it deems in the best interests of the Fund, including conducting additional solicitations with respect to the Merger proposal or continuing to operate the Target Fund as a standalone fund. The closing of each Merger is not contingent on the
closing of the other Merger.
Terms of the Mergers
General. The Agreement and Plan of Merger by and among the Acquiring Fund, each Target Fund and the Merger Sub (the
“Agreement”), in the form attached as Appendix A to this Joint Proxy Statement/Prospectus, sets forth the terms of each Merger and, with respect to each Merger, provides for: (1) the merger of the Target Fund with and into the
Merger Sub, with the Merger Sub continuing as the surviving company and the separate legal existence of the Target Fund ceasing for all purposes at the Effective Time; (2) the conversion of the issued and outstanding common shares of beneficial
interest of the Target Fund into newly issued common shares of beneficial interest of the Acquiring Fund, par value $0.01 per share (with cash being received in lieu of any fractional Acquiring Fund common shares), and (3) the conversion of the
issued and outstanding AMTP Shares or VRDP Shares of the Target Fund into newly issued AMTP Shares, with a par value of $0.01 per share and a liquidation preference of $100,000 per share, or newly issued VRDP Shares, with a par value of $0.01 per
share and a liquidation preference of $100,000 per share, respectively. With respect to each Merger, at the Effective Time, without any further action, the Merger Sub as the surviving company shall (i) succeed to and possess all rights, powers and
privileges of the Merger Sub and the Target Fund, and all of the assets and property of whatever kind and character of the Target Fund and the Merger Sub shall vest in the Merger Sub, and (ii) be
36
liable for all of the liabilities and obligations of the Target Fund and the Merger Sub. As soon as practicable following the completion of the Mergers, the Merger Sub will distribute its assets
to the Acquiring Fund and the Acquiring Fund will assume the liabilities of the Merger Sub in complete liquidation and dissolution of the Merger Sub under Massachusetts law. The Merger Sub has been formed for the sole purpose of consummating the
Mergers and the Merger Sub will not commence operations prior to the closing of the Mergers, except as necessary to facilitate the Mergers.
As a result of the Mergers, and subsequent distribution of assets to the Acquiring Fund, the assets of the Acquiring Fund and the Target Funds
would be combined, and the shareholders of the Target Funds would become shareholders of the Acquiring Fund. The Acquiring Fund will be the accounting survivor of the Mergers.
Each preferred shareholder of a Target Fund will receive the same number of Acquiring Fund AMTP Shares or Acquiring Fund VRDP Shares, as
applicable, having substantially similar terms as the outstanding AMTP Shares or VRDP Shares of such Target Fund held by such preferred shareholder immediately prior to the closing of the Mergers. The aggregate liquidation preference of the
Acquiring Fund AMTP Shares or VRDP Shares received in connection with the Mergers will equal the aggregate liquidation preference of a Target Fund’s AMTP Shares or VRDP Shares, as applicable, held immediately prior to the closing of the
Mergers. The Acquiring Fund AMTP Shares and VRDP Shares to be issued in connection with the Mergers will have equal priority with each other and with the Acquiring Fund’s other outstanding preferred shares as to the payment of dividends and the
distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. In addition, the preferred shares of the Acquiring Fund, including any AMTP Shares and VRDP Shares of the Acquiring Fund to be issued in
connection with the Mergers, will be senior in priority to the Acquiring Fund’s common shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund.
However, the Acquiring Fund has multiple types and series of preferred shares outstanding.
The closing date is expected to be on or about
March 6, 2023, or such other date as the parties may agree (the “Closing Date”). Following the Mergers, each Target Fund will terminate its registration as an investment company under the 1940 Act. The Acquiring Fund will continue to
operate after the Mergers as a registered closed-end management investment company, with the investment objectives and policies described in this Joint Proxy Statement/Prospectus.
The aggregate net asset value, as of the Valuation Time (as defined below), of the Acquiring Fund common shares received by each Target
Fund’s common shareholders in connection with the Mergers will equal the aggregate net asset value of the Target Fund common shares held by shareholders of the Target Fund as of the Valuation Time. Prior to the Valuation Time, the net asset
value of each Fund will be reduced by the costs of the Mergers borne by such Fund. See “—Description of Common Shares to Be Issued by the Acquiring Fund; Comparison to Target Funds” for a description of the rights of Acquiring Fund
common shareholders. However, no fractional Acquiring Fund common shares will be distributed to a Target Fund’s common shareholders in connection with a Merger. The Acquiring Fund’s transfer agent will aggregate all fractional Acquiring
Fund common shares that may be due to a Target Fund’s shareholders as of the Closing Date and will sell the resulting whole shares for the account of holders of all such fractional interests at a value that may be higher or lower than net asset
value, and each such holder will be entitled to a pro rata share of the proceeds from such sale. With respect to the aggregation and sale of fractional common shares, the Acquiring Fund’s transfer agent will act directly on behalf of the
shareholders entitled to receive fractional shares and will accumulate fractional shares, sell the shares and distribute the cash proceeds net of brokerage commissions, if any, directly to the Target Fund shareholders entitled to receive the
fractional shares (without interest and subject to withholding taxes). For federal income tax purposes, Target Fund shareholders will be treated as if they received fractional share interests and then sold such interests for cash. The holding period
and the aggregate tax basis of the Acquiring Fund shares received by a shareholder, including fractional share interests deemed received by a shareholder, will be the same as the holding period and aggregate tax basis of the Target Fund common
shares previously held by the shareholder, provided the Target Fund shares were held as capital assets at the effective time of a Merger.
37
As a result of the Mergers, common shareholders of the Funds will hold a smaller percentage of the outstanding common shares of the combined fund as compared to their percentage holdings of their
respective Fund prior to the Mergers and thus, common shareholders will hold reduced percentages of ownership in the larger combined entity than they held in the Acquiring Fund or a Target Fund individually.
Following the Mergers, each preferred shareholder of the Target Funds would own the same number of Acquiring Fund AMTP Shares or VRDP Shares,
as applicable, with the same aggregate liquidation preference as the AMTP Shares or VRDP Shares of the Target Fund held by such shareholder immediately prior to the closing of the Mergers, with substantially similar terms as the outstanding AMTP
Shares or VRDP Shares of the Target Fund held by such preferred shareholder immediately prior to the closing of a Merger. As a result of the Mergers, preferred shareholders of the Funds may hold reduced voting percentages of preferred shares in the
combined fund than they held in the Acquiring Fund or a Target Fund individually.
Valuation of Common Shares. Pursuant to the
Agreement, the net asset value per share of each Target Fund and the Acquiring Fund shall be computed as of the close of regular trading on the NYSE on the business day immediately prior to the Closing Date (such time and date referred to herein as
the “Valuation Time”) using the valuation procedures of the Nuveen closed-end funds or such other valuation procedures as will be mutually agreed upon by the parties.
Acquiring Fund Common Shares to be Issued. At the effective time of the closing (the “Effective Time”), each Target Fund
common share outstanding immediately prior to the Effective Time shall be converted into a number of Acquiring Fund common shares equal to one multiplied by the quotient of the net asset value per share of the Target Fund divided by the net asset
value per share of the Acquiring Fund.
Distributions. Undistributed net investment income represents net earnings from a
Fund’s investment portfolio that over time have not been distributed to shareholders. Under the terms of the Agreement, if a Target Fund has undistributed net investment income or undistributed net capital gains, such Target Fund is required to
declare a distribution prior to the Valuation Time, which, together with all previous dividends, has the effect of distributing to its shareholders all undistributed net investment income and undistributed realized net capital gains (after reduction
by any available capital loss carryforwards and excluding any net capital gain on which the Target Fund paid federal income tax) for all taxable periods ending on or before the Closing Date. The Acquiring Fund is not subject to a similar
distribution requirement; however, it is anticipated that the Acquiring Fund will declare a distribution prior to the Closing Date which will result in the distribution of a portion of its undistributed net investment income to its shareholders.
Consequently, Target Fund shareholders effectively will purchase a pro rata portion of the Acquiring Fund’s remaining undistributed net investment income and undistributed realized net capital gains, if any, which may be more or less
than a Target Fund’s undistributed net investment income and undistributed realized net capital gains immediately preceding the distributions described above, if any. As a result, the Acquiring Fund’s existing shareholders will experience
a corresponding reduction in their respective portion of undistributed net investment income and undistributed realized net capital gains per share, if any, such that the Acquiring Fund’s undistributed net investment income and undistributed
realized net capital gains per share immediately following the Mergers is expected to be less than the Acquiring Fund’s undistributed net investment income and undistributed realized net capital gains per share immediately preceding the
Mergers.
Amendments. Under the terms of the Agreement, the Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by each Fund as specifically authorized by each Fund’s Board; provided, however, that following the receipt of shareholder approval of the Agreement, no such amendment, modification or supplement may have
the effect of changing the provisions for determining the number of Acquiring Fund shares to be issued to a Target Fund’s shareholders under the Agreement to the detriment of such shareholders without their further approval.
38
Conditions. Under the terms of the Agreement, the closing of each Merger is subject to
the satisfaction or waiver (if permissible) of the following closing conditions: (1) the requisite approval by the common and preferred shareholders of the Target Fund and the preferred shareholders of the Acquiring Fund of the proposal with
respect to the Target Fund’s Merger described in this Joint Proxy Statement/Prospectus, (2) each Fund’s receipt of an opinion of counsel substantially to the effect that the merger of the Target Fund with and into the Merger Sub will
qualify as a reorganization under the Code (see “—Material Federal Income Tax Consequences of the Mergers”), (3) the absence of legal proceedings challenging the Mergers, and (4) the Funds’ receipt of certain customary
certificates and legal opinions. Additionally, in order for the Mergers to occur, certain other consents, confirmations and/or waivers from various third parties, including the liquidity providers and/or the initial purchasers with respect to
outstanding preferred shares of the Acquiring Fund, must also be obtained.
Termination. With respect to each Merger, the
Agreement may be terminated by the mutual agreement of the parties, and such termination may be effected by the Chief Administrative Officer, President or any Vice President of each Fund without further action by a Target Fund’s Board or the
Acquiring Fund’s Board. In addition, a Fund may at its option terminate the Agreement with respect to its Merger at or before the closing due to: (1) a breach by the non-terminating party of any
representation or warranty, or agreement to be performed at or before the closing, if not cured within 30 days of the breach and prior to the closing; (2) a condition precedent to the obligations of the terminating party that has not been met
or waived and it reasonably appears that it will not or cannot be met; or (3) a determination by a Target Fund’s Board or the Acquiring Fund’s Board that the consummation of the transactions contemplated by the Agreement is not in the
best interests of its respective Fund involved in the Merger(s).
Reasons for the Mergers
Based on the considerations described below, the Board of Trustees of each Target Fund (each, a “Target Board” and collectively, the
“Target Boards”), all of whom are not “interested persons,” as defined in the 1940 Act, and the Board of Trustees of the Acquiring Fund (the “Acquiring Board” and together with the Target Boards, the “Boards”
and each individually, a “Board”), all of whom are not “interested persons,” as defined in the 1940 Act, have each determined that its Fund’s Merger(s) would be in the best interests of its Fund and that the interests of the
existing shareholders of its Fund would not be diluted as a result of such Merger(s). At a meeting held on November 15-17, 2022 (the “Board Meeting”), each Board approved its Fund’s Merger(s) and recommended that shareholders of
its Fund, as applicable, approve such Merger(s).
At and prior to the Board Meeting, including at previous meetings, Nuveen Fund Advisors
made presentations and provided the Boards with information relating to the proposed Mergers and alternatives to the proposed Mergers. Prior to approving the Mergers, each Board reviewed the foregoing information with its independent legal counsel
and with management, reviewed with independent legal counsel applicable law and its duties in considering such matters and met with independent legal counsel in private sessions without management present. Each Board recognized that Nuveen Fund
Advisors, each Fund’s investment adviser, had recommended the Merger proposal as part of an ongoing initiative to streamline Nuveen’s municipal closed-end fund line-up and eliminate overlapping
products. Based on the foregoing, the Boards considered the following factors (as applicable), among others, in approving the Mergers and recommending that shareholders of the Funds (as applicable) approve the Mergers:
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the compatibility of the Funds’ investment objectives, policies and related risks; |
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the consistency of portfolio management; |
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the larger asset base of the combined fund as a result of the Mergers and the effect of the Mergers on fees and
expense ratios; |
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the potential for improved secondary market trading with respect to common shares; |
39
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the anticipated federal income tax-free nature of the Mergers;
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the expected costs of the Mergers; |
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the terms of the Mergers and whether the Mergers would dilute the interests of the shareholders of the applicable
Funds; |
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the effect of the Mergers on shareholder rights; |
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alternatives to the Mergers; and |
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any potential benefits of the Mergers to Nuveen Fund Advisors and its affiliates as a result of the Mergers.
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Compatibility of Investment Objectives, Policies and Related Risks. Based on the information presented, the
Boards noted that, as municipal funds, the Funds’ investment objectives and policies share certain similarities, but there are differences. The Acquiring Fund is a national municipal fund that seeks to provide current income exempt from regular
federal income tax. In contrast, each Target Fund is a state-specific municipal fund that seeks to provide current income exempt from regular federal income tax and the income tax of a single state. Under its investment policies, each Fund,
under normal circumstances, could invest a portion of its portfolio in municipal securities that pay interest that is taxable under the federal alternative minimum tax. In its review, each Board considered the impact of the Mergers on its
Fund’s portfolio, including any shifts in credit quality and yield. In this regard, the Target Boards recognized that a greater percentage of the Acquiring Fund’s portfolio may be allocated to lower rated municipal securities relative to
the amount permitted by the policies of the Target Funds. The Target Boards further observed the significantly larger asset size of the Acquiring Fund compared to that of each Target Fund. The Target Boards noted that each Target Fund’s
shareholders would lose the benefit of the state tax exemption as a result of the applicable Merger, but recognized the potential for higher common share net earnings and distribution levels of the combined fund as a result of, among other things,
the Acquiring Fund’s ability to invest to a greater degree in lower rated securities, the geographically diverse national portfolio and the operating economies from the combined fund’s greater scale following the Mergers. Further, in
comparison to the Target Funds, the Target Boards recognized the increased portfolio and leverage management flexibility afforded by the significantly larger asset base of the combined fund and the Acquiring Fund’s broader national mandate with
greater flexibility to invest in lower rated securities.
The Boards considered that each Fund may use leverage through a number of
methods, including through the issuance of preferred shares and investments in inverse floating rate securities. In this regard, the Boards recognized, among other things, that Georgia Municipal has one series of AMTP Shares outstanding, Ohio
Municipal has one series of VRDP Shares outstanding, and the Acquiring Fund has three series of MFP Shares outstanding and three series of VRDP Shares outstanding which are expected to remain outstanding following the Mergers. With respect to
holders of preferred shares of each Target Fund, the Target Board considered that upon closing of its Fund’s Merger, holders of any preferred shares outstanding immediately prior to the closing will receive, on a
one-for-one basis, newly issued preferred shares of the Acquiring Fund having substantially similar terms, immediately prior to the closing of such Merger, to those of
the preferred shares of the applicable Target Fund.
With respect to the Acquiring Fund, the Acquiring Board considered that based on
information provided by Nuveen Fund Advisors, the Acquiring Fund may benefit in the near term from a modest increase in operating efficiencies and over the long term from increased investment capital, which allows the Acquiring Fund to pursue
additional investment opportunities. The Acquiring Board also recognized that the outstanding preferred shares of the Acquiring Fund and any preferred shares of the Acquiring Fund to be issued in the Mergers would have equal priority with each other
as to payment of dividends and distributions of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund.
40
With respect to principal investment risks, while the principal risks of an investment in
each Fund would be similar in certain respects because each Fund invests in municipal securities and other investments the income from which is exempt from regular federal income taxes, the differences relating to the Funds’ investment
objectives and policies would affect the comparative risk profiles. For example, each Target Fund is subject to single state risk while the Acquiring Fund is not. Each Target Fund also invests primarily in investment grade securities, while the
Acquiring Fund is permitted to allocate a greater percentage of its portfolio to lower rated municipal securities than the Target Funds. Investments in lower rated securities are subject to greater risks than investments in higher rated securities.
The Acquiring Fund therefore would be subject to increased risks from investments in lower rated securities, including the higher risk that the issuer will be unable to pay interest or principal when due.
Consistency of Portfolio Management. Each Fund has the same investment adviser and sub-adviser, but
the portfolio manager of the Acquiring Fund is different from the portfolio manager of the Target Funds, and the portfolio manager of the Acquiring Fund will continue to manage the combined fund upon completion of the Mergers. Through the Mergers,
the Boards recognized that shareholders would remain invested in a closed-end management investment company that will have greater net assets and the same investment adviser and
sub-adviser.
Larger Asset Base of the Combined Fund; Effect of the Mergers on Fees and
Expense Ratios. The Boards evaluated the fees and expense ratios of each of the Funds (including estimated expenses of the combined fund following the Mergers). It was anticipated that the Funds will benefit from the larger asset size as fixed
costs are shared over a larger asset base. The Target Boards also considered that the fund-level management fee schedule of the Acquiring Fund was higher (approximately by 5 basis points) than that of each Target Fund at each breakpoint level.
However, the Target Boards noted that it was expected that the net operating expenses per common share (i.e., expenses excluding the costs of leverage) of the combined fund would be lower than those of each Target Fund prior to the closing of the
Mergers. In addition, assuming both Mergers are completed, the Acquiring Board noted that the net operating expenses per common share (i.e., expenses excluding the costs of leverage) of the combined fund were expected to be modestly lower than those
of the Acquiring Fund prior to the closing of the Mergers.
Potential for Improved Secondary Market Trading. While it is not
possible to predict trading levels following the Mergers, the Target Boards noted that the Mergers are being proposed, in part, to seek to enhance the secondary trading market for the common shares with respect to the Target Funds. The Target Boards
considered that, relative to the Target Funds, the combined fund’s greater share volume may result in greater secondary market liquidity and improved secondary market trading for common shares after the Mergers, which may lead to narrower bid-ask spreads and smaller trade-to-trade price movements. In addition, based on information provided by Nuveen Fund Advisors, the
Target Boards considered the potential for a narrower trading discount, relative to the Target Funds, as a result of the Acquiring Fund’s common shares trading at a discount that historically has been lower than that of each Target Fund’s
common shares; however, the Target Boards recognized that the past trading record of the common shares of the Acquiring Fund may not necessarily be indicative of how the common shares of the combined fund will trade in the future and there is no
guarantee that the common shares of the combined fund would have a narrower trading discount than that of either Target Fund’s common shares. Further, with respect to the Acquiring Fund, the Acquiring Board noted that such Fund may experience
modest secondary market benefits with respect to its common shares due to increased scale.
Anticipated Tax-Free Reorganizations; Capital Loss Carryforwards. Each Merger will be structured with the intention that it qualifies as a tax-free reorganization for federal income
tax purposes, and each Fund participating in a Merger will obtain an opinion of counsel substantially to this effect (based on certain factual representations and certain customary assumptions and exclusions). In addition, the Boards considered the
impact of the Mergers on any estimated capital loss carryforwards of the Funds and applicable limitations of federal income tax rules.
Expected Costs of the Mergers. The Boards considered the terms and conditions of the Mergers, including the estimated costs associated
with the Mergers and the allocation of such costs among the Funds. Preferred shareholders will not bear any costs of the Mergers.
41
Terms of the Mergers and Impact on Shareholders. The terms of the Mergers are intended to
avoid dilution of the interests of the existing shareholders of the applicable Funds. In this regard, each Target Board considered that each holder of common shares of its Target Fund will receive common shares of the Acquiring Fund (taking into
account any fractional shares to which the shareholder would be entitled) equal in value as of the Valuation Time to the aggregate per share net asset value of that shareholder’s Target Fund common shares held as of the Valuation Time. However,
no fractional common shares of the Acquiring Fund will be distributed to the Target Funds’ common shareholders in connection with the Mergers. In lieu of such fractional shares, the Target Funds’ common shareholders will receive cash. As
noted above with respect to holders of preferred shares of each Target Fund, holders of any preferred shares outstanding immediately prior to the closing of the applicable Merger will receive, on a one-for-one basis, newly issued preferred shares of the Acquiring Fund having substantially similar terms, immediately prior to the closing of such Merger, to those of the preferred shares of the applicable
Target Fund.
In conjunction with the issuance of additional shares of the Acquiring Fund as described above, the Acquiring Board
considered that the Acquiring Fund would receive additional assets and liabilities as a result of each Merger. Further, as noted above, the outstanding preferred shares of the Acquiring Fund and any preferred shares of the Acquiring Fund to be
issued in the Mergers would have equal priority with each other as to payment of dividends and distributions of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund.
Effect on Shareholder Rights. The Boards considered that each Fund is organized as a Massachusetts business trust. In this regard, with
respect to each Target Fund, there will be no change to shareholder rights under state statutory law.
Alternatives. The Target
Boards considered various alternatives to the Mergers, including keeping the status quo, liquidating the Target Funds, and merging the Target Funds into a state specific open-end fund. In considering the
status quo, the Target Boards considered Nuveen Fund Advisors’ view, among other things, that while the Target Funds would maintain the state income tax exemption, this option may result in continuing secondary market trading discounts and less
competitive tax-adjusted distributions. In considering liquidation, the Target Boards took into account, among other things, that such alternative would be a taxable event and could be potentially disruptive
to long-term shareholders. With respect to a merger into a state specific open-end fund, the Target Boards considered, among other things, that while the Target Funds would maintain the state income tax
exemption, based on the information provided by Nuveen Fund Advisors, this option may result in potentially lower tax-free earnings over time and be disruptive to acquiring fund shareholders. In evaluating the
proposed Mergers, the Target Boards considered, among other things, Nuveen Fund Advisors’ view that combining the Target Funds with a larger closed-end municipal fund with a national mandate was an
attractive alternative in light of certain potential benefits to shareholders of the Target Funds, as outlined above.
Potential
Benefits to Nuveen Fund Advisors and Affiliates. The Boards recognized that the Mergers may result in some benefits and economies of scale for Nuveen Fund Advisors and its affiliates. These may include, for example, a reduction in the level of
operational expenses incurred for administrative, compliance and portfolio management services as a result of the elimination of each Target Fund as a separate fund in the Nuveen complex.
Conclusion. Each Board approved the Merger(s) involving its Fund, concluding that each such Merger is in the best interests of its Fund
and that the interests of existing shareholders of its Fund will not be diluted as a result of the respective Merger(s).
Capitalization
The following table sets forth the unaudited capitalization of the Funds as of November 30, 2022, and the
pro-forma combined capitalization of the Acquiring Fund as if the Merger(s) had occurred on that date assuming the completion of both Mergers and the completion of each Merger separately.
42
| 1. |
Capitalization Table—Mergers of Both Georgia Municipal and Ohio Municipal |
The table reflects pro forma exchange ratios of approximately 0.87068067 and 1.08361635 common shares of the Acquiring Fund issued for
each common share of Georgia Municipal and Ohio Municipal, respectively. If the Mergers are consummated, the actual exchange ratios may vary.
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Georgia
Municipal |
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Ohio
Municipal |
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Acquiring
Fund |
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Pro
Forma
Adjustments |
|
|
Acquiring
Fund
Pro Forma(1) |
|
| Series 2028 Adjustable Rate MuniFund Term Preferred (AMTP) Shares, $100,000 stated value per
share, at liquidation value |
|
$ |
58,500,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
58,500,000 |
|
| Series A MuniFund Preferred (MFP) Shares, $100,000 stated value per share, at liquidation
value |
|
|
— |
|
|
|
— |
|
|
$ |
150,000,000 |
|
|
|
— |
|
|
$ |
150,000,000 |
|
| Series B MuniFund Preferred (MFP) Shares, $100,000 stated value per share, at liquidation
value |
|
|
— |
|
|
|
— |
|
|
$ |
155,000,000 |
|
|
|
— |
|
|
$ |
155,000,000 |
|
| Series C MuniFund Preferred (MFP) Shares, $100,000 stated value per share, at liquidation
value |
|
|
— |
|
|
|
— |
|
|
$ |
336,000,000 |
|
|
|
— |
|
|
$ |
336,000,000 |
|
| Series 1 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
$ |
148,000,000 |
|
|
$ |
268,800,000 |
|
|
$ |
(148,000,000 |
) |
|
$ |
268,800,000 |
|
| Series 2 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
|
— |
|
|
$ |
262,200,000 |
|
|
|
— |
|
|
$ |
262,200,000 |
|
| Series 3 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
|
— |
|
|
$ |
146,000,000 |
|
|
|
— |
|
|
$ |
146,000,000 |
|
| Series 4 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
148,000,000 |
|
|
$ |
148,000,000 |
(2) |
| Common Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Shares, $0.01 par value per share; 10,399,813 shares outstanding for Georgia Municipal,
18,254,255 shares outstanding for Ohio Municipal, 165,390,401 shares outstanding for the Acquiring Fund and 194,226,031 shares outstanding for the Combined Fund Pro Forma |
|
$ |
103,998 |
|
|
$ |
182,543 |
|
|
$ |
1,653,904 |
|
|
$ |
1,815 |
(3) |
|
$ |
1,942,260 |
|
| Paid-in surplus |
|
$ |
137,104,608 |
|
|
$ |
277,564,322 |
|
|
$ |
2,344,235,732 |
|
|
$ |
(1,216,815 |
)(4) |
|
$ |
2,757,687,847 |
|
| Total distributable earnings |
|
$ |
(16,150,910 |
) |
|
$ |
(12,976,273 |
) |
|
$ |
(139,858,693 |
) |
|
|
— |
|
|
$ |
(168,985,876 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets applicable to common shares |
|
$ |
121,057,696 |
|
|
$ |
264,770,592 |
|
|
$ |
2,206,030,943 |
|
|
$ |
(1,215,000 |
) |
|
$ |
2,590,644,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Georgia
Municipal |
|
|
Ohio
Municipal |
|
|
Acquiring
Fund |
|
|
Pro
Forma
Adjustments |
|
|
Acquiring
Fund
Pro Forma(1) |
|
| Net asset value per common share outstanding (net assets attributable to common shares, divided by
common shares outstanding) |
|
$ |
11.64 |
|
|
$ |
14.50 |
|
|
$ |
13.34 |
|
|
|
|
|
|
$ |
13.34 |
|
| Authorized shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common |
|
|
Unlimited |
|
|
|
Unlimited |
|
|
|
Unlimited |
|
|
|
|
|
|
|
Unlimited |
|
| Preferred |
|
|
Unlimited |
|
|
|
Unlimited |
|
|
|
Unlimited |
|
|
|
|
|
|
|
Unlimited |
|
| (1) |
The pro forma balances are presented as if the Mergers were effective as of November 30, 2022, are
presented for informational purposes only and assumes the issuance of preferred shares in the amounts set forth above, which amounts may change prior to the Closing Date. The actual Closing Date of the Mergers is expected to be on or about March 6,
2023, or such later time agreed to by the parties at which time the results would be reflective of the actual composition of shareholders’ equity as of that date. All pro forma adjustments are directly attributable to the Mergers.
|
| (2) |
Assumes the conversion of outstanding Ohio Municipal Series 1 VRDP Shares into shares of a new series of shares
designated as Series 4 VRDP Shares of the Acquiring Fund in connection with the Merger of Ohio Municipal. |
| (3) |
Assumes the issuance of 9,054,954 and 19,780,676 Acquiring Fund common shares to Georgia Municipal common
shareholders and Ohio Municipal common shareholders, respectively, in connection with the Mergers. These numbers are based on the net asset values of the Acquiring Fund and the Target Funds as of November 30, 2022, adjusted for estimated Merger
costs. |
| (4) |
Includes the impact of estimated total Merger costs of $1,215,000, which are currently expected to be borne by
Georgia Municipal, Ohio Municipal and the Acquiring Fund in the amounts of $280,000, $930,000 and $5,000, respectively. |
| 2. |
Capitalization Table—Merger of Georgia Municipal Only |
The table reflects a pro forma exchange ratio of approximately 0.87068067 common shares of the Acquiring Fund issued for each common share of
Georgia Municipal. If the Merger is consummated, the actual exchange ratio may vary.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Georgia
Municipal |
|
|
Acquiring
Fund |
|
|
Pro Forma
Adjustments |
|
|
Acquiring Fund
Pro Forma(1) |
|
| Series 2028 Adjustable Rate MuniFund Term Preferred (AMTP) Shares, $100,000 stated value per
share, at liquidation value |
|
$ |
58,500,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
58,500,000 |
|
| Series A MuniFund Preferred (MFP) Shares, $100,000 stated value per share, at liquidation
value |
|
|
— |
|
|
$ |
150,000,000 |
|
|
|
— |
|
|
$ |
150,000,000 |
|
| Series B MuniFund Preferred (MFP) Shares, $100,000 stated value per share, at liquidation
value |
|
|
— |
|
|
$ |
155,000,000 |
|
|
|
— |
|
|
$ |
155,000,000 |
|
| Series C MuniFund Preferred (MFP) Shares, $100,000 stated value per share, at liquidation
value |
|
|
— |
|
|
$ |
336,000,000 |
|
|
|
— |
|
|
$ |
336,000,000 |
|
| Series 1 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
$ |
268,800,000 |
|
|
|
— |
|
|
$ |
268,800,000 |
|
| Series 2 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
$ |
262,200,000 |
|
|
|
— |
|
|
$ |
262,200,000 |
|
| Series 3 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
$ |
146,000,000 |
|
|
|
— |
|
|
$ |
146,000,000 |
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Georgia
Municipal |
|
|
Acquiring
Fund |
|
|
Pro Forma
Adjustments |
|
|
Acquiring Fund
Pro Forma(1) |
|
| Common Shareholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Shares, $0.01 par value per share;
10,399,813 shares outstanding for Georgia Municipal,
165,390,401 shares outstanding for the Acquiring Fund and 174,445,355 shares outstanding for the Combined Fund Pro Forma |
|
$ |
103,998 |
|
|
$ |
1,653,904 |
|
|
$ |
(13,448 |
)(2) |
|
$ |
1,744,454 |
|
| Paid-in surplus |
|
|
137,104,608 |
|
|
|
2,344,235,732 |
|
|
|
(271,552 |
)(3) |
|
|
2,481,068,788 |
|
| Total distributable earnings |
|
|
(16,150,910 |
) |
|
|
(139,858,693 |
) |
|
|
— |
|
|
|
(156,009,603 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets applicable to common shares |
|
$ |
121,057,696 |
|
|
$ |
2,206,030,943 |
|
|
$ |
(285,000 |
) |
|
$ |
2,326,803,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net asset value per common share outstanding (net assets attributable to common shares, divided by
common shares outstanding) |
|
$ |
11.64 |
|
|
$ |
13.34 |
|
|
|
|
|
|
$ |
13.34 |
|
| Authorized shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common |
|
|
Unlimited |
|
|
|
Unlimited |
|
|
|
|
|
|
|
Unlimited |
|
| Preferred |
|
|
Unlimited |
|
|
|
Unlimited |
|
|
|
|
|
|
|
Unlimited |
|
| (1) |
The pro forma balances are presented as if the Merger was effective as of November 30, 2022, are presented
for informational purposes only and assumes the issuance of preferred shares in the amounts set forth above, which amounts may change prior to the Closing Date. The actual Closing Date of the Merger is expected to be on or about March 6, 2023, or
such later time agreed to by the parties at which time the results would be reflective of the actual composition of shareholders’ equity as of that date. All pro forma adjustments are directly attributable to the Merger. |
| (2) |
Assumes the issuance of 9,054,954 Acquiring Fund common shares to Georgia Municipal common shareholders in
connection with the Merger. These numbers are based on the net asset values of the Acquiring Fund and Georgia Municipal as of November 30, 2022, adjusted for estimated Merger costs. |
| (3) |
Includes the impact of estimated total Merger costs of $285,000, which are currently expected to be borne by
Georgia Municipal and the Acquiring Fund in the amounts of $280,000 and $5,000, respectively. |
| 3. |
Capitalization Table—Merger of Ohio Municipal Only |
The table reflects a pro forma exchange ratio of approximately 1.08361635 common shares of the Acquiring Fund issued for each common share of
Ohio Municipal. If the Merger is consummated, the actual exchange ratio may vary.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Ohio
Municipal |
|
|
Acquiring
Fund |
|
|
Pro Forma
Adjustments |
|
|
Acquiring Fund
Pro Forma(1) |
|
| Series A MuniFund Preferred (MFP) Shares, $100,000 stated value per share, at liquidation
value |
|
|
— |
|
|
$ |
150,000,000 |
|
|
|
— |
|
|
$ |
150,000,000 |
|
| Series B MuniFund Preferred (MFP) Shares, $100,000 stated value per share, at liquidation
value |
|
|
— |
|
|
$ |
155,000,000 |
|
|
|
— |
|
|
$ |
155,000,000 |
|
| Series C MuniFund Preferred (MFP) Shares, $100,000 stated value per share, at liquidation
value |
|
|
— |
|
|
$ |
336,000,000 |
|
|
|
— |
|
|
$ |
336,000,000 |
|
| Series 1 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
$ |
148,000,000 |
|
|
$ |
268,800,000 |
|
|
$ |
(148,000,000 |
) |
|
$ |
268,800,000 |
|
| Series 2 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
$ |
262,200,000 |
|
|
|
— |
|
|
$ |
262,200,000 |
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Ohio
Municipal |
|
|
Acquiring
Fund |
|
|
Pro Forma
Adjustments |
|
|
Acquiring Fund
Pro Forma(1) |
|
| Series 3 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
$ |
146,000,000 |
|
|
|
— |
|
|
$ |
146,000,000 |
|
| Series 4 Variable Rate Demand Preferred (VRDP) Shares, $100,000 stated value per share, at
liquidation value |
|
|
— |
|
|
|
— |
|
|
$ |
148,000,000 |
|
|
$ |
148,000,000 |
(2) |
| Common Shareholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Shares, $0.01 par value per share; 18,254,255 shares outstanding for Ohio Municipal,
165,390,401 shares outstanding for the Acquiring Fund and 185,171,077 shares outstanding for the Combined Fund Pro Forma |
|
$ |
182,543 |
|
|
$ |
1,653,904 |
|
|
$ |
15,264 |
(3) |
|
$ |
1,851,711 |
|
| Paid-in surplus |
|
|
277,564,322 |
|
|
|
2,344,235,732 |
|
|
|
(950,264 |
)(4) |
|
|
2,620,849,790 |
|
| Total distributable earnings |
|
|
(12,976,273 |
) |
|
|
(139,858,693 |
) |
|
|
— |
|
|
|
(152,834,966 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets applicable to common shares |
|
$ |
264,770,592 |
|
|
$ |
2,206,030,943 |
|
|
$ |
(935,000 |
) |
|
$ |
2,469,866,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net asset value per common share outstanding (net assets attributable to common shares, divided by
common shares outstanding) |
|
$ |
14.50 |
|
|
$ |
13.34 |
|
|
|
|
|
|
$ |
13.34 |
|
| Authorized shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common |
|
|
Unlimited |
|
|
|
Unlimited |
|
|
|
|
|
|
|
Unlimited |
|
| Preferred |
|
|
Unlimited |
|
|
|
Unlimited |
|
|
|
|
|
|
|
Unlimited |
|
| (1) |
The pro forma balances are presented as if the Merger was effective as of November 30, 2022, are presented
for informational purposes only and assumes the issuance of preferred shares in the amounts set forth above, which amounts may change prior to the Closing Date. The actual Closing Date of the Merger is expected to be on or about March 6, 2023, or
such later time agreed to by the parties at which time the results would be reflective of the actual composition of shareholders’ equity as of that date. All pro forma adjustments are directly attributable to the Merger. |
| (2) |
Assumes the conversion of outstanding Ohio Municipal Series 1 VRDP Shares into shares of a new series of shares
designated as Series 4 VRDP Shares of the Acquiring Fund in connection with the Merger of Ohio Municipal. |
| (3) |
Assumes the issuance of 19,780,676 Acquiring Fund common shares to Ohio Municipal common shareholders in
connection with the Merger. These numbers are based on the net asset values of the Acquiring Fund and Ohio Municipal as of November 30, 2022, adjusted for estimated Merger costs. |
| (4) |
Includes the impact of estimated total Merger costs of $935,000, which are currently expected to be borne by
Ohio Municipal and the Acquiring Fund in the amounts of $930,000 and $5,000, respectively. |
Expenses
Associated with the Mergers
Preferred shareholders will not bear any costs of the Mergers. The costs of the Mergers are estimated to
be $1,215,000, but the actual costs may be higher or lower than that amount. These costs represent the estimated nonrecurring expenses of the Funds in carrying out their obligations under the Agreement and consist of management’s estimate of
professional service fees, printing costs and mailing charges related to the proposed Mergers. Based on the expected benefits of the Mergers to each Fund, each of Georgia Municipal, Ohio Municipal and the Acquiring Fund is expected to be allocated
$280,000, $930,000 and $5,000, respectively, of the estimated expenses in connection with the Mergers (0.20%, 0.30% and 0.00%, respectively, of Georgia Municipal’s, Ohio Municipal’s and the Acquiring Fund’s average net assets
applicable to common shares for the six months ended April 30, 2022). If one or both Mergers is not consummated for any reason, including because the requisite shareholder approvals are not obtained, each of the Funds, and common shareholders
of each of the Funds indirectly, will still bear the costs of the Mergers.
The Funds have engaged Computershare Fund Services to assist
in the solicitation of proxies at an estimated aggregate cost of $7,500 per Fund plus reasonable expenses, which is included in the foregoing estimate.
46
Dissenting Shareholders’ Rights of Appraisal
Under the charter documents of the Funds, shareholders do not have dissenters’ rights of appraisal with respect to their shares in
connection with the Mergers.
Material Federal Income Tax Consequences of the Mergers
As a non-waivable condition to each Fund’s obligation to consummate the Mergers, each Fund will
receive a tax opinion from Vedder Price P.C. (which opinion will be based on certain factual representations and certain customary assumptions and exclusions) with respect to its Merger(s) substantially to the effect that, on the basis of the
existing provisions of the Code, current administrative rules and court decisions, for federal income tax purposes:
| |
(a) |
The merger of the Target Fund with and into the Merger Sub pursuant to applicable state laws will constitute a
“reorganization” within the meaning of Section 368(a) of the Code and the Acquiring Fund and the Target Fund will each be a “party to a reorganization,” within the meaning of Section 368(b) of the Code, with respect to
the merger. |
| |
(b) |
No gain or loss will be recognized by the Acquiring Fund or the Merger Sub upon the merger of the Target Fund
with and into the Merger Sub pursuant to applicable state laws or upon the liquidation of the Merger Sub. |
| |
(c) |
No gain or loss will be recognized by the Target Fund upon the merger of the Target Fund with and into the
Merger Sub pursuant to applicable state laws. |
| |
(d) |
No gain or loss will be recognized by the Target Fund shareholders upon the conversion of all their Target Fund
shares solely into Acquiring Fund shares in the merger of the Target Fund with and into the Merger Sub pursuant to applicable state laws, except to the extent the Target Fund common shareholders receive cash in lieu of a fractional Acquiring Fund
common share. |
| |
(e) |
The aggregate basis of the Acquiring Fund shares received by each Target Fund shareholder pursuant to the
merger (including any fractional Acquiring Fund common share to which a Target Fund common shareholder would be entitled) will be the same as the aggregate basis of the Target Fund shares that were converted into such Acquiring Fund shares.
|
| |
(f) |
The holding period of the Acquiring Fund shares received by each Target Fund shareholder in the merger
(including any fractional Acquiring Fund common share to which a Target Fund common shareholder would be entitled) will include the period during which the shares of the Target Fund that were converted into such Acquiring Fund shares were held by
such shareholder, provided the Target Fund shares are held as capital assets at the effective time of the merger. |
| |
(g) |
The basis of the Target Fund’s assets received by the Merger Sub in the merger will be the same as the
basis of such assets in the hands of the Target Fund immediately before the merger. |
| |
(h) |
The holding period of the assets of the Target Fund received by the Merger Sub in the merger will include the
period during which those assets were held by the Target Fund. |
With respect to each Merger, the opinion addressing
the federal income tax consequences of the Merger described above will rely on the assumption that the Acquiring Fund AMTP or VRDP Shares received in the Merger, if any, will constitute equity of the Acquiring Fund. In that regard, Sidley LLP, as
special tax counsel to the Acquiring Fund, will deliver an opinion to the Acquiring Fund, subject to certain representations, assumptions and conditions, substantially to the effect that any Acquiring Fund VRDP Shares received in the
47
Merger of Ohio Municipal by the holders of VRDP Shares of Ohio Municipal will qualify as equity of the Acquiring Fund for federal income tax purposes. Stradley, Ronon, Stevens and Young, LLP, as
special tax counsel to the Acquiring Fund, will deliver an opinion to the Acquiring Fund, subject to certain representations, assumptions and conditions, substantially to the effect that any Acquiring Fund AMTP Shares received in the Merger of
Georgia Municipal by the holders of AMTP Shares of Georgia Municipal will qualify as equity of the Acquiring Fund for federal income tax purposes. As a result, distributions with respect to the preferred shares (other than distributions in
redemption of preferred shares subject to Section 302(b) of the Code) will generally constitute dividends to the extent of the Acquiring Fund’s allocable current or accumulated earnings and profits, as calculated for federal income tax
purposes. Because the treatment of a corporate security as debt or equity is determined on the basis of the facts and circumstances of each case, and no controlling precedent exists for the preferred shares issued in the Mergers, there can be no
assurance that the Internal Revenue Service (“IRS”) will not question special tax counsel’s opinion and the Acquiring Fund’s treatment of the preferred shares as equity. If the IRS were to succeed in such a challenge, holders of
preferred shares could be characterized as receiving taxable interest income rather than exempt-interest or other dividends, possibly requiring them to file amended income tax returns and retroactively to recognize additional amounts of ordinary
income and pay additional tax, interest and penalties, and the tax consequences of the Mergers could differ significantly from those described in this Joint Proxy Statement/Prospectus.
No opinion will be expressed as to (1) the effect of the Mergers on a Target Fund, the Acquiring Fund, the Merger Sub or any Target Fund
shareholder with respect to any asset (including, without limitation, any stock held in a passive foreign investment company as defined in Section 1297(a) of the Code) as to which any gain or loss is required to be recognized under federal
income tax principles (i) at the end of a taxable year (or on the termination thereof) or (ii) upon the transfer of such asset regardless of whether such transfer would otherwise be a non-taxable
transaction under the Code, (2) the effect of the Mergers under the alternative minimum tax imposed under Section 55 of the Code on a direct or indirect shareholder of a Target Fund that is a corporation, and (3) any other federal tax
issues (except those set forth above) and all state, local or non-U.S. tax issues of any kind.
Each opinion will be based on certain factual representations and customary assumptions. The opinion will rely on such representations and
will assume the accuracy of such representations. If such representations and assumptions are incorrect, the Merger that is the subject of such opinion may not qualify as a “reorganization” within the meaning of Section 368(a) of the
Code, and the Target Fund involved in such Merger and Target Fund shareholders may recognize taxable gain or loss as a result of that Merger.
Opinions of counsel are not binding upon the IRS or the courts and there can be no assurance that the IRS or a court will concur on all or any
of the issues discussed above. If the Mergers occur but the IRS or the courts determine that a Merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, the Target Fund involved in such Merger may
recognize gain or loss on the transfer of its assets to the Acquiring Fund and/or the deemed distribution of Acquiring Fund shares to its shareholders and each shareholder of that Target Fund would recognize taxable gain or loss equal to the
difference between its basis in its Target Fund shares and the fair market value of the shares of the Acquiring Fund it receives.
If a
Target Fund common shareholder receives cash in lieu of a fractional Acquiring Fund common share, the shareholder will be treated as having received the fractional Acquiring Fund common share pursuant to the Merger and then as having sold that
fractional Acquiring Fund common share for cash. As a result, each such Target Fund common shareholder generally will recognize gain or loss equal to the difference between the amount of cash received and the basis in the fractional Acquiring Fund
common share. This gain or loss generally will be a capital gain or loss and generally will be long-term capital gain or loss if, as of the effective time of the Merger, the holding period for the shares (including the holding period of Target Fund
shares surrendered therefor if the Target Fund shares were held as capital assets at the time of the Merger) is more than one year. The deductibility of capital losses is subject to limitations. Any cash received in lieu of a fractional share may be
subject to backup withholding taxes.
48
Prior to the Valuation Time, each Target Fund will declare a distribution to its preferred and
common shareholders, which together with all other distributions to shareholders made with respect to the taxable year in which its Merger occurs and all prior taxable years, will have the effect of distributing to such shareholders all its net
investment income and realized net capital gains (after reduction by any available capital loss carryforwards and excluding any net capital gain on which the Target Fund paid federal income tax), if any, through the Closing Date of the Merger. To
the extent distributions are attributable to ordinary taxable income or capital gains, the distribution will be taxable to shareholders who are subject to federal income tax. Each Fund designates distributions to common and preferred shareholders as
consisting of particular types of income (such as exempt interest, ordinary income and capital gain) based on each class’s proportionate share of the total distributions paid by the Fund with respect to the year. Additional distributions may be
made if necessary. For the Acquiring Fund, all dividends and distributions will be paid in cash unless a shareholder has made an election to reinvest dividends and distributions in additional shares under each Fund’s dividend reinvestment plan.
The tax character of dividends and distributions (as consisting of ordinary income and capital gain) will be the same for federal income tax purposes whether received in cash or additional shares.
After the Mergers, the Acquiring Fund’s ability to use a Target Fund’s or the Acquiring Fund’s realized and unrealized pre-Merger capital losses may be limited under certain federal income tax rules applicable to reorganizations of this type. Therefore, in certain circumstances, shareholders may pay federal income tax sooner, or pay
more federal income tax, than they would have had the Mergers not occurred. The effect of these potential limitations, however, will depend on a number of factors including the amount of the losses, the amount of gains to be offset, the exact timing
of the Mergers and the amount of unrealized capital gains in the Funds at the time of the Mergers.
The table below sets forth, as of
May 31, 2022 (the Fund’s tax year end), Georgia Municipal’s unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any.
|
|
|
|
|
| |
|
Georgia
Municipal |
|
| Not subject to expiration: |
|
|
|
|
| Short-Term |
|
$ |
2,903,602 |
|
| Long-Term |
|
$ |
1,802,813 |
|
|
|
|
|
|
| Total |
|
$ |
4,706,415 |
|
|
|
|
|
|
The table below sets forth, as of February 28, 2022 (the Fund’s tax year end), Ohio Municipal’s
unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any.
|
|
|
|
|
| |
|
Ohio
Municipal |
|
| Not subject to expiration: |
|
|
|
|
| Short-Term |
|
|
— |
|
| Long-Term |
|
|
— |
|
|
|
|
|
|
| Total |
|
|
— |
|
|
|
|
|
|
49
The table below sets forth, as of October 31, 2021 (the Fund’s tax year end), the
Acquiring Fund’s unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any.
|
|
|
|
|
| |
|
Acquiring
Fund |
|
| Not subject to expiration: |
|
|
|
|
| Short-Term |
|
$ |
25,114,491 |
|
| Long-Term |
|
|
— |
|
|
|
|
|
|
| Total |
|
$ |
25,114,491 |
|
|
|
|
|
|
In addition, the shareholders of the Target Funds will receive a proportionate share of any taxable income and
gains (after the application of any available capital loss carryforwards) realized by the Acquiring Fund and not distributed to its shareholders prior to the closing of a Merger when such income and gains are eventually distributed by the Acquiring
Fund. To the extent the Acquiring Fund sells portfolio investments after the Mergers, the Acquiring Fund may recognize gains or losses (including any built-in gain in the portfolio investments of a Target Fund
or the Acquiring Fund that was unrealized at the time of the Mergers), which also may result in taxable distributions to shareholders holding shares of the Acquiring Fund, including former Target Fund shareholders who hold Acquiring Fund shares
after the Mergers. As a result, shareholders of the Target Funds and the Acquiring Fund may receive a greater amount of taxable distributions than they would have had the Mergers not occurred.
The foregoing is intended to be only a summary of the principal federal income tax consequences of the Mergers and should not be considered to
be tax advice. This description of the federal income tax consequences of the Mergers is made without regard to the particular facts and circumstances of any shareholder. There can be no assurance that the IRS or a court will concur on all or any of
the issues discussed above. Shareholders are urged to consult their own tax advisers as to the specific consequences to them of the Mergers, including without limitation the federal, state, local, and non-U.S.
tax consequences with respect to the foregoing matters and any other considerations that may be applicable to them.
Shareholder Approval
With respect to each Merger, the Merger is required to be approved by the affirmative vote of the holders of a majority (more than 50%) of a
Target Fund’s outstanding common and preferred shares entitled to vote on the matter, voting together as a single class, and by the affirmative vote of the holders of a majority (more than 50%) of a Target Fund’s outstanding preferred
shares entitled to vote on the matter, voting together as a single class. Each Merger also is required to be approved by the affirmative vote of the holders of a majority (more than 50%) of the Acquiring Fund’s outstanding preferred shares,
voting together as a single class. Holders of each Target Fund’s preferred shares are being solicited separately on the foregoing proposal through a separate proxy statement and not through this Joint Proxy Statement/Prospectus.
Abstentions and broker non-votes, if any, will have the same effect as a vote against the approval of
a Merger. Broker non-votes are shares held by brokers or nominees, typically in “street name,” as to which (1) instructions have not been received from the beneficial owners or persons entitled
to vote and (2) the broker or nominee does not have discretionary voting power on a particular matter. Because Georgia Municipal’s common shareholders are being asked to vote on both Proposals Nos. 1 and 2, there may be broker non-votes received with respect to Proposal No. 1 at Georgia Municipal’s Meeting. Because Proposal No. 1 is a non-routine matter and the sole proposal at the
Ohio Municipal Meeting and Acquiring Fund Meeting, it is expected that there will be no broker non-votes at those Meetings.
50
Preferred shareholders of the Funds are separately being asked to approve the Agreement as a
“plan of reorganization” under the 1940 Act. Section 18(a)(2)(D) of the 1940 Act provides that the terms of preferred shares issued by a registered closed-end management investment company must
contain provisions requiring approval by the vote of a majority of such shares, voting as a class, of any plan of reorganization adversely affecting such shares. Because the 1940 Act makes no distinction between a plan of reorganization that has an
adverse effect as opposed to a materially adverse effect, the Funds are seeking approval of the Agreement by the holders of their preferred shares.
The closing of each Merger is subject to the satisfaction or waiver of certain closing conditions, which include customary closing conditions.
In order for a Merger to occur, all requisite shareholder approvals must be obtained at the applicable Fund’s shareholder meeting, and certain other consents, confirmations and/or waivers from various third parties, including the liquidity
providers and/or the initial purchasers with respect to outstanding preferred shares of the Acquiring Fund, must also be obtained. Because the closing of each Merger is contingent upon the applicable Target Fund and the Acquiring Fund obtaining such
shareholder approvals and satisfying (or obtaining the waiver of) other closing conditions, it is possible that a Merger will not occur even if shareholders of a Fund entitled to vote approve the Merger and a Fund satisfies all of its closing
conditions if the other Fund does not obtain its requisite shareholder approvals or satisfy (or obtain the waiver of) its closing conditions. If a Merger is not consummated, the Board of the Target Fund involved in that Merger may take such actions
as it deems in the best interests of the Fund, including conducting additional solicitations with respect to the Merger proposal or continuing to operate the Target Fund as a standalone fund. The closing of each Merger is not contingent on the
closing of the other Merger.
Each series of preferred shares was issued on a private placement basis to one or a small number of
institutional holders. To the extent that one or more preferred shareholders of a Fund owns, holds or controls, individually or in the aggregate, all or a significant portion of a Fund’s outstanding preferred shares, the approval by a
Fund’s preferred shareholders required for a Merger to occur may turn on the exercise of voting or consent rights by such particular shareholder(s) and its or their determination as to the favorable view of the Merger with respect to its or
their interests. The Funds exercise no influence or control over the determinations of such shareholders with respect to a Merger; there is no guarantee that such shareholders will vote to approve a Merger proposal.
Description of Common Shares to Be Issued by the Acquiring Fund; Comparison to Target Funds
General
As a
general matter, the common shares of the Acquiring Fund and the Target Funds have equal voting rights and equal rights with respect to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs
of their Fund and have no preemptive, conversion or exchange rights, except as the Trustees may authorize, or rights to cumulative voting. Holders of whole common shares of each Fund are entitled to one vote per share on any matter on which they are
entitled to vote, while each fractional share entitles its holder to a proportional fractional vote. Furthermore, the provisions set forth in each Fund’s declaration of trust and by-laws include, among
other things, substantially identical super-majority voting provisions and other anti-takeover provisions, as described under “Additional Information About the Acquiring Fund—Certain Provisions in the Acquiring Fund’s Declaration of
Trust and By-Laws.” The full text of each Fund’s declaration of trust and by-laws are on file with the SEC and may be obtained as described on page 117.
The Acquiring Fund’s declaration of trust authorizes an unlimited number of common shares, par value $0.01 per share. If the
Mergers are consummated, the Acquiring Fund will issue additional common shares on the Closing Date to each Target Fund based on the relative per share net asset value of the Acquiring Fund and the aggregate net assets of each Target Fund that are
transferred in connection with the Mergers, in each case as of the Valuation Time. The value of the Acquiring Fund’s net assets will be calculated net of the liquidation preference (including accumulated and unpaid dividends) of all of the
Acquiring Fund’s outstanding preferred shares.
51
The terms of the Acquiring Fund common shares to be issued pursuant to the Mergers will be
identical to the terms of the Acquiring Fund common shares that are then outstanding. Acquiring Fund common shares have equal rights with respect to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up
of the affairs of the Acquiring Fund. The Acquiring Fund common shares, when issued, will be fully paid and non-assessable and have no preemptive, conversion or exchange rights or rights to cumulative voting.
See also “—Summary Description of Massachusetts Business Trusts.”
Distributions
As a general matter, each Fund has a monthly distribution policy and each Fund seeks to maintain a stable level of distributions. Each
Fund’s current policy, which may be changed by its Board, is to pay regular monthly dividends out of its net investment income to holders of its common shares at a level rate (stated in terms of a fixed cents per common share dividend rate)
that reflects the past and projected performance of the Fund.
The Acquiring Fund’s ability to maintain a level dividend rate will
depend on a number of factors, including the rate at which dividends are payable on the preferred shares. The net income of the Acquiring Fund generally consists of all interest income accrued on portfolio assets less all expenses of the Fund.
Expenses of the Acquiring Fund are accrued each day. Over time, all the net investment income of the Acquiring Fund will be distributed. At least annually, the Acquiring Fund also intends to effectively distribute net capital gains and ordinary
taxable income, if any, after paying any accrued dividends or making any liquidation payments to preferred shareholders. Although it does not now intend to do so, the Board may change the Acquiring Fund’s dividend policy and the amount or
timing of the distributions based on a number of factors, including the amount of the Fund’s undistributed net investment income and historical and projected investment income and the amount of the expenses and dividend rates on the outstanding
preferred shares.
As explained more fully below, at least annually, the Acquiring Fund may elect to retain rather than distribute all or
a portion of any net capital gains (the excess of net long-term capital gains over net short-term capital losses) otherwise allocable to shareholders and pay federal income tax on the retained gain. As provided under federal income tax law,
shareholders will include their share of the retained net capital gains in their income for the year as a long-term capital gain (regardless of their holding period in the shares) and will be entitled to a federal income tax credit or refund for the
federal income tax deemed paid on their behalf by the Acquiring Fund. See “Additional Information About the Acquiring Fund—Federal Income Tax Matters Associated with Investment in the Acquiring Fund” below and “Federal Income Tax
Matters” in the Merger SAI.
So long as preferred shares are outstanding, the Acquiring Fund may not declare a dividend or
distribution to common shareholders (other than a dividend in common shares of the Fund) or purchase outstanding common shares unless all accumulated dividends on preferred shares have been paid and unless the asset coverage, as defined in the 1940
Act, with respect to its preferred shares at the time of the declaration of such dividend or distribution or at the time of such purchase would be at least 200% after giving effect to the dividend or distribution or purchase price.
Dividend Reinvestment Plan
The terms of the dividend reinvestment plan (the “Plan”) for the Acquiring Fund and the Target Funds are identical. Under the
Acquiring Fund’s Plan, you may elect to have all dividends, including any capital gain distributions, on your common shares automatically reinvested by Computershare Trust Company, N.A. (the “Plan Agent”) in additional common shares
under the Plan. You may elect to participate in the Plan by contacting Nuveen Investor Services at (800) 257-8787. If you do not participate, you will receive all distributions in cash paid by check mailed
directly to you or your brokerage firm by Computershare Inc. and the Plan Agent.
52
If you decide to participate in the Plan of the Acquiring Fund, the number of common shares you
will receive will be determined as follows:
| |
(1) |
If common shares are trading at or above net asset value, at the then-current market price; or
|
| |
(2) |
If common shares are trading below net asset value at the time of valuation, the Plan Agent will receive the
dividend or distribution in cash and will purchase common shares in the open market, on the NYSE or elsewhere, for the participants’ accounts. It is possible that the market price for the common shares may increase before the Plan Agent has
completed its purchases. Therefore, the average purchase price per share paid by the Plan Agent may exceed the market price at the time of valuation, resulting in the purchase of fewer shares than if the dividend or distribution had been paid in
common shares issued by the Acquiring Fund. The Plan Agent will use all dividends and distributions received in cash to purchase common shares in the open market within 30 days of the valuation date. Interest will not be paid on any uninvested cash
payments; or |
| |
(3) |
If the Plan Agent begins purchasing Acquiring 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 Acquiring Fund shares at a price equal to the greater of the shares’ net asset value or 95% of the shares’ market value. |
You may withdraw from the Plan at any time by giving written notice to the Plan Agent. If you withdraw or the Plan is terminated, you will
receive a cash payment for any fraction of a share in your account. If you wish, the Plan Agent will sell your shares and send you the proceeds, minus brokerage commissions and a $2.50 service fee.
The Plan Agent maintains all shareholders’ accounts in the Plan and gives written confirmation of all transactions in the accounts,
including information you may need for tax records. Upon a sale of your shares, the Acquiring Fund (or its administrative agent) may be required to report to the IRS and furnish to you cost basis and holding period information for the Acquiring
Fund’s shares purchased on or after January 1, 2012 (“covered shares”).
For shares of the Acquiring Fund held in the
Plan, you are permitted to elect from among several permitted cost basis methods. In the absence of an election, the Plan will use first-in first-out methodology for
tracking and reporting your cost basis on covered shares as its default cost basis method. The cost basis method you use may not be changed with respect to a sale of shares after the settlement date of the sale. You should consult with your tax
advisors to determine the best permitted cost basis method for your tax situation and to obtain more information about how the cost basis reporting rules apply to you.
Common shares in your account will be held by the Plan Agent in non-certificated form. Any proxy you
receive will include all common shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends
or distributions in common shares. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases.
Automatically reinvesting dividends and distributions does not mean that you do not have to pay income taxes due on such dividends and
distributions.
If you hold your common shares with a brokerage firm that does not participate in the Plan, you will not be able to
participate in the Plan and any dividend reinvestment may be effected on different terms than those described above. Consult your financial advisor for more information.
53
The Acquiring Fund reserves the right to amend or terminate the Plan if in the judgment of the
Board the change is warranted. There is no direct service charge to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants. Additional information about the Plan may
be obtained by writing to Computershare, P.O. Box 505000, Louisville, Kentucky 40233-5000, or by calling (800) 257-8787.
Common Share Price Data
The following tables show for the periods indicated: (1) the high and low sales prices for common shares reported as of the end of the
day on the NYSE, (2) the high and low net asset values of the common shares, and (3) the high and low of the premium/(discount) to net asset value (expressed as a percentage) of the common shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Georgia Municipal |
|
| |
|
Market Price |
|
|
Net Asset Value |
|
|
Premium/(Discount) |
|
| Fiscal Quarter Ended |
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
| November 2022 |
|
$ |
10.85 |
|
|
$ |
9.42 |
|
|
$ |
11.64 |
|
|
$ |
10.68 |
|
|
|
(6.22 |
)% |
|
|
(14.11 |
)% |
| August 2022 |
|
$ |
11.35 |
|
|
$ |
10.32 |
|
|
$ |
12.32 |
|
|
$ |
11.52 |
|
|
|
(6.16 |
)% |
|
|
(10.73 |
)% |
| May 2022 |
|
$ |
12.43 |
|
|
$ |
10.85 |
|
|
$ |
13.56 |
|
|
$ |
11.56 |
|
|
|
(5.25 |
)% |
|
|
(11.79 |
)% |
| February 2022 |
|
$ |
13.84 |
|
|
$ |
12.33 |
|
|
$ |
14.27 |
|
|
$ |
13.42 |
|
|
|
(2.28 |
)% |
|
|
(8.73 |
)% |
| November 2021 |
|
$ |
13.93 |
|
|
$ |
13.35 |
|
|
$ |
14.37 |
|
|
$ |
14.08 |
|
|
|
(2.11 |
)% |
|
|
(6.04 |
)% |
| August 2021 |
|
$ |
14.10 |
|
|
$ |
13.61 |
|
|
$ |
14.56 |
|
|
$ |
14.37 |
|
|
|
(2.56 |
)% |
|
|
(6.33 |
)% |
| May 2021 |
|
$ |
13.67 |
|
|
$ |
12.65 |
|
|
$ |
14.43 |
|
|
$ |
14.13 |
|
|
|
(5.07 |
)% |
|
|
(10.92 |
)% |
| February 2021 |
|
$ |
13.19 |
|
|
$ |
12.54 |
|
|
$ |
14.58 |
|
|
$ |
14.12 |
|
|
|
(9.03 |
)% |
|
|
(11.79 |
)% |
| November 2020 |
|
$ |
12.74 |
|
|
$ |
11.99 |
|
|
$ |
14.38 |
|
|
$ |
14.09 |
|
|
|
(11.34 |
)% |
|
|
(15.02 |
)% |
| August 2020 |
|
$ |
12.83 |
|
|
$ |
12.01 |
|
|
$ |
14.46 |
|
|
$ |
13.95 |
|
|
|
(11.23 |
)% |
|
|
(14.51 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Ohio Municipal |
|
| |
|
Market Price |
|
|
Net Asset Value |
|
|
Premium/(Discount) |
|
| Fiscal Quarter Ended |
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
| November 2022 |
|
$ |
12.81 |
|
|
$ |
11.62 |
|
|
$ |
14.60 |
|
|
$ |
13.49 |
|
|
|
(11.66 |
)% |
|
|
(16.49 |
)% |
| August 2022 |
|
$ |
13.46 |
|
|
$ |
12.22 |
|
|
$ |
15.40 |
|
|
$ |
14.52 |
|
|
|
(11.91 |
)% |
|
|
(16.02 |
)% |
| May 2022 |
|
$ |
14.87 |
|
|
$ |
12.47 |
|
|
$ |
16.65 |
|
|
$ |
14.53 |
|
|
|
(10.26 |
)% |
|
|
(15.79 |
)% |
| February 2022 |
|
$ |
16.19 |
|
|
$ |
14.37 |
|
|
$ |
17.53 |
|
|
$ |
16.47 |
|
|
|
(7.39 |
)% |
|
|
(13.07 |
)% |
| November 2021 |
|
$ |
16.58 |
|
|
$ |
15.79 |
|
|
$ |
17.68 |
|
|
$ |
17.30 |
|
|
|
(6.15 |
)% |
|
|
(9.67 |
)% |
| August 2021 |
|
$ |
16.68 |
|
|
$ |
16.21 |
|
|
$ |
17.88 |
|
|
$ |
17.68 |
|
|
|
(6.44 |
)% |
|
|
(8.63 |
)% |
| May 2021 |
|
$ |
16.32 |
|
|
$ |
15.23 |
|
|
$ |
17.69 |
|
|
$ |
17.35 |
|
|
|
(7.59 |
)% |
|
|
(12.75 |
)% |
| February 2021 |
|
$ |
15.98 |
|
|
$ |
15.04 |
|
|
$ |
17.92 |
|
|
$ |
17.34 |
|
|
|
(10.58 |
)% |
|
|
(14.11 |
)% |
| November 2020 |
|
$ |
15.60 |
|
|
$ |
15.03 |
|
|
$ |
17.74 |
|
|
$ |
17.38 |
|
|
|
(12.05 |
)% |
|
|
(14.44 |
)% |
| August 2020 |
|
$ |
15.67 |
|
|
$ |
14.92 |
|
|
$ |
17.90 |
|
|
$ |
17.40 |
|
|
|
(12.24 |
)% |
|
|
(14.89 |
)% |
| May 2020 |
|
$ |
15.75 |
|
|
$ |
12.73 |
|
|
$ |
17.93 |
|
|
$ |
14.89 |
|
|
|
(9.60 |
)% |
|
|
(20.58 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Acquiring Fund |
|
| |
|
Market Price |
|
|
Net Asset Value |
|
|
Premium/(Discount) |
|
| Fiscal Quarter Ended |
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
| October 2022 |
|
$ |
13.89 |
|
|
$ |
10.74 |
|
|
$ |
14.53 |
|
|
$ |
12.12 |
|
|
|
(3.74 |
)% |
|
|
(11.98 |
)% |
| July 2022 |
|
$ |
13.77 |
|
|
$ |
11.99 |
|
|
$ |
14.54 |
|
|
$ |
13.40 |
|
|
|
(5.23 |
)% |
|
|
(10.79 |
)% |
| April 2022 |
|
$ |
16.17 |
|
|
$ |
13.15 |
|
|
$ |
16.52 |
|
|
$ |
14.33 |
|
|
|
(1.76 |
)% |
|
|
(9.50 |
)% |
| January 2022 |
|
$ |
17.39 |
|
|
$ |
15.61 |
|
|
$ |
17.25 |
|
|
$ |
16.34 |
|
|
|
1.10 |
% |
|
|
(6.64 |
)% |
| October 2021 |
|
$ |
17.50 |
|
|
$ |
16.38 |
|
|
$ |
17.51 |
|
|
$ |
16.88 |
|
|
|
0.70 |
% |
|
|
(3.64 |
)% |
| July 2021 |
|
$ |
17.53 |
|
|
$ |
16.56 |
|
|
$ |
17.58 |
|
|
$ |
16.96 |
|
|
|
0.06 |
% |
|
|
(2.91 |
)% |
| April 2021 |
|
$ |
16.61 |
|
|
$ |
15.65 |
|
|
$ |
17.28 |
|
|
$ |
16.61 |
|
|
|
(2.35 |
)% |
|
|
(6.96 |
)% |
| January 2021 |
|
$ |
16.23 |
|
|
$ |
14.74 |
|
|
$ |
17.13 |
|
|
$ |
15.95 |
|
|
|
(4.03 |
)% |
|
|
(7.64 |
)% |
54
On November 30, 2022, the closing sale prices of Georgia Municipal, Ohio Municipal and
Acquiring Fund common shares were $10.36, $12.81 and $12.35, respectively. These prices represent discounts to net asset value for Georgia Municipal, Ohio Municipal and the Acquiring Fund of (11.00)%, (11.66)% and (7.42)%, respectively.
Common shares of each Fund have historically traded at a discount to net asset value. It is not possible to state whether Acquiring Fund
common shares will trade at a premium or discount to net asset value following the Mergers, or what the extent of any such premium or discount might be.
Affiliated Brokerage and Other Fees
None of the Target Funds or the Acquiring Fund paid brokerage commissions within the last fiscal year to (i) any broker that is an
affiliated person of such Fund or an affiliated person of such person, or (ii) any broker an affiliated person of which is an affiliated person of such Fund, the Adviser, or the Sub-Adviser of such Fund.
Description of AMTP Shares to Be Issued by the Acquiring Fund
If the Georgia Municipal Merger takes place, the Acquiring Fund will issue AMTP Shares (“New AMTP Shares”) pursuant to the Agreement
if AMTP Shares of Georgia Municipal are outstanding immediately prior to the closing.
The terms of the New AMTP Shares will be
substantially similar to the terms of the AMTP Shares of Georgia Municipal outstanding immediately prior to the closing of the Merger of Georgia Municipal. However, because of the Acquiring Fund’s policy of investing in a nationally diversified
portfolio of municipal securities, the terms of the New AMTP Shares will not include a provision, currently applicable to the Target Fund AMTP Shares, that generally would require an additional payment to holders subject to Georgia income taxation
in the event the Target Fund was required to allocate income subject to Georgia income tax, including capital gains and/or ordinary income, to a given month’s distribution in order to make such distribution equal, on an after-tax basis, to the amount of the distribution if it was excludable from Georgia income taxation (in addition to federal income taxation). In addition, due to the phase out of LIBOR, the terms of the Statement
(as defined below) for the New AMTP Shares will reflect a reference rate based on SOFR rather than LIBOR. The aggregate liquidation preference of the New AMTP Shares received in the Merger of Georgia Municipal, if any, will equal the aggregate
liquidation preference of the Georgia Municipal AMTP Shares held immediately prior to the closing of the Mergers. The economic terms of the New AMTP Shares likely will not be the same as the terms of the outstanding preferred shares of the Acquiring
Fund. The number of AMTP Shares of Georgia Municipal currently outstanding may change due to market or other conditions. See “Additional Information About the Acquiring Fund—Description of Outstanding Acquiring Fund MFP Shares” and
“—Description of Outstanding Acquiring Fund VRDP Shares.”
Holders of the New AMTP Shares will be entitled to receive
cash dividends when, as and if declared by the Acquiring Fund’s Board. The amount of dividends per New AMTP Share will equal the sum of dividends accumulated for each day but not yet paid during the relevant monthly dividend period. The amount
of dividends will be calculated based on an index rate equal to the SIFMA Municipal Swap Index plus an applicable spread. The applicable spread will be subject to adjustment in certain circumstances, including a change in the credit rating assigned
to the New AMTP Shares. The dividend amount shall in no circumstances exceed the liquidation preference described below multiplied by 15%, divided by the actual number of days in the year.
The outstanding AMTP Shares for Georgia Municipal have, and the New AMTP Shares will have, a term redemption date of December 1, 2028,
unless earlier redeemed or repurchased. The Acquiring Fund will be obligated to redeem the New AMTP Shares on December 1, 2028, unless earlier redeemed or repurchased by the Acquiring Fund, at a redemption price per share equal to the
liquidation preference per share ($100,000) plus any accumulated but unpaid dividends. The New AMTP Shares will be subject to optional and mandatory redemption in certain circumstances. The New AMTP Shares may be redeemed in whole or in part at the
option of the
55
Acquiring Fund at a redemption price per share equal to the liquidation preference per share plus any accumulated but unpaid dividends. In the event the Acquiring Fund fails to comply with asset
coverage and/or effective leverage ratio requirements and any such failure is not cured within the applicable cure period, the Acquiring Fund may become obligated to redeem such number of preferred shares as are necessary to achieve compliance with
such requirements.
Except as otherwise provided in the Acquiring Fund’s declaration of trust, the statement establishing and fixing
the rights and preferences (the “Statement”) of the New AMTP Shares, or as otherwise required by applicable law, (1) each holder of the New AMTP Shares will be entitled to one vote for each New AMTP Share held on each matter submitted
to a vote of shareholders of the Acquiring Fund, and (2) the holders of the New AMTP Shares, along with holders of other outstanding preferred shares of the Acquiring Fund, will vote with holders of common shares of the Acquiring Fund as a
single class; provided, however, that holders of preferred shares, including the New AMTP Shares, are entitled as a class to elect two trustees of the Acquiring Fund at all times. The holders of outstanding common shares and preferred shares,
including the New AMTP Shares, voting as a single class, will elect the balance of the trustees of the Acquiring Fund.
Holders of the New
AMTP Shares, as a separate class, will have voting and consent rights with respect to certain actions that would materially and adversely affect any preference, right or power of the New AMTP Shares or holders of the New AMTP Shares. In addition,
holders of the New AMTP Shares will have certain consent rights under the purchase agreement for the New AMTP Shares with respect to certain actions that would affect their investment in the Acquiring Fund. Holders of the New AMTP Shares also will
be entitled to vote as a class with holders of other preferred shares of the Acquiring Fund on matters that relate to the conversion of the Acquiring Fund to an open-end investment company, certain plans of
reorganization adversely affecting holders of the preferred shares or any other action requiring a vote of security holders of the Acquiring Fund under Section 13(a) of the 1940 Act. In certain circumstances, holders of preferred shares,
including the New AMTP Shares, are entitled to elect additional trustees in the event dividends are due and unpaid and sufficient cash or specified securities have not been deposited for their payment, or at any time holders of preferred shares are
entitled under the 1940 Act to elect a majority of the trustees of the Acquiring Fund.
The New AMTP Shares will be senior in priority to
the Acquiring Fund’s common shares as to the payment of dividends and as to the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The New AMTP Shares will have equal priority with the other
preferred shares of the Acquiring Fund, including the Acquiring Fund’s outstanding MFP Shares and VRDP Shares, any VRDP Shares to be issued by the Acquiring Fund in the Mergers and any other preferred shares that the Acquiring Fund may issue in
the future, as to the payment of dividends and as to distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund.
Description of VRDP Shares to Be Issued by the Acquiring Fund
If the Merger of Ohio Municipal takes place, the Acquiring Fund will issue VRDP Shares (the “New VRDP Shares”) pursuant to the
Agreement if VRDP Shares of Ohio Municipal are outstanding immediately prior to the closing.
The terms of the New VRDP Shares will be
substantially similar, as of the time of the closing of the Merger of Ohio Municipal, to the terms of the VRDP Shares of Ohio Municipal outstanding immediately prior to the closing of the Merger of Ohio Municipal. However, because of the Acquiring
Fund’s policy of investing in a nationally diversified portfolio of municipal securities, the terms of the New VRDP Shares will not include a provision, currently applicable to the Target Fund VRDP Shares, that generally would require an
additional payment to holders subject to Ohio income taxation in the event the Target Fund was required to allocate capital gains and/or ordinary income to a given month’s distribution in order to make such distribution equal, on an after-tax basis, to the amount of the distribution if it was excludable from Ohio income taxation (in addition to federal income taxation). The aggregate liquidation preference of the New VRDP Shares to be received
in the
56
Merger, if any, will equal the aggregate liquidation preference of the Ohio Municipal VRDP Shares held immediately prior to the closing of the Merger. The economic terms of any New VRDP Shares
likely may not be the same as the terms of the outstanding preferred shares of the Acquiring Fund. The number of VRDP Shares of Ohio Municipal currently outstanding may change prior to the Merger due to market or other conditions. See
“Additional Information About the Acquiring Fund—Description of Outstanding Acquiring Fund MFP Shares” and “—Description of Outstanding Acquiring Fund VRDP Shares.”
Holders of the New VRDP Shares will be entitled to receive cash dividends when, as and if declared by the Acquiring Fund’s Board. The
amount of dividends per New VRDP Share will equal the sum of dividends accumulated for each day but not yet paid during the relevant monthly dividend period. The amount of dividends will be calculated based on an index rate equal to the SIFMA
Municipal Swap Index or another index plus an applicable spread. The applicable spread will be subject to adjustment in certain circumstances, including a change in the credit rating assigned to the New VRDP Shares. The dividend rate shall in no
circumstances exceed 15% per year.
The outstanding VRDP Shares for Ohio Municipal have a final mandatory redemption date of
September 1, 2043, subject to earlier redemption or repurchase. The New VRDP Shares will have the same final mandatory redemption date as the corresponding Ohio Municipal VRDP Shares. The VRDP Shares of Ohio Municipal are (and the New VRDP
Shares will be) in a “Special Rate Period,” in which the dividend is currently a variable rate determined by reference to an index rate plus an applicable spread.
The New VRDP Shares will be subject to optional and mandatory redemption in certain circumstances. The Acquiring Fund is obligated to redeem
the New VRDP Shares on the final mandatory redemption date, unless earlier redeemed or repurchased by the Acquiring Fund, at a redemption price per share equal to the liquidation preference per share ($100,000) plus any accumulated but unpaid
dividends (whether or not earned or declared).
During the Special Rate Period for the New VRDP Shares, in the event the Acquiring
Fund fails to comply with asset coverage and/or effective leverage ratio requirements and any such failure is not cured within the applicable cure period, the Acquiring Fund may become obligated to redeem such number of preferred shares as are
necessary to achieve compliance with such requirements. Also, during the Special Rate Period for the New VRDP Shares, the Acquiring Fund is obligated to redeem all of the outstanding New VRDP Shares, in the event a Special Rate Period transition is
initiated and a failed transition occurs, if such failure is not cured within the applicable cure period.
New VRDP Shares also may be
redeemed in whole at any time or in part from time to time at the option of the Acquiring Fund at a redemption price per share equal to the liquidation preference per share plus any accumulated but unpaid dividends (whether or not earned or
declared).
The New VRDP Shares will be senior in priority to the Acquiring Fund’s common shares as to the payment of dividends and
as to the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The New VRDP Shares will have equal priority with the other preferred shares of the Acquiring Fund, including the Acquiring
Fund’s outstanding MFP Shares and VRDP Shares, any New AMTP Shares to be issued by the Acquiring Fund in the Mergers and any other preferred shares that the Acquiring Fund may issue in the future, as to the payment of dividends and as to
distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund.
Summary
Description of Massachusetts Business Trusts
The following description is based on relevant provisions of applicable Massachusetts
law and each Fund’s governing documents. This summary does not purport to be complete and we refer you to applicable Massachusetts law and each Fund’s operative documents.
57
General. Each Fund is a Massachusetts business trust. A fund organized as a Massachusetts
business trust is governed by the trust’s declaration of trust or similar instrument, and its by-laws (its “governing documents”). Massachusetts law allows the trustees of a business trust to
set the terms of a fund’s governance in its governing documents. All power and authority to manage the fund and its affairs generally reside with the trustees, and shareholder voting and other rights are limited to those provided to the
shareholders in the fund’s governing documents.
Because Massachusetts law governing business trusts provides more flexibility
compared to typical state corporate statutes, the Massachusetts business trust is a common form of organization for closed-end funds. However, some consider it less desirable than other entities because it
relies on the terms of the applicable declaration of trust and by-laws and judicial interpretations rather than statutory provisions for substantive issues, such as the personal liability of shareholders and
trustees, and does not provide the level of certitude that corporate laws or newer statutory trust laws, such as those of Delaware, provide.
Shareholders of a Massachusetts business trust are not afforded the statutory limitation of personal liability generally afforded to
shareholders of a corporation from the trust’s liabilities. Instead, the declaration of trust of a fund organized as a Massachusetts business trust typically provides that a shareholder will not be personally liable, and further provides for
indemnification to the extent that a shareholder is found personally liable, for the fund’s acts or obligations. The declaration of trust of each Fund contains such provisions.
Similarly, the trustees of a Massachusetts business trust are not afforded statutory protection from personal liability for the obligations of
the trust. However, courts in Massachusetts have recognized limitations of a trustee’s personal liability in contract actions for the obligations of a trust contained in the trust’s declaration of trust, and declarations of trust may also
provide that trustees may be indemnified out of the assets of the trust to the extent held personally liable. The declaration of trust of each Fund contains such provisions.
The Funds
Each
Fund is organized as a Massachusetts business trust and is governed by its declaration of trust and by-laws. Under the declaration of trust of each Fund, any determination as to what is in the interests of the
Fund made by the trustees in good faith is conclusive, and in construing the provisions of the declaration of trust, there is a presumption in favor of a grant of power to the trustees. Further, the declaration of trust provides that certain
determinations made in good faith by the trustees are binding upon the Fund and all shareholders, and shares are issued and sold on the condition and understanding, evidenced by the purchase of shares, that any and all such determinations will be so
binding. The by-laws of each Fund provide that each shareholder of the Fund, by virtue of having become a shareholder, shall be held to have expressly assented and agreed to be bound by the terms of the
Fund’s governing documents. The Funds’ declaration of trusts are substantially the same, and the Funds have adopted the same by-laws. The following is a summary of some of the key provisions of the
Funds’ governing documents.
Shareholder Voting. The declaration of trust of each Fund limits shareholder voting to certain
enumerated matters, including certain amendments to the declaration of trust, the election of trustees if required by the 1940 Act, the merger or consolidation of the Fund with any corporation or a reorganization or sales of assets in certain
circumstances and matters required to be voted on by the 1940 Act, or, for Georgia Municipal and the Acquiring Fund, a recapitalization of the Fund (under certain circumstances).
Meetings of shareholders may be called by the trustees and by the written request of shareholders owning at least 10% of the outstanding
shares entitled to vote. The holders of a majority (more than 50%) of the voting power of the shares of beneficial interest of the Fund entitled to vote at a meeting will constitute a quorum for the transaction of business. Notwithstanding the
foregoing, when the holders of preferred shares are entitled to elect any of a Fund’s trustees by class vote of such holders, the holders of thirty-three and one-third percent (33 1/3%) of the preferred
shares entitled to vote at a meeting shall constitute a quorum for the purpose of such an election.
58
Unless other voting provisions contained in the Fund’s governing documents or the 1940 Act apply, the affirmative vote of the holders of a majority (more than 50%) of the shares present in
person or by proxy and entitled to vote at a meeting of shareholders at which a quorum is present is required to approve a matter. The governing documents require a super-majority vote in certain circumstances with respect to a merger, consolidation
or dissolution of or sale of substantially all of the assets by, the Fund, or its conversion to an open-end investment company and that the affirmative vote of a majority (more than 50%) of the shares
outstanding and entitled to vote is required to elect trustees in a “contested election” (i.e., an election in which the number of trustees nominated exceeds the number of trustees to be elected), but that a plurality vote applies in an
uncontested election.
The by-laws of each Fund provide that common shares held by a
shareholder who obtains beneficial ownership of common shares in a “Control Share Acquisition” shall have the same voting rights as other common shares only to the extent authorized by the Fund’s shareholders (the “Control Share
Provision”). Such authorization shall require the affirmative vote of the holders of a majority (more than 50%) of the shares of the Fund entitled to vote in the election of trustees, excluding Interested Shares. Interested Shares include
shares held by Fund officers and any person who has acquired common shares in a Control Share Acquisition. The by-laws define a “Control Share Acquisition,” subject to various conditions and
exceptions, generally to mean an acquisition of common shares that would give the beneficial owner, upon the acquisition of such shares, the ability to exercise voting power, but for the Control Share Provision, in the election of trustees (except
for any elections of trustees by holders of preferred shares voting as a separate class) in any one of the following ranges: (i) one-tenth or more, but less than
one-fifth of all voting power; (ii) one-fifth or more, but less than one-third of all voting power; (iii) one-third or more, but less than a majority of all voting power; or (iv) a majority or more of all voting power. For this purpose, all common shares acquired by a person within ninety days before or
after the date on which such person acquires shares that result in a Control Share Acquisition, and all common shares acquired by such person pursuant to a plan to make a Control Share Acquisition, shall be deemed to have been acquired in the same
Control Share Acquisition. Subject to various conditions and procedural requirements, including the delivery of a “Control Share Acquisition Statement” to the Fund setting forth certain required information, a shareholder who obtains or
proposes to obtain beneficial ownership of common shares in a Control Share Acquisition generally may request a vote of shareholders to approve the authorization of voting rights of such shareholder with respect to such shares. See “General
Information—Additional Information About the Solicitation” at page 117 for a description of certain legal matters with respect to the Control Share Provision.
Shareholder Meetings. Meetings of shareholders may be called by the trustees and must be called upon the written request of
shareholders entitled to cast at least 10% of all votes entitled to be cast at the meeting. Shareholder requests for special meetings are subject to various requirements under each Fund’s by-laws,
including as to the specific form of, and information required in, a shareholder’s request to call such a meeting. A shareholder may request a special meeting only to act on a matter upon which such shareholder is entitled to vote, and
shareholders may not request special meetings for the purpose of electing trustees.
The by-laws
of each Fund authorize the trustees or the chair of a shareholder meeting to adopt rules, regulations and procedures appropriate for the proper conduct of the meeting, which may include (i) the establishment of an agenda or order of business
for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on by the shareholders present or represented at the meeting; (iii) rules and procedures for maintaining order at the meeting
and the safety of those present; (iv) limitations on attendance at and participation in the meeting by shareholders, their duly authorized and constituted proxies or such other persons as the chair of the meeting shall determine;
(v) restrictions on entry to the meeting after the time fixed for the commencement thereof; (vi) limitations on the time allotted to questions or comments by shareholders; and (vii) the extent to which, if any, other participants are
permitted to speak.
The by-laws of each Fund establish qualification criteria applicable to
prospective trustees and generally require that advance notice be given to the Fund in the event a shareholder desires to nominate a person for election to the Board or to transact any other business at a meeting of shareholders. Any notice by a
shareholder
59
must be accompanied by certain information as required by the by-laws. No shareholder proposal will be considered at any meeting of shareholders of a Fund
if such proposal is submitted by a shareholder who does not satisfy all applicable requirements set forth in the by-laws.
Election and Removal of Trustees. The declaration of trust of each Fund provides that the trustees determine the size of the Board,
subject to a minimum and a maximum number. Subject to the provisions of the 1940 Act, the declaration of trust also provides that vacancies on the Board may be filled by the remaining trustees. A trustee may be removed only for cause and only by
action of at least two-thirds of the remaining trustees or by action of at least two-thirds of the outstanding shares of the class or classes that elected such trustee.
The by-laws of each Fund establish qualification requirements applicable to any person who is recommended, nominated, elected, appointed, qualified or seated as a trustee.
Pursuant to each Fund’s by-laws, the Fund’s Board is divided into three classes (Class I,
Class II and Class III) with staggered multi-year terms, such that only the members of one of the three classes stand for election each year. The staggered board structure could delay for up to two years the election of a majority of the
Board of each Fund. The board structure of the Acquiring Fund will remain in place following the closing of the Mergers.
Issuance of
Shares. Under the declaration of trust of each Fund, the trustees are permitted to issue an unlimited number of shares for such consideration and on such terms as the trustees may determine. Shareholders are not entitled to any preemptive rights
or other rights to subscribe to additional shares, except as the trustees may determine. Shares are subject to such other preferences, conversion, exchange or similar rights, as the trustees may determine.
Classes. The declaration of trust of each Fund gives broad authority to the trustees to establish classes or series in addition to
those currently established and to determine the rights and preferences, conversion rights, voting powers, restrictions, limitations, qualifications or terms or conditions of redemptions of the shares of the classes or series. The trustees are also
authorized to terminate a class or series without a vote of shareholders under certain circumstances.
Amendments to Governing
Documents. Amendments to the declaration of trust generally require the consent of shareholders owning more than 50% of shares entitled to vote, voting in the aggregate. Certain amendments may be made by the trustees without a shareholder vote,
and any amendment to the voting requirements contained in the declaration of trust requires the approval of two-thirds of the outstanding common shares and preferred shares, if any, entitled to vote, voting in
the aggregate and not by class except to the extent that applicable law or the declaration of trust may require voting by class. Each Fund’s by-laws may be amended or repealed, or new by-laws may be adopted, by a vote of a majority of the trustees. The by-laws of each Fund may not be amended by shareholders.
Shareholder, Trustee and Officer Liability. The declaration of trust of each Fund provides that shareholders have no personal liability
for the acts or obligations of the Fund and requires the Fund to indemnify a shareholder from any loss or expense arising solely by reason of his or her being or having been a shareholder and not because of his or her acts or omissions or for some
other reason. In addition, each declaration of trust provides that the Fund will assume the defense of any claim against a shareholder for personal liability at the request of the shareholder. Similarly, each declaration of trust provides that any
person who is a trustee, officer or employee of the Fund is not personally liable to any person in connection with the affairs of the Fund, other than to the Fund and its shareholders arising from such trustee’s, officer’s or
employee’s bad faith, willful misfeasance, gross negligence or reckless disregard for his or her duty. Each declaration of trust further provides for indemnification of such persons and advancement of the expenses of defending any such actions
for which indemnification might be sought. Each declaration of trust also provides that the trustees may rely in good faith on expert advice.
60
Forum Selection. Each Fund’s by-laws provide
that, unless the Fund consents in writing to the selection of an alternative forum, and except for certain claims brought under the federal securities laws, the sole and exclusive forum for any shareholder or group of shareholders to bring
(i) any derivative action or proceeding brought on behalf of the Fund, (ii) any action asserting a claim for breach of any duty owed by a trustee or officer or other employee of a Fund to the Fund or to the Fund’s shareholders,
(iii) any action asserting a claim arising pursuant to Massachusetts business trust law or the Fund’s governing documents, and (iv) any other action asserting a claim governed by the internal affairs doctrine, shall be within the
United States District Court for the District of Massachusetts (Boston Division) or, to the extent such court does not have jurisdiction, the Business Litigation Session of the Massachusetts Superior Court in Suffolk County. Each Fund’s by-laws further provide that in any such covered action there is no right to a jury trial and the right to a jury trial is expressly waived to the fullest extent permitted by law.
Derivative and Direct Claims of Shareholders. Each Fund’s by-laws contain provisions
regarding derivative and direct claims of shareholders. Massachusetts has what is commonly referred to as a “universal demand statute,” which requires that a shareholder make a written demand on the board, requesting the trustees to bring
an action, before the shareholder is entitled to bring or maintain a derivative action in the right of or name of or on behalf of the trust. Under the Massachusetts statute, a shareholder whose demand has been refused by the trustees may bring the
claim only if the shareholder demonstrates to a court that the trustees’ decision not to pursue the requested action was not a good faith exercise of their business judgment on behalf of the Fund. The
by-laws of each Fund largely incorporate the substantive elements of the Massachusetts statute and establish procedures for shareholders to bring derivative actions and for the Board to consider shareholder
demands that the Fund commence a suit. In addition, the by-laws of each Fund distinguish direct actions from derivative claims and prohibit the latter from being brought directly by a shareholder.
61
| D. |
ADDITIONAL INFORMATION ABOUT THE INVESTMENT POLICIES |
Comparison of the Investment Objectives and Policies of the Acquiring Fund and the Target Funds
General
The
Funds have similar investment objectives, but there are differences. Each Target Fund is a state-specific municipal fund that seeks to provide current income exempt from regular federal income tax and the income tax of a single state. In contrast,
the Acquiring Fund is a national municipal fund that seeks to provide current income exempt from regular federal income tax.
Georgia
Municipal’s investment objectives are current income exempt from regular federal and Georgia income tax and the enhancement of portfolio value relative to the municipal bond market by investing in
tax-exempt municipal bonds that the Fund’s investment adviser or sub-adviser believes are underrated or undervalued or that represent municipal market sectors that
are undervalued. As a fundamental policy, under normal circumstances, Georgia Municipal will invest at least 80% of its Assets in municipal securities and other related investments the income from which is exempt from regular federal and Georgia
income taxes.
Ohio Municipal’s primary investment objective is current income exempt from both regular federal income taxes and Ohio
personal income taxes, and its secondary investment objective is the enhancement of portfolio value relative to the Ohio municipal bond market through investments in tax-exempt Ohio municipal obligations that,
in the opinion of the Fund’s investment adviser or sub-adviser are underrated or undervalued or that represent municipal market sectors that are undervalued. As a fundamental policy, under normal
circumstances, Ohio Municipal will invest at least 80% of its Assets, in municipal securities and other related investments the income from which is exempt from regular federal and Ohio income taxes.
The Acquiring Fund’s investment objectives are to provide current income exempt from regular federal income tax and to enhance portfolio
value relative to the municipal bond market by investing in tax-exempt municipal bonds that the Fund’s investment adviser or sub-adviser believes are underrated or
undervalued or that represent municipal market sectors that are undervalued. Under normal circumstances, the Acquiring Fund will invest at least 80% of its Assets (as defined below) in municipal securities and other related investments, the income
from which is exempt from regular federal income taxes.
As a non-fundamental policy, under
normal circumstances, the Acquiring Fund may invest up to 55% of its Managed Assets in securities that, at the time of investment, are rated below the three highest grades (Baa or BBB or lower) by at least one NRSRO or unrated securities judged to
be of comparable quality by the Fund’s sub-adviser. As a non-fundamental investment policy, under normal circumstances, each Target Fund will invest at least 80% of
its Managed Assets in investment grade quality municipal securities. A security is considered investment grade if, at the time of investment, it is rated within the four highest letter grades (Baa or BBB or better) by at least one NRSRO that rates
such security (even if rated lower by another), or if it is unrated but judged to be of comparable quality by the Fund’s sub-adviser (such securities are commonly referred to as split-rated securities).
Under normal circumstances, each Target Fund may invest up to 20% of its Managed Assets in municipal securities that, at the time of investment, are rated below investment grade (Ba or BB or lower) by all NRSROs or are unrated but judged to be of
comparable quality by the Fund’s sub-adviser. As a non-fundamental policy, under normal circumstances, each Fund will limit the amount of AMT Bonds to no more than
20% of Managed Assets.
Note that (1) each Fund’s investment objectives; (2) Georgia Municipal’s policy to invest
at least 80% of its Assets in municipal securities and other related investments the income from which is exempt from regular federal and Georgia income taxes; (3) Ohio Municipal’s policy to invest at least 80% of its Assets, in municipal
securities and other related investments the income from which is exempt from regular federal and Ohio income taxes and (4) the Acquiring Fund’s policy to invest, under normal circumstances, at least 80% of its Assets in
62
municipal securities and other related investments, the income from which is exempt from regular federal income taxes, may not be changed without the approval of the holders of a majority of the
outstanding common and preferred shares voting together as a single class, and the approval of the holders of a majority of the outstanding preferred shares, voting separately as a single class. When used with respect to particular shares of a Fund,
a “majority of the outstanding” shares means (1) 67% or more of the shares present at a meeting, if the holders of more than 50% of the shares are present in person (including participation by means of remote or “virtual”
communication) or represented by proxy, or (2) more than 50% of the shares, whichever is less.
Investment Policies of the
Acquiring Fund
Under normal circumstances, the Acquiring Fund will invest at least 80% of its Assets in municipal securities and
other related investments, the income from which is exempt from regular federal income taxes.
As a
non-fundamental policy, under normal circumstances, the Acquiring Fund may invest up to 55% of its Managed Assets in securities that, at the time of investment, are rated below the three highest grades (Baa or
BBB or lower) by at least one NRSRO or are unrated but judged to be of comparable quality by the Fund’s sub-adviser.
The Acquiring Fund generally invests in municipal securities with long-term maturities in order to maintain an average effective maturity of
15 to 30 years, including the effects of leverage, but the average effective maturity of obligations held by the Fund may be lengthened or shortened as a result of portfolio transactions effected by the Adviser and/or the Sub-Adviser, depending on market conditions and on an assessment by the portfolio manager of which segments of the municipal securities markets offer the most favorable relative investment values and opportunities
for tax-exempt income and total return.
Under normal circumstances:
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The Acquiring Fund may invest up to 20% of its Managed Assets in AMT Bonds. |
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The Acquiring Fund may invest up to 15% of its Managed Assets in inverse floating rate securities.
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The Acquiring Fund may not enter into a futures contract or related options or forward contracts if more than 30%
of the Fund’s Managed Assets would be represented by futures contracts or more than 5% of the Fund’s Managed Assets would be committed to initial margin deposits and premiums on futures contracts or related options. |
Investment Policies of Georgia Municipal
As a fundamental policy, under normal circumstances, Georgia Municipal will invest at least 80% of its Assets in municipal securities and
other related investments the income from which is exempt from regular federal and Georgia income taxes.
Georgia Municipal emphasizes
investments in municipal securities with long- or intermediate-term maturities. The Fund buys municipal securities with different maturities and intends to maintain an average portfolio maturity of 15 to 30 years, although this may be shortened
depending on market conditions. As a result, Georgia Municipal’s portfolio may include long-term and intermediate-term municipal securities.
Under normal circumstances:
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Georgia Municipal will invest at least 80% of its Managed Assets in municipal securities that at the time of
investment are investment grade quality. A security is considered investment grade quality if it is rated within the four highest letter grades (Baa or BBB or better) by at least one NRSRO that rates such security (even if it is rated lower by
another), or if it is unrated by any NRSRO but judged to be of comparable quality by the Sub-Adviser. |
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Georgia Municipal may invest up to 20% of its Managed Assets in municipal securities that at the time of
investment are rated below investment grade or are unrated by any NRSRO but judged to be of comparable quality by the Sub-Adviser. |
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No more than 10% of the Georgia Municipal’s Managed Assets may be invested in municipal securities rated
below B-/B3 or that are unrated but judged to be of comparable quality by the Sub-Adviser. |
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The Fund may invest up to 20% of its Managed Assets in AMT Bonds. |
Investment Policies of Ohio Municipal
As a fundamental policy, under normal circumstances, Ohio Municipal will invest at least 80% of its Assets, in municipal securities and other
related investments the income from which is exempt from regular federal and Ohio income taxes.
Ohio Municipal emphasizes investments in
municipal securities with long- or intermediate-term maturities. The Fund generally invests in municipal securities with different maturities to maintain an average portfolio maturity of 15 to 30 years, although this may be shortened depending on
market conditions.
Under normal circumstances:
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Ohio Municipal will invest at least 80% of its Managed Assets in investment grade municipal securities that, at
the time of investment, are rated within the four highest grades (Baa or BBB or better) by at least one NRSRO or are unrated but judged to be of comparable quality by the Fund’s investment adviser. |
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Ohio Municipal may invest up to 20% of its Managed Assets in municipal securities that at the time of investment
are rated below investment grade (Ba or BB or lower) or are unrated but judged to be of comparable quality by the Fund’s investment adviser. |
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No more than 10% of Ohio Municipal’s Managed Assets may be invested in municipal securities rated below B3/B- or that are unrated but judged to be of comparable quality by the Fund’s investment adviser. |
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Ohio Municipal may not enter into a futures contract or related options or forward contracts if more than 30% of
its Managed Assets would be represented by futures contracts or more than 5% of its Managed Assets would be committed to initial margin deposits and premiums on futures contracts or related options. |
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Ohio Municipal may invest up to 20% of its Managed Assets in AMT Bonds. |
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Ohio Municipal may invest up to 15% of its Managed Assets in inverse floating rate securities.
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Ohio Municipal may invest up to 10% of its Managed Assets in securities of other open- or closed-end investment companies (including ETFs) that invest primarily in municipal securities of the types in which the Fund may invest directly. |
Use of Leverage
Each Fund uses leverage to pursue its investment objectives. The Funds may use leverage to the extent permitted by the 1940 Act. The Funds may
source leverage through a number of methods including the issuance of preferred shares, investments in inverse floating rate securities and borrowings. In addition, the Funds may also use certain derivatives that have the economic effect of leverage
by creating additional investment exposure. The amount and sources of leverage will vary depending on market conditions.
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Temporary Defensive Periods
During temporary defensive periods (e.g., times when, in the Adviser’s and/or the
Sub-Adviser’s opinion, temporary imbalances of supply and demand or other temporary dislocations in the tax-exempt bond market adversely affect the price at which
long-term or intermediate-term municipal securities are available), and in order to keep a Fund’s cash fully invested, each Fund may invest any percentage of its Managed Assets in short-term investments including high quality, short-term debt
securities that may be either tax-exempt or taxable. The Funds may not achieve their investment objectives during such periods.
Portfolio Investments
Municipal Securities
General. The Acquiring Fund may invest in various municipal securities, including municipal bonds and notes, other securities issued to
finance and refinance public projects, and other related securities and derivative instruments creating exposure to municipal bonds, notes and securities that provide for the payment of interest income that is exempt from regular federal income tax.
Municipal securities are generally debt obligations issued by state and local governmental entities and may be issued by U.S. territories and possessions to finance or refinance public projects such as roads, schools, and water supply systems.
Municipal securities may also be issued on behalf of private entities or for private activities, such as housing, medical and educational facility construction, or for privately owned transportation, electric utility and pollution control projects.
Municipal securities may be issued on a long-term basis to provide permanent financing. The repayment of such debt may be secured generally by a pledge of the full faith and credit taxing power of the issuer, a limited or special tax, or any other
revenue source including project revenues, which may include tolls, fees and other user charges, lease payments, and mortgage payments. Municipal securities may also be issued to finance projects on a short-term interim basis, anticipating repayment
with the proceeds of the later issuance of long-term debt. Municipal securities may be issued and purchased in the form of bonds, notes, leases or certificates of participation; structured as callable or
non-callable; with payment forms including fixed coupon, variable rate, zero coupon, capital appreciation bonds, tender option bonds and residual interest bonds or inverse floating rate securities; or acquired
through investments in pooled vehicles, partnerships or other investment companies. Inverse floating rate securities are securities that pay interest at rates that vary inversely with changes in prevailing short-term
tax-exempt interest rates and represent a leveraged investment in an underlying municipal security, which may increase the effective leverage of the Acquiring Fund.
The Acquiring Fund may invest in municipal bonds issued by U.S. territories and possessions (such as Puerto Rico or Guam) the income from
which is exempt from regular federal income tax. The yields on municipal securities depend on a variety of factors, including prevailing interest rates and the condition of the general money market and the municipal bond market, the size of a
particular offering, the maturity of the obligation and the rating of the issue. The market value of municipal securities will vary with changes in interest rate levels and as a result of changing evaluations of the ability of their issuers to meet
interest and principal payments.
Tobacco Settlement Bonds. The Acquiring Fund may invest in tobacco settlement bonds, which are
municipal securities that are backed solely by expected revenues to be derived from lawsuits involving tobacco related deaths and illnesses which were settled between certain states and U.S. tobacco companies. Tobacco settlement bonds are secured by
an issuing state’s proportionate share in the Master Settlement Agreement (“MSA”). The MSA is an agreement, reached out of court in November 1998 between 46 states and nearly all of the U.S. tobacco manufacturers. The MSA
provides for annual payments in perpetuity by the manufacturers to the states in exchange for releasing all claims against the manufacturers and a pledge of no further litigation. Tobacco manufacturers pay into a master escrow trust based on their
market share, and each state receives a fixed percentage of the payment as set forth in the MSA. A number of states have securitized the future flow of those payments by selling bonds pursuant to indentures or through distinct governmental entities
created for such
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purpose. The principal and interest payments on the bonds are backed by the future revenue flow related to the MSA. Annual payments on the bonds, and thus risk to a Fund, are highly dependent on
the receipt of future settlement payments to the state or its governmental entity.
The actual amount of future settlement payments is
further dependent on many factors, including, but not limited to, annual domestic cigarette shipments, reduced cigarette consumption, increased taxes on cigarettes, inflation, financial capability of tobacco companies, continuing litigation and the
possibility of tobacco manufacturer bankruptcy. The initial and annual payments made by the tobacco companies will be adjusted based on a number of factors, the most important of which is domestic cigarette consumption. If the volume of cigarettes
shipped in the United States by manufacturers participating in the settlement decreases significantly, payments due from them will also decrease. Demand for cigarettes in the United States could continue to decline due to price increases needed to
recoup the cost of payments by tobacco companies. Demand could also be affected by anti-smoking campaigns, tax increases, reduced advertising, and enforcement of laws prohibiting sales to minors; elimination of certain sales venues such as vending
machines; and the spread of local ordinances restricting smoking in public places. As a result, payments made by tobacco manufacturers could be negatively impacted if the decrease in tobacco consumption is significantly greater than the forecasted
decline. A market share loss by the MSA companies to non-MSA participating tobacco manufacturers would cause a downward adjustment in the payment amounts. A participating manufacturer filing for bankruptcy
also could cause delays or reductions in bond payments. The MSA itself has been subject to legal challenges and has, to date, withstood those challenges.
Municipal Leases and Certificates of Participation. The Acquiring Fund also may purchase municipal securities that represent lease
obligations and certificates of participation in such leases. These carry special risks because the issuer of the securities may not be obligated to appropriate money annually to make payments under the lease. A municipal lease is an obligation in
the form of a lease or installment purchase that is issued by a state or local government to acquire equipment and facilities. Income from such obligations generally is exempt from state and local taxes in the state of issuance. Leases and
installment purchase or conditional sale contracts (which normally provide for title to the leased asset to pass eventually to the governmental issuer) have evolved as a means for governmental issuers to acquire property and equipment without
meeting the constitutional and statutory requirements for the issuance of debt. The debt issuance limitations are deemed to be inapplicable because of the inclusion in many leases or contracts of
“non-appropriation” clauses that relieve the governmental issuer of any obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis. In addition, such leases or contracts may be subject to the temporary abatement of payments in the event the issuer is prevented from maintaining occupancy of the leased premises or
utilizing the leased equipment or facilities.
Although the obligations may be secured by the leased equipment or facilities, the
disposition of the property in the event of non-appropriation or foreclosure might prove difficult, time consuming and costly, and result in a delay in recovering, or the failure to recover fully, the
Acquiring Fund’s original investment. To the extent that the Acquiring Fund invests in unrated municipal leases or participates in such leases, the credit quality rating and risk of cancellation of such unrated leases will be monitored on an
ongoing basis. In order to reduce this risk, the Acquiring Fund will purchase municipal securities representing lease obligations only where the Adviser and/or the Sub-Adviser believes the issuer has a strong
incentive to continue making appropriations until maturity.
A certificate of participation represents an undivided interest in an
unmanaged pool of municipal leases, an installment purchase agreement or other instruments. The certificates typically are issued by a municipal agency, a trust or other entity that has received an assignment of the payments to be made by the state
or political subdivision under such leases or installment purchase agreements. Such certificates provide the Acquiring Fund with the right to a pro rata undivided interest in the underlying municipal securities. In addition, such
participations generally provide the Acquiring Fund with the right to demand payment, on not more than seven days’ notice, of all or any part of the Fund’s participation interest in the underlying municipal securities, plus accrued
interest.
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Municipal Notes. Municipal securities in the form of notes generally are used to provide
for short-term capital needs, in anticipation of an issuer’s receipt of other revenues or financing, and typically have maturities of up to three years. Such instruments may include tax anticipation notes, revenue anticipation notes, bond
anticipation notes, tax and revenue anticipation notes and construction loan notes. Tax anticipation notes are issued to finance the working capital needs of governments. Generally, they are issued in anticipation of various tax revenues, such as
income, sales, property, use and business taxes, and are payable from these specific future taxes. Revenue anticipation notes are issued in expectation of receipt of other kinds of revenue, such as federal revenues available under federal revenue
sharing programs. Bond anticipation notes are issued to provide interim financing until long-term bond financing can be arranged. In most cases, the long-term bonds then provide the funds needed for repayment of the bond anticipation notes. Tax and
revenue anticipation notes combine the funding sources of both tax anticipation notes and revenue anticipation notes. Construction loan notes are sold to provide construction financing. Mortgage notes insured by the Federal Housing Authority secure
these notes; however, the proceeds from the insurance may be less than the economic equivalent of the payment of principal and interest on the mortgage note if there has been a default. The anticipated revenues from taxes, grants or bond financing
generally secure the obligations of an issuer of municipal notes. However, an investment in such instruments presents a risk that the anticipated revenues will not be received or that such revenues will be insufficient to satisfy the issuer’s
payment obligations under the notes or that refinancing will be otherwise unavailable.
Pre-Refunded Municipal Securities. The principal of, and interest on, pre-refunded municipal securities are no longer paid from the original revenue source for the securities. Instead, the source of such payments is typically an escrow fund consisting of U.S. government securities.
The assets in the escrow fund are derived from the proceeds of refunding bonds issued by the same issuer as the pre-refunded municipal securities. Issuers of municipal securities use this advance refunding
technique to obtain more favorable terms with respect to securities that are not yet subject to call or redemption by the issuer. For example, advance refunding enables an issuer to refinance debt at lower market interest rates, restructure debt to
improve cash flow or eliminate restrictive covenants in the indenture or other governing instrument for the pre-refunded municipal securities. However, except for a change in the revenue source from which
principal and interest payments are made, the pre-refunded municipal securities remain outstanding on their original terms until they mature or are redeemed by the issuer.
Private Activity Bonds. Private activity bonds are issued by or on behalf of public authorities to obtain funds to provide privately
operated housing facilities, airport, mass transit or port facilities, sewage disposal, solid waste disposal or hazardous waste treatment or disposal facilities and certain local facilities for water supply, gas or electricity. Other types of
private activity bonds, the proceeds of which are used for the construction, equipment, repair or improvement of privately operated industrial or commercial facilities, may constitute municipal securities, although the current federal tax laws place
substantial limitations on the size of such issues.
Inverse Floating Rate Securities. The Acquiring Fund may invest in inverse
floating rate securities. Inverse floating rate securities are securities whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index. Generally, inverse floating rate securities represent
beneficial interests in a special purpose trust, commonly referred to as a “tender option bond trust” (“TOB trust”), that holds municipal bonds. The TOB trust typically sells two classes of beneficial interests or securities:
floating rate securities (sometimes referred to as short-term floaters or tender option bonds (“TOBs”)), and inverse floating rate securities (sometimes referred to as inverse floaters). Both classes of beneficial interests are represented
by certificates or receipts. The floating rate securities have first priority on the cash flow from the municipal bonds held by the TOB trust. In this structure, the floating rate security holders have the option, at periodic short-term intervals,
to tender their securities to the trust for purchase and to receive the face value thereof plus accrued interest. The obligation of the trust to repurchase tendered securities is supported by a remarketing agent and by a liquidity provider. As
consideration for providing this support, the remarketing agent and the liquidity provider receive periodic fees. The holder of the short-term floater effectively holds a demand obligation that bears
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interest at the prevailing short-term, tax-exempt rate. However, the trust is not obligated to purchase tendered short-term floaters in the event of
certain defaults with respect to the underlying municipal bonds or a significant downgrade in the credit rating assigned to the bond issuer.
As the holder of an inverse floating rate investment, the Acquiring Fund receives the residual cash flow from the TOB trust. Because the
holder of the short-term floater is generally assured liquidity at the face value of the security plus accrued interest, the holder of the inverse floater assumes the interest rate cash flow risk and the market value risk associated with the
municipal bond deposited into the TOB trust. The volatility of the interest cash flow and the residual market value will vary with the degree to which the trust is leveraged. This is expressed in the ratio of the total face value of the short-term
floaters to the value of the inverse floaters that are issued by the TOB trust, and can exceed three times for more “highly leveraged” trusts. All voting rights and decisions to be made with respect to any other rights relating to the
municipal bonds held in the TOB trust are passed through, pro rata, to the holders of the short-term floaters and to the Acquiring Fund as the holder of the associated inverse floaters.
Because any increases in the interest rate on the short-term floaters issued by a TOB trust would reduce the residual interest paid on the
associated inverse floaters, and because fluctuations in the value of the municipal bond deposited in the TOB trust would affect only the value of the inverse floater and not the value of the short-term floater issued by the trust so long as the
value of the municipal bond held by the trust exceeded the face amount of short-term floaters outstanding, the value of inverse floaters is generally more volatile than that of an otherwise comparable municipal bond held on an unleveraged basis
outside a TOB trust. Inverse floaters generally will underperform the market of fixed-rate bonds in a rising interest rate environment (i.e., when bond values are falling), but will tend to outperform the market of fixed-rate bonds when interest
rates decline or remain relatively stable. Although volatile in value and return, inverse floaters typically offer the potential for yields higher than those available on fixed-rate bonds with comparable credit quality, coupon, call provisions and
maturity. Inverse floaters have varying degrees of liquidity or illiquidity based primarily upon the inverse floater holder’s ability to sell the underlying bonds deposited in the TOB trust at an attractive price.
The Acquiring Fund may invest in inverse floating rate securities issued by TOB trusts in which the liquidity providers have recourse to the
Fund pursuant to a separate shortfall and forbearance agreement. Such an agreement would require the Acquiring Fund to reimburse the liquidity provider, among other circumstances, upon termination of the TOB trust for the difference between the
liquidation value of the bonds held in the trust and the principal amount and accrued interest due to the holders of floating rate securities issued by the trust. The Acquiring Fund will enter into such a recourse agreement (1) when the
liquidity provider requires such a recourse agreement because the level of leverage in the TOB trust exceeds the level that the liquidity provider is willing to support absent such an agreement; and/or (2) to seek to prevent the liquidity
provider from collapsing the trust in the event the municipal bond held in the trust has declined in value to the point where it may cease to exceed the face amount of outstanding short-term floaters. In an instance where the Acquiring Fund has
entered such a recourse agreement, the Fund may suffer a loss that exceeds the amount of its original investment in the inverse floating rate securities; such loss could be as great as that original investment amount plus the face amount of the
floating rate securities issued by the trust plus accrued interest thereon.
The Acquiring Fund may invest in both inverse floating rate
securities and floating rate securities (as discussed below) issued by the same TOB trust.
Investments in inverse floating rate
securities create leverage. The use of leverage creates special risks for common shareholders. See “B. Risk Factors—Inverse Floating Rate Securities Risk.”
Floating Rate Securities. The Acquiring Fund may also invest in short-term floating rate securities, as described above, issued by TOB
trusts. Generally, the interest rate earned will be based upon the market rates for municipal securities with maturities or remarketing provisions that are comparable in duration to the periodic interval of the tender option, which may vary from
weekly, to monthly, to other periods of up to one year. Since
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the tender option feature provides a shorter term than the final maturity or first call date of the underlying municipal bond deposited in the trust, the Acquiring Fund, as the holder of the
floating rate securities, relies upon the terms of the remarketing and liquidity agreements with the financial institution that acts as remarketing agent and/or liquidity provider as well as the credit strength of that institution. As further
assurance of liquidity, the terms of the TOB trust provide for a liquidation of the municipal bond deposited in the trust and the application of the proceeds to pay off the floating rate securities. The TOB trusts that are organized to issue both
short-term floating rate securities and inverse floaters generally include liquidation triggers to protect the investor in the floating rate securities.
Special Taxing Districts. Special taxing districts are organized to plan and finance infrastructure developments to induce residential,
commercial and industrial growth and redevelopment. The bond financing methods such as tax increment finance, tax assessment, special services district and Mello- Roos bonds, generally are payable solely from taxes or other revenues attributable to
the specific projects financed by the bonds without recourse to the credit or taxing power of related or overlapping municipalities. They often are exposed to real estate development-related risks and can have more taxpayer concentration risk than
general tax-supported bonds, such as general obligation bonds. Further, the fees, special taxes, or tax allocations and other revenues that are established to secure such financings generally are limited as to
the rate or amount that may be levied or assessed and are not subject to increase pursuant to rate covenants or municipal or corporate guarantees. The bonds could default if development failed to progress as anticipated or if larger taxpayers failed
to pay the assessments, fees and taxes as provided in the financing plans of the districts.
Illiquid Securities
The Acquiring Fund may invest in illiquid securities (i.e., securities that are not readily marketable), including, but not limited to,
restricted securities (securities the disposition of which is restricted under the federal securities laws), securities that may be resold only pursuant to Rule 144A under the 1933 Act, and repurchase agreements with maturities in excess of seven
days.
Restricted securities may be sold only in privately negotiated transactions or in a public offering with respect to which a
registration statement is in effect under the 1933 Act. Where registration is required, the Acquiring Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell
and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Acquiring Fund might obtain a less favorable price than that which
prevailed when it decided to sell. Illiquid securities will be priced at a fair value as determined in good faith by the Board or its delegatee.
When-Issued and Delayed-Delivery Transactions
The Acquiring Fund may buy and sell municipal securities on a when-issued or delayed-delivery basis, making payment or taking delivery at a
later date, normally within 15 to 45 days of the trade date. On such transactions, the payment obligation and the interest rate are fixed at the time the buyer enters into the commitment. Beginning on the date the Acquiring Fund enters into a
commitment to purchase securities on a when-issued or delayed-delivery basis, the Fund is required under interpretations of the SEC to maintain in a separate account liquid assets, consisting of cash, cash equivalents or liquid securities having a
market value, at all times, at least equal to the amount of the commitment. Income generated by any such assets which provide taxable income for federal income tax purposes is includable in the taxable income of the Acquiring Fund and, to the extent
distributed, will be taxable to shareholders. The Acquiring Fund may enter into contracts to purchase municipal securities on a forward basis (i.e., where settlement will occur more than 60 days from the date of the transaction) only to the extent
that the Fund specifically collateralizes such obligations with a security that is expected to be called or mature within 60 days before or after the settlement date of the forward transaction. The commitment to purchase securities on a when-issued,
delayed-delivery or forward basis may involve an element of risk because no interest accrues on the bonds prior to settlement and, at the time of delivery, the market value may be less than cost.
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Derivatives
General. The Acquiring Fund may invest in certain derivative instruments in pursuit of its investment objectives. Such instruments
include financial futures contracts, swap contracts (including interest rate swaps, credit default swaps and MMD Rate Locks), options on financial futures, options on swap contracts or other derivative instruments. Credit default swaps may require
initial premium (discount) payments as well as periodic payments (receipts) related to the interest leg of the swap or to the default of a reference obligation. If the Acquiring Fund is a seller of a contract, the Fund would be required to pay the
par (or other agreed upon) value of a referenced debt obligation to the counterparty in the event of a default or other credit event by the reference issuer, such as a U.S. or foreign corporate issuer, with respect to such debt obligations. In
return, the Acquiring Fund would receive from the counterparty a periodic stream of payments over the term of the contract provided that no event of default has occurred. If no default occurs, the Acquiring Fund would keep the stream of payments and
would have no payment obligations. As the seller, the Acquiring Fund would be subject to investment exposure on the notional amount of the swap. If the Acquiring Fund is a buyer of a contract, the Fund would have the right to deliver a referenced
debt obligation and receive the par (or other agreed-upon) value of such debt obligation from the counterparty in the event of a default or other credit event (such as a credit downgrade) by the reference issuer, such as a U.S. or foreign
corporation, with respect to its debt obligations. In return, the Acquiring Fund would pay the counterparty a periodic stream of payments over the term of the contract provided that no event of default has occurred. If no default occurs, the
counterparty would keep the stream of payments and would have no further obligations to the Acquiring Fund. Interest rate swaps involve the exchange by the Acquiring Fund with a counterparty of their respective commitments to pay or receive
interest, such as an exchange of fixed-rate payments for floating rate payments. The Acquiring Fund will usually enter into interest rate swaps on a net basis; that is, the two payment streams will be netted out in a cash settlement on the payment
date or dates specified in the instrument, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. An MMD Rate Lock permits the Acquiring Fund to lock in a specified municipal interest rate for a portion of
its portfolio to preserve a return on a particular investment or a portion of its portfolio as a duration management technique or to protect against any increase in the price of securities to be purchased at a later date. By using an MMD Rate Lock,
the Acquiring Fund can create a synthetic long or short position, allowing the Fund to select what the manager believes is an attractive part of the yield curve. The Acquiring Fund will ordinarily use these transactions as a hedge or for duration or
risk management although it is permitted to enter into them to enhance income or gain or to increase the Acquiring Fund’s yield, for example, during periods of steep interest rate yield curves (i.e., wide differences between short term and long
term interest rates).
The Adviser and/or the Sub-Adviser may use derivative instruments to seek
to enhance return, to hedge some of the risks of the Acquiring Fund’s investments in municipal securities or as a substitute for a position in the underlying asset. These types of strategies may generate taxable income.
There is no assurance that these derivative strategies will be available at any time or that the Adviser and/or the Sub-Adviser will determine to use them for the Acquiring Fund or, if used, that the strategies will be successful.
Limitations on the Use of Futures, Options on Futures and Swaps. The Adviser has claimed, with respect to the Acquiring Fund, the
exclusion from the definition of “commodity pool operator” under the CEA provided by CFTC Regulation 4.5 and is therefore not currently subject to registration or regulation as such under the CEA with respect to the Fund. In addition, the Sub-Adviser has claimed the exemption from registration as a commodity trading advisor provided by CFTC Regulation 4.14(a)(8) and is therefore not currently subject to registration or regulation as such under the
CEA with respect to the Acquiring Fund. In February 2012, the CFTC announced substantial amendments to certain exemptions, and to the conditions for reliance on those exemptions, from registration as a commodity pool operator. Under amendments
to the exemption provided under CFTC Regulation 4.5, if the Acquiring Fund uses futures, options on futures, or swaps other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums on these positions
(after taking
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into account unrealized profits and unrealized losses on any such positions and excluding the amount by which options that are
“in-the-money” at the time of purchase are “in-the-money”) may not
exceed 5% of the Fund’s net asset value, or alternatively, the aggregate net notional value of those positions may not exceed 100% of the Fund’s net asset value (after taking into account unrealized profits and unrealized losses on any
such positions). The CFTC amendments to Regulation 4.5 took effect on December 31, 2012, and the Acquiring Fund intends to comply with amended Regulation 4.5’s requirements such that the Adviser will not be required to register as a
commodity pool operator with the CFTC with respect to the Fund. The Acquiring Fund reserves the right to employ futures, options on futures and swaps to the extent allowed by CFTC regulations in effect from time to time and in accordance with the
Fund’s policies. However, the requirements for qualification as a regulated investment company under Subchapter M of the Code may limit the extent to which the Acquiring Fund may employ futures, options on futures or swaps.
Structured Notes
The Acquiring Fund may utilize structured notes and similar instruments for investment purposes and also for hedging purposes. Structured
notes are privately negotiated debt obligations where the principal and/or interest is determined by reference to the performance of a benchmark asset, market or interest rate (an “embedded index”), such as selected securities, an index of
securities or specified interest rates, or the differential performance of two assets or markets. The terms of such structured instruments normally provide that their principal and/or interest payments are to be adjusted upwards or downwards (but
not ordinarily below zero) to reflect changes in the embedded index while the structured instruments are outstanding. As a result, the interest and/or principal payments that may be made on a structured product may vary widely, depending upon a
variety of factors, including the volatility of the embedded index and the effect of changes in the embedded index on principal and/or interest payments. The rate of return on structured notes may be determined by applying a multiplier to the
performance or differential performance of the referenced index or indices or other assets. Application of a multiplier involves leverage that will serve to magnify the potential for gain and the risk of loss.
Other Investment Companies
The Acquiring Fund may invest in securities of other open- or closed-end investment companies
(including ETFs) that invest primarily in municipal securities of the types in which the Fund may invest directly, to the extent permitted by the 1940 Act, the rules and regulations issued thereunder and applicable exemptive orders issued by the
SEC. In addition, the Acquiring Fund may invest a portion of its Managed Assets in pooled investment vehicles (other than investment companies) that invest primarily in municipal securities of the types in which the Fund may invest directly. The
Acquiring Fund generally expects that it may invest in other investment companies and/or other pooled investment vehicles either during periods when it has large amounts of uninvested cash or during periods when there is a shortage of attractive,
high yielding municipal securities available in the market. The Acquiring Fund may invest in investment companies that are advised by the Adviser and/or the Sub-Adviser or their affiliates to the extent
permitted by applicable law and/or pursuant to rules promulgated by the SEC. As a shareholder in an investment company, the Acquiring Fund will bear its ratable share of that investment company’s expenses and would remain subject to payment of
its own management fees with respect to assets so invested. Common shareholders would therefore be subject to duplicative expenses to the extent the Acquiring Fund invests in other investment companies.
The Adviser and/or the Sub-Adviser will take expenses into account when evaluating the investment
merits of an investment in an investment company relative to available municipal security investments. In addition, the securities of other investment companies may also be leveraged and will therefore be subject to the same leverage risks described
herein. The net asset value and market value of leveraged shares will be more volatile, and the yield to common shareholders will tend to fluctuate more than the yield generated by unleveraged shares.
71
Inter-Fund Borrowing and Lending
The SEC has granted an exemptive order permitting the Nuveen registered open-end and closed-end funds, including the Acquiring Fund, to
participate in an inter-fund lending facility whereby those funds may directly lend to and borrow money from each other for temporary purposes (e.g., to satisfy redemption requests or when a sale of securities “fails,” resulting in
an unanticipated cash shortfall) (the “Inter-Fund Program”). The closed-end Nuveen funds will participate only as lenders, and not as borrowers, in the Inter-Fund Program because such closed-end funds rarely, if ever, need to borrow cash
to meet redemptions. The Inter-Fund Program is subject to a number of conditions, including, among other things, the requirements that (1) no fund may borrow or lend money through the Inter-Fund Program unless it receives a more favorable interest
rate than is typically available from a bank or other financial institution for a comparable transaction; (2) no fund may borrow on an unsecured basis through the Inter-Fund Program unless the fund’s outstanding borrowings from all sources
immediately after the inter-fund borrowing total 10% or less of its total assets; provided that if the borrowing fund has a secured borrowing outstanding from any other lender, including but not limited to another fund, the inter-fund loan must be
secured on at least an equal priority basis with at least an equivalent percentage of collateral to loan value; (3) if a fund’s total outstanding borrowings immediately after an inter-fund borrowing would be greater than 10% of its total
assets, the fund may borrow through the inter-fund loan on a secured basis only; (4) no fund may lend money if the loan would cause its aggregate outstanding loans through the Inter-Fund Program to exceed 15% of its net assets at the time of the
loan; (5) a fund’s inter-fund loans to any one fund shall not exceed 5% of the lending fund’s net assets; (6) the duration of inter-fund loans will be limited to the time required to receive payment for securities sold, but in no event
more than seven days; and (7) each inter-fund loan may be called on one business days’ notice by a lending fund and may be repaid on any day by a borrowing fund. In addition, a Nuveen fund may participate in the Inter-Fund Program only if and
to the extent that such participation is consistent with the fund’s investment objective and investment policies. The Board of Trustees of the Nuveen Funds is responsible for overseeing the Inter-Fund Program. The limitations detailed above and
the other conditions of the SEC exemptive order permitting the Inter-Fund Program are designed to minimize the risks associated with Inter-Fund Program for both the lending fund and the borrowing fund. However, no borrowing or lending activity is
without risk. When a fund borrows money from another fund, there is a risk that the loan could be called on one day’s notice or not renewed, in which case the fund may have to borrow from a bank at a higher rate or take other actions to payoff
such loan if an inter-fund loan is not available from another fund. Any delay in repayment to a lending fund could result in a lost investment opportunity or additional borrowing costs.
Zero Coupon Bonds
A zero coupon bond is a bond that typically does not pay interest either for the entire life of the obligation or for an initial period after
the issuance of the obligation. When held to its maturity, the holder receives the par value of the zero coupon bond, which generates a return equal to the difference between the purchase price and its maturity value. A zero coupon bond is normally
issued and traded at a deep discount from face value. This original issue discount (“OID”) approximates the total amount of interest the security will accrue and compound prior to its maturity and reflects the payment deferral and credit
risk associated with the instrument. Because zero coupon securities and other OID instruments do not pay cash interest at regular intervals, the instruments’ ongoing accruals require ongoing judgments concerning the collectability of deferred
payments and the value of any associated collateral. As a result, these securities may be subject to greater value fluctuations and less liquidity in the event of adverse market conditions than comparably rated securities that pay cash on a current
basis. Because zero coupon bonds, and OID instruments generally, allow an issuer to avoid or delay the need to generate cash to meet current interest payments, they may involve greater payment deferral and credit risk than coupon loans and bonds
that pay interest currently or in cash. The Acquiring Fund generally will be required to distribute dividends to shareholders representing the income of these instruments as it accrues, even though the Fund will not receive all of the income on a
current basis or in cash. Thus, the Acquiring Fund may have to sell other investments, including when it may not be advisable to do so, and use the cash proceeds to make income distributions to its shareholders. For accounting purposes, these cash
distributions to shareholders will not be treated as a return of capital.
72
Further, the Adviser collects management fees on the value of a zero coupon bond or OID
instrument attributable to the ongoing noncash accrual of interest over the life of the bond or other instrument. As a result, the Adviser receives nonrefundable cash payments based on such noncash accruals while investors incur the risk that such
noncash accruals ultimately may not be realized.
Hedging Strategies
The Acquiring Fund may use various investment strategies designed to limit the risk of bond price fluctuations and to preserve capital. These
hedging strategies include using financial futures contracts, options on financial futures or options based on either an index of long-term municipal securities or on taxable debt securities whose prices, in the opinion of the Adviser and/or the Sub-Adviser, correlate with the prices of the Acquiring Fund’s investments. These hedging strategies may generate taxable income.
Each Board recommends that shareholders vote FOR the approval of the Agreement and Plan of Merger.
73
PROPOSAL NO. 2—THE ELECTION OF BOARD MEMBERS
(COMMON SHAREHOLDERS OF GEORGIA MUNICIPAL ONLY)
Pursuant to the governing documents of Georgia Municipal, the Fund’s Board is divided into three classes (Class I, Class II
and Class III), to be elected by the holders of the outstanding shares to serve until the third succeeding annual meeting of shareholders subsequent to their election or thereafter, in each case until their successors have been duly elected and
qualified. The preferred shareholders of Georgia Municipal are being solicited to vote on this Proposal No. 2, including the election of such Board Members to be elected by the preferred shareholders of Georgia Municipal, by means of a separate
proxy statement.
Four (4) Board Members are to be elected by holders of common and preferred shares of Georgia Municipal, voting
together as a single class. Board Members Lancellotta, Nelson and Toth have been designated as Class II Board Members and are nominees for election at the Annual Meeting to serve for a term expiring at the 2026 annual meeting of shareholders or
until their successors have been duly elected and qualified. Board Member Young has been designated as a Class I Board Member and is a nominee for election at the Annual Meeting to serve for a term expiring at the 2025 annual meeting of shareholders
or until his successor has been duly elected and qualified. Board Members Hunter and Moschner are nominees to be elected by holders of preferred shares for a term expiring at the next annual meeting or until their successors have been duly elected
and qualified.
Board Members Evans, Medero, Thornton and Wolff are current and continuing Board Members. Board Member Wolff has been
designated as a Class I Board Member for a term expiring at the 2025 annual meeting of shareholders or until her successor has been duly elected and qualified. Board Members Evans, Medero and Thornton have been designated as Class III
Board Members for a term expiring at the 2024 annual meeting of shareholders or until their successors have been duly elected and qualified. Board Members Stockdale and Stone currently serve as Class I Board Members and are scheduled to retire as of
December 31, 2022.
It is the intention of the persons named in the enclosed proxy to vote the shares represented thereby for the
election of the nominees listed in the table below unless the proxy is marked otherwise. Each of the nominees has agreed to serve as a Board Member of Georgia Municipal if elected. However, should any nominee become unable to serve or for good cause
will not serve, the proxies will be voted for substitute nominees, if any, designated by Georgia Municipal’s present Board.
Current Class I Board Members Stockdale, Stone and Wolff were last elected at the annual meeting of shareholders held on April 8,
2022. Current Class II Board Members Nelson, Toth and Young were last elected at the annual meeting of shareholders held on April 22, 2020. Board Member Lancellotta was appointed to Georgia Municipal’s Board as a Class II Board
Member effective June 1, 2021. Class III Board Members Evans and Thornton were last elected at the annual meeting of shareholders held on April 6, 2021. Board Member Medero was appointed to Georgia Municipal’s Board as a
Class III Board Member effective June 1, 2021. Board Members Hunter and Moschner were last elected at the annual meeting of shareholders held on April 8, 2022.
Each of the Board Members and Board Member nominees is not an “interested person,” as defined in the 1940 Act, of Georgia Municipal
or of Nuveen Fund Advisors, LLC (previously defined as “Nuveen Fund Advisors” or the “Adviser”), the investment adviser to Georgia Municipal, and has never been an employee or director of the Adviser, Nuveen, the Adviser’s
parent company, or any affiliate. Accordingly, such Board Members are deemed “Independent Board Members.”
The affirmative vote
of a plurality (the greatest number of affirmative votes) of the shares present and entitled to vote at the Meeting will be required to elect each Board Member of Georgia Municipal. When there are four (4) nominees for election to the Board, as
is the case here, a vote by plurality means the four nominees with the highest number of affirmative votes, regardless of the votes withheld for the nominees, will be elected. Because the election of Board Members does not require that a minimum
percentage of Georgia Municipal’s outstanding common shares be voted in favor of any nominee, assuming the presence of a quorum, abstentions and broker non-votes will have no effect on the outcome of the
election of Georgia Municipal’s Board Members.
74
The affirmative vote of a plurality of Georgia Municipal’s preferred shares, voting separately, will be required to elect Board Members Hunter and Moschner.
The Board of Georgia Municipal unanimously recommends that shareholders vote FOR the election of each Board Member nominee.
Board Nominees/Board Members
|
|
|
|
|
|
|
|
|
|
|
| Name,
Business
Address
and Year
of
Birth |
|
Position(s)
Held with
Fund |
|
Term of
Office and
Length of
Time Served
with Funds
in the
Fund Complex;
Nominee(1) |
|
Principal
Occupation(s)
During Past Five
Years |
|
Number
of
Portfolios
in Fund
Complex
Overseen
by Board
Member |
|
Other
Directorships
Held by
Board Member
During
the Past Five
Years |
| Board Members/Nominees who are not “interested persons” of the
Funds |
|
|
|
|
|
|
Terence J.
Toth
c/o
Nuveen
333 West
Wacker
Drive
Chicago,
IL 60606
1959 |
|
Chair of the Board; Board Member |
|
Term: Class II Board Member until 2023 annual shareholder meeting and nominee as Class II Board Member until 2026 annual shareholder meeting
Length of Service:
Since 2008, Chair of the Board since
July 2018 |
|
Formerly, Co-Founding Partner, Promus Capital (investment advisory firm) (2008-2017); formerly, Director of Quality Control Corporation (manufacturing) (2012-2021); formerly,
Director of Fulcrum IT Services LLC (information technology services firm to government entities) (2010-2019); formerly, Director, LogicMark LLC (health services) (2012-2016); formerly, Director, Legal & General Investment Management
America, Inc. (asset management) (2008-2013); formerly, CEO and President, Northern Trust Global Investments (financial services) (2004-2007); Executive Vice President, Quantitative Management & Securities Lending (2000-2004); prior
thereto, various positions with Northern Trust Company (financial services) (since 1994); Chair of the Board of the Kehrein Center for the Arts (philanthropy) (since 2021); Member of Catalyst Schools of Chicago Board (since 2008) and Mather
Foundation Board (philanthropy) (since 2012) and is Chair of its Investment Committee; formerly, Member, Chicago Fellowship |
|
143 |
|
None |
75
|
|
|
|
|
|
|
|
|
|
|
| Name,
Business
Address
and Year
of
Birth |
|
Position(s)
Held with
Fund |
|
Term of
Office and
Length of
Time Served
with Funds
in the
Fund Complex(1) |
|
Principal
Occupation(s)
During Past Five
Years |
|
Number
of
Portfolios
in Fund
Complex
Overseen
by Board
Member |
|
Other
Directorships
Held by
Board Member
During
the Past Five
Years |
|
|
|
|
|
|
Board (philanthropy) (2005- 2016); formerly, Member, Northern Trust Mutual Funds Board (2005-2007), Northern Trust Global Investments Board (2004-2007), Northern Trust Japan Board (2004-2007), Northern Trust Securities Inc. Board
(2003-2007) and Northern Trust Hong Kong Board (1997-2004). |
|
|
|
|
|
|
|
|
|
|
Jack B. Evans
c/o
Nuveen
333
West Wacker Drive Chicago,
IL 60606
1948 |
|
Board Member |
|
Term: Class III Board Member until 2024 annual shareholder meeting
Length of Service:
Since 1999 |
|
Chairman (since 2019), formerly, President (1996-2019), The Hall-Perrine Foundation (private philanthropic corporation); Life Trustee of Coe College; formerly, Director, Public Member, American Board of Orthopaedic Surgery
(2015-2020); Director (1997-2003) Federal Reserve Bank of Chicago; President and Chief Operating Officer (1972-1995), SCI Financial Group, Inc. (regional financial services firm); Member and President Pro Tem of the Board of Regents for the State of
Iowa University System (2007-2013); Director (1996-2015), The Gazette Company (media and publishing). |
|
143 |
|
Formerly, Director and Chairman (2009-2021), United Fire Group, a publicly held company; Director (2000-2004), Alliant Energy |
|
|
|
|
|
|
William
C.
Hunter
c/o
Nuveen
333
West Wacker Drive Chicago,
IL 60606
1948 |
|
Board Member |
|
Term: Annual Member until 2023 annual shareholder meeting and nominee for term until 2024 annual shareholder meeting
Length of Service:
Since 2004 |
|
Dean Emeritus, formerly, Dean (2006-2012), Tippie College of Business, University of Iowa; past Director (2005-2015) and past President (2010-2014) of Beta Gamma Sigma, Inc., The International Business Honor Society; formerly,
Director (1997-2007), Credit Research Center at Georgetown University; formerly, Dean and Distinguished Professor of Finance (2003-2006), School of Business at the University of |
|
143 |
|
Director (since 2009) of Wellmark, Inc.; formerly, Director (2004-2018) of Xerox Corporation. |
76
|
|
|
|
|
|
|
|
|
|
|
| Name,
Business
Address
and Year
of
Birth |
|
Position(s)
Held with
Fund |
|
Term of
Office and
Length of
Time Served
with Funds
in the
Fund Complex(1) |
|
Principal
Occupation(s)
During Past Five
Years |
|
Number
of
Portfolios
in Fund
Complex
Overseen
by Board
Member |
|
Other
Directorships
Held by
Board Member
During
the Past Five
Years |
|
|
|
|
|
|
Connecticut; previously, Senior Vice President and Director of Research (1995-2003) at the Federal Reserve Bank of Chicago. |
|
|
|
|
|
|
|
|
|
|
| Amy B. R. Lancellotta c/o Nuveen
333 West
Wacker Drive
Chicago, IL 60606 1959 |
|
Board Member |
|
Term: Class II Board Member until 2023 annual shareholder meeting and nominee for Class II Board Member until 2026 annual shareholder
meeting
Length of Service: Since 2021 |
|
Formerly, Managing Director, Independent Directors Council (IDC) (supports the fund independent director community and is part of the Investment Company Institute (ICI), which represents regulated investment companies) (2006-2019);
formerly, various positions with ICI (1989-2006); Member of the Board of Directors, Jewish Coalition Against Domestic Abuse (JCADA) (since 2020). |
|
143 |
|
None |
|
|
|
|
|
|
| Joanne T. Medero c/o Nuveen
333 West Wacker
Drive
Chicago, IL 60606 1954 |
|
Board Member |
|
Term: Class III Board Member until 2024 annual shareholder meeting
Length of Service: Since 2021 |
|
Formerly, Managing Director, Government Relations and Public Policy (2009-2020) and Senior Advisor to the Vice Chairman (2018-2020), BlackRock, Inc. (global investment management firm); formerly, Managing Director, Global Head of
Government Relations and Public Policy, Barclays Group (IBIM) (investment banking, investment management and wealth management businesses) (2006-2009); formerly, Managing Director, Global General Counsel and Corporate Secretary, Barclays Global
Investors (global investment management firm) (1996-2006); formerly, Partner, Orrick, Herrington & Sutcliffe LLP (law firm) (1993-1995); formerly, General Counsel, Commodity Futures Trading Commission (government agency overseeing U.S.
derivatives markets) (1989-1993); formerly, Deputy Associate Director/ |
|
143 |
|
None |
77
|
|
|
|
|
|
|
|
|
|
|
| Name,
Business
Address
and Year
of
Birth |
|
Position(s)
Held with
Fund |
|
Current Term
of Office and
Length of
Time Served
with Funds
in the
Fund Complex;
Nominee(1) |
|
Principal
Occupation(s)
During Past Five
Years |
|
Number
of
Portfolios
in Fund
Complex
Overseen
by Board
Member |
|
Other
Directorships
Held by
Board Member
During
the Past Five
Years |
|
|
|
|
|
|
Associate Director for Legal and Financial Affairs, Office of Presidential Personnel, The White House (1986-1989); Member of the Board of Directors, Baltic-American Freedom Foundation (seeks to provide opportunities for citizens of
the Baltic states to gain education and professional development through exchanges in the U.S.) (since 2019). |
|
|
|
|
|
|
|
|
|
|
Albin F. Moschner
c/o
Nuveen
333 West Wacker Drive Chicago,
IL 60606
1952 |
|
Board Member |
|
Term: Annual Board Member until 2023 annual shareholder meeting and nominee for term until 2024 annual shareholder meeting
Length of Service:
Since 2016 |
|
Founder and Chief Executive Officer, Northcroft Partners, LLC (management consulting) (since 2012); previously, held positions at Leap Wireless International, Inc. (consumer wireless services), including Consultant (2011-2012),
Chief Operating Officer (2008-2011) and Chief Marketing Officer (2004-2008); formerly, President, Verizon Card Services division of Verizon Communications, Inc. (telecommunications services) (2000-2003); formerly, President, One Point Services at
One Point Communications (telecommunications services) (1999-2000); formerly, Vice Chairman of the Board, Diba, Incorporated (internet technology provider) (1996-1997); formerly, various executive positions (1991-1996), including Chief Executive
Officer (1995-1996) of Zenith Electronics Corporation (consumer electronics). |
|
143 |
|
Formerly, Chairman (2019) and Director (2012-2019), USA Technologies, Inc., a provider of solutions and services to facilitate electronic payment transactions; formerly, Director, Wintrust Financial Corporation
(1996-2016). |
78
|
|
|
|
|
|
|
|
|
|
|
| Name,
Business
Address
and Year
of
Birth |
|
Position(s)
Held with
Fund |
|
Current Term
of Office and
Length of
Time Served
with Funds
in the
Fund Complex;
Nominee(1) |
|
Principal
Occupation(s)
During Past Five
Years |
|
Number
of
Portfolios
in Fund
Complex
Overseen
by Board
Member |
|
Other
Directorships
Held by
Board Member
During
the Past Five
Years |
John K. Nelson
c/o
Nuveen
333 West Wacker Drive Chicago, IL 60606
1962 |
|
Board Member |
|
Term: Class II Board Member until 2023 annual shareholder meeting and nominee for Class II Board Member term until 2026 annual
shareholder meeting Length of Service:
Since 2013 |
|
Member of Board of Directors of Core12 LLC (private firm which develops branding, marketing and communications strategies for clients) (since 2008); served on The President’s Council of Fordham University (2010-2019) and
previously a Director of the Curran Center for Catholic American Studies (2009-2018); formerly, senior external advisor to the Financial Services practice of Deloitte Consulting LLP (2012-2014); former Chair of the Board of Trustees of Marian
University (2010-2014 as trustee, 2011-2014 as Chair); formerly Chief Executive Officer of ABN AMRO Bank N.V., North America, and Global Head of the Financial Markets Division (2007-2008), with various executive leadership roles in ABN AMRO Bank
N.V. between 1996 and 2007. |
|
143 |
|
None |
|
|
|
|
|
|
Judith M. Stockdale
c/o
Nuveen
333 West Wacker Drive Chicago, IL 60606
1947 |
|
Board Member |
|
Term: Class I Board Member until 2025 annual shareholder meeting
Length of Service:
Since 1997 |
|
Board Member of the Land Trust Alliance (national public charity addressing natural land and water conservation in the U.S.) (since 2013); formerly, Board Member of the U.S. Endowment for Forestry and Communities (national endowment
addressing forest health, sustainable forest production and markets, and economic health of forest-reliant communities in the U.S.) (2013-2019); formerly, Executive Director (1994-2012), Gaylord and Dorothy Donnelley Foundation (private foundation
endowed to support both natural land conservation and artistic vitality); prior thereto, Executive Director, Great Lakes Protection Fund (endowment created jointly by seven of the eight Great Lake |
|
143 |
|
None |
79
|
|
|
|
|
|
|
|
|
|
|
| Name,
Business
Address
and Year
of
Birth |
|
Position(s)
Held with
Fund |
|
Current Term
of Office and
Length of
Time Served
with Funds
in the
Fund Complex;
Nominees(1) |
|
Principal
Occupation(s)
During Past Five
Years |
|
Number
of
Portfolios
in Fund
Complex
Overseen
by Board
Member |
|
Other
Directorships
Held by
Board Member
During
the Past Five
Years |
|
|
|
|
|
|
states’ Governors to take a regional approach to improving the health of the Great Lakes) (1990-1994). |
|
|
|
|
|
|
|
|
|
|
Carole E. Stone
c/o
Nuveen
333 West Wacker Drive Chicago, IL 60606
1947 |
|
Board Member |
|
Term: Class I Board Member until 2025 annual shareholder meeting
Length of Service:
Since 2007 |
|
Former Director, Chicago Board Options Exchange (2006-2017) and C2 Options Exchange, Incorporated (2009-2017); formerly, Commissioner, New York State Commission on Public Authority Reform (2005-2010). |
|
143 |
|
Formerly, Director, Cboe Global Markets, Inc. (2010-2020) (formerly named CBOE Holdings, Inc.). |
|
|
|
|
|
|
| Matthew Thornton
III c/o Nuveen
333
West Wacker Drive Chicago, IL 60606 1958 |
|
Board Member |
|
Term: Class III Board Member until 2024 annual shareholder meeting
Length of Service: Since 2020 |
|
Formerly, Executive Vice President and Chief Operating Officer (2018-2019), FedEx Freight Corporation, a subsidiary of FedEx Corporation (“FedEx”) (provider of transportation,
e-commerce and business services through its portfolio of companies); formerly, Senior Vice President, U.S. Operations (2006-2018), Federal Express Corporation, a subsidiary of FedEx; formerly, Member of the
Board of Directors (2012-2018), Safe Kids Worldwide® (non-profit organization dedicated to preventing childhood injuries). |
|
143 |
|
Member of the Board of Directors (since 2014), The Sherwin-Williams Company (develops, manufactures, distributes and sells paints, coatings and related products); Member of the Board of Directors (since 2020), Crown Castle
International (provider of communications infrastructure). |
80
|
|
|
|
|
|
|
|
|
|
|
| Name,
Business
Address
and Year
of
Birth |
|
Position(s)
Held with
Fund |
|
Current Term
of Office and
Length of
Time Served
with Funds
in the
Fund Complex;
Nominee(1) |
|
Principal
Occupation(s)
During Past Five
Years |
|
Number
of
Portfolios
in Fund
Complex
Overseen
by Board
Member |
|
Other
Directorships
Held by
Board Member
During
the Past Five
Years |
Margaret L. Wolff
c/o Nuveen
333 West Wacker Drive Chicago, IL 60606
1955 |
|
Board Member |
|
Term: Class I Board Member until 2025 annual shareholder meeting
Length of Service:
Since 2016 |
|
Formerly, Of Counsel (2005-2014), Skadden, Arps, Slate, Meagher & Flom LLP (Mergers & Acquisitions Group) (legal services); Member of the Board of Trustees of New York-Presbyterian Hospital (since 2005); Member
(since 2004), formerly, Chair (2015-2022) of the Board of Trustees of The John A. Hartford Foundation (philanthropy dedicated to improving the care of older adults); formerly, Member (2005-2015) and Vice Chair (2011-2015) of the Board of Trustees of
Mt. Holyoke College. |
|
143 |
|
Formerly, Member of the Board of Directors (2013-2017) of Travelers Insurance Company of Canada and The Dominion of Canada General Insurance Company (each, a part of Travelers Canada, the Canadian operation of The Travelers
Companies, Inc.). |
|
|
|
|
|
|
Robert L. Young
c/o Nuveen
333 West Wacker Drive Chicago, IL 60606
1963 |
|
Board Member |
|
Term: Class II Board Member until 2023 annual shareholder meeting and nominee as Class I Board Member until 2025 annual shareholder
meeting Length of Service:
Since 2017 |
|
Formerly, Chief Operating Officer and Director, J.P. Morgan Investment Management Inc. (financial services) (2010-2016); formerly, President and Principal Executive Officer (2013-2016), and Senior Vice President and Chief
Operating Officer (2005-2010), of J.P. Morgan Funds; formerly, Director and various officer positions for J.P. Morgan Investment Management Inc. (formerly, JPMorgan Funds Management, Inc. and formerly, One Group Administrative Services)
and JPMorgan Distribution Services, Inc. (financial services) (formerly, One Group Dealer Services, Inc.) (1999-2017). |
|
143 |
|
None |
| (1) |
Length of Time Served indicates the year in which the individual became a Board Member of a fund in the Nuveen
fund complex. |
81
Board Member Investments in the Funds
In order to create an appropriate identity of interests between Board Members and shareholders, the Boards of Directors/Trustees of the Nuveen
funds have adopted a governance principle pursuant to which each Board Member is expected to invest, either directly or on a deferred basis, at least the equivalent of one year of compensation in the funds in the Nuveen fund complex.
The following table sets forth for each Board Member the dollar range of equity securities beneficially owned in each Fund and all Nuveen
funds overseen by the Board Member as of December 31, 2021. The information as to beneficial ownership is based on statements furnished by each Board Member/nominee.
Dollar Range of Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name of Board Member/Nominee |
|
Georgia
Municipal |
|
|
Ohio
Municipal |
|
|
Acquiring Fund |
|
Family of
Investment
Companies(1) |
| Jack B. Evans |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
Over $100,000 |
| William C. Hunter |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
Over $100,000 |
| Amy B.R. Lancellotta |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
0 |
| Joanne T. Medero |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
0 |
| Albin F. Moschner |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
Over $100,000 |
| John K. Nelson |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
Over $100,000 |
| Judith M. Stockdale |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
Over $100,000 |
| Carole E. Stone |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
Over $100,000 |
| Matthew Thornton III |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
0 |
| Terence J. Toth |
|
$ |
0 |
|
|
$ |
0 |
|
|
$10,001-$50,000 |
|
Over $100,000 |
| Margaret L. Wolff |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
Over $100,000 |
| Robert L. Young |
|
$ |
0 |
|
|
$ |
0 |
|
|
$0 |
|
Over $100,000 |
| (1) |
The amounts reflect the aggregate dollar range of equity securities of the number of shares beneficially owned
by the Board Member/nominee of the Funds and in all Nuveen Funds overseen by each Board Member/nominee. |
No Independent
Board Member or his or her immediate family member owns beneficially or of record any security of Nuveen Fund Advisors, Nuveen Asset Management, LLC, the Funds’ sub-adviser (previously defined as
“Nuveen Asset Management” or the “Sub-Adviser”), Nuveen or any person (other than a registered investment company) directly or indirectly controlling, controlled by or under common control
with Nuveen Fund Advisors, Nuveen Asset Management or Nuveen.
As of December 31, 2021, each Board Member’s individual beneficial
shareholdings of each Fund constituted less than 1% of the outstanding shares of the Fund. As of December 31, 2021, the Board Members and executive officers as a group beneficially owned less than 1% of the outstanding shares of each Fund.
Information regarding beneficial owners that, to the knowledge of the Funds, own 5% or more of any class of shares of either Fund is provided under “General Information—Shareholders of the Target Funds and the Acquiring Fund.”
Compensation
Effective January 1, 2022, Independent Board Members receive a $205,000 annual retainer, increased from $200,000 as of January 1,
2021, plus; (a) a fee of $7,000 per day for attendance in person or by telephone at regularly scheduled meetings of the Board; (b) a fee of $3,000 per meeting for attendance in person or by telephone at special, non-regularly scheduled Board meetings where in-person attendance is required and $3,000, increased from $2,000 as of January 1, 2021, per meeting for attendance by
telephone or in person at such meetings where in-person attendance is not required; (c) a fee of $2,500 per meeting for attendance in person or by telephone at Audit Committee meetings where in-person attendance is required and $2,250, increased from
82
$2,000 as of January 1, 2021, per meeting for attendance by telephone or in person at such meetings where in-person attendance is not required;
(d) a fee of $5,000 per meeting for attendance in person or by telephone at Compliance, Risk Management and Regulatory Oversight Committee meetings where in-person attendance is required and $2,000 per
meeting for attendance by telephone or in person at such meetings where in-person attendance is not required; (e) a fee of $1,250, increased from $1,000 as of January 1, 2021, per meeting for
attendance in person or by telephone at Dividend Committee meetings; (f) a fee of $500 per meeting for attendance in person or by telephone at all other committee meetings ($1,000 for shareholder meetings) where
in-person attendance is required and $250 per meeting for attendance by telephone or in person at such committee meetings (excluding shareholder meetings) where
in-person attendance is not required, and $100 per meeting when the Executive Committee acts as pricing committee for IPOs, plus, in each case, expenses incurred in attending such meetings; provided that no
fees are received for meetings held on days on which regularly scheduled Board meetings are held; and (g) a fee of $2,500 per meeting for attendance in person or by telephone at Closed-End Funds Committee
meetings where in-person attendance is required and $2,000 per meeting for attendance by telephone or in person at such meetings where in-person attendance is not
required; provided that no fees are received for meetings held on days on which regularly scheduled Board meetings are held. In addition to the payments described above, the Chair of the Board receives $125,000, increased from $100,000 as of
January 1, 2021, and the chairpersons of the Audit Committee, the Dividend Committee, the Compliance, Risk Management and Regulatory Oversight Committee, the Nominating and Governance Committee and the
Closed-End Funds Committee receive $20,000, increased from $15,000 as of January 1, 2021, each as additional retainers. Independent Board Members also receive a fee of $3,500 per day for site visits to
entities that provide services to the Nuveen funds on days on which no Board meeting is held. When ad hoc committees are organized, the Nominating and Governance Committee will at the time of formation determine compensation to be paid to the
members of such committee; however, in general, such fees will be $1,000 per meeting for attendance in person or by telephone at ad hoc committee meetings where in-person attendance is required and $500 per
meeting for attendance by telephone or in person at such meetings where in-person attendance is not required. The annual retainer, fees and expenses are allocated among the Nuveen funds on the basis of
relative net assets, although management may, in its discretion, establish a minimum amount to be allocated to each fund. In certain instances fees and expenses will be allocated only to those Nuveen funds that are discussed at a given meeting. In
certain circumstances, such as during the COVID-19 pandemic, the Board may hold in-person meetings by telephonic or videographic means and be compensated at the in-person rate.
The Funds do not have retirement or pension plans. Certain Nuveen funds (the
“Participating Funds”) participate in a deferred compensation plan (the “Deferred Compensation Plan”) that permits an Independent Board Member to elect to defer receipt of all or a portion of his or her compensation as an
Independent Board Member. The deferred compensation of a participating Independent Board Member is credited to a book reserve account of the Participating Fund when the compensation would otherwise have been paid to such Independent Board Member.
The value of an Independent Board Member’s deferral account at any time is equal to the value that the account would have had if contributions to the account had been invested and reinvested in shares of one or more of the eligible Nuveen
funds. At the time for commencing distributions from an Independent Board Member’s deferral account, the Independent Board Member may elect to receive distributions in a lump sum or over a period of five years. The Participating Fund will not
be liable for any other fund’s obligations to make distributions under the Deferred Compensation Plan.
The Funds have no employees.
The officers of the Funds and the Board Members of each Fund who are not Independent Board Members serve without any compensation from the Funds. The Funds’ Chief Compliance Officer’s (“CCO”) compensation, which is composed of
base salary and incentive compensation, is paid by the Adviser, with review and input by the Board. The Funds reimburse the Adviser for an allocable portion of the Adviser’s cost of the CCO’s incentive compensation.
The table below shows, for each Independent Board Member, the aggregate compensation paid by each Fund to the Independent Board Member/nominee
for its last fiscal year.
83
Aggregate Compensation from the Funds*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fund Name |
|
Jack B.
Evans |
|
|
William
C. Hunter |
|
|
Amy B.R.
Lancellotta(1) |
|
|
Joanne
T. Medero(1) |
|
|
Albin F.
Moschner |
|
|
John K.
Nelson |
|
|
Judith M.
Stockdale |
|
|
Carole E.
Stone |
|
|
Matthew
Thornton
III |
|
|
Terence J.
Toth |
|
|
Margaret
L. Wolff |
|
|
Robert L.
Young |
|
| Georgia Municipal |
|
$ |
445 |
|
|
$ |
435 |
|
|
$ |
309 |
|
|
$ |
316 |
|
|
$ |
465 |
|
|
$ |
460 |
|
|
$ |
426 |
|
|
$ |
445 |
|
|
$ |
419 |
|
|
$ |
552 |
|
|
$ |
442 |
|
|
$ |
452 |
|
| Ohio Municipal |
|
$ |
1,124 |
|
|
$ |
1,149 |
|
|
$ |
272 |
|
|
$ |
272 |
|
|
$ |
1,156 |
|
|
$ |
1,231 |
|
|
$ |
1,151 |
|
|
$ |
1,194 |
|
|
$ |
942 |
|
|
$ |
1,396 |
|
|
$ |
1,190 |
|
|
$ |
932 |
|
| Acquiring Fund |
|
$ |
9,025 |
|
|
$ |
9,142 |
|
|
$ |
2,159 |
|
|
$ |
2,159 |
|
|
$ |
9,202 |
|
|
$ |
9,803 |
|
|
$ |
9,444 |
|
|
$ |
9,600 |
|
|
$ |
7,522 |
|
|
$ |
11,110 |
|
|
$ |
9,402 |
|
|
$ |
7,471 |
|
| Total
Compensation from
Nuveen
Funds Paid
to Board
Members/ Nominees |
|
$ |
408,135 |
|
|
$ |
415,750 |
|
|
$ |
117,500 |
|
|
$ |
117,500 |
|
|
$ |
420,050 |
|
|
$ |
434,500 |
|
|
$ |
415,771 |
|
|
$ |
420,088 |
|
|
$ |
335,500 |
|
|
$ |
499,050 |
|
|
$ |
425,368 |
|
|
$ |
349,018 |
|
| (1) |
Board Members Lancellotta and Medero were appointed to the Board of each Fund effective June 1, 2021.
|
| * |
Includes deferred fees. Pursuant to the Deferred Compensation Plan with certain Participating Funds, deferred
amounts are treated as though an equivalent dollar amount has been invested in shares of one or more Participating Funds. Total deferred fees for the Participating Funds (including the return from the assumed investment in the Participating Funds)
payable are: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fund Name |
|
Jack B.
Evans |
|
|
William C.
Hunter |
|
|
Amy B.R.
Lancellotta |
|
|
Joanne
T. Medero |
|
|
Albin F.
Moschner |
|
|
John K.
Nelson |
|
|
Judith
M. Stockdale |
|
|
Carole E.
Stone |
|
|
Matthew
Thornton
III |
|
|
Terence J.
Toth |
|
|
Margaret
L. Wolff |
|
|
Robert
L. Young |
|
| Georgia Municipal |
|
$ |
10 |
|
|
$ |
— |
|
|
$ |
31 |
|
|
$ |
47 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
74 |
|
|
$ |
26 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
51 |
|
|
$ |
85 |
|
| Ohio Municipal |
|
$ |
101 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
509 |
|
|
$ |
322 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
396 |
|
|
$ |
932 |
|
| Acquiring Fund |
|
$ |
887 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,341 |
|
|
$ |
2,659 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,090 |
|
|
$ |
7,471 |
|
Board Leadership Structure and Risk Oversight
The Board of each Fund oversees the operations and management of the Fund, including the duties performed for the Fund by the Adviser. The
Board has adopted a unitary board structure. A unitary board consists of one group of board members who serves on the board of every fund in the complex. In adopting a unitary board structure, the Board Members seek to provide effective governance
through establishing a board the overall composition of which will, as a body, possess the appropriate skills, diversity (including, among other things, gender, race and ethnicity), independence and experience to oversee the Funds’ business.
With this overall framework in mind, when the Board, through its Nominating and Governance Committee discussed below, seeks nominees for the Board, the Board Members consider not only the candidate’s particular background, skills and
experience, among other things, but also whether such background, skills and experience enhance the Board’s diversity and at the same time complement the Board given its current composition and the mix of skills and experiences of the incumbent
Board Members. The Nominating and Governance Committee believes that the Board generally benefits from diversity of background (including, among other things, gender, race and ethnicity), skills, experience and views among Board Members, and
considers this a factor in evaluating the composition of the Board, but has not adopted any specific policy on diversity or any particular definition of diversity.
The Board believes the unitary board structure enhances good and effective governance, particularly given the nature of the structure of the
investment company complex. Funds in the same complex generally are served by the same service providers and personnel and are governed by the same regulatory scheme which raises common issues that must be addressed by the Board Members across the
fund complex (such as compliance, valuation, liquidity, brokerage, trade allocation and risk management). The Board believes it is more efficient to have a single board review and oversee common policies and procedures which increases the
Board’s knowledge and expertise with respect to the many aspects of fund operations that are complex-wide in nature. The unitary structure also enhances the Board’s influence and oversight over the Adviser and other service providers.
In an effort to enhance the independence of the Board, the Board also has a Chair who is an Independent Board Member. The Board recognizes
that a chair can perform an important role in setting the agenda for the
84
Board, establishing the boardroom culture, establishing a point person on behalf of the Board for Fund management and reinforcing the Board’s focus on the long-term interests of
shareholders. The Board recognizes that a chair may be able to better perform these functions without any conflicts of interests arising from a position with Fund management. Accordingly, the Board Members have elected Mr. Toth as the
independent Chair of the Board. Pursuant to the Fund’s By-Laws, the Chair shall perform all duties incident to the office of Chair of the Board and such other duties as from time to time may be assigned
to him or her by the Board Members or the By-Laws.
Although the Board has direct responsibility
over various matters (such as advisory contracts, underwriting contracts and Fund performance), the Board also exercises certain of its oversight responsibilities through several committees that it has established and which report back to the full
Board. The Board believes that a committee structure is an effective means to permit Board Members to focus on particular operations or issues affecting the Funds, including risk oversight. More specifically, with respect to risk oversight, the
Board has delegated matters relating to valuation and compliance to certain committees (as summarized below) as well as certain aspects of investment risk. In addition, the Board believes that the periodic rotation of Board Members among the
different committees allows the Board Members to gain additional and different perspectives of a Fund’s operations. The Board has established six standing committees: the Executive Committee, the Dividend Committee, the Audit Committee, the
Compliance, Risk Management and Regulatory Oversight Committee, the Nominating and Governance Committee and the Closed-End Funds Committee. The Board may also from time to time create ad hoc committees to
focus on particular issues as the need arises. The membership and functions of the standing committees are summarized below.
Executive
Committee. The Executive Committee, which meets between regular meetings of the Board, is authorized to exercise all of the powers of the Board. The members of the Executive Committee are Mr. Toth, Chair, Ms. Wolff and Mr. Young.
The number of Executive Committee meetings of each Fund held during its last fiscal year is shown in Appendix C.
Dividend
Committee. The Dividend Committee is authorized to declare distributions on each Fund’s shares, including, but not limited to, regular and special dividends, capital gains and ordinary income distributions. The Dividend Committee operates
under a written charter adopted and approved by the Board. The members of the Dividend Committee are Mr. Young, Chair, Mr. Moschner, Mr. Nelson and Mr. Thornton. The number of Dividend Committee meetings of each Fund held during
its last fiscal year is shown in Appendix C.
Audit Committee. The Board has an Audit Committee, in accordance with
Section 3(a)(58)(A) of the 1934 Act, that is composed of Independent Board Members who are also “independent” as that term is defined in the listing standards pertaining to closed-end funds of
the NYSE. The Audit Committee assists the Board in: the oversight and monitoring of the accounting and reporting policies, processes and practices of the Funds, and the audits of the financial statements of the Funds; the quality and integrity of
the financial statements of the Funds; the Funds’ compliance with legal and regulatory requirements relating to the Funds’ financial statements; the independent auditors’ qualifications, performance and independence; and the pricing
procedures of the Funds and the internal valuation group of Nuveen. It is the responsibility of the Audit Committee to select, evaluate and replace any independent auditors (subject only to Board and, if applicable, shareholder ratification) and to
determine their compensation. The Audit Committee is also responsible for, among other things, overseeing the valuation of securities comprising the Funds’ portfolios. Subject to the Board’s general supervision of such actions, the Audit
Committee addresses any valuation issues, oversees the Funds’ pricing procedures and actions taken by Nuveen’s internal valuation group which provides regular reports to the Audit Committee, reviews any issues relating to the valuation of
the Funds’ securities brought to its attention, and considers the risks to the Funds in assessing the possible resolutions of these matters. The Audit Committee may also consider any financial risk exposures for the Funds in conjunction with
performing its functions.
To fulfill its oversight duties, the Audit Committee receives and reviews annual and semi-annual reports and
has regular meetings with the external auditors for the Funds and the internal audit group at Nuveen. The
85
Audit Committee also may review, in a general manner, the processes the Board or other Board committees have in place with respect to risk assessment and risk management as well as compliance
with legal and regulatory matters relating to the Funds’ financial statements. The Audit Committee operates under a written Audit Committee Charter (the “Charter”) adopted and approved by the Board, which Charter conforms to the
listing standards of the NYSE. Members of the Audit Committee are independent (as set forth in the Charter) and free of any relationship that, in the opinion of the Board Members, would interfere with their exercise of independent judgment as an
Audit Committee member. The members of the Audit Committee are Ms. Stone, Chair, Mr. Evans, Mr. Moschner, Mr. Nelson, Ms. Stockdale and Mr. Young, each of whom is an Independent Board Member of the Funds. A copy of the
Charter is available at https://www.nuveen.com/fund-governance. The number of Audit Committee meetings of each Fund held during its last fiscal year is shown in Appendix C.
Compliance, Risk Management and Regulatory Oversight Committee. The Compliance, Risk Management and Regulatory Oversight Committee (the
“Compliance Committee”) is responsible for the oversight of compliance issues, risk management and other regulatory matters affecting the Funds that are not otherwise under or within the jurisdiction of the other committees. The Board has
adopted and periodically reviews policies and procedures designed to address the Funds’ compliance and risk matters. As part of its duties, the Compliance Committee: reviews the policies and procedures relating to compliance matters and
recommends modifications thereto as necessary or appropriate to the full Board; develops new policies and procedures as new regulatory matters affecting the Funds arise from time to time; evaluates or considers any comments or reports from
examinations from regulatory authorities and responses thereto; and performs any special reviews, investigations or other oversight responsibilities relating to risk management, compliance and/or regulatory matters as requested by the Board.
In addition, the Compliance Committee is responsible for risk oversight, including, but not limited to, the oversight of risks related to
investments and operations. Such risks include, among other things, exposures to: particular issuers, market sectors, or types of securities; risks related to product structure elements, such as leverage; and techniques that may be used to address
those risks, such as hedging and swaps. In assessing issues brought to the Compliance Committee’s attention or in reviewing a particular policy, procedure, investment technique or strategy, the Compliance Committee evaluates the risks to the
Funds in adopting a particular approach or resolution compared to the anticipated benefits to the Funds and their shareholders. In fulfilling its obligations, the Compliance Committee meets on a quarterly basis, and at least once a year in person.
The Compliance Committee receives written and oral reports from the Funds’ Chief Compliance Officer (“CCO”) and meets privately with the CCO at each of its quarterly meetings. The CCO also provides an annual report to the full Board
regarding the operations of the Funds’ and other service providers’ compliance programs as well as any recommendations for modifications thereto. The Compliance Committee also receives reports from the investment oversight group of Nuveen
regarding various investment risks. Notwithstanding the foregoing, the full Board also participates in discussions with management regarding certain matters relating to investment risk, such as the use of leverage and hedging. The investment
oversight group therefore also reports to the full Board at its quarterly meetings regarding, among other things, Fund performance and the various drivers of such performance. Accordingly, the Board directly and/or in conjunction with the Compliance
Committee oversees matters relating to investment risks. Matters not addressed at the committee level are addressed directly by the full Board. The Compliance Committee operates under a written charter adopted and approved by the Board. The members
of the Compliance Committee are Ms. Wolff, Chair, Dr. Hunter, Ms. Lancellotta, Ms. Medero, Mr. Nelson, Mr. Thornton and Mr. Toth. The number of Compliance Committee meetings of each Fund held during its last fiscal
year is shown in Appendix C.
Nominating and Governance Committee. The Nominating and Governance Committee is responsible
for seeking, identifying and recommending to the Board qualified candidates for election or appointment to the Board. In addition, the Nominating and Governance Committee oversees matters of corporate governance, including the evaluation of Board
performance and processes, the assignment and rotation of committee members, and the establishment of corporate governance guidelines and procedures, to the extent necessary or desirable, and matters related thereto. Although the unitary Board and
committee structures have been developed
86
over the years and the Nominating and Governance Committee believes these structures have provided efficient and effective governance, the Nominating and Governance Committee recognizes that, as
demands on the Board evolve over time (such as through an increase in the number of funds overseen or an increase in the complexity of the issues raised), the Nominating and Governance Committee must continue to evaluate the Board and committee
structures and their processes and modify the foregoing as may be necessary or appropriate to continue to provide effective governance. Accordingly, the Nominating and Governance Committee has a separate meeting each year to, among other things,
review the Board and committee structures, their performance and functions, and recommend any modifications thereto or alternative structures or processes that would enhance the Board’s governance over the Funds’ business.
In addition, the Nominating and Governance Committee, among other things: makes recommendations concerning the continuing education of Board
Members; monitors performance of legal counsel and other service providers; establishes and monitors a process by which security holders are able to communicate in writing with Board Members; and periodically reviews and makes recommendations about
any appropriate changes to Board Member compensation. In the event of a vacancy on the Board, the Nominating and Governance Committee receives suggestions from various sources, including shareholders, as to suitable candidates. Suggestions should be
sent in writing to William Siffermann, Manager of Fund Board Relations, Nuveen, 333 West Wacker Drive, Chicago, Illinois 60606. The Nominating and Governance Committee sets appropriate standards and requirements for nominations for new Board Members
and each nominee is evaluated using the same standards. However, the Nominating and Governance Committee reserves the right to interview any and all candidates and to make the final selection of any new Board Members. In considering a
candidate’s qualifications, each candidate must meet certain basic requirements, including relevant skills and experience, time availability (including the time requirements for due diligence meetings with internal and external sub-advisers and service providers) and, if qualifying as an Independent Board Member candidate, independence from the Adviser, sub-advisers, underwriters or other service
providers, including any affiliates of these entities. These skill and experience requirements may vary depending on the current composition of the Board, since the goal is to ensure an appropriate range of skills, diversity and experience, in the
aggregate. Accordingly, the particular factors considered and weight given to these factors will depend on the composition of the Board and the skills and backgrounds of the incumbent Board Members at the time of consideration of the nominees. All
candidates, however, must meet high expectations of personal integrity, independence, governance experience and professional competence. All candidates must be willing to be critical within the Board and with management and yet maintain a collegial
and collaborative manner toward other Board Members. The Nominating and Governance Committee operates under a written charter adopted and approved by the Board, a copy of which is available on the Funds’ website at
https://www.nuveen.com/fund-governance, and is composed entirely of Independent Board Members, who are also “independent” as defined by NYSE listing standards. The members of the Nominating and Governance Committee are Mr. Toth,
Chair, Mr. Evans, Dr. Hunter, Ms. Lancellotta, Ms. Medero, Mr. Moschner, Mr. Nelson, Ms. Stockdale, Ms. Stone, Mr. Thornton, Ms. Wolff and Mr. Young. The number of Nominating and Governance
Committee meetings of each Fund held during its last fiscal year is shown in Appendix C.
Closed-End Funds Committee. The Closed-End Funds
Committee was established by the Board in 2012 and is responsible for assisting the Board in the oversight and monitoring of the Nuveen funds that are registered as closed-end management investment companies (“Closed-End Funds”). The Closed-End Funds Committee may review and evaluate matters related to the formation and the initial presentation to the Board of any new Closed-End Fund and may review and evaluate any matters relating to any existing Closed-End Fund. The Closed-End Funds Committee
receives updates on the secondary closed-end fund market and evaluates the premiums and discounts of the Nuveen closed-end funds, including the Funds, at each quarterly
meeting. The Closed-End Funds Committee reviews, among other things, the premium and discount trends in the broader closed-end fund market, by asset category and by closed-end fund; the historical total return performance data for the Nuveen closed-end funds, including the Funds, based on net asset value and price over various periods;
the volatility trends in the market; the use of leverage by the Nuveen closed-end funds, including the Funds; the distribution data of the Nuveen closed-end funds,
including the Funds, and as compared to peer averages; and a
87
summary of common share issuances, if any, and share repurchases, if any, during the applicable quarter by the Nuveen closed-end funds, including the
Funds. The Closed-End Funds Committee regularly engages in more in-depth discussions of premiums and discounts of the Nuveen
closed-end funds. Additionally, the Closed-End Funds Committee members participate in in-depth workshops to explore, among other
things, actions to address discounts of the Nuveen closed-end funds, potential share repurchases and available leverage strategies and their use. The Closed-End Funds
Committee operates under a written charter adopted and approved by the Board. The members of the Closed-End Funds Committee are Mr. Evans, Chair, Dr. Hunter, Ms. Lancellotta, Mr. Nelson,
Mr. Toth and Ms. Wolff. The number of Closed-End Funds Committee meetings of each Fund held during its last fiscal year is shown in Appendix C.
Board Member Attendance. The number of regular quarterly meetings and special meetings held by the Board of each Fund during the
Fund’s last fiscal year is shown in Appendix C. During the last fiscal year, each Board Member attended 75% or more of each Fund’s Board meetings and the committee meetings (if a member thereof) held during the period for which such
Board Member was a Board Member. The policy of the Board relating to attendance by Board Members at annual meetings of shareholders of the Funds and the number of Board Members who attended the last annual meeting of shareholders of each Fund is
posted on the Funds’ website at https://www.nuveen.com/fund-governance.
Board Diversification and Board Member
Qualifications. In determining that a particular Board Member was qualified to serve on the Board, the Board considered each Board Member’s background, skills, experience and other attributes in light of the composition of the Board with no
particular factor controlling. The Board believes that Board Members need to have the ability to critically review, evaluate, question and discuss information provided to them, and to interact effectively with Fund management, service providers and
counsel, in order to exercise effective business judgment in the performance of their duties, and the Board believes each Board Member satisfies this standard. An effective Board Member may achieve this ability through his or her educational
background; business, professional training or practice; public service or academic positions; experience from service as a board member or executive of investment funds, public companies or significant private or not-for-profit entities or other organizations; and/or other life experiences. Accordingly, set forth below is a summary of the experiences, qualifications, attributes and skills that led to the conclusion,
as of the date of this document, that each Board Member should serve in that capacity. References to the experiences, qualifications, attributes and skills of Board Members are pursuant to requirements of the SEC, do not constitute holding out the
Board or any Board Member as having any special expertise or experience and shall not impose any greater responsibility or liability on any such person or on the Board by reason thereof.
Jack B. Evans
Mr. Evans has served as Chairman (since 2019), formerly, President from 1996-2019 of the Hall-Perrine Foundation, a private philanthropic
corporation. Mr. Evans was formerly President and Chief Operating Officer (1972-1995) of the SCI Financial Group, Inc., a regional financial services firm headquartered in Cedar Rapids, Iowa. Formerly, he was a member of the Board of the
Federal Reserve Bank of Chicago from 1997 to 2003 as well as a Director of Alliant Energy from 2000 to 2004 and Member and President Pro Tem of the Board of Regents for the State of Iowa University System from 2007 to 2013. Mr. Evans is a Life
Trustee of Coe College and formerly served as Chairman of the Board of United Fire Group from 2009 to 2021, served as a Director and Public Member of the American Board of Orthopaedic Surgery from 2015 to 2020 and served on the Board of The Gazette
Company from 1996 to 2015. He has a Bachelor of Arts from Coe College and an M.B.A. from the University of Iowa. Mr. Evans joined the Board in 1999.
William C. Hunter
Dr. Hunter became Dean Emeritus of the Henry B. Tippie College of Business at the University of Iowa in 2012, after having served as Dean
of the College since July 2006. He had been Dean and Distinguished Professor of Finance at the University of Connecticut School of Business from 2003 to 2006. From 1995 to 2003,
88
he was the Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago. He has held faculty positions at Emory University, Atlanta University, the University of Georgia
and Northwestern University. He has consulted with numerous foreign central banks and official agencies in Europe, Asia, Central America and South America. He has been a Director of Wellmark, Inc. since 2009. He is a past Director (2005-2015) and a
past President (2010-2014) of Beta Gamma Sigma, Inc., The International Business Honor Society, and a past Director (2004-2018) of the Xerox Corporation. Dr. Hunter received his PhD (1978) and MBA (1970) from Northwestern University
and his BS from Hampton University (1970). Dr. Hunter joined the Board in 2004.
Amy B. R. Lancellotta
After 30 years of service, Ms. Lancellotta retired at the end of 2019 from the Investment Company Institute (ICI), which represents
regulated investment companies on regulatory, legislative and securities industry initiatives that affect funds and their shareholders. From November 2006 until her retirement, Ms. Lancellotta served as Managing Director of ICI’s
Independent Directors Council (IDC), which supports fund independent directors in fulfilling their responsibilities to promote and protect the interests of fund shareholders. At IDC, Ms. Lancellotta was responsible for all ICI and IDC
activities relating to the fund independent director community. In conjunction with her responsibilities, Ms. Lancellotta advised and represented IDC, ICI, independent directors and the investment company industry on issues relating to fund
governance and the role of fund directors. She also directed and coordinated IDC’s education, communication, governance and policy initiatives. Prior to serving as Managing Director of IDC, Ms. Lancellotta held various other positions with
ICI beginning in 1989. Before joining ICI, Ms. Lancellotta was an associate at two Washington, D.C. law firms. In addition, since 2020, she has been a member of the Board of Directors of the Jewish Coalition Against Domestic Abuse (JCADA), an
organization that seeks to end power-based violence, empower survivors and ensure safe communities. Ms. Lancellotta received a B.A. degree from Pennsylvania State University in 1981 and a J.D. degree from the National Law Center, George
Washington University (currently known as George Washington University Law School) in 1984. Ms. Lancellotta joined the Board in 2021.
Joanne T. Medero
Ms. Medero has over 30 years of financial services experience and, most recently, from December 2009 until her retirement in
July 2020, she was a Managing Director in the Government Relations and Public Policy Group at BlackRock, Inc. (BlackRock). From July 2018 to July 2020, she was also Senior Advisor to BlackRock’s Vice Chairman, focusing on public
policy and corporate governance issues. In 1996, Ms. Medero joined Barclays Global Investors (BGI), which merged with BlackRock in 2009. At BGI, she was a Managing Director and served as Global General Counsel and Corporate Secretary until
2006. Then, from 2006 to 2009, Ms. Medero was a Managing Director and Global Head of Government Relations and Public Policy at Barclays Group (IBIM), where she provided policy guidance and directed legislative and regulatory advocacy programs
for the investment banking, investment management and wealth management businesses. Before joining BGI, Ms. Medero was a Partner at Orrick, Herrington & Sutcliffe LLP from 1993 to 1995, where she specialized in derivatives and
financial markets regulation issues. Additionally, she served as General Counsel of the Commodity Futures Trading Commission (CFTC) from 1989 to 1993 and, from 1986 to 1989, she was Deputy Associate Director/Associate Director for Legal and
Financial Affairs at The White House Office of Presidential Personnel. Further, from 2006 to 2010, Ms. Medero was a member of the CFTC Global Markets Advisory Committee and she has been actively involved in financial industry associations,
serving as Chair of the Steering Committee of the SIFMA (Securities Industry and Financial Markets Association) Asset Management Group (2016-2018) and Chair of the CTA (Commodity Trading Advisor), CPO (Commodity Pool Operator) and Futures Committee
of the Managed Funds Association (2010-2012). Currently, Ms. Medero chairs the Corporations, Antitrust and Securities Practice Group of The Federalist Society for Law and Public Policy (since 2010 and from 2000 to 2002). In addition, since
2019, she has been a member of the Board of Directors of the Baltic-American Freedom Foundation, which seeks to provide opportunities for citizens of the Baltic states to gain education and professional development through exchanges in the United
States. Ms. Medero received a B.A.
89
degree from St. Lawrence University in 1975 and a J.D. degree from the National Law Center, George Washington University (currently known as George Washington University Law School) in 1978.
Ms. Medero joined the Board in 2021.
Albin F. Moschner
Mr. Moschner is a consultant in the wireless industry and, in July 2012, founded Northcroft Partners, LLC, a management consulting
firm that provides operational, management and governance solutions. Prior to founding Northcroft Partners, LLC, Mr. Moschner held various positions at Leap Wireless International, Inc., a provider of wireless services, where he was a
consultant from February 2011 to July 2012, Chief Operating Officer from July 2008 to February 2011, and Chief Marketing Officer from August 2004 to June 2008. Before he joined Leap Wireless International, Inc.,
Mr. Moschner was President of the Verizon Card Services division of Verizon Communications, Inc. from 2000 to 2003, and President of One Point Services at One Point Communications from 1999 to 2000. Mr. Moschner also served at Zenith
Electronics Corporation as Director, President and Chief Executive Officer from 1995 to 1996, and as Director, President and Chief Operating Officer from 1994 to 1995. Mr. Moschner was formerly Chairman (2019) and a member of the Board of
Directors (2012-2019) of USA Technologies, Inc. and, from 1996 until 2016, he was a member of the Board of Directors of Wintrust Financial Corporation. In addition, he is emeritus (since 2018) of the Advisory Boards of the Kellogg School of
Management (1995-2018) and the Archdiocese of Chicago Financial Council (2012-2018). Mr. Moschner received a Bachelor of Engineering degree in Electrical Engineering from The City College of New York in 1974 and a Master of Science degree in
Electrical Engineering from Syracuse University in 1979. Mr. Moschner joined the Board in 2016.
John K. Nelson
Mr. Nelson is on the Board of Directors of Core12, LLC. (since 2008), a private firm which develops branding, marketing, and
communications strategies for clients. Mr. Nelson has extensive experience in global banking and markets, having served in several senior executive positions with ABN AMRO Holdings N.V. and its affiliated entities and predecessors, including
LaSalle Bank Corporation from 1996 to 2008, ultimately serving as Chief Executive Officer of ABN AMRO N.V. North America. During his tenure at the bank, he also served as Global Head of its Financial Markets Division, which encompassed the
bank’s Currency, Commodity, Fixed Income, Emerging Markets, and Derivatives businesses. He was a member of the Foreign Exchange Committee of the Federal Reserve Bank of the United States and during his tenure with ABN AMRO served as the
bank’s representative on various committees of The Bank of Canada, European Central Bank, and The Bank of England. Mr. Nelson previously served as a senior, external advisor to the financial services practice of Deloitte Consulting LLP
(2012-2014). At Fordham University, he served as a director of The President’s Council (2010-2019) and previously served as a director of The Curran Center for Catholic American Studies (2009-2018). He served as a trustee and Chairman of The
Board of Trustees of Marian University (2011-2013). Mr. Nelson is a graduate of Fordham University, holding a BA in Economics and an MBA in Finance. Mr. Nelson joined the Board in 2013.
Judith M. Stockdale
Ms. Stockdale retired in 2012 as Executive Director of the Gaylord and Dorothy Donnelley Foundation, a private foundation working in land
conservation and artistic vitality in the Chicago region and the Low Country of South Carolina. She is currently a board member of the Land Trust Alliance (since 2013). Her previous positions include Executive Director of the Great Lakes Protection
Fund, Executive Director of Openlands, and Senior Staff Associate at the Chicago Community Trust. She has served on the Advisory Council of the National Zoological Park, the Governor’s Science Advisory Council (Illinois) and the Nancy Ryerson
Ranney Leadership Grants Program. She has been a member of the Boards of Brushwood Center, Forefront f/k/a Donors Forum and the U.S. Endowment for Forestry and Communities. Ms. Stockdale, a native of the United Kingdom, has a Bachelor of
Science degree in geography from the University of Durham (UK) and a Master of Forest Science degree from Yale University. Ms. Stockdale joined the Board in 1997.
90
Carole E. Stone
Ms. Stone recently retired from the Board of Directors of Cboe Global Markets, Inc. (formerly, CBOE Holdings, Inc.) having served from
2010-2020. She previously served on the Boards of the Chicago Board Options Exchange and C2 Options Exchange, Incorporated. Ms. Stone retired from the New York State Division of the Budget in 2004, having served as its Director for nearly five
years and as Deputy Director from 1995 through 1999. She has also served as the Chair of the New York Racing Association Oversight Board, as a Commissioner on the New York State Commission on Public Authority Reform and as a member of the Boards of
Directors of several New York State public authorities. Ms. Stone has a Bachelor of Arts from Skidmore College in Business Administration. Ms. Stone joined the Board in 2007.
Matthew Thornton III
Mr. Thornton has over 40 years of broad leadership and operating experience from his career with FedEx Corporation (“FedEx”),
which, through its portfolio of companies, provides transportation, e-commerce and business services. In November 2019, Mr. Thornton retired as Executive Vice President and Chief Operating Officer of
FedEx Freight Corporation (FedEx Freight), a subsidiary of FedEx, where, from May 2018 until his retirement, he had been responsible for day-to-day operations,
strategic guidance, modernization of freight operations and delivering innovative customer solutions. From September 2006 to May 2018, Mr. Thornton served as Senior Vice President, U.S. Operations at Federal Express Corporation (FedEx
Express), a subsidiary of FedEx. Prior to September 2006, Mr. Thornton held a range of positions of increasing responsibility with FedEx, including various management positions. In addition, Mr. Thornton currently (since 2014) serves
on the Board of Directors of The Sherwin-Williams Company, where he is a member of the Audit Committee and the Nominating and Corporate Governance Committee, and the Board of Directors of Crown Castle International (since 2020), where he is a member
of the Strategy Committee and the Compensation Committee. Formerly (2012-2018), he was a member of the Board of Directors of Safe Kids Worldwide®, a
non-profit organization dedicated to the prevention of childhood injuries. Mr. Thornton is a member (since 2014) of the Executive Leadership Council (ELC), the nation’s premier organization of global
black senior executives. He is also a member of the National Association of Corporate Directors (NACD). Mr. Thornton has been recognized by Black Enterprise on its 2017 list of the Most Powerful Executives in Corporate America and by Ebony on
its 2016 Power 100 list of the world’s most influential and inspiring African Americans. Mr. Thornton received a B.B.A. degree from the University of Memphis in 1980 and an M.B.A. from the University of Tennessee in 2001. Mr. Thornton
joined the Board in 2020.
Terence J. Toth
Mr. Toth, the Nuveen Funds’ Independent Chair, was a Co-Founding Partner of Promus Capital
(2008-2017). From 2012 to 2021, he was a Director of Quality Control Corporation, from 2008 to 2013, he was a Director of Legal & General Investment Management America, Inc. From 2004 to 2007, he was Chief Executive Officer and President of
Northern Trust Global Investments, and Executive Vice President of Quantitative Management & Securities Lending from 2000 to 2004. He also formerly served on the Board of the Northern Trust Mutual Funds. He joined Northern Trust in 1994
after serving as Managing Director and Head of Global Securities Lending at Bankers Trust (1986 to 1994) and Head of Government Trading and Cash Collateral Investment at Northern Trust from 1982 to 1986. He currently serves as Chair of the Board of
the Kehrein Center for the Arts (since 2021) and is on the Board of Catalyst Schools of Chicago since 2008. He is on the Mather Foundation Board since 2012 and is Chair of its Investment Committee and previously served as a Director of LogicMark LLC
(2012-2016) and of Fulcrum IT Service LLC (2010-2019). Mr. Toth graduated with a Bachelor of Science degree from the University of Illinois, and received his MBA from New York University. In 2005, he graduated from the CEO Perspectives Program
at Northwestern University. Mr. Toth joined the Board in 2008.
91
Margaret L. Wolff
Ms. Wolff retired from Skadden, Arps, Slate, Meagher & Flom LLP in 2014 after more than 30 years of providing client service in
the Mergers & Acquisitions Group. During her legal career, Ms. Wolff devoted significant time to advising boards and senior management on U.S. and international corporate, securities, regulatory and strategic matters, including
governance, shareholder, fiduciary, operational and management issues. Ms. Wolff has been a trustee of New York-Presbyterian Hospital since 2005 and, since 2004, she has served as a trustee of The John A. Hartford Foundation (a philanthropy
dedicated to improving the care of older adults) where she formerly served as Chair from 2015 to 2022. From 2013 to 2017, she was a Board member of Travelers Insurance Company of Canada and The Dominion of Canada General Insurance Company (each of
which is a part of Travelers Canada, the Canadian operation of The Travelers Companies, Inc.). From 2005 to 2015, she was a trustee of Mt. Holyoke College and served as Vice Chair of the Board from 2011 to 2015. Ms. Wolff received her Bachelor
of Arts from Mt. Holyoke College and her Juris Doctor from Case Western Reserve University School of Law. Ms. Wolff joined the Board in 2016.
Robert L. Young
Mr. Young has more than 30 years of experience in the investment management industry. From 1997 to 2017, he held various positions
with J.P. Morgan Investment Management Inc. (“J.P. Morgan Investment”) and its affiliates (collectively, “J.P. Morgan”). Most recently, he served as Chief Operating Officer and Director of J.P. Morgan Investment (from
2010 to 2016) and as President and Principal Executive Officer of the J.P. Morgan Funds (from 2013 to 2016). As Chief Operating Officer of J.P. Morgan Investment, Mr. Young led service, administration and business platform support
activities for J.P. Morgan’s domestic retail mutual fund and institutional commingled and separate account businesses, and co-led these activities for J.P. Morgan’s global retail and
institutional investment management businesses. As President of the J.P. Morgan Funds, Mr. Young interacted with various service providers to these funds, facilitated the relationship between such funds and their boards, and was directly
involved in establishing board agendas, addressing regulatory matters, and establishing policies and procedures. Before joining J.P. Morgan, Mr. Young, a former Certified Public Accountant (CPA), was a Senior Manager (Audit) with
Deloitte & Touche LLP (formerly, Touche Ross LLP), where he was employed from 1985 to 1996. During his tenure there, he actively participated in creating, and ultimately led, the firm’s midwestern mutual fund practice. Mr. Young
holds a Bachelor of Business Administration degree in Accounting from the University of Dayton and, from 2008 to 2011, he served on the Investment Committee of its Board of Trustees. Mr. Young joined the Board in 2017.
Board Member Terms. For each Fund, shareholders will be asked to elect Board Members as each Board Member’s term expires, and with
respect to Board Members elected by holders of common shares, such Board Members shall be elected for a term expiring at the time of the third succeeding annual meeting of shareholders subsequent to their election or thereafter, in each case when
their respective successors are duly elected and qualified. These provisions could delay for up to two years the replacement of a majority of the Board.
92
The Officers
The following table sets forth information with respect to each officer of the Funds. Officers receive no compensation from the Funds. The
officers are elected by the Board on an annual basis to serve until successors are elected and qualified.
|
|
|
|
|
|
|
| Name,
Address and Year of Birth |
|
Position(s)
Held with Fund |
|
Term of Office
and Length of
Time Served(1) |
|
Principal Occupation(s) During Past 5 Years(2) |
| David J. Lamb
333 West Wacker Drive
Chicago, IL 60606
1963 |
|
Chief Administrative Officer |
|
Term: Indefinite Length of Service: Since 2015 |
|
Managing Director of Nuveen Fund Advisors, LLC (since 2019); Senior Managing Director (since 2021), formerly, Managing Director (2020-2021) of Nuveen Securities, LLC; Senior Managing Director (since 2021), formerly, Managing
Director (2017-2021), Senior Vice President (2006-2017) of Nuveen, Vice President prior to 2006. |
|
|
|
|
Brett E. Black
333 West Wacker Drive
Chicago, IL 60606
1972 |
|
Vice President and Chief Compliance Officer |
|
Term: Indefinite Length of Service: Since 2022 |
|
Enterprise Senior Compliance Officer of Nuveen (since 2022); formerly, Vice President (2014-2022), Chief Compliance Officer (2017-2022), Deputy Chief Compliance Officer (2014-2017) and Senior Compliance Officer (2012-2014) of BMO
Funds, Inc.; formerly Senior Compliance Officer of BMO Asset Management Corp. (2012-2014). |
|
|
|
|
| Mark J. Czarniecki 901 Marquette
Avenue Minneapolis, MN 55402 1979 |
|
Vice President and Assistant Secretary |
|
Term: Indefinite Length of Service: Since 2013 |
|
Vice President and Assistant Secretary of Nuveen Securities, LLC (since 2016); Managing Director (since 2022), formerly, Vice President (2017-2022) and Assistant Secretary (since 2017) of Nuveen Fund Advisors, LLC; Managing Director
(since 2022), formerly, Vice President (2018-2022), Associate General Counsel and Assistant Secretary (since 2018) of Nuveen Asset Management, LLC; Managing Director and Associate General Counsel (since January 2022), formerly, Vice President
and Associate General Counsel of Nuveen (2013-2021). |
|
|
|
|
| Diana R. Gonzalez 8500 Andrew Carnegie
Blvd. Charlotte, NC 28262 1978 |
|
Vice President and Assistant Secretary |
|
Term: Indefinite Length of Service: Since 2017 |
|
Vice President and Assistant Secretary of Nuveen Fund Advisors (since 2017); Vice President, Associate General Counsel and Assistant Secretary of Nuveen Asset Management, LLC (since 2022); Vice President and Associate General
Counsel of Nuveen (since 2017); formerly, Associate General Counsel of Jackson National Asset Management (2012-2017). |
|
|
|
|
| Nathaniel T. Jones 333 West Wacker Drive
Chicago, IL 60606 1979 |
|
Vice President and Treasurer |
|
Term: Indefinite Length of Service: Since 2016 |
|
Senior Managing Director (since 2021), formerly, Managing Director (2017-2021), Senior Vice President (2016-2017), Vice President (2011-2016) of Nuveen; Managing Director (since 2015) of Nuveen Fund Advisors, LLC; Chartered
Financial Analyst. |
93
|
|
|
|
|
|
|
| Name,
Address and Year of Birth |
|
Position(s)
Held with Fund |
|
Term of Office
and Length of
Time Served(1) |
|
Principal Occupation(s) During Past 5 Years(2) |
| Tina M. Lazar 333 West Wacker Drive
Chicago, IL 60606 1961 |
|
Vice President |
|
Term: Indefinite Length of Service: Since 2002 |
|
Managing Director (since 2017), formerly, Senior Vice President (2014-2017) of Nuveen Securities, LLC. |
|
|
|
|
| Brian J. Lockhart 333 West Wacker
Drive Chicago, IL 60606 1974 |
|
Vice President |
|
Term: Indefinite
Length of Service: Since 2019 |
|
Managing Director (since 2019) of Nuveen Fund Advisors, LLC; Senior Managing Director (since 2021), formerly, Managing Director (2017-2021), Vice President (2010-2017) of Nuveen; Head of Investment Oversight (since
September 2017), formerly, Team Leader of Manager Oversight (2015-2017); Chartered Financial Analyst and Certified Financial Risk Manager. |
|
|
|
|
| John M. McCann 8500 Andrew Carnegie Blvd.
Charlotte, NC 28262 1975 |
|
Vice President and Assistant Secretary |
|
Term: Indefinite
Length of Service: Since 2022 |
|
Managing Director and Assistant Secretary of Nuveen Fund Advisors, LLC (since 2021); Managing Director, Associate General Counsel and Assistant Secretary of Nuveen Asset Management, LLC (since 2021); Managing Director (since 2021)
and Assistant Secretary (since 2016) of TIAA SMA Strategies LLC; Managing Director (since 2019, formerly, Vice President and Director), Associate General Counsel and Assistant Secretary) of the College Retirement Equities Fund, TIAA Separate Account
VA-1, TIAA-CREF Funds and TIAA-CREF Life Funds; Managing Director (since 2018), formerly, Vice President and Director, Associate General Counsel and Assistant Secretary of Teachers Insurance and Annuity
Association of America, Teacher Advisors LLC and TIAA-CREF Investment Management, LLC; Vice President (since 2017), Associate General Counsel and Assistant Secretary (since 2011) of Nuveen Alternative Advisors LLC; General Counsel and Assistant
Secretary of Covariance Capital Management, Inc. (2014-2017). |
94
|
|
|
|
|
|
|
| Name,
Address and Year of Birth |
|
Position(s)
Held with Fund |
|
Term of Office
and Length of
Time Served(1) |
|
Principal Occupation(s) During Past 5 Years(2) |
| Kevin J. McCarthy 333 West Wacker
Drive Chicago, IL 60606 1966 |
|
Vice President and Assistant Secretary |
|
Term: Indefinite
Length of Service: Since 2007 |
|
Senior Managing Director (since 2017) and Secretary and General Counsel (since 2016) of Nuveen Investments, Inc., formerly, Executive Vice President (2016-2017) and Managing Director and Assistant Secretary (2008-2016); Senior
Managing Director (since 2017) and Assistant Secretary (since 2008) of Nuveen Securities, LLC, formerly Executive Vice President (2016-2017) and Managing Director (2008-2016); Senior Managing Director (since 2017), Secretary (since 2016) of Nuveen
Fund Advisors, LLC, formerly, Co-General Counsel (2011-2020), Executive Vice President (2016-2017), Managing Director (2008-2016) and Assistant Secretary (2007-2016); Senior Managing Director (since 2017),
Secretary (since 2016) of Nuveen Asset Management, LLC, formerly Associate General Counsel (2011-2020), Executive Vice President (2016-2017) and Managing Director and Assistant Secretary (2011-2016); Vice President (since 2007) and Secretary (since
2016), (formerly, Assistant Secretary) of NWQ Investment Management Company, LLC, Santa Barbara Asset Management, LLC and Winslow Capital Management, LLC (since 2010); Senior Managing Director (since 2017) and Secretary (since 2016) of Nuveen
Alternative Investments, LLC. |
| Jon Scott Meissner 8500 Andrew Carnegie
Blvd. Charlotte, NC 28262 1973 |
|
Vice President and Assistant Secretary |
|
Term: Indefinite
Length of Service: Since 2019 |
|
Managing Director of Mutual Fund Tax and Financial Reporting groups at Nuveen (since 2017); Managing Director (since 2019) of Nuveen Fund Advisors, LLC; Senior Director of Teachers Advisors, LLC and TIAA-CREF Investment Management,
LLC (since 2016); Senior Director (since 2015) Mutual Fund Taxation to the TIAA-CREF Funds, the TIAA-CREF Life Funds, the TIAA Separate Account VA-1 and the CREF Accounts; has held various positions with TIAA
since 2004. |
|
|
|
|
| Deann D. Morgan 730 Third Avenue
New York, NY 10017 1969 |
|
Vice President |
|
Term: Indefinite
Length of Service: Since February 2020 |
|
President of Nuveen Fund Advisors, LLC (since 2020); Executive Vice President, Global Head of Product at Nuveen, LLC (since November 2019); Co-Chief Executive Officer of Nuveen
Securities, LLC (since 2020); Managing Member of MDR Collaboratory LLC (since 2018), formerly, Managing Director, Head of Wealth Management Product Structuring & COO Multi Asset Investing, The Blackstone Group (2013-2017). |
|
|
|
|
William A. Siffermann
333 West Wacker Drive
Chicago, IL 60606
1975 |
|
Vice President |
|
Term: Indefinite Length of Service: Since 2017 |
|
Managing Director (since 2017), formerly, Senior Vice President (2016-2017) and Vice President (2011-2016) of Nuveen. |
95
|
|
|
|
|
|
|
| Name,
Address and Year of Birth |
|
Position(s)
Held with Fund |
|
Term of Office
and Length of
Time Served(1) |
|
Principal Occupation(s) During Past 5 Years(2) |
| Trey S. Stenersen 8500 Andrew Carnegie
Blvd. Charlotte, NC 28262 1965 |
|
Vice President |
|
Term: Indefinite
Length of Service: Since 2022 |
|
Senior Managing Director of Teacher Advisors LLC and TIAA-CREF Investment Management, LLC (since 2018); Senior Managing Director (since 2019) and Chief Risk Officer (since 2022), formerly Head of Investment Risk Management
(2017-2022) of Nuveen; Senior Managing Director (since 2018) of Nuveen Alternative Advisors LLC. |
|
|
|
|
| E. Scott Wickerham
8500 Andrew Carnegie Blvd.
Charlotte, NC 28262
1973 |
|
Vice President and Controller |
|
Term: Indefinite
Length of Service: Since 2019 |
|
Senior Managing Director, Head of Public Investment Finance at Nuveen (since 2019), formerly, Managing Director, Senior Managing Director (since 2019), of Nuveen Fund Advisors, LLC; Principal Financial Officer, Principal Accounting
Officer and Treasurer (since 2017) of the TIAA-CREF Funds, the TIAA-CREF Life Funds, the TIAA Separate Account VA-1 and Principal Financial Officer, Principal Accounting Officer (since 2020) and Treasurer
(since 2017) to the CREF Accounts; Senior Director, TIAA-CREF Fund Administration (2014-2015); has held various positions with TIAA since 2006. |
|
|
|
|
Mark L. Winget
333 West Wacker Drive
Chicago, IL 60606
1968 |
|
Vice President and Secretary |
|
Term: Indefinite
Length of Service: Since 2008 |
|
Vice President and Assistant Secretary of Nuveen Securities, LLC (since 2008); Vice President and Assistant Secretary of Nuveen Fund Advisors, LLC (since 2019); Vice President, Associate General Counsel and Assistant Secretary of
Nuveen Asset Management, LLC (since 2020); Vice President (since 2010) and Associate General Counsel (since 2019), formerly, Assistant General Counsel (2008-2016) of Nuveen. |
|
|
|
|
Gifford R. Zimmerman
333 West Wacker Drive
Chicago, IL 60606
1956 |
|
Vice President and Assistant Secretary |
|
Term: Indefinite
Length of Service: Since 1988 |
|
Managing Director and Assistant Secretary of Nuveen Securities, LLC (since 2022); Managing Director, Assistant Secretary and General Counsel (since 2022), formerly, Co-General Counsel
(2011-2020) of Nuveen Fund Advisors, LLC; formerly, Managing Director (2004-2020) and Assistant Secretary (1994-2020) of Nuveen Investments, Inc.; Managing Director, Assistant Secretary and Associate General Counsel (since 2022) of Nuveen Asset
Management, LLC; Vice President and Assistant Secretary (since 2022) of Winslow Capital Management, LLC; formerly Vice President and Assistant Secretary of NWQ Investment Management Company, LLC (2002-2020) and Santa Barbara Asset Management, LLC
(2006-2020); Chartered Financial Analyst. |
96
|
|
|
|
|
|
|
| Name,
Address and Year of Birth |
|
Position(s)
Held with Fund |
|
Term of Office
and Length of
Time Served(1) |
|
Principal Occupation(s) During Past 5 Years(2) |
| Rachael Zufall 8500 Andrew Carnegie Blvd.
Charlotte, NC 28262 1973 |
|
Vice President and Assistant Secretary |
|
Term: Indefinite
Length of Service: Since 2022 |
|
Managing Director (since 2017), Associate General Counsel and Assistant Secretary (since 2014) of the CREF Accounts, TIAA Separate Account VA-1, TIAA-CREF Funds and TIAA-CREF Life Funds;
Managing Director (since 2017), Associate General Counsel and Assistant Secretary (since 2011) of Teacher Advisors, LLC and TIAA-CREF Investment Management, LLC; Managing Director of Nuveen, LLC and of TIAA (since 2017). |
| (1) |
Length of Time Served indicates the year the individual became an officer of a fund in the Nuveen fund complex.
|
| (2) |
Information as of November 30, 2022. |
Audit Committee Report
The Audit Committee of each Board is responsible for the oversight and monitoring of (1) the accounting and reporting policies, processes
and practices, and the audit of the financial statements, of each Fund, (2) the quality and integrity of each Fund’s financial statements and (3) the independent registered public accounting firm’s qualifications, performance and
independence. In its oversight capacity, the Audit Committee reviews each Fund’s annual financial statements with both management and the independent registered public accounting firm and the Audit Committee meets periodically with the
independent registered public accounting firm and internal auditors to consider their evaluation of each Fund’s financial and internal controls. The Audit Committee also selects, retains, evaluates and may replace each Fund’s independent
registered public accounting firm. The Audit Committee is currently composed of six Independent Board Members and operates under a written charter adopted and approved by each Board. Each Audit Committee member meets the independence and experience
requirements, as applicable, of the NYSE, Section 10A of the 1934 Act and the rules and regulations of the SEC.
The Audit Committee,
in discharging its duties, has met with and held discussions with management and each Fund’s independent registered public accounting firm. The Audit Committee has also reviewed and discussed the audited financial statements with management.
Management has represented to the independent registered public accounting firm that each Fund’s financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee has also discussed with the
independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards (“SAS”) No. 114 (The Auditor’s Communication With Those Charged With Governance), which supersedes SAS
No. 61 (Communication with Audit Committees). Each Fund’s independent registered public accounting firm provided to the Audit Committee the written disclosure required by Public Company Accounting Oversight Board Rule 3526 (Communications
with Audit Committees Concerning Independence), and the Audit Committee discussed with representatives of the independent registered public accounting firm their firm’s independence. As provided in the Audit Committee Charter, it is not the
Audit Committee’s responsibility to determine, and the considerations and discussions referenced above do not ensure, that each Fund’s financial statements are complete and accurate and presented in accordance with generally accepted
accounting principles.
Based on the Audit Committee’s review and discussions with management and the independent registered public
accounting firm, the representations of management and the report of the independent registered public accounting firm to the Audit Committee, the Audit Committee has recommended that the audited financial statements be included in each Fund’s
Annual Report.
97
The current members of the Audit Committee are:
Jack B. Evans
Albin F. Moschner
John K. Nelson
Judith M. Stockdale
Carole E. Stone, Chair
Robert L. Young
Audit and Related Fees
The following tables provide the aggregate fees billed during each Fund’s last two fiscal years by each Fund’s independent
registered public accounting firm for engagements directly related to the operations and financial reporting of each Fund including those relating (i) to each Fund for services provided to the Fund and (ii) to the Adviser and certain
entities controlling, controlled by, or under common control with the Adviser that provide ongoing services to each Fund (“Adviser Entities”).
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|
|
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| |
|
Audit Fees(1) |
|
|
Audit Related Fees(2) |
|
|
Tax Fees(3) |
|
|
All Other Fees(4) |
|
| |
|
Fund |
|
|
Fund |
|
|
Adviser and
Adviser
Entities |
|
|
Fund |
|
|
Adviser and
Adviser
Entities |
|
|
Fund |
|
|
Adviser and
Adviser
Entities |
|
| |
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2021 |
|
| Georgia Municipal |
|
$ |
26,580 |
|
|
$ |
25,580 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Ohio Municipal |
|
$ |
30,300 |
|
|
$ |
29,150 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| |
|
Audit Fees(1) |
|
|
Audit Related Fees(2) |
|
|
Tax Fees(3) |
|
|
All Other Fees(4) |
|
| |
|
Fund |
|
|
Fund |
|
|
Adviser and
Adviser
Entities |
|
|
Fund |
|
|
Adviser and
Adviser
Entities |
|
|
Fund |
|
|
Adviser and
Adviser
Entities |
|
| |
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
| Acquiring Fund |
|
$ |
28,125 |
|
|
$ |
25,090 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| (1) |
“Audit Fees” are the aggregate fees billed for professional services for the audit of the Fund’s
annual financial statements and services provided in connection with statutory and regulatory filings or engagements. |
| (2) |
“Audit Related Fees” are the aggregate fees billed for assurance and related services reasonably
related to the performance of the audit or review of financial statements that are not reported under “Audit Fees.” These fees include offerings related to the Fund’s common shares and leverage. |
| (3) |
“Tax Fees” are the aggregate fees billed for professional services for tax advice, tax compliance, and
tax planning. These fees include: all global withholding tax services; excise and state tax reviews; capital gain, tax equalization and taxable basis calculation performed by the principal accountant. |
| (4) |
“All Other Fees” are the aggregate fees billed for products and services other than “Audit
Fees,” “Audit-Related Fees” and “Tax Fees.” These fees represent all “Agreed-Upon Procedures” engagements pertaining to the Fund’s use of leverage. |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Non-Audit Fees
Billed to Fund |
|
|
Total Non-Audit Fees
Billed to Adviser and
Adviser Entities
(Engagements
Related Directly
to
the Operations and
Financial Reporting
of Fund) |
|
|
Total Non-Audit Fees
Billed to Adviser and
Adviser Entities (All
Other Engagements) |
|
|
Total |
|
| |
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2022 |
|
|
Fiscal
Year
Ended
2020 |
|
| Georgia Municipal |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Ohio Municipal |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
98
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|
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|
| |
|
Total Non-Audit Fees
Billed to Fund |
|
|
Total Non-Audit Fees
Billed to Adviser and
Adviser Entities
(Engagements
Related Directly
to
the Operations and
Financial Reporting
of Fund) |
|
|
Total Non-Audit
Fees Billed to
Adviser and
Adviser Entities
(All Other
Engagements) |
|
|
Total |
|
| |
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
|
Fiscal
Year
Ended
2021 |
|
|
Fiscal
Year
Ended
2020 |
|
| Acquiring Fund |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Audit Committee Pre-Approval Policies and Procedures
Generally, the Audit Committee must approve each Fund’s independent registered public accounting firm’s engagements
(i) with the Fund for audit or non-audit services and (ii) with the Adviser and Adviser Entities for non-audit services if the engagement relates directly to
the operations and financial reporting of the Fund. Regarding tax and research projects conducted by the independent registered public accounting firm for each Fund and the Adviser and Adviser Entities (with respect to the operations and financial
reporting of each Fund), such engagements will be (i) pre-approved by the Audit Committee if they are expected to be for amounts greater than $10,000; (ii) reported to the Audit Committee Chair for
his or her verbal approval prior to engagement if they are expected to be for amounts under $10,000 but greater than $5,000; and (iii) reported to the Audit Committee at the next Audit Committee meeting if they are expected to be for an amount
under $5,000.
The Audit Committee has approved in advance all audit services and non-audit
services that the independent registered public accounting firm provided to each Fund and to the Adviser and Adviser Entities (with respect to the operations and financial reporting of each Fund). None of the services rendered by the independent
registered public accounting firm to each Fund or the Adviser or Adviser Entities were pre-approved by the Audit Committee pursuant to the pre-approval exception under
Rule 2-01(c)(7)(i)(C) or Rule 2-01(c)(7)(ii) of Regulation S-X.
Appointment of the Independent Registered Public Accounting Firm
The Board of each Fund has appointed KPMG LLP (“KPMG”) as independent registered public accounting firm to audit the books and
records of the Fund for its current fiscal year. A representative of KPMG will be present at the Annual Meetings to make a statement, if such representative so desires, and to respond to shareholders’ questions. KPMG has informed each Fund that
it has no direct or indirect material financial interest in the Funds, Nuveen, the Adviser or any other investment company sponsored by Nuveen.
99
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUND
Annual Expenses Excluding the Costs of Leverage
Based on information provided by the Adviser, the Boards considered that the annual operating expense ratio of the combined fund following the
Mergers, excluding leverage, would be lower than the operating expense ratio of each Target Fund. The operating expense ratios presented below reflect Georgia Municipal’s fiscal year ended May 31, 2022, Ohio Municipal’s six month
semi-annual period ended August 31, 2022 (annualized), the Acquiring Fund’s six month semi-annual period ended April 30, 2022 (annualized) and the pro forma fees and expenses of the combined fund following the Mergers for the six
months ended April 30, 2022 (annualized), based on the assumptions set forth in the “Comparative Fee Table” at page 15.
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| |
|
Georgia
Municipal |
|
|
Ohio
Municipal |
|
|
Acquiring
Fund |
|
|
Combined
Fund Pro
Forma |
|
| Operating Expenses (as a percentage of net assets attributable to common shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Management Fees |
|
|
0.93 |
% |
|
|
0.95 |
% |
|
|
0.94 |
% |
|
|
0.93 |
% |
| Other Expenses |
|
|
0.10 |
% |
|
|
0.08 |
% |
|
|
0.05 |
% |
|
|
0.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Operating Expenses |
|
|
1.03 |
% |
|
|
1.03 |
% |
|
|
0.99 |
% |
|
|
0.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain Provisions in the Acquiring Fund’s Declaration of Trust and By-Laws
General
The by-laws of the Acquiring Fund provide that by becoming a shareholder of the Fund, each shareholder
shall be deemed to have agreed to be bound by the terms of the Declaration of Trust and by-laws. However, neither the Declaration of Trust nor the by-laws purport to
require the waiver of a shareholder’s rights under the federal securities laws.
Shareholder and Trustee Liability
Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Acquiring Fund.
However, the Acquiring Fund’s declaration of trust contains an express disclaimer of shareholder liability for debts or obligations of the Acquiring Fund and requires that notice of such limited liability be given in each obligation, contract
or instrument made or issued by the Acquiring Fund or the trustees. The Acquiring Fund’s declaration of trust further provides for indemnification out of the assets and property of the Acquiring Fund for all loss and expense of any shareholder
held personally liable for the obligations of the Acquiring Fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Acquiring Fund would be unable to meet its
obligations. The Acquiring Fund believes that the likelihood of such circumstances is remote.
The Acquiring Fund’s declaration of
trust provides that the obligations of the Acquiring Fund are not binding upon the Acquiring Fund’s trustees individually, but only upon the assets and property of the Acquiring Fund, and that the trustees will not be liable for errors of
judgment or mistakes of fact or law. However, nothing in the Acquiring Fund’s declaration of trust protects a trustee against any liability to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or her office.
Anti-Takeover Provisions
The Acquiring Fund’s declaration of trust and by-laws include provisions that could limit the
ability of other entities or persons to acquire control of the Acquiring Fund or to convert the Acquiring Fund to open-end
100
status. Specifically, the Acquiring Fund’s declaration of trust requires a vote by holders of at least two-thirds of the outstanding common shares and
preferred shares entitled to vote, voting as a single class, except as described below, to authorize (1) a conversion of the Acquiring Fund from a closed-end to an
open-end investment company, (2) a merger or consolidation of the Acquiring Fund with any corporation, association, trust or other organization or a reorganization or recapitalization of the Acquiring
Fund or a series or class of the Acquiring Fund, (3) a sale, lease or transfer of all or substantially all of the Acquiring Fund’s assets (other than in the regular course of the Acquiring Fund’s investment activities), (4) in
certain circumstances, a termination of the Acquiring Fund, or (5) a removal of trustees by shareholders, and then only for cause, unless, with respect to (1) through (4), such transaction has already been authorized by the affirmative
vote of two-thirds of the total number of trustees fixed in accordance with the Acquiring Fund’s declaration of trust or the Acquiring Fund’s by-laws, in which
case the affirmative vote of the holders of at least a majority of the Acquiring Fund’s outstanding common shares and preferred shares entitled to vote, voting as a single class, is required; provided, however, that, where only a particular
class or series is affected (or, in the case of removing a trustee, when the trustee has been elected by only one class), only the required vote by the applicable class or series will be required. For the purposes of the foregoing, the term
“recapitalization” will not mean, without limitation, the issuance or redemption of preferred shares pursuant to the terms of the declaration of trust or the applicable Statement adopted with respect to such preferred shares, whether or
not in conjunction with the issuance, retirement or redemption of other securities or indebtedness of the Acquiring Fund. However, approval of shareholders is not required for any transaction, whether deemed a merger, consolidation, reorganization
or otherwise, whereby the Acquiring Fund issues shares in connection with the acquisition of assets (including those subject to liabilities) of any other investment company or similar entity. In the case of the conversion of the Acquiring Fund to an
open-end investment company, or in the case of any of the foregoing transactions constituting a plan of reorganization (as that term is used in the 1940 Act) which adversely affects the holders of preferred
shares, the action in question will also require the affirmative vote of the holders of at least two-thirds of the Acquiring Fund’s preferred shares outstanding at the time, voting as a separate class,
or, if such action has been authorized by the affirmative vote of two-thirds of the total number of trustees fixed in accordance with the Acquiring Fund’s declaration of trust or the Acquiring Fund’s
by-laws, the affirmative vote of the holders of at least a majority of the Acquiring Fund’s preferred shares outstanding at the time, voting as a separate class. None of the foregoing voting provisions
may be amended or repealed except by the vote of at least two-thirds of the common shares and preferred shares entitled to vote, voting as a single class. The votes required to approve the conversion of the
Acquiring Fund from a closed-end to an open-end investment company or to approve transactions constituting a plan of reorganization which adversely affects the holders
of preferred shares are higher than those required by the 1940 Act. The Acquiring Fund’s Board believes that the provisions of the Acquiring Fund’s declaration of trust relating to such higher votes are in the best interests of the
Acquiring Fund.
In addition, the Acquiring Fund’s by-laws require the Board be divided into
three classes with staggered terms. This provision of the by-laws could delay for up to two years the replacement of a majority of the Board. Holders of preferred shares, voting as a separate class, are
entitled to elect two of the Acquiring Fund’s trustees.
The by-laws of the Acquiring
Fund include a Control Share Provision pursuant to which a shareholder who obtains beneficial ownership of Acquiring Fund common shares in a Control Share Acquisition may exercise voting rights with respect to such shares only to the extent
authorized by the affirmative vote of the holders of a majority (more than 50%) of the shares of the Acquiring Fund that are not held by Acquiring Fund officers or any person who has acquired common shares in a Control Share Acquisition. See
“Proposal No. 1—C. Information About the Mergers—Summary Description of Massachusetts Business Trusts—The Funds—Shareholder Voting.” See also “General Information—Additional Information About the
Solicitation” at page 117 for a description of certain legal matters with respect to the Control Share Provision.
The
provisions of the Acquiring Fund’s declaration of trust and by-laws described above could have the effect of depriving the common shareholders of opportunities to sell their common shares at a premium
over the then-current market price of the common shares by discouraging a third party from seeking to obtain control of the Acquiring Fund in a tender offer or similar transaction. The overall effect of these provisions is to render
101
more difficult the accomplishment of a merger or the assumption of control by a third party. However, they provide the advantage of potentially requiring persons seeking control of the Acquiring
Fund to negotiate with its management regarding the price to be paid and facilitating the continuity of the Acquiring Fund’s investment objectives and policies. The Acquiring Fund’s Board has considered the foregoing anti-takeover
provisions and concluded that they are in the best interests of the Acquiring Fund.
The Acquiring Fund’s declaration of trust
provides that shareholders will have no right to acquire, purchase or subscribe for any shares or securities of the Acquiring Fund, other than such right, if any, as the Acquiring Fund’s Board in its discretion may determine.
Procedural Requirements on Derivative Actions, Exclusive Jurisdiction and Jury Trial Waiver
The by-laws of the Acquiring Fund contain certain provisions affecting potential shareholder claims
against the Fund, including procedural requirements for derivative actions, an exclusive forum provision, and the waiver of shareholder rights to a jury trial. Massachusetts is considered a “universal demand” state, meaning that under
Massachusetts corporate law a shareholder must make a demand on the company before bringing a derivative action (i.e., a lawsuit brought by a shareholder on behalf of the company). The by-laws of the Acquiring
Fund provide detailed procedures for the bringing of derivative actions by shareholders (the “Demand By-Law”) which are modeled on the substantive provisions of the Massachusetts corporate law
derivative demand statute. The Demand By-Law is intended to permit legitimate inquiries and claims while avoiding the time, expense, distraction, and other harm that can be caused to the Acquiring Fund or its
shareholders as a result of spurious shareholder demands and derivative actions. Among other things, the Demand By-Law:
| |
• |
|
provides that before bringing a derivative action, a shareholder must make a written demand to the Acquiring
Fund; |
| |
• |
|
establishes a 90 day review period, subject to extension in certain circumstances, for the Board of Trustees to
evaluate the shareholder’s demand; |
| |
• |
|
establishes a mechanism for the Board of Trustees to submit the question of whether to maintain a derivative
action to a vote of shareholders; |
| |
• |
|
provides that if the Acquiring Fund does not notify the requesting shareholder of the rejection of the demand
within the applicable review period, the shareholder may commence a derivative action; |
| |
• |
|
establishes bases upon which a trustee will not be considered to be not independent for purposes of evaluating a
derivative demand; and |
| |
• |
|
provides that if the trustees who are independent for purposes of considering a shareholder demand determine in
good faith within the applicable review period that the maintenance of a derivative action is not in the best interest of the Acquiring Fund, the shareholder shall not be permitted to maintain a derivative action unless he or she first sustains the
burden of proof to the court that the decision of the trustees not to pursue the requested action was not a good faith exercise of their business judgment on behalf of the Fund. |
The Demand By-Law may be more restrictive than procedures for bringing derivative suits applicable to
other investment companies.
The by-laws also require that actions by shareholders against the
Acquiring Fund, except for actions under the U.S. federal securities laws, be brought only in a certain federal court in Massachusetts, or if not permitted to be brought in federal court, then in the Business Litigation Session of the Massachusetts
Superior Court in Suffolk County (the “Exclusive Jurisdictions”), and that the right to jury trial be waived to the fullest
102
extent permitted by law. Other investment companies may not be subject to similar restrictions. The designation of Exclusive Jurisdictions may make it more expensive for a shareholder to bring a
suit than if the shareholder were permitted to select another jurisdiction. Also, the designation of Exclusive Jurisdictions and the waiver of jury trials limit a shareholder’s ability to litigate a claim in the jurisdiction and in a manner
that may be more favorable to the shareholder. It is possible that a court may choose not to enforce these provisions of the Acquiring Fund’s by-laws.
Reference should be made to the Acquiring Fund’s declaration of trust and by-laws on file with
the SEC for the full text of these provisions.
Repurchase of Common Shares; Conversion to
Open-End Fund
The Acquiring Fund is a closed-end
management investment company, and as such its shareholders do not have the right to cause the Acquiring Fund to redeem their common shares. Instead, the common shares of the Acquiring Fund trade in the open market at a price that is a function of
several factors, including dividend levels (which are in turn affected by expenses), net asset value, call protection, dividend stability, portfolio credit quality, relative demand for and supply of such shares in the market, general market and
economic conditions and other factors. Because common shares of closed-end management investment companies may frequently trade at prices lower than net asset value, the Acquiring Fund’s Board has
determined that, at least annually, it will consider action that might be taken to reduce or eliminate any material discount from net asset value in respect of common shares, which may include the repurchase of such shares in the open market or in
private transactions, the making of a tender offer for such shares at net asset value, or the conversion of the Acquiring Fund to an open-end investment company. There is no assurance that the Acquiring
Fund’s Board will decide to take any of these actions, or that share repurchases or tender offers will actually reduce market discount.
Notwithstanding the foregoing, at any time when the Acquiring Fund’s preferred shares are outstanding, the Acquiring Fund may not
purchase, redeem or otherwise acquire any of its common shares unless (1) all accumulated but unpaid preferred shares dividends due to be paid have been paid and (2) at the time of such purchase, redemption or acquisition, the net asset
value of the Acquiring Fund’s portfolio (determined after deducting the acquisition price of the common shares) is at least 200% of the liquidation value (expected to equal the original purchase price per share plus any accumulated but unpaid
dividends thereon) of the outstanding preferred shares.
If the Acquiring Fund converted to an
open-end investment company, it would be required to redeem all its preferred shares then outstanding (requiring in turn that it liquidate a portion of its investment portfolio), and the common shares would no
longer be listed on an exchange. In contrast to a closed-end management investment company, shareholders of an open-end management investment company may require the
company to redeem their shares at any time (except in certain circumstances as authorized by or under the 1940 Act) at their net asset value, less any redemption charge that is in effect at the time of redemption. See “—Certain Provisions
in the Acquiring Fund’s Declaration of Trust and By-Laws” above for a discussion of the voting requirements applicable to the conversion of the Acquiring Fund to an
open-end management investment company.
Before deciding whether to take any action if the common
shares trade below net asset value, the Board would consider all relevant factors, including the extent and duration of the discount, the liquidity of the Acquiring Fund’s portfolio, the impact of any action that might be taken on the Acquiring
Fund or its shareholders and market considerations. Based on these considerations, even if the Acquiring Fund’s common shares should trade at a discount, the Board may determine that, in the interest of the Acquiring Fund, no action should be
taken. See the Merger SAI under “Repurchase of Common Shares; Conversion to Open-End Fund” for a further discussion of possible action to reduce or eliminate such discount to net asset value.
103
Description of Outstanding Acquiring Fund MFP Shares
The Acquiring Fund’s outstanding MFP Shares, which are expected to remain outstanding following the completion of the Mergers are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Series |
|
Shares
Outstanding |
|
|
Par Value
Per Share |
|
|
Liquidation
Preference
Per Share |
|
|
Issue Date |
|
Term Redemption
Date |
| Series A MFP Shares |
|
|
1,500 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
|
May 2017 |
|
May 1, 2047 |
| Series B MFP Shares |
|
|
1,550 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
|
February 2018 |
|
February 3, 2048 |
| Series C MFP Shares |
|
|
3,360 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
|
June 2018 |
|
June 1, 2048 |
The Series A MFP Shares, the Series B MFP Shares and the Series C MFP Shares were issued to
qualified institutional buyers through private transactions exempt from registration under the 1933 Act.
The MFP Shares of each series
are in the “Variable Rate Mode” (the “VR Mode”), in which the dividend is currently a variable rate determined by reference to an index rate plus an applicable spread. The Series B MFP Shares are “Adjustable Rate,”
meaning that so long as the Series B MFP Shares are in the current VR Mode, the Acquiring Fund and the beneficial owner or owners of the Series B MFP Shares may agree from time to time to adjust the dividend rate and other economic terms.
The term of the current VR Mode for the Series B MFP Shares ends on the Term Redemption Date set forth for such series in the table
above, subject to earlier redemption, repurchase or transition to a new mode by the Acquiring Fund. The term of the current VR Mode for the Series A MFP Shares currently ends on May 3, 2023, subject to extension or transition to a new
mode, or earlier redemption or repurchase. The term of the current VR Mode for the Series C MFP Shares currently ends on June 21, 2023, subject to extension or transition to a new mode, or earlier redemption or repurchase. Under the
respective statements establishing and fixing the rights and preferences of the MFP Shares, as supplemented (the “MFP Statements”), the Acquiring Fund may terminate the VR Mode early or, as applicable, not extend it, and transition the
applicable MFP Shares to a new mode (and, thereafter, until the term redemption date, subsequent new modes), during which many of the economic terms of the MFP Shares set forth in such MFP Statements may be modified. Modified terms for a new mode
may include provisions with respect to (but not limited to) optional tender provisions, mandatory tender provisions, a liquidity facility or other credit enhancement, mandatory purchase provisions, the dividend rate setting provisions (including as
to any maximum rate), and, if the dividend may be determined by reference to an index, formula or other method, the manner in which it will be determined and redemption provisions.
Dividends
The
holders of outstanding MFP Shares of each series are entitled to receive, when, as and if declared by the Board, out of funds legally available therefor in accordance with the Acquiring Fund’s declaration of trust and applicable law, cumulative
cash dividends at the dividend rate or rates for the outstanding MFP Shares of such series payable on the dividend payment dates with respect to the outstanding MFP Shares of such series. Holders of outstanding MFP Shares are not entitled to any
dividend, whether payable in cash, property or shares, in excess of such cumulative dividends on the outstanding MFP Shares. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on
outstanding MFP Shares which may be in arrears, and no additional sum of money will be payable in respect of such arrearage.
Redemption
The
outstanding MFP Shares of each series are subject to optional and mandatory redemption in certain circumstances. The Acquiring Fund is obligated to redeem the outstanding MFP Shares on the Term Redemption Date set forth for each series in the table
above, unless earlier redeemed or repurchased by the Acquiring Fund, at a redemption price per share equal to the applicable liquidation preference per share ($100,000) plus any
104
accumulated but unpaid dividends (whether or not earned or declared). In the event the Acquiring Fund fails to comply with asset coverage and/or effective leverage ratio requirements, as
applicable, and any such failure is not cured within the applicable cure period, the Acquiring Fund may become obligated to redeem such number of preferred shares as are necessary to achieve compliance with such requirements. In the case of Series
A, B or C MFP Shares, the Acquiring Fund is obligated to redeem all of the outstanding MFP Shares of the applicable series, in the event a mode change is initiated and a failed transition to a new mode occurs, or, in the case of Series B MFP
Shares, a rate adjustment is initiated by the majority beneficial owner and a failed rate adjustment occurs, if such failure is not cured within the applicable cure period. Outstanding MFP Shares also may be redeemed in whole at any time or in part
from time to time at the option of the Acquiring Fund at a redemption price per share equal to the liquidation preference per share plus any accumulated but unpaid dividends (whether or not earned or declared).
Voting and Consent Rights
Except as otherwise provided in the Acquiring Fund’s declaration of trust, the Statements, or as otherwise required by applicable law,
(i) each holder of outstanding MFP Shares is entitled to one vote for each outstanding MFP Share held on each matter submitted to a vote of shareholders of the Acquiring Fund, and (ii) the holders of outstanding MFP Shares, along with
holders of other outstanding preferred shares of the Acquiring Fund, vote with holders of common shares of the Acquiring Fund as a single class; provided, however, that holders of preferred shares, including outstanding MFP Shares, are entitled as a
class to elect two trustees of the Acquiring Fund at all times. The holders of outstanding common shares and preferred shares, including outstanding MFP Shares, voting as a single class, elect the balance of the trustees of the Acquiring Fund.
Holders of outstanding MFP Shares of each series, as a separate class, have voting and consent rights with respect to certain actions that
would materially and adversely affect any preference, right or power of the outstanding MFP Shares or holders of outstanding MFP Shares of the applicable series. In addition, holders of outstanding Series A MFP Shares, Series B MFP Shares
and Series C MFP Shares have certain consent rights under the purchase agreement for the outstanding MFP Shares of the applicable series with respect to certain actions that would affect their investment in the Acquiring Fund. Holders of
outstanding MFP Shares also are entitled to vote as a class with holders of other preferred shares of the Acquiring Fund on matters that relate to the conversion of the Acquiring Fund to an open-end investment
company, certain plans of reorganization adversely affecting holders of the preferred shares or any other action requiring a vote of security holders of the Acquiring Fund under Section 13(a) of the 1940 Act. In certain circumstances, holders
of preferred shares, including outstanding MFP Shares, are entitled to elect additional trustees in the event dividends are due and unpaid and sufficient cash or specified securities have not been deposited for their payment, or at any time holders
of preferred shares are entitled under the 1940 Act to elect a majority of the trustees of the Acquiring Fund.
Priority of Payment
The outstanding MFP Shares are senior in priority to the Acquiring Fund’s common shares as to the payment of dividends and
the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The outstanding MFP Shares of each series have equal priority as to the payment of dividends and the distribution of assets upon
dissolution, liquidation or winding up of the affairs of the Acquiring Fund with the other preferred shares of the Acquiring Fund, including the other series of outstanding MFP Shares, the outstanding VRDP Shares and the New AMTP Shares and the New
VRDP Shares to be issued in the Mergers, if any.
105
Description of Outstanding Acquiring Fund VRDP Shares
The Acquiring Fund’s outstanding VRDP Shares, each offered to qualified institutional buyers in private transactions exempt from
registration under the 1933 Act, which are expected to remain outstanding following the completion of the Mergers, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Series |
|
Shares
Outstanding |
|
|
Par Value
Per Share |
|
|
Liquidation
Preference
Per Share |
|
|
Issue Date |
|
Mandatory
Redemption
Date |
| Series 1 VRDP Shares |
|
|
2,688 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
|
April 2016 |
|
March 1, 2040 |
| Series 2 VRDP Shares |
|
|
2,622 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
|
April 2016 |
|
March 1, 2040 |
| Series 3 VRDP Shares |
|
|
1,460 |
|
|
$ |
0.01 |
|
|
$ |
100,000 |
|
|
April 2016 |
|
June 1, 2040 |
Under the statement establishing and fixing the rights and preferences of the outstanding VRDP Shares of
each series (each, a “Statement”), the Acquiring Fund is permitted to establish, from time to time, special rate periods during which many of the terms of the VRDP Shares set forth in such Statement may be modified. The Series 1 VRDP
Shares and the Series 2 VRDP Shares are in an “Adjustable Rate Special Rate Period,” in which the dividend is currently a variable rate determined by reference to an index rate plus an applicable spread. So long as the Series 1
VRDP Shares and the Series 2 VRDP Shares are in the current respective special rate period, the Acquiring Fund and the beneficial owner or owners of the VRDP Shares of the applicable series may agree from time to time to adjust the dividend
rate and other economic terms. The term of the current special rate period for the Series 1 VRDP Shares and the Series 2 VRDP Shares ends on the Mandatory Redemption Date set forth for the applicable series in the table above, subject to
earlier redemption, repurchase or transition to a new special rate period or minimum rate periods by the Acquiring Fund.
Under the
Statement for the outstanding Series 3 VRDP Shares, the Series 3 VRDP Shares currently pay an adjustable dividend rate set weekly by a remarketing agent. Holders of the outstanding Series 3 VRDP Shares have the right to give notice on
any business day to tender the securities for remarketing in seven days. The outstanding Series 3 VRDP Shares are also subject to a mandatory tender for remarketing upon the occurrence of certain events, such as the non-payment of dividends by the Acquiring Fund. Should a remarketing be unsuccessful, the dividend rate will reset to a maximum rate as defined in the governing documents of the outstanding Series 3 VRDP
Shares.
The outstanding Series 3 VRDP Shares have the benefit of an unconditional demand feature pursuant to a purchase agreement
provided by a bank acting as liquidity provider to ensure full and timely repayment of the liquidation preference amount plus any accumulated and unpaid dividends to holders upon the occurrence of certain events. The agreement for the outstanding
Series 3 VRDP Shares requires the liquidity provider to purchase from holders all outstanding Series 3 VRDP Shares tendered for sale that were not successfully remarketed. The liquidity provider also must purchase all outstanding Series 3
VRDP Shares prior to termination of the purchase agreement for such series, including by reason of the failure of the liquidity provider to maintain the requisite level of short-term ratings, if the Acquiring Fund has not obtained an alternate
purchase agreement before the termination date.
The obligation of the liquidity provider for the outstanding Series 3 VRDP Shares to
purchase the outstanding Series 3 VRDP Shares pursuant to the purchase agreement for such series runs to the benefit of the holders of the outstanding Series 3 VRDP Shares and is unconditional and irrevocable, and as such the short-term
ratings assigned to the outstanding Series 3 VRDP Shares are directly linked to the short-term creditworthiness of the liquidity provider. The liquidity provider for the outstanding Series 3 VRDP Shares entered into a purchase agreement
with respect to the outstanding Series 3 VRDP Shares, subject to periodic extension by agreement with the Acquiring Fund.
106
Dividends
The holders of outstanding VRDP Shares of each series are entitled to receive, when, as and if declared by the Board, out of funds legally
available therefor in accordance with the Acquiring Fund’s declaration of trust and applicable law, cumulative cash dividends at the dividend rate for the outstanding VRDP Shares of such series payable on the dividend payment dates with respect
to the outstanding VRDP Shares of such series. Holders of outstanding VRDP Shares are not entitled to any dividend, whether payable in cash, property or shares, in excess of such cumulative dividends on the outstanding VRDP Shares. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on outstanding VRDP Shares which may be in arrears, and no additional sum of money will be payable in respect of such arrearage.
Redemption
The
outstanding VRDP Shares of each series are subject to optional and mandatory redemption in certain circumstances. The Acquiring Fund is obligated to redeem the outstanding VRDP Shares on the Mandatory Redemption Date set forth for each series in the
table above, unless earlier redeemed or repurchased by the Acquiring Fund, at a redemption price per share equal to the liquidation preference per share ($100,000) plus any accumulated but unpaid dividends (whether or not earned or declared).
Pursuant to the Statement for the outstanding Series 3 VRDP Shares and the fee agreement with the liquidity provider for such series, the
Acquiring Fund will have an obligation to redeem, at a redemption price equal to $100,000 per share plus accumulated but unpaid dividends thereon (whether or not earned or declared) until, but excluding, the date fixed by the Board for redemption,
shares of such series purchased by the liquidity provider pursuant to its obligations under the purchase agreement if the liquidity provider continues to be the beneficial owner for a period of six months and such shares cannot be successfully
remarketed. The Acquiring Fund also will redeem, at a redemption price equal to the liquidation preference per share plus accumulated but unpaid dividends thereon (whether or not earned or declared) until, but excluding, the date fixed by the Board
for redemption, such number of preferred shares as is necessary to achieve compliance, if the Acquiring Fund fails to maintain the minimum VRDP asset coverage required under the 1940 Act and the Acquiring Fund’s agreement with the liquidity
provider for the outstanding Series 3 VRDP Shares, and such failure is not cured by the applicable cure date.
During the special
rate period for the outstanding Series 1 and Series 2 VRDP Shares, in the event the Acquiring Fund fails to comply with asset coverage and/or effective leverage ratio requirements and any such failure is not cured within the applicable
cure period, the Acquiring Fund may become obligated to redeem such number of preferred shares as are necessary to achieve compliance with such requirements. Also, during the special rate period for the outstanding Series 1 and Series 2
VRDP Shares, the Acquiring Fund is obligated to redeem all of the outstanding VRDP Shares of the applicable series, in the event a special rate period transition is initiated and a failed transition occurs, or if a rate adjustment is initiated by
the majority beneficial owner and a failed rate adjustment occurs, if such failure is not cured within the applicable cure period.
Outstanding VRDP Shares also may be redeemed in whole at any time or in part from time to time at the option of the Acquiring Fund at a
redemption price per share equal to the liquidation preference per share plus any accumulated but unpaid dividends (whether or not earned or declared).
Voting and Consent Rights
Except as otherwise provided in the Acquiring Fund’s declaration of trust, the Statements, or as otherwise required by applicable law,
(i) each holder of outstanding VRDP Shares is entitled to one vote for each outstanding VRDP Share held on each matter submitted to a vote of shareholders of the Acquiring Fund, and (ii) the holders of outstanding VRDP Shares, along with
holders of other outstanding preferred shares of the Acquiring Fund, vote with holders of common shares of the Acquiring Fund as a single class; provided, however,
107
that holders of preferred shares, including outstanding VRDP Shares, are entitled as a class to elect two trustees of the Acquiring Fund at all times. The holders of outstanding common shares and
preferred shares, including outstanding VRDP Shares, voting as a single class, elect the balance of the trustees of the Acquiring Fund.
Holders of outstanding VRDP Shares of each series, as a separate class, have voting and consent rights with respect to certain actions that
would materially and adversely affect any preference, right or power of the outstanding VRDP Shares or holders of outstanding VRDP Shares of the applicable series. In addition, holders of outstanding Series 1 and Series 2 VRDP Shares have
certain consent rights under the purchase agreement entered into for the special rate period for the outstanding VRDP Shares of the applicable series with respect to certain actions that would affect their investment in the Acquiring Fund. Holders
of outstanding VRDP Shares also are entitled to vote as a class with holders of other preferred shares of the Acquiring Fund on matters that relate to the conversion of the Acquiring Fund to an open-end
investment company, certain plans of reorganization adversely affecting holders of the preferred shares or any other action requiring a vote of security holders of the Acquiring Fund under Section 13(a) of the 1940 Act. In certain
circumstances, holders of preferred shares, including outstanding VRDP Shares, are entitled to elect additional trustees in the event at least two full years’ dividends are due and unpaid and sufficient cash or specified securities have not
been deposited for their payment, or at any time holders of preferred shares are entitled under the 1940 Act to elect a majority of the trustees of the Acquiring Fund.
Priority of Payment
The outstanding VRDP Shares are senior in priority to the Acquiring Fund’s common shares as to the payment of dividends and the
distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The outstanding VRDP Shares have equal priority as to the payment of dividends and the distribution of assets upon dissolution, liquidation or
winding up of the affairs of the Acquiring Fund with the other preferred shares of the Acquiring Fund, including the outstanding MFP Shares, the other series of outstanding VRDP Shares and the New AMTP Shares and the New VRDP Shares to be issued in
the Mergers, if any.
Custodian, Transfer Agent, Dividend Disbursing Agent and Redemption and Paying Agent
The custodian of the assets of each Fund is State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111. The
custodian performs custodial, fund accounting and portfolio accounting services. With respect to each Fund’s common shares and Georgia Municipal’s AMTP Shares, the transfer, shareholder services and dividend disbursing agent is
Computershare Inc. and Computershare Trust Company, N.A., 150 Royall Street, Canton, Massachusetts 02021 (“Computershare”). Computershare will serve in such capacity with respect to any New AMTP Shares to be issued by the Acquiring Fund in
the Mergers. The Bank of New York Mellon, 240 Greenwich Street, New York, New York 10286, acts as the tender agent, transfer agent and registrar, dividend disbursing agent and paying agent, calculation agent and redemption price disbursing agent
with respect to the Acquiring Fund’s MFP Shares and VRDP Shares and Ohio Municipal’s VRDP Shares and will serve in such capacity with respect to any New VRDP Shares to be issued by the Acquiring Fund in the Mergers.
Federal Income Tax Matters Associated with Investment in the Acquiring Fund
The following information is meant as a general summary of certain federal income tax matters for U.S. shareholders. Please see the Merger SAI
for additional information. Investors should rely on their own tax adviser for advice about the particular federal, foreign, state and local tax consequences to them of investing in the Acquiring Fund.
108
The Acquiring Fund has elected to be treated and intends to qualify each year (including the
taxable year in which the Mergers occur) as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). In order to qualify as a RIC, the Acquiring Fund must satisfy
certain requirements regarding the sources of its income, the diversification of its assets and the distribution of its income. As a RIC, the Acquiring Fund is not expected to be subject to federal income tax on the income and gains it distributes
to its shareholders. The Acquiring Fund invests primarily in municipal securities. Thus, substantially all of the Acquiring Fund’s dividends paid to you should qualify as “exempt-interest dividends.” A shareholder treats an
exempt-interest dividend as interest on state and local bonds exempt from regular federal income tax. Federal income tax law imposes an alternative minimum tax with respect to individuals, trusts and estates. Interest on certain municipal
obligations, such as certain private activity bonds, is included as an item of tax preference in determining the amount of a taxpayer’s alternative minimum taxable income. To the extent that the Acquiring Fund receives income from such
municipal obligations, a portion of the dividends paid by the Acquiring Fund, although exempt from regular federal income tax, will be taxable to shareholders to the extent that their tax liability is determined under the federal alternative minimum
tax. For taxable years beginning after December 31, 2022, exempt-interest dividends may also affect the corporate alternative minimum tax liability of some corporate shareholders.
Future legislation could limit the exclusion from gross income of tax-exempt interest (which includes
exempt-interest dividends received from the Acquiring Fund). Such legislation could affect the value of the municipal securities owned by the Acquiring Fund. The likelihood of such legislation being enacted cannot be predicted. Shareholders should
consult their own tax advisers regarding the potential consequences of future legislation on their investment in the Acquiring Fund.
In
addition to exempt-interest dividends, the Acquiring Fund may also distribute to its shareholders amounts that are treated as long-term capital gain or ordinary income (which may include short-term capital gains). These distributions may be subject
to federal, state and local taxation, depending on a shareholder’s situation. If so, they are taxable whether or not such distributions are reinvested. Distributions of net capital gains (the excess of net long-term capital gains over net
short- term capital losses) are generally taxable at rates applicable to long-term capital gains regardless of how long a shareholder has held its shares. Long-term capital gains are currently taxable to noncorporate shareholders at a maximum
federal income tax rate of 20%. In addition, certain individuals, estates and trusts are subject to a 3.8% Medicare tax on net investment income, including net capital gains and other taxable dividends. Corporate shareholders are taxed on capital
gain at the same rates as apply to ordinary income. The Acquiring Fund does not expect that any part of its distributions to shareholders from its investments will qualify for the dividends-received deduction available to corporate shareholders or
as “qualified dividend income” to noncorporate shareholders.
As a RIC, the Acquiring Fund will not be subject to federal income
tax in any taxable year provided that it meets certain distribution requirements. The Acquiring Fund may retain for investment some (or all) of its net capital gains. If the Acquiring Fund retains any net capital gains or investment company taxable
income, it will be subject to tax at regular corporate rates on the amount retained. If the Acquiring Fund retains any net capital gains, it may designate the retained amount as undistributed capital gains in a notice to its shareholders who, if
subject to federal income tax on long-term capital gains, (1) will be required to include in income for federal income tax purposes, as long-term capital gain, their share of such undistributed amount; (2) will be entitled to credit their
proportionate shares of the federal income tax paid by the Acquiring Fund on such undistributed amount against their federal income tax liabilities, if any; and (3) may claim refunds to the extent the credit exceeds such liabilities. For
federal income tax purposes, the basis of shares owned by a shareholder of the Acquiring Fund will be increased by an amount equal to the difference between the amount of undistributed capital gains included in the shareholder’s gross income
and the tax deemed paid by the shareholder under clause (2) of the preceding sentence.
The Internal Revenue Service (the
“IRS”) currently requires that a RIC that has two or more classes of stock allocate to each such class proportionate amounts of each type of its income (such as exempt interest,
109
ordinary income and capital gains). Accordingly, the Acquiring Fund reports dividends made with respect to common shares and preferred shares as consisting of particular types of income (e.g.,
exempt interest, net capital gains and ordinary income) in accordance with each class’s proportionate share of the total dividends paid by the Acquiring Fund with respect to the year.
Dividends declared by the Acquiring Fund in October, November or December to shareholders of record in one of those months and paid
during the following January will be treated as having been paid by the Acquiring Fund and received by shareholders on December 31 of the year the distributions were declared.
Each shareholder will receive an annual statement summarizing the shareholder’s dividend and capital gains distributions.
The redemption, sale or exchange of shares normally will result in capital gain or loss to shareholders who hold their shares as capital
assets. Generally, a shareholder’s gain or loss will be long-term capital gain or loss if the shares have been held for more than one year even though the increase in value in such shares is attributable to
tax-exempt interest income. The gain or loss on shares held for one year or less will generally be treated as short-term capital gain or loss. Current federal income tax law taxes both long-term and short-term
capital gains of corporations at the same rates applicable to ordinary income. However, for noncorporate taxpayers, long-term capital gains are currently taxed at a maximum federal income tax rate of 20%, while short-term capital gains are currently
taxed at ordinary income rates. An additional 3.8% Medicare tax may also apply to certain individual, estate or trust shareholders’ capital gain from the sale or other disposition of their shares. Any loss on the sale of shares that have been
held for six months or less will be disallowed to the extent of any distribution of exempt-interest dividends received with respect to such shares, unless the shares are of a RIC that declares exempt-interest dividends on a daily basis in an amount
equal to at least 90% of its net tax-exempt interest and distributes such dividends on a monthly or more frequent basis. Any remaining loss on the sale or disposition of shares held for six months or less will
be treated as a long-term capital loss to the extent of any distributions of net capital gains received (and undistributed net capital gain designated by the Acquiring Fund that is deemed to be received) by the shareholder on such shares. Any loss
realized on a sale or exchange of shares of the Acquiring Fund will be disallowed to the extent those shares of the Acquiring Fund are replaced by other substantially identical shares of the Acquiring Fund or other substantially identical stock or
securities (including through reinvestment of dividends) within a period of 61 days beginning 30 days before and ending 30 days after the date of disposition of the original shares. In that event, the basis of the replacement shares will be adjusted
to reflect the disallowed loss. The deductibility of capital losses is subject to limitations.
Any interest on indebtedness incurred or
continued to purchase or carry the Acquiring Fund’s shares to which exempt-interest dividends are allocated is not deductible. Under certain applicable rules, the purchase or ownership of shares may be considered to have been made with borrowed
funds even though such funds are not directly used for the purchase or ownership of the shares. In addition, if you receive Social Security or certain railroad retirement benefits, you may be subject to federal income tax on a portion of such
benefits as a result of receiving investment income, including exempt-interest dividends and other distributions paid by the Acquiring Fund.
If the Acquiring Fund invests in certain pay-in-kind
securities, zero coupon securities, deferred interest securities or, in general, any other securities with original issue discount (or with market discount if the Acquiring Fund elects to include market discount in income currently), the Acquiring
Fund must accrue income on such investments for each taxable year, which generally will be prior to the receipt of the corresponding cash payments. However, the Acquiring Fund must distribute to shareholders, at least annually, all or substantially
all of its investment company taxable income (determined without regard to the deduction for dividends paid) and its net tax-exempt income, including such income it is required to accrue, to qualify as a RIC
and (with respect to its ordinary income and capital gain) to avoid federal income and excise taxes. Therefore, the Acquiring Fund may have to dispose of its portfolio securities under disadvantageous circumstances to generate cash, or may have to
leverage itself by borrowing the cash, to satisfy these distribution requirements.
110
The Acquiring Fund may hold or acquire municipal obligations that are market discount bonds. A
market discount bond is a security acquired in the secondary market at a price below its redemption value (or its adjusted issue price if it is also an original issue discount bond). If the Acquiring Fund invests in a market discount bond, it will
be required to treat any gain recognized on the disposition of such market discount bond as ordinary taxable income to the extent of the accrued market discount.
The Acquiring Fund’s investment in lower rated or unrated debt securities may present issues for the Acquiring Fund if the issuers of
these securities default on their obligations because the federal income tax consequences to a holder of such securities are not certain.
The Acquiring Fund may be required to withhold federal income tax at a rate of 24% from all distributions (including exempt-interest
dividends) and redemption proceeds payable to a shareholder if the shareholder fails to provide the Acquiring Fund with his, her or its correct taxpayer identification number or to make required certifications, or if the shareholder has been
notified by the IRS (or the IRS notifies the Acquiring Fund) that he, she or it is subject to backup withholding. Backup withholding is not an additional tax; rather, it is a way in which the IRS ensures it will collect taxes otherwise due. Any
amounts withheld may be credited against a shareholder’s federal income tax liability.
The Foreign Account Tax Compliance Act
(“FATCA”) generally requires the Acquiring Fund to obtain information sufficient to identify the status of each of its shareholders. If a shareholder fails to provide this information or otherwise fails to comply with FATCA, the Acquiring
Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on Acquiring Fund dividends and distributions and redemption proceeds. The Acquiring Fund may disclose the information that it receives from (or
concerning) its shareholders to the IRS, non-U.S. taxing authorities or other parties as necessary to comply with FATCA, related intergovernmental agreements or other applicable law or regulation. Investors
are urged to consult their own tax advisers regarding the applicability of FATCA and any other reporting requirements with respect to the investor’s own situation, including investments through an intermediary.
Pursuant to proposed regulations, the Treasury Department has indicated its intent to eliminate the requirements under FATCA of withholding on
gross proceeds from the sale, exchange, maturity or other disposition of relevant financial instruments (including redemption of stock). The Treasury Department has indicated that taxpayers may rely on these proposed regulations pending their
finalization.
With respect to the preferred shares of the Acquiring Fund to be issued in the Mergers, if any, the Acquiring Fund will
receive opinions from special tax counsel that the preferred shares will constitute equity of the Acquiring Fund, and the foregoing discussion and the tax opinion received by the Funds regarding certain aspects of the Mergers, including that the
Mergers will qualify as reorganizations within the meaning of Section 368(a) of the Code, relies on the position that the preferred shares will constitute equity of the Acquiring Fund. Accordingly, distributions with respect to the preferred
shares (other than distributions in redemption of preferred shares subject to Section 302(b) of the Code) will generally constitute dividends to the extent of the Acquiring Fund’s current or accumulated earnings and profits, as calculated
for federal income tax purposes and to the extent allocable to such distribution. Because the treatment of a corporate security as debt or equity is determined on the basis of the facts and circumstances of each case, and no controlling precedent
exists for any preferred shares to be issued in the Mergers, there can be no assurance that the IRS will not challenge special tax counsel’s opinion and the Acquiring Fund’s treatment of the preferred shares as equity. If the IRS were to
succeed in such a challenge, holders of preferred shares could be characterized as receiving taxable interest income rather than exempt-interest or other dividends, possibly requiring them to file amended income tax returns and retroactively to
recognize additional amounts of ordinary income and pay additional tax, interest and penalties.
111
Net Asset Value
The Fund’s NAV is determined as of the close of regular session trading (normally 4:00 p.m. Eastern Time) on each day the New York
Stock Exchange (“NYSE”) is open for business. The Fund’s NAV is calculated by taking the market value of the Fund’s total assets, including interest or dividends accrued but not yet collected, less all liabilities, and dividing
by the total number of Common Shares outstanding. The result, rounded to the nearest cent, is the NAV. All valuations are subject to review by the Fund’s Board of Trustees or its delegate.
The Fund utilizes independent pricing services approved by the Board of Trustees to value portfolio instruments at their market value. If the
pricing services are unable to provide a market value or if a significant event occurs such that the valuation(s) provided are deemed unreliable, the Fund may value portfolio instrument(s) at their fair value, which is generally the amount that an
owner might reasonably expect to receive upon a current sale. Independent pricing services typically value non-equity portfolio instruments utilizing a range of market-based inputs and assumptions, including
readily available market quotations obtained from broker-dealers making markets in such instruments, cash flows and transactions for comparable instruments. In valuing municipal securities, the pricing services may also consider, among other
factors, the yields or prices of municipal securities of comparable quality, type of issue, coupon, maturity and rating and the obligor’s credit characteristics considered relevant by the pricing service or the Board of Trustees’ designee.
In pricing certain securities, particularly less liquid and lower quality securities, the pricing services may consider information about a security, its issuer or market activity provided by Nuveen Fund Advisors or Nuveen Asset Management.
If a price cannot be obtained from a pricing service or other pre-approved source, or if Nuveen Fund
Advisors deems such price to be unreliable, or if a significant event occurs after the close of the local market but prior to the time at which the Fund’s NAV is calculated, a portfolio instrument will be valued at its fair value as determined
in good faith by the Board of Trustees or persons acting at their direction. Nuveen Fund Advisors may determine that a price is unreliable in various circumstances. For example, a price may be deemed unreliable if it has not changed for an
identified period of time, or has changed from the previous day’s price by more than a threshold amount, and recent transactions and/or broker dealer price quotations differ materially from the price in question.
The valuations for fixed-income securities and certain derivative instruments are typically the prices supplied by independent third party
pricing services, which may use market prices or broker/dealer quotations or a variety of fair valuation techniques and methodologies. Short-term fixed-income securities that will mature in 60 days or less are valued at amortized cost, unless it is
determined that using this method would not reflect an investment’s fair value. The valuations of certain fixed-income securities will generally be based on prices determined as of the earlier closing time of the markets on which they primarily
trade, unless a significant event has occurred.
The Board of Trustees has adopted valuation procedures for the Fund and has delegated the
day-to-day responsibility for fair value determinations to Nuveen Fund Advisors’ Valuation Committee. All fair value determinations made by the Valuation Committee
are subject to review and ratification by the Board of Trustees. As a general principle, the fair value of a portfolio instrument is the amount that an owner might reasonably expect to receive upon the instrument’s current sale. A range of
factors and analysis may be considered when determining fair value, including relevant market data, interest rates, credit considerations and/or issuer specific news. However, fair valuation involves subjective judgments and it is possible that the
fair value determined for a portfolio instrument may be materially different from the value that could be realized upon the sale of that instrument.
Legal Opinions
Certain legal matters in connection with the issuance of common shares pursuant to the Agreement will be passed
upon by Morgan, Lewis & Bockius LLP, One Federal Street, Boston, Massachusetts 02110.
112
Experts
The financial statements appearing in the Annual Reports of Georgia
Municipal for the fiscal year ended May 31, 2022, Ohio Municipal for the fiscal year ended February
28, 2022 and the Acquiring Fund for the fiscal year ended October 31, 2021 are incorporated by reference herein. The Target Funds’ financial statements
as of and for the 2022, 2021, 2020, 2019 and 2018 fiscal years have been audited by KPMG, independent registered public accounting firm, as set forth in their reports thereon. The Acquiring Fund’s financial statements as of and for the 2021,
2020, 2019, 2018 and 2017 fiscal years have been audited by KPMG, independent registered public accounting firm, as set forth in their reports thereon. Such financial statements are incorporated by reference herein in reliance upon such reports
given on the authority of such firm as experts in accounting and auditing. KPMG provides auditing services to the Acquiring Fund and the Target Funds. The principal business address of KPMG is 200 East Randolph Street, Chicago, Illinois 60601.
113
GENERAL INFORMATION
Outstanding Shares of the Acquiring Fund and the Target Funds
The following table sets forth the number of outstanding common shares and preferred shares and certain other share information as of November
10, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1)
Title of Class |
|
(2)
Shares Authorized |
|
|
(3)
Shares Held by
Fund for Its
Own Account |
|
|
(4)
Shares Outstanding
Exclusive of Shares
Shown under (3) |
|
| Georgia Municipal |
|
|
|
|
|
|
|
|
|
|
|
|
| Common shares |
|
|
Unlimited |
|
|
|
— |
|
|
|
10,399,813 |
|
| Preferred shares |
|
|
Unlimited |
|
|
|
— |
|
|
|
585 (Series 2028 AMTP) |
|
| Ohio Municipal |
|
|
|
|
|
|
|
|
|
|
|
|
| Common shares |
|
|
Unlimited |
|
|
|
— |
|
|
|
18,254,255 |
|
| Preferred shares |
|
|
Unlimited |
|
|
|
— |
|
|
|
1,480 (Series 1 VRDP) |
|
| Acquiring Fund |
|
|
|
|
|
|
|
|
|
|
|
|
| Common shares |
|
|
Unlimited |
|
|
|
— |
|
|
|
165,390,401 |
|
| Preferred shares |
|
|
Unlimited |
|
|
|
— |
|
|
|
1,500 (Series A MFP) |
|
|
|
|
|
|
|
|
|
|
|
|
1,550 (Series B MFP) |
|
|
|
|
|
|
|
|
|
|
|
|
3,360 (Series C MFP) |
|
|
|
|
|
|
|
|
|
|
|
|
2,688 (Series 1 VRDP) |
|
|
|
|
|
|
|
|
|
|
|
|
2,622 (Series 2 VRDP) |
|
|
|
|
|
|
|
|
|
|
|
|
1,960 (Series 3 VRDP) |
|
The common shares of Georgia Municipal, Ohio Municipal and the Acquiring Fund are listed and trade on the
NYSE under the ticker symbols NKG, NUO and NZF, respectively. Upon the closing of the Mergers, it is expected that the common shares of the Acquiring Fund will continue to be listed on the NYSE. None of the preferred shares of the Acquiring Fund and
the Target Funds are currently listed on any exchange.
Shareholders of the Acquiring Fund and the Target Funds
As of November 10, 2022, the members of the Board and officers of each Fund as a group owned less than 1% of the total outstanding common
shares and less than 1% of the total outstanding preferred shares of each Fund.
Information regarding shareholders or groups of
shareholders who, to the knowledge of a Fund, beneficially own more than 5% of a class of shares of a Fund is provided below. Information in the table below regarding the number and percentage of shares owned is based on a review of
Schedule 13D and 13G filings and
114
amendments made on or before November 10, 2022. The estimated pro forma information presented is calculated assuming outstanding common and preferred shares as of November 10, 2022 for each Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Estimated Pro Forma |
|
| Fund and Class |
|
Shareholder
Name and
Address |
|
Number of
Shares
Owned |
|
|
Percentage
Owned |
|
|
Corresponding
Class of
Combined
Fund |
|
|
All
Preferred
Shares of
Combined
Fund |
|
| Georgia Municipal— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Shares |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Series 2028 AMTP |
|
Wells Fargo Municipal Capital Strategies, LLC
301 South Tryon Street, 11th Floor Charlotte, NC
28202-6000 |
|
|
585 |
|
|
|
100 |
% |
|
|
100.00 |
% |
|
|
3.72 |
% |
| Ohio Municipal— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Shares |
|
Karpus Investment Management 183
Sully’s Trail Pittsford, New York 14534 |
|
|
1,038,358 |
|
|
|
5.67 |
% |
|
|
0.59 |
% |
|
|
N/A |
|
| Series 1 VRDP |
|
Bank of America Corporation Bank of America
Corporate Center 100 N. Tryon Street Charlotte, North
Carolina 28255 |
|
|
1,480 |
|
|
|
100 |
% |
|
|
100.00 |
% |
|
|
26.05 |
% |
| Acquiring Fund— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Shares |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Series A MFP |
|
Toronto Dominion Investments, Inc. 31 West
52nd Street, Floor 18 New York, NY 10019 |
|
|
1,500 |
|
|
|
100 |
% |
|
|
100.00 |
% |
|
|
19.37 |
% |
| Series B MFP |
|
Toronto Dominion Investments, Inc. 31 West
52nd Street, Floor 18 New York, NY 10019 |
|
|
1,550 |
|
|
|
100 |
% |
|
|
100.00 |
% |
|
|
19.37 |
% |
| Series C MFP |
|
JPMorgan Chase Bank, National Association
1111 Polaris Parkway
Columbus, OH 43240 |
|
|
3,360 |
|
|
|
100 |
%* |
|
|
100.00 |
% |
|
|
21.34 |
% |
| Series 1 VRDP |
|
Wells Fargo & Company 1700 Lincoln
Street, 12th Floor Denver, CO 80203 |
|
|
2,688 |
|
|
|
100 |
%* |
|
|
100.00 |
% |
|
|
17.07 |
% |
| Series 2 VRDP |
|
Bank of America Corporation Bank of America
Corporate Center 100 N. Tryon Street Charlotte, North
Carolina 28255 |
|
|
2,622 |
|
|
|
100 |
%* |
|
|
100.00 |
% |
|
|
26.05 |
% |
As of November 10, 2022, neither Fund is not aware of any shareholders holding more than 5% of its
common shares. Neither Fund is aware of any person who, as of November 10, 2022, “controls” (within the meaning of the 1940 Act) the Fund. Under the 1940 Act, a person who beneficially owns, directly or indirectly, more than 25% of the
voting securities of a fund is presumed to control the fund.
The Acquiring Fund Series 3 VRDP Shares currently are designed to be
eligible for purchase by money market funds and other short duration investors. Information with respect to aggregate holdings of Series 3 VRDP Shares associated with fund complexes known to the Fund to hold greater than 5% of such shares as of
November 10, 2022, including the number of shares associated with the fund complex and percentage of total outstanding shares, is as follows: Vanguard (1,960 shares (100%)). Following a partial redemption on November 21, 2022, the total number
of outstanding Acquiring Fund Series 3 VRDP Shares was 1,460.
115
Expenses of Proxy Solicitation
Preferred shareholders will not bear any costs of the Mergers. The costs of the Mergers are estimated to be $1,215,000, but the actual costs
may be higher or lower than that amount. These costs represent the estimated nonrecurring expenses of the Funds in carrying out their obligations under the Agreement and consist of management’s estimate of professional service fees, printing
costs and mailing charges related to the proposed Mergers. Based on the expected benefits of the Mergers to each Fund, each of Georgia Municipal, Ohio Municipal and the Acquiring Fund is expected to be allocated $280,000, $930,000 and $5,000,
respectively, of the estimated expenses in connection with the Mergers (0.20%, 0.30% and 0.00%, respectively, of Georgia Municipal’s, Ohio Municipal’s and the Acquiring Fund’s average net assets applicable to common shares for the six
months ended April 30, 2022). If one or both Mergers is not consummated for any reason, including because the requisite shareholder approvals are not obtained, each of the Funds, and common shareholders of each of the Funds indirectly, will still
bear the costs of the Mergers.
The Funds have engaged Computershare Fund Services to assist in the solicitation of proxies at an
estimated aggregate cost of $7,500 per Fund plus reasonable expenses, which is included in the foregoing estimate.
Shareholder Proposals
The Acquiring Fund expects to hold its 2023 annual meeting of shareholders in August 2023. To be considered for presentation at the 2023
annual meeting of shareholders of the Acquiring Fund, shareholder proposals submitted pursuant to Rule 14a-8 under the 1934 Act must have been received at the offices of the Fund, 333 West Wacker Drive,
Chicago, Illinois 60606, not later than March 2, 2023. A shareholder wishing to provide notice in the manner prescribed by Rule 14a-4(c)(1) under the 1934 Act of a proposal submitted outside of the
process of Rule 14a-8 for the 2023 annual meeting must, pursuant to the Acquiring Fund’s by-laws, submit such written notice to the Acquiring Fund no earlier than
April 1, 2023 and no later than April 16, 2023. Timely submission of a proposal does not mean that such proposal will be included in a proxy statement.
If Proposal No. 1 is approved at each Target Fund’s and the Acquiring Fund’s Meeting and the Mergers are consummated, each
Target Fund will cease to exist and will not hold its next annual meeting. If the Mergers are not approved or are not consummated, Georgia Municipal and Ohio Municipal will hold their next annual meeting of shareholders, expected to be held in
April 2024 and November 2023, respectively.
To be considered for presentation at the 2024 annual meeting of shareholders of
Georgia Municipal, shareholder proposals submitted pursuant to Rule 14a-8 under the 1934 Act must be received at the offices of the Fund, 333 West Wacker Drive, Chicago, Illinois 60606, not later than
[●], 2023. A shareholder wishing to provide notice in the manner prescribed by Rule 14a-4(c)(1) under the 1934 Act of a proposal submitted outside of the process of Rule
14a-8 for the 2024 annual meeting must, pursuant to the Fund’s by-laws, submit such written notice to Georgia Municipal no earlier than [●], 2023 and no later
than [●], 2023. Timely submission of a proposal does not mean that such proposal will be included in a proxy statement.
To be
considered for presentation at the 2023 annual meeting of shareholders of Ohio Municipal, shareholder proposals submitted pursuant to Rule 14a-8 under the 1934 Act must be received at the offices of the Fund,
333 West Wacker Drive, Chicago, Illinois 60606, not later than June 14, 2023. A shareholder wishing to provide notice in the manner prescribed by Rule 14a-4(c)(1) under the 1934 Act of a proposal
submitted outside of the process of Rule 14a-8 for the 2023 annual meeting must, pursuant to the Fund’s by-laws, submit such written notice to Ohio Municipal no
earlier than July 14, 2023 and no later than July 29, 2023. Timely submission of a proposal does not mean that such proposal will be included in a proxy statement.
Proposals may be presented by shareholders only if advance notice is duly submitted in accordance with applicable law and the Fund’s
governing documents, and the subject matter of such proposal is a matter upon
116
which the proposing shareholder is entitled to vote. Each Fund’s by-laws require shareholders submitting advance notices of proposals of business or
nominations for election as Board Members to provide the Fund with certain information and representations about the proponent shareholder and the nominees or business being proposed. A shareholder wishing to present a proposal of business or
nomination is encouraged to carefully review the applicable Fund’s by-laws.
Copies of the by-laws of each Fund are available on the EDGAR Database on the SEC’s website at www.sec.gov.
Shareholder Communications
Fund shareholders who want to communicate with the Board or any individual Board Member should write
to the attention of William Siffermann, Manager of Fund Board Relations, Nuveen Investments, 333 West Wacker Drive, Chicago, Illinois 60606. The letter should indicate that you are a Fund shareholder and note the Fund or Funds that you own. If the
communication is intended for a specific Board Member and so indicates, it will be sent only to that Board Member. If a communication does not indicate a specific Board Member it will be sent to the Independent Chair and the outside counsel to the
Independent Board Members for further distribution as deemed appropriate by such persons.
Fiscal Year
The fiscal year end for Georgia Municipal is May 31. The fiscal year end for Ohio Municipal is February 28/29. The fiscal year end
for the Acquiring Fund is October 31.
Shareholder Report Delivery
Shareholder reports will be made available to shareholders of record of each Fund following each Fund’s fiscal year end. Each Fund
will furnish, without charge, a copy of its annual report and/or semi-annual report as available upon request. Such written or oral requests should be directed to a Fund at 333 West Wacker Drive, Chicago, Illinois 60606 or by calling (800) 257-8787.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder
Meeting to Be Held on February 8, 2023
The Joint Proxy Statement/Prospectus is available at http://www.nuveenproxy.com/Closed-End-Fund-Proxy-Information. For more information, shareholders may also contact the applicable Fund at the address and phone number set forth above.
Please note that only one annual report or proxy statement may be delivered to two or more shareholders of a Fund who share an address, unless
the Fund has received instructions to the contrary. To request a separate copy of an annual report or proxy statement, or for instructions as to how to request a separate copy of such documents or as to how to request a single copy if multiple
copies of such documents are received, shareholders should contact the applicable Fund at the address and phone number set forth above.
Additional Information About the Solicitation
On January 14, 2021, a shareholder of certain Nuveen closed-end funds (the “Subject Funds”) filed a civil complaint in the U.S. District Court for the Southern District of New York (the “District Court”) against the Subject Funds and their
trustees, seeking a declaration that the Subject Funds’ Control Share Provision violates the 1940 Act and rescission of the Subject Fund’s Control Share Provision. On February 18, 2022, the District
117
Court granted summary judgment in favor of the plaintiff on its claims for rescission and declaratory judgment. Following careful review of the judgment of the District Court, on
February 24, 2022, the Board of Trustees amended the by-laws of the Subject Funds and all other Nuveen closed-end funds whose
by-laws include a Control Share Provision, including the Target Funds and the Acquiring Fund, to provide that the Control Share Provision shall be of no force and effect for so long as the judgment of the
District Court is effective and that if the judgment of the District Court is reversed, overturned, vacated, stayed, or otherwise nullified, the Control Share Provision will be automatically reinstated and apply to any beneficial owner of common
shares acquired in a Control Share Acquisition, regardless of whether such Control Share Acquisition occurs before or after such reinstatement, for the duration of the stay or upon issuance of the mandate reversing, overturning, vacating or
otherwise nullifying the judgment of the District Court. As a result, the Funds’ Control Share Provision will not be in effect with respect to this meeting. On February 25, 2022, the Subject Funds and their trustees filed a notice of their
intention to appeal the District Court’s decision.
Other Information
Management of the Funds does not intend to present and does not have reason to believe that others will present any items of business at the
Meetings, except as described in this Joint Proxy Statement/Prospectus. However, if other matters are properly presented at the meetings for a vote, the proxies will be voted upon such matters in accordance with the judgment of the persons acting
under the proxies.
Upon at least five business days advance written notice to a Fund, a shareholder of the Fund is entitled to inspect
and copy at the offices where they are maintained, a list of shareholders and their addresses entitled to be present and to vote at that Fund’s Meeting, provided that the written notice describes with reasonable particularity the purpose of the
demand, that the demand is made in good faith and for a proper purpose, and the records requested are directly connected to that purpose, and provided further that the Trustees shall not have determined in good faith that disclosure of the records
sought would adversely affect the Fund in the conduct of its business or constitute material non-public information at the time when the shareholder’s notice of demand to inspect and copy is received by
the Fund. The Fund may furnish the shareholder with copies of the shareholder list, including copies furnished through an electronic transmission. Shareholders interested in inspecting the list of shareholders for their respective Fund(s) should
contact (800) 257-8787 for additional information. To email the Fund(s), please visit www.nuveen.com/contact-us.
In the absence of a quorum for a particular matter, business may proceed on any other matter or matters that may properly come before the
Meetings if there is present, in person (including virtually) or by proxy, a quorum of shareholders in respect of such other matters. The chair of the meeting may, whether or not a quorum is present, adjourn the meeting with respect to one or more
matters to be considered on behalf of a Fund without further notice to permit further solicitation of proxies.
By returning the enclosed
form of proxy, you are authorizing the persons named on the proxy to vote in their discretion on any matter that properly comes before the Meetings.
Broker-dealer firms holding shares in “street name” for the benefit of their customers and clients are generally required to request
the instruction of such customers and clients on how to vote their shares on the proposals. A broker-dealer firm that is subject to the rules of the NYSE and that has not received instructions from a customer prior to the date specified in its
request for voting instructions may not vote such customer’s shares on Proposal No. 1 described in this Joint Proxy Statement/Prospectus. A signed proxy card or other authorization by a beneficial owner of shares of a Fund that does not
specify how the beneficial owner’s shares are to be voted on the proposal may be deemed to be an instruction to vote such shares in favor of the proposal. However, a broker-dealer firm subject to the rules of the NYSE and that has not received
instructions from a customer prior to the date specified in its request for voting instructions may vote such customer’s shares on Proposal No. 2 described in this Joint Proxy Statement/Prospectus.
118
IF YOU CANNOT BE PRESENT AT THE MEETINGS, YOU ARE REQUESTED TO FILL IN, SIGN AND RETURN THE
ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
Mark L. Winget
Vice President and Secretary
The Nuveen Closed-End Funds
119
APPENDIX A
FORM OF AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is made as of this [●]
day of [●], 2022, by and among Nuveen Municipal Credit Income Fund (the “Acquiring Fund”), each of Nuveen Georgia Quality Municipal Income Fund (“Georgia Municipal” or a “Target Fund”) and Nuveen Ohio
Quality Municipal Income Fund (“Ohio Municipal” or a “Target Fund”), each a Massachusetts business trust, and NMCIF Merger Sub, LLC (the “Merger Sub”), a Massachusetts limited liability company and a direct,
wholly-owned subsidiary of the Acquiring Fund. The Acquiring Fund and the Merger Sub may be referred to herein together as the “Acquiring Fund Parties.” The Acquiring Fund and each Target Fund may be referred to herein as a
“Fund” and, collectively, as the “Funds.”
For each Merger, this Agreement is intended to be, and is adopted as, a
plan of reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder. The reorganization of each Target Fund into the Acquiring
Fund will consist of the merger of the Target Fund with and into the Merger Sub pursuant to which shareholders of the Target Fund (collectively, “Target Fund Shareholders”) will receive (i) with respect to holders of the issued and
outstanding common shares of beneficial interest of the Target Fund (“Target Fund Common Shares”), newly issued common shares of beneficial interest, par value $0.01 per share, of the Acquiring Fund (the “Acquiring Fund Common
Shares”) and, (ii) with respect to holders of any issued and outstanding Adjustable Rate MuniFund Term Preferred Shares (“AMTP Shares”) of Georgia Municipal, newly issued AMTP Shares of the Acquiring Fund with a par value of
$0.01 per share and liquidation preference of $100,000 per share (the “Acquiring Fund AMTP Shares”) and, (iii) with respect to holders of any issued and outstanding Variable Rate Demand Preferred Shares (“VRDP Shares”) of
Ohio Municipal, newly issued VRDP Shares of the Acquiring Fund with a par value of $0.01 per share and liquidation preference of $100,000 per share (the “Acquiring Fund VRDP Shares” and, together with the Acquiring Fund AMTP Shares, the
“Acquiring Fund Preferred Shares” and, collectively with the Acquiring Fund AMTP Shares and the Acquiring Fund Common Shares, the “Acquiring Fund Shares”) as provided herein, all upon the terms and conditions set forth in this
Agreement (each, a “Merger” and together, the “Mergers”).
WHEREAS, each Fund is a
closed-end, management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and each Target Fund owns securities that generally are assets of the
character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue the Acquiring Fund
Shares; and
WHEREAS, the Board of Trustees of the Acquiring Fund (the “Acquiring Fund Board”) has determined that each Merger
is in the best interests of the Acquiring Fund and that the interests of the existing shareholders of the Acquiring Fund will not be diluted as a result of the Mergers, and the Board of Trustees of each Target Fund (each, a “Target Fund
Board”) has determined that its Merger is in the best interests of such Target Fund and that the interests of the existing shareholders of such Target Fund will not be diluted as a result of its Merger.
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and
agree as follows:
ARTICLE I
MERGER
1.1
MERGER. With respect to each Merger, subject to the terms and conditions contained herein and on the basis of the representations and warranties contained herein, and in
accordance with Section 2 of
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Chapter 182 of the Massachusetts General Laws (“M.G.L.”) and Section 59 of the M.G.L. Chapter 156C, at the Effective Time (as defined in Section 3.1), the Target Fund shall be
merged with and into the Merger Sub, the separate existence of the Target Fund shall cease and the Merger Sub shall be the surviving company in the Merger (sometimes referred to herein as the “Surviving Company”) in accordance with such
laws and shall continue as a wholly-owned subsidiary of the Acquiring Fund. The separate limited liability company existence of the Merger Sub shall continue unaffected and unimpaired by the Merger and, as the Surviving Company, it shall be governed
by the laws of the Commonwealth of Massachusetts.
(a) With respect to each Merger, at
the Effective Time, as a result of the Merger and without any action on the part of the holder of any shares of the Target Fund:
(i) Each Target Fund Common Share issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the number of Acquiring Fund Common Shares provided for in Section 2.2 (with cash being distributed in lieu of
fractional Acquiring Fund Common Shares as set forth in Section 2.2);
(ii)
The Target Fund AMTP Shares or VRDP Shares, as applicable, issued and outstanding immediately prior to the Effective Time, if any, shall, by virtue of the Merger and without any action on the part of
the holder(s) thereof, be converted into the same number of Acquiring Fund AMTP Shares or VRDP Shares, respectively, having (a) substantially similar terms to such Target Fund AMTP Shares or VRDP Shares, respectively, as of the Closing (as
defined in Section 3.1), (b) equal priority with other outstanding preferred shares of the Acquiring Fund as to the payment of dividends and as to the distribution of assets upon liquidation of the Acquiring Fund, and (c) along with
any other outstanding preferred shares of the Acquiring Fund, preference with respect to the payment of dividends and as to the distribution of assets upon liquidation of the affairs of the Acquiring Fund over the common shares of the Acquiring
Fund; and
(iii) The membership interests in the Merger Sub issued and
outstanding immediately prior to the Effective Time shall remain unchanged as a result of the Merger and shall remain as the only issued and outstanding membership interests of the Surviving Company.
(b) The certificate of organization of the Merger Sub as in effect immediately prior to the
Effective Time (the “Certificate of Organization”) shall be the certificate of organization of the Surviving Company, unless and until amended in accordance with its terms and applicable law. The operating agreement of the Merger Sub in
effect immediately prior to the Effective Time (the “LLC Agreement”), shall be the operating agreement of the Surviving Company unless and until amended in accordance with its terms and applicable law.
(c) With respect to each Merger, at the Effective Time, the separate legal existence of the
Target Fund shall cease for all purposes and the Merger Sub shall continue in existence as the Surviving Company, and without any further action being required, the Surviving Company shall succeed to and possess all of the rights, privileges and
powers of the Merger Sub and the Target Fund, and all of the assets and property of whatever kind and character of the Merger Sub and the Target Fund shall vest in the Merger Sub without further act or deed. With respect to each Merger, at the
Effective Time, the Surviving Company shall be liable for all of the liabilities and obligations of the Merger Sub and the Target Fund, and any claim or judgment against the Merger Sub and the Target Fund may be enforced against the Surviving
Company, in accordance with applicable law.
(d) With respect to each Merger, the
Acquiring Fund will issue Acquiring Fund Shares to shareholders of the Target Fund upon the conversion of Target Fund Shares by opening shareholder accounts on the share ledger records of the Acquiring Fund in the names of and in the amounts due to
the shareholders of the Target Fund based on (i) with respect to holders of the issued and outstanding Target Fund Common Shares, their holdings of Target Fund Common Shares as of immediately prior to the Effective Time, and (ii) with
respect to holders of any issued and outstanding AMTP Shares or VRDP Shares of a Target Fund, as applicable, the number of AMTP Shares or VRDP Shares held by such shareholder immediately prior to the Effective Time.
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Ownership of Acquiring Fund Shares will be shown on the books of the applicable transfer agent or tender and paying agent, as applicable, for the Acquiring Fund, and the Acquiring Fund will not
issue certificates representing Acquiring Fund Shares in connection with the Merger, except for any global share certificate or certificates required by a securities depository in connection with the establishment of book-entry ownership of the
Acquiring Fund Common Shares or the Acquiring Fund Preferred Shares. All Acquiring Fund Shares to be issued pursuant to the Merger shall be deemed issued and outstanding as of the Effective Time.
(e) For each Merger, upon the terms and subject to the conditions of this Agreement, the
parties shall cause the filing of one or more certificates of merger (a “Certificate of Merger”) with the Secretary of the Commonwealth of Massachusetts in accordance with the laws of the Commonwealth of Massachusetts.
(f) With respect to each Merger, the Target Fund agrees to dispose of certain assets prior to
the Closing, but only if and to the extent necessary, so that at the Closing, when the assets of such Target Fund participating in a Merger are aggregated with the Acquiring Fund’s assets and the assets of the other Target Fund participating in
a Merger, the resulting portfolio will meet the Acquiring Fund’s investment objective, policies and restrictions, as set forth in the Acquiring Fund’s Registration Statement (as defined in Section 5.5). Notwithstanding the foregoing,
nothing herein will require the Target Fund to dispose of any investments or securities if, in the reasonable judgment of the Target Fund Board or Nuveen Fund Advisors, LLC, the investment adviser to the Funds (the “Adviser”), such
disposition would adversely affect the status of the Merger as a “reorganization” as such term is used in Section 368(a) of the Code or would otherwise not be in the best interests of the Target Fund.
1.2 DISSOLUTION, LIQUIDATION AND TERMINATION. If both Mergers occur at
the same time, as soon as practicable after the Effective Time (or if both Mergers do not occur at the same time, as soon as practicable after the Effective Time of the last Merger to occur), the Merger Sub shall be dissolved and the Acquiring Fund
will assume all of the Merger Sub’s liabilities and obligations, known and unknown, contingent or otherwise, whether or not determinable, and the Merger Sub will distribute to the Acquiring Fund, which will be the sole member of the Merger Sub
at such time, all of the assets of the Merger Sub in complete liquidation of its interest in the Merger Sub in accordance with a Plan of Dissolution adopted by the Merger Sub.
1.3 ACCOUNTING AND PERFORMANCE SURVIVOR. In connection with the transactions contemplated by
this Agreement, notwithstanding that the Merger Sub shall be the surviving entity in the Merger, the Acquiring Fund shall be deemed the survivor solely for accounting and performance record purposes.
1.4 DECLARATION OF PREFERRED SHARE DIVIDENDS. Dividends shall accumulate on any issued and
outstanding AMTP Shares or VRDP Shares of a Target Fund, as applicable, up to and including the day immediately preceding the Closing Date (as defined in Section 3.1) and then cease to accumulate, and dividends on the Acquiring Fund Preferred Shares
will accumulate from and including the Closing Date. Prior to the Valuation Time (as defined in Section 2.1), each Target Fund will declare all accumulated but unpaid dividends on such AMTP Shares or VRDP Shares, as applicable, up to and
including the day immediately preceding the Closing Date. With respect to any issued and outstanding AMTP Shares of Georgia Municipal, such accumulated and unpaid dividends will be paid on the dividend payment date in respect of the first dividend
period of the Acquiring Fund AMTP Shares. With respect to any issued and outstanding VRDP Shares of Ohio Municipal, such dividends will be paid on the Closing Date to holders thereof as of the day immediately preceding the Closing Date (or, if such
day is not a business day, the next preceding business day). Prior to the Closing Date, Georgia Municipal shall establish an escrow account and set aside assets in the amount of the accumulated but unpaid dividends on its issued and outstanding AMTP
Shares to be held solely of the benefit of the holder(s) of such AMTP Shares as of the record date for such dividends and such dividends shall be paid to such holder(s) on the dividend payment date in respect of the first dividend period of the
Acquiring Fund AMTP Shares. None of the Target Funds, the Acquiring Fund or the Merger Sub shall have any rights with respect to, or interest in, the assets held in such escrow account.
1.5 TRANSFER TAXES. Any transfer taxes payable upon the issuance of Acquiring Fund Shares in a
name other than the registered holder of a Target Fund’s common shares or preferred shares on the books of
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such Target Fund as of that time shall, as a condition of such issuance and transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred.
1.6 REPORTING. Any reporting responsibility of a Target Fund, including, without limitation,
the responsibility for filing of regulatory reports, tax returns or other documents with the Securities and Exchange Commission (the “Commission”) or other regulatory authority, the exchange on which such Target Fund’s shares are
listed or any state securities commission and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of such Target Fund or its duly appointed agent.
1.7 BOOKS AND RECORDS. All books and records of each Target Fund, including all books and
records required to be maintained under the 1940 Act and the rules and regulations thereunder, will be available to the Acquiring Fund from and after the Closing and will be turned over to the Acquiring Fund as soon as practicable following the
Closing.
ARTICLE II
VALUATION
2.1
VALUATION OF SHARES. With respect to each Target Fund, the net asset value per share of the Target Fund Common Shares and the net asset value per share of the Acquiring Fund Common Shares shall be
computed as of the close of regular trading on the New York Stock Exchange on the business day immediately prior to the Closing Date (such time and date being hereinafter called the “Valuation Time”), using the valuation procedures of the
Nuveen closed-end funds or such other valuation procedures as shall be mutually agreed upon by the parties (and approved by the applicable Target Fund Board and the Acquiring Fund Board).
2.2 COMMON SHARES TO BE ISSUED. In each Merger, as of the Effective Time, each Target Fund
Common Share outstanding immediately prior to the Effective Time shall be converted into a number of Acquiring Fund Common Shares equal to one multiplied by the quotient of the net asset value per share of a Target Fund Common Share divided by the
net asset value per share of an Acquiring Fund Common Share, each as determined as of the Valuation Time in accordance with Section 2.1. The aggregate net asset value of Acquiring Fund Common Shares received by Target Fund common shareholders
(the “Target Fund Common Shareholders”) in a Merger (including any fractional share interests to which they would be entitled) will equal, as of the Valuation Time, the aggregate net asset value of such Target Fund’s Common Shares
held by such Target Fund Common Shareholders as of such time. No fractional Acquiring Fund Common Shares will be distributed to Target Fund Common Shareholders and, in lieu of such fractional shares, Target Fund Common Shareholders will receive
cash. With respect to each Merger, in the event Target Fund Common Shareholders would be entitled to receive fractional Acquiring Fund Common Shares, the Acquiring Fund’s transfer agent will aggregate all such fractional common shares and sell
the resulting whole shares on the exchange on which such shares are listed for the account of all such Target Fund Common Shareholders, and each such Target Fund Common Shareholder will be entitled to a pro rata share of the proceeds from such sale.
With respect to the aggregation and sale of fractional common shares in each Merger, the transfer agent for the Acquiring Fund’s common shares will act directly on behalf of the Target Fund Common Shareholders entitled to receive fractional
shares and will accumulate such fractional shares, sell the shares and distribute the cash proceeds net of brokerage commissions, if any, directly to the Target Fund Common Shareholders entitled to receive the fractional shares (without interest and
subject to withholding taxes).
2.3 EFFECT OF SUSPENSION IN TRADING. In the event that at
the Valuation Time an accurate appraisal of the net asset value per share of the Acquiring Fund or a Target Fund is impracticable due to either: (a) the closure of, or the imposition of a trading restriction on, the exchange on which shares of
a Fund are listed or another exchange on which the portfolio securities of the Acquiring Fund or a Target Fund are purchased or sold; or (b) a disruption in trading or the reporting of trading on the exchange on which shares of a Fund are
listed or elsewhere, the Closing Date shall be postponed until at least the first business day after the day on which trading is fully resumed and/or reporting is restored or such later time as the parties may agree pursuant to Section 3.1.
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2.4 COMPUTATIONS OF NET ASSET VALUE. Subject to Section 2.1 above, all computations of net
asset value in this Article II shall be made by or under the direction of State Street Bank and Trust Company in accordance with its regular practice as custodian of the Funds.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. With respect to each Merger, the conditions precedent set forth in Articles VI-VIII herein must be satisfied or waived with respect to the Target Fund, the Acquiring Fund and the Merger Sub in order for the closing of a Merger to take place. The closing of each Merger (the
“Closing”) shall occur on March 6, 2023 or such other date as the parties may agree (the “Closing Date”). Unless otherwise provided, all acts taking place at the Closing shall be deemed to take place as of 7:59 a.m., Central
time, on the Closing Date (the “Effective Time”). The Closing will be held as of 7:59 a.m., Central time, on the Closing Date at the offices of Vedder Price P.C. in Chicago, Illinois, or at such other time and/or place as the parties may
agree.
3.2 CUSTODIAN’S CERTIFICATE. With respect to each Merger, the Target
Fund shall cause the custodian for such Target Fund to deliver to the Acquiring Fund Parties at the Closing a certificate of an authorized officer identifying all of the Target Fund’s portfolio securities, investments, cash and any other assets
as of the Valuation Time and stating that the Target Fund’s portfolio securities, investments, cash and any other assets have been delivered in proper form to the Acquiring Fund as of the Closing.
3.3 CERTIFICATES OF TRANSFER AGENTS.
(a) With respect to each Merger, the Target Fund shall issue and deliver, or cause its
transfer agent or tender and paying agent, as applicable, to issue and deliver, to the Acquiring Fund at the Closing a certificate of an authorized officer setting forth, with respect to such Target Fund, the number of Target Fund Shares outstanding
as of the Valuation Time and stating that its records contain the names and addresses of all holders of common shares and preferred shares, as applicable, of the Target Fund and the number and percentage ownership of outstanding common shares and
preferred shares, as applicable, held by each such Target Fund Shareholder immediately prior to the Closing.
(b)
With respect to each Merger, the Acquiring Fund shall issue and deliver, or cause the transfer agent, or tender and paying agent, as applicable, with respect to each of the Acquiring Fund Common Shares
and Acquiring Fund Preferred Shares, as applicable, to issue and deliver, to the Target Fund a confirmation evidencing the Acquiring Fund Shares to be credited at the Closing to the shareholders of the Target Fund or provide evidence satisfactory to
each Target Fund that such Acquiring Fund Shares have been credited to the account of the shareholders of the Target Fund on the books of the Acquiring Fund.
3.4 DELIVERY OF ADDITIONAL ITEMS. At the Closing, each party shall deliver to the other party
or parties such bills of sale, checks, assignments, assumptions of liability, share certificates, opinions, receipts and other documents or instruments, if any, as such other parties or their counsel may reasonably request to effect the transactions
contemplated by this Agreement. Each Target Fund shall, from time to time, as and when reasonably requested by the Acquiring Fund or the Merger Sub, execute and deliver or cause to be executed and delivered all such assignments and other
instruments, and will take or cause to be taken such further action as the Acquiring Fund or the Merger Sub may reasonably deem necessary or desirable in order to vest and confirm the Merger Sub’s title to and possession of all of the assets of
such Target Fund and to otherwise carry out the intent and purpose of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF EACH TARGET FUND. Each Target Fund represents and warrants the
following to the Acquiring Fund Parties solely on its own behalf with respect to itself and its Merger, as applicable:
(a)
The Target Fund is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts.
(b) The Target Fund is registered as a closed-end
management investment company under the 1940 Act, and such registration is in full force and effect.
(c)
The Target Fund is not, and the execution, delivery and performance of this Agreement (subject to shareholder approval and compliance with the other provisions hereof) will not result, in violation of
any provision of the Target Fund’s Declaration of Trust, By-Laws or, if the Target Fund has any issued and outstanding AMTP Shares or VRDP Shares as of the Closing, the Target Fund’s Statement
Establishing and Fixing the Rights and Preferences of Adjustable Rate MuniFund Term Preferred Shares (“Target Fund AMTP Statement” or a “Target Fund Statement”) or Statement Establishing and Fixing the Rights and Preferences of
Variable Rate Demand Preferred Shares (“Target Fund VRDP Statement” or a “Target Fund Statement”), as applicable, or of any material agreement, indenture, instrument, contract, lease or other undertaking to which the Target Fund
is a party or by which it is bound.
(d) There are no contracts outstanding to which the
Target Fund is a party that have not been disclosed in writing to the Acquiring Fund Parties. Except as otherwise disclosed in writing to and accepted by the Acquiring Fund Parties, the Target Fund has no material contracts or other commitments that
will be terminated with liability to it on or before the Closing.
(e) No litigation,
administrative proceeding or investigation of or before any court or governmental body presently is pending or to its knowledge threatened against the Target Fund or any of its properties or assets, which, if adversely determined, would result in
liability on the part of the Target Fund other than as have been disclosed to the Acquiring Fund Parties. The Target Fund knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
(f) (Georgia Municipal Only) The financial statements of the Target Fund as of May 31,
2022, and for the fiscal year then ended, have been prepared in accordance with generally accepted accounting principles in the United States of America and have been audited by an independent registered public accounting firm, and such statements
(copies of which have been furnished to the Acquiring Fund Parties) fairly reflect the financial condition of the Target Fund as of May 31, 2022, and there are no known liabilities, contingent or otherwise, of the Target Fund as of such date
that are not disclosed in such statements.
(g) (Georgia Municipal Only) Since the date
of the financial statements referred to in subsection (f) above, there have been no material adverse changes in the Target Fund’s financial condition, assets, liabilities or business (other than changes occurring in the ordinary course of
business), and there are no liabilities of a material nature, contingent or otherwise, of the Target Fund that have arisen after such date. Before the Closing Date, the Target Fund will advise the Acquiring Fund Parties of all material liabilities
contingent or otherwise, incurred by it subsequent to May 31, 2022, whether or not incurred in the ordinary course of business. For the purposes of this subsection (g), a decline in the net asset value of the Target Fund shall not
constitute a material adverse change.
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(h) (Ohio Municipal Only) The financial
statements of the Target Fund as of February 28, 2022, and for the fiscal year then ended, have been prepared in accordance with generally accepted accounting principles in the United States of America and have been audited by an independent
registered public accounting firm, and such statements (copies of which have been furnished to the Acquiring Fund Parties) fairly reflect the financial condition of the Target Fund as of February 28, 2022, and there are no known liabilities,
contingent or otherwise, of the Target Fund as of such date that are not disclosed in such statements.
(i)
(Ohio Municipal Only) The unaudited semi-annual financial statements of the Target Fund as of August 31, 2022, and for the period then ended, have been prepared in accordance with generally
accepted accounting principles in the United States of America and such statements (copies of which have been furnished to the Acquiring Fund Parties) fairly reflect the financial condition of the Target Fund as of August 31, 2022, and there
are no known liabilities, contingent or otherwise, of the Target Fund as of such date that are not disclosed in such statements.
(j)
(Ohio Municipal Only) Since the date of the financial statements referred to in subsection (i) above, there have been no material adverse changes in the Target Fund’s financial condition,
assets, liabilities or business (other than changes occurring in the ordinary course of business), and there are no liabilities of a material nature, contingent or otherwise, of the Target Fund that have arisen after such date. Before the Closing
Date, the Target Fund will advise the Acquiring Fund Parties of all material liabilities contingent or otherwise, incurred by it subsequent to August 31, 2022, whether or not incurred in the ordinary course of business. For the purposes of this
subsection (j), a decline in the net asset value of the Target Fund shall not constitute a material adverse change.
(k)
All federal, state, local and other tax returns and reports of the Target Fund required by law to be filed by it (taking into account permitted extensions for filing) have been timely filed and are
complete and correct in all material respects. All federal, state, local and other taxes of the Target Fund required to be paid (whether or not shown on any such return or report) have been paid, or provision shall have been made for the payment
thereof, and any such unpaid taxes, as of the date of the financial statements referred to above, are properly reflected thereon. To the best of the Target Fund’s knowledge, no tax authority is currently auditing or preparing to audit the
Target Fund, and no assessment for taxes, interest, additions to tax or penalties has been asserted against the Target Fund.
(l)
The authorized capital of the Target Fund consists of an unlimited number of common shares and preferred shares of beneficial interest, par value $0.01 per share. All of the issued and outstanding
shares of the Target Fund are duly and validly issued, fully paid and non-assessable by the Target Fund (recognizing that under the laws of the Commonwealth of Massachusetts, Target Fund shareholders, under
certain circumstances, could be held personally liable for the obligations of the Target Fund). All of the issued and outstanding shares of the Target Fund will, at the time of the Closing, be held of record by the persons and in the amounts set
forth in the records of the Target Fund’s transfer agent or tender and paying agent, as applicable, as provided in Section 3.3. The Target Fund has no outstanding preferred shares except as set forth in the capitalization table in the
Joint Proxy Statement/Prospectus (as defined in Section 5.5); no outstanding options, warrants or other rights to subscribe for or purchase any shares of the Target Fund; and no outstanding securities convertible into shares of the Target Fund.
(m) At the Closing, the Target Fund will have good and marketable title to the Target
Fund’s assets held immediately prior to the Effective Time, and full right, power and authority to sell, assign, transfer and deliver such assets hereunder free and clear of any liens or encumbrances, except those liens and encumbrances to
which the Acquiring Fund Parties have received written notice and have not objected, and the Merger Sub will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including such restrictions as might
arise under the Securities Act of 1933, as amended (the “1933 Act”).
(n) The
execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of the Target Fund, including the determinations of the Target Fund Board
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required by Rule 17a-8(a) under the 1940 Act. This Agreement constitutes a valid and binding obligation of the Target Fund, enforceable in accordance
with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights and to general equity principles.
(o) The information to be furnished by the Target Fund for use in any “no-action” letters, applications for orders, registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated herein shall be accurate
and complete in all material respects and shall comply in all material respects with the requirements of the federal securities laws and other laws and regulations.
(p) From the effective date of the Registration Statement (as defined in Section 5.5)
through the time of the meetings of Fund shareholders described in Section 5.2 and as of the Closing, any written information furnished by the Target Fund with respect to the Target Fund for use in the Proxy Materials (as defined in
Section 5.5), or any other materials provided in connection with the Target Fund’s Merger, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make
the statements, in light of the circumstances under which such statements were made, not misleading.
(q)
No consent, approval, authorization, or order of any court, governmental authority, or any stock exchange on which shares of the Target Fund are listed is required for the consummation by the Target
Fund of the transactions contemplated herein, except such as have been or will be obtained.
(r)
For each taxable year of its operations (including the taxable year ending on the Closing Date), the Target Fund (i) has elected to qualify, and has qualified or will qualify (in the case of the
taxable year ending on the Closing Date), as a “regulated investment company” under Subchapter M of the Code (a “RIC”); (ii) has been eligible to compute and has computed its federal income tax under Section 852 of the
Code, and on or prior to the Closing Date will have declared a distribution with respect to all of its investment company taxable income (determined without regard to the deduction for dividends paid), the excess of its interest income excludible
from gross income under Section 103(a) of the Code over its deductions disallowed under Sections 265 and 171(a)(2) of the Code and its net capital gain (after reduction for any available capital loss carryforward and excluding
any net capital gain on which the Target Fund paid tax under Section 852(b)(3)(A) of the Code) (as such terms are defined in the Code) that has accrued or will accrue on or prior to the Closing Date, and (iii) has been, and will be (in the
case of the taxable year ending on the Closing Date), treated as a separate corporation for federal income tax purposes. The Target Fund has not taken any action, caused any action to be taken or caused any action to fail to be taken which action or
failure could cause the Target Fund to fail to qualify as a RIC. Prior to the Closing, the Target Fund will have had no earnings and profits accumulated in any taxable year to which the provisions of Part I of Subchapter M of the Code did not apply
to it.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND PARTIES. Each of the Acquiring Fund and
the Merger Sub, as applicable, represents and warrants to each Target Fund as follows:
(a)
The Acquiring Fund is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts.
(b) The Merger Sub is a limited liability company, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts.
(c) The Acquiring Fund is
registered as a closed-end management investment company under the 1940 Act, and such registration is in full force and effect.
(d) The Acquiring Fund is not, and the execution, delivery and performance of this Agreement
(subject to approval by its preferred shareholders and compliance with the other provisions hereof)
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will not result, in violation of the Acquiring Fund’s Declaration of Trust, By-Laws, any Statement Establishing and Fixing the Rights and Preferences
of MuniFund Preferred Shares, as supplemented and amended (each, an “Acquiring Fund MFP Statement”), any Statement Establishing and Fixing the Rights and Preferences of Variable Rate Demand Preferred Shares, as supplemented and amended
(each, an “Acquiring Fund VRDP Statement”) or any material agreement, indenture, instrument, contract, lease or other undertaking to which the Acquiring Fund is a party or by which it is bound.
(e) The Merger Sub is not, and the execution delivery and performance of this Agreement will
not result, in violation of the Merger Sub’s Certificate of Organization or LLC Agreement.
(f)
No litigation, administrative proceeding or investigation of or before any court or governmental body presently is pending or to its knowledge threatened against the Acquiring Fund or the Merger Sub or
any of their properties or assets, which, if adversely determined, would result in liability on the part of the Acquiring Fund or the Merger Sub, other than as have been disclosed to a Target Fund. The Acquiring Fund and the Merger Sub know of no
facts that might form the basis for the institution of such proceedings and neither is a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or
its ability to consummate the transactions contemplated herein.
(g) The financial
statements of the Acquiring Fund as of October 31, 2021, and for the fiscal year then ended, have been prepared in accordance with generally accepted accounting principles in the United States of America and have been audited by an independent
registered public accounting firm, and such statements (copies of which have been furnished to each Target Fund) fairly reflect the financial condition of the Acquiring Fund as of October 31, 2021, and there are no known liabilities, contingent
or otherwise, of the Acquiring Fund as of such date that are not disclosed in such statements.
(h)
The unaudited semi-annual financial statements of the Acquiring Fund as of April 30, 2022, and for the period then ended, have been prepared in accordance with generally accepted accounting
principles in the United States of America and such statements (copies of which have been furnished to each Target Fund) fairly reflect the financial condition of the Acquiring Fund as of April 30, 2022, and there are no known liabilities,
contingent or otherwise, of the Acquiring Fund as of such date that are not disclosed in such statements.
(i)
Since the date of the financial statements referred to in subsection (h) above, there have been no material adverse changes in the Acquiring Fund’s financial condition, assets, liabilities or
business (other than changes occurring in the ordinary course of business), and there are no known liabilities of a material nature, contingent or otherwise, of the Acquiring Fund arising after such date. For the purposes of this
subsection (i), a decline in the net asset value of the Acquiring Fund shall not constitute a material adverse change.
(j)
All federal, state, local and other tax returns and reports of the Acquiring Fund and the Merger Sub required by law to be filed by it (taking into account permitted extensions for filing) have been
timely filed and are complete and correct in all material respects. All federal, state, local and other taxes of the Acquiring Fund and the Merger Sub required to be paid (whether or not shown on any such return or report) have been paid, or
provision will have been made for the payment thereof, and any such unpaid taxes, as of the date of the financial statements referred to above, are properly reflected thereon. To the best of the Acquiring Fund’s and the Merger Sub’s
knowledge, no tax authority is currently auditing or preparing to audit the Acquiring Fund or the Merger Sub, and no assessment for taxes, interest, additions to tax or penalties has been asserted against the Acquiring Fund or the Merger Sub.
(k) The authorized capital of the Acquiring Fund consists of an unlimited number of common
and preferred shares of beneficial interest, par value $0.01 per share. All of the issued and outstanding shares of the Acquiring Fund are duly and validly issued, fully paid and non-assessable by the
Acquiring Fund (recognizing that under the laws of the Commonwealth of Massachusetts, Acquiring Fund shareholders, under
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certain circumstances, could be held personally liable for the obligations of the Acquiring Fund). The Acquiring Fund has no outstanding preferred shares other than as set forth in the
capitalization table in the Joint Proxy Statement/Prospectus (as defined in Section 5.5); no outstanding options, warrants or other rights to subscribe for or purchase any shares of the Acquiring Fund; and no outstanding securities convertible
into shares of the Acquiring Fund.
(l) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on the part of the Acquiring Fund and the Merger Sub, including the determinations of the Acquiring Fund Board required pursuant to Rule 17a-8(a)
under the 1940 Act. This Agreement constitutes a valid and binding obligation of the Acquiring Fund and the Merger Sub, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors’ rights and to general equity principles.
(m)
The Acquiring Fund Shares to be issued and delivered pursuant to the terms of this Agreement will, at the Closing, have been duly authorized. When so issued and delivered, such Acquiring Fund Shares
will be duly and validly issued shares of the Acquiring Fund and will be fully paid and non-assessable by the Acquiring Fund (recognizing that under the laws of the Commonwealth of Massachusetts, Acquiring
Fund shareholders, under certain circumstances, could be held personally liable for the obligations of the Acquiring Fund).
(n)
The information to be furnished by the Acquiring Fund and the Merger Sub for use in any “no-action” letters, applications for orders, registration statements, proxy materials and other
documents that may be necessary in connection with the transactions contemplated herein shall be accurate and complete in all material respects and shall comply in all material respects with the requirements of the federal securities laws and other
laws and regulations.
(o) From the effective date of the Registration Statement (as
defined in Section 5.5) through the time of the meetings of Fund shareholders described in Section 5.2 and as of the Closing, any written information furnished by the Acquiring Fund and the Merger Sub with respect to the Acquiring Fund and
the Merger Sub for use in the Proxy Materials (as defined in Section 5.5), or any other materials provided in connection with the Mergers, does not and will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated or necessary to make the statements, in light of the circumstances under which such statements were made, not misleading.
(p) No consent, approval, authorization, or order of any court or governmental authority is
required for the consummation by the Acquiring Fund or the Merger Sub of the transactions contemplated herein, except such as have been or will be obtained.
(q) For each taxable year of its operations, including the taxable year that includes the
Closing Date, the Acquiring Fund: (i) has elected to qualify, has qualified or will qualify (in the case of the taxable year that includes the Closing Date) and intends to continue to qualify as a RIC under the Code; (ii) has been eligible
to and has computed its federal income tax under Section 852 of the Code, and will do so for the taxable year that includes the Closing Date; and (iii) has been, and will be (in the case of the taxable year that includes the Closing Date),
treated as a separate corporation for federal income tax purposes. The Acquiring Fund has not taken any action, caused any action to be taken or caused any action to fail to be taken which action or failure could cause the Acquiring Fund to fail to
qualify as a RIC. Prior to the Closing, the Acquiring Fund will have had no earnings and profits accumulated in any taxable year to which the provisions of Part I of Subchapter M of the Code did not apply to it.
(r) All of the issued and outstanding membership interests in the Merger Sub are, and at the
Effective Time and on the Closing Date will be, owned by the Acquiring Fund, as the sole member of the Merger Sub, and there are (i) no other membership interests or voting securities of the Merger Sub, (ii) no securities of
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the Merger Sub convertible into membership interests or voting securities of the Merger Sub and (iii) no options or other rights to acquire from the Merger Sub, and no obligations of the
Merger Sub to issue, any membership interests, voting securities or securities convertible into membership interests or voting securities of the Merger Sub.
(s) Since the date of its organization through the Effective Time, the Merger Sub has been,
and will be, disregarded as an entity separate from its owner within the meaning of Section 301.7701-3 of the Treasury Regulations. The Merger Sub has not elected, and will not elect, to be classified,
with effect as of or prior to the liquidation of the Merger Sub, as an association taxable as a corporation pursuant to Section 301.7701-3 of the Treasury Regulations.
ARTICLE V
COVENANTS OF THE FUNDS AND MERGER SUBSIDIARY
5.1 OPERATION IN ORDINARY COURSE. Subject to Sections 1.1(f) and
8.5, each Fund will operate its respective business in the ordinary course from the date of this Agreement through the Closing, it being understood that such ordinary course of business will include customary dividends and distributions, and any
other distributions necessary or desirable to avoid federal income or excise taxes.
5.2
APPROVAL OF SHAREHOLDERS. The Acquiring Fund will call a meeting of its preferred shareholders and each Target Fund will call a meeting of its common and preferred shareholders
to consider and act upon the proposal or proposals required to effect the provisions of this Agreement and to take all other appropriate actions necessary to obtain approval of the transactions contemplated herein.
5.3 ADDITIONAL INFORMATION. Each Target Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of such Target Fund’s shares.
5.4 FURTHER ACTION. Subject to the provisions of this Agreement, each
Fund and the Merger Sub will take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, including any
actions required to be taken after the Closing.
5.5 PREPARATION OF REGISTRATION
STATEMENT AND PROXY MATERIALS. The Funds will prepare and file with the Commission a registration statement on Form N-14 relating to the Acquiring Fund Common Shares to be issued to Target Fund Common Shareholders of each
Target Fund and the approval of each Merger by the common shareholders of the applicable Target Fund and the preferred shareholders of the Acquiring Fund and related matters (the “Registration Statement”), a proxy statement relating to the
approval of the applicable Merger by the holders of Georgia Municipal’s AMTP Shares (the “AMTP Proxy Statement”) and a proxy statement relating to the approval of the applicable Merger by the holders of Ohio Municipal’s VRDP
Shares (the “VRDP Proxy Statement”). The Registration Statement shall include a proxy statement of the Funds and a prospectus of the Acquiring Fund relating to the transactions contemplated by this Agreement, as applicable (the “Joint
Proxy Statement/Prospectus”). The Registration Statement, the AMTP Proxy Statement and the VRDP Proxy Statement shall be in compliance with the 1933 Act, the Securities Exchange Act of 1934, as amended, and the 1940 Act, as applicable. Each
party will provide the other party with the materials and information necessary to prepare the Registration Statement and the proxy statements and related materials (the “Proxy Materials”), for inclusion therein, in connection with the
meetings of the Funds’ shareholders to consider the approval of this Agreement and the transactions contemplated herein.
5.6
REGULATORY APPROVALS. The Acquiring Fund will use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act, the listing rules of
the New York Stock Exchange or another national securities exchange and such of the state “blue sky” or securities laws as it may deem appropriate in order to consummate the transactions hereunder.
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5.7 TAX STATUS OF
MERGERS. The intention of the parties is that each Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. None of the Funds or the Merger Sub shall take any action, or cause
any action to be taken (including, without limitation, the filing of any tax return), that is inconsistent with such treatment or that results in the failure of the transactions to qualify as “reorganizations” within the meaning of
Section 368(a) of the Code. At or prior to the Closing, the parties to this Agreement will take such action, or cause such action to be taken, as is reasonably necessary to enable counsel to render the tax opinion contemplated in
Section 8.9.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH TARGET FUND
With respect to the Merger of each Target Fund, the obligations of the Target Fund to consummate the transactions provided for herein will be
subject to the fulfillment or waiver of the following conditions:
6.1 All
representations, covenants and warranties of the Acquiring Fund Parties contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing, with the same force and effect as if made at and as
of the Closing. The Acquiring Fund shall have delivered to the Target Fund a certificate executed in the Acquiring Fund’s name by (i) the Chief Administrative Officer or any Vice President of the Acquiring Fund and (ii) the Controller
or Treasurer of the Acquiring Fund, in form and substance satisfactory to the Target Fund and dated as of the Closing Date, to such effect and as to such other matters as the Target Fund shall reasonably request.
6.2 The Acquiring Fund Parties shall have performed and complied in all material respects with
all terms, conditions, covenants, obligations, agreements and restrictions required by this Agreement to be performed or complied with by them prior to or at the Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND PARTIES
With respect to the Merger of each Target Fund, the obligations of the Acquiring Fund Parties to consummate the transactions provided for
herein shall be subject to the fulfillment or waiver of the following conditions:
7.1 All
representations, covenants and warranties of such Target Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing, with the same force and effect as if made at and as of the
Closing. Such Target Fund shall have delivered to the Acquiring Fund Parties on the Closing Date a certificate executed in such Target Fund’s name by (i) the Chief Administrative Officer or any Vice President of such Target Fund and
(ii) the Controller or Treasurer of such Target Fund, in form and substance satisfactory to the Acquiring Fund Parties and dated as of the Closing Date, to such effect and as to such other matters as the Acquiring Fund Parties shall reasonably
request.
7.2 Such Target Fund shall have performed and complied in all material respects
with all terms, conditions, covenants, obligations, agreements and restrictions required by this Agreement to be performed or complied with by it prior to or at the Closing.
7.3 Such Target Fund shall have delivered to the Acquiring Fund Parties a statement of the
Target Fund’s assets and liabilities, together with a list of the Target Fund’s portfolio securities showing the tax basis of such securities by lot and the holding periods of such securities, as of the Closing, certified by the Controller
or Treasurer of the Target Fund.
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7.4 Prior to the Valuation Time, such Target Fund
will have declared the dividends and/or distributions contemplated by Sections 1.4 and 8.5.
7.5
Such Target Fund shall have delivered such records, agreements, certificates, instruments and such other documents as the Acquiring Fund Parties shall reasonably request.
7.6 Unless otherwise directed by the Adviser, all contracts of a Target Fund set forth on
Schedule 7.6 will be terminated with respect to such Target Fund as of or prior to the Closing.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT
With respect to the Merger of each Target Fund, the obligations of the Target Fund and the Acquiring Fund Parties to consummate the
transactions provided for herein are subject to the fulfillment or waiver of the following conditions, as applicable:
8.1
This Agreement and the transactions contemplated herein shall have been approved by the requisite votes of the holders of the outstanding common and preferred shares of the Target Fund in accordance
with applicable law and the provisions of such Target Fund’s Declaration of Trust, By-Laws and the applicable Target Fund Statement. In addition, this Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of the outstanding preferred shares of the Acquiring Fund in accordance with applicable law and the provisions of the Acquiring Fund’s Declaration of Trust, By-Laws, each Acquiring Fund MFP Statement and each Acquiring Fund VRDP Statement. Notwithstanding anything herein to the contrary, the parties may not waive the condition set forth in this Section 8.1.
8.2 As of the Closing, the Commission shall not have issued an unfavorable report under
Section 25(b) of the 1940 Act, or instituted any proceeding seeking to enjoin the consummation of the transactions contemplated by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action, suit or other proceeding shall
be threatened or pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein.
8.3 All consents, orders and permits of federal, state and local regulatory authorities
(including those of the Commission and of state securities authorities, including any necessary “no-action” positions and exemptive orders from such federal and state authorities) to permit
consummation of the transactions contemplated herein will have been obtained or made. All notices to, or consents or waivers from, other persons, including without limitation holders of preferred shares or liquidity providers with respect to
preferred shares, if necessary, or other actions necessary to permit consummation of the transactions contemplated herein will have been obtained or made.
8.4 The Registration Statement shall have become effective under the 1933 Act, and no stop
orders suspending the effectiveness thereof shall have been issued. To the best knowledge of the parties to this Agreement, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under
the 1933 Act.
8.5 The Target Fund shall have declared, prior to the Valuation Time, a
dividend or dividends with respect to its common shares in an amount determined by the Target Fund’s officers in accordance with the Target Fund’s past practice that, together with all other dividends paid by such Target Fund with respect
to all taxable periods ending on or before the Closing Date, shall have the effect of distributing to its shareholders at least all of such Target Fund’s investment company taxable income for all taxable periods ending on or before
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the Closing Date (computed without regard to any deduction for dividends paid), if any, plus the excess of its interest income excludible from gross income under Section 103(a) of the
Code, if any, over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for all taxable periods ending on or before the Closing Date and all of its net capital gains realized in all taxable periods ending on or before the
Closing Date (after reduction for any available capital loss carryforward and excluding any net capital gain on which such Target Fund paid tax under Section 852(b)(3)(A) of the Code). Prior to the Closing, to the extent such dividend or
dividends are not paid prior to the Closing, the Target Fund shall establish an escrow account and set aside assets in the amount of such dividend or dividends in such escrow account to be held solely for the benefit of common shareholders of such
Target Fund as of the record date for such dividend or dividends and such dividends shall be paid as previously authorized by the Target Fund Board. None of the Target Funds, the Acquiring Fund or the Merger Sub shall have any rights with respect
to, or interest in, the assets held in such escrow account.
8.6 A Certificate of Merger,
specifying the Effective Time as the date and time of the effectiveness of the Merger, shall have been filed with, and accepted by, the Secretary of the Commonwealth of Massachusetts.
8.7 The Target Fund shall have received (i) an opinion from Vedder Price P.C., special
counsel to the Acquiring Fund, and (ii) an opinion from Morgan, Lewis & Bockius LLP, with respect to matters governed by the laws of the Commonwealth of Massachusetts, each dated as of the Closing Date, substantially to the effect
that:
(a) The Acquiring Fund has been formed as a voluntary association with
transferable shares of beneficial interest commonly referred to as a “Massachusetts business trust,” and is existing under the laws of the Commonwealth of Massachusetts and, to such counsel’s knowledge, has the power as a business
trust under its Declaration of Trust and Massachusetts law applicable to business trusts to conduct its business as described in the definitive Joint Proxy Statement/Prospectus as filed with the Commission pursuant to Rule 497 under the 1933 Act.
(b) The Merger Sub has been formed as a limited liability company and is existing under
the laws of the Commonwealth of Massachusetts.
(c) The Acquiring Fund is registered as a
closed-end management investment company under the 1940 Act, and, to such counsel’s knowledge, such registration under the 1940 Act is in full force and effect.
(d) Assuming that the Acquiring Fund Shares will be issued in accordance with the terms of
this Agreement, the Acquiring Fund Shares to be issued and delivered to the Target Fund on behalf of the Target Fund Shareholders as provided by this Agreement are duly authorized and, upon such delivery, will be validly issued and fully paid and non-assessable by the Acquiring Fund, except that, as described in the definitive Joint Proxy Statement/Prospectus as filed with the Commission pursuant to Rule 497 under the 1933 Act, shareholders of the Acquiring
Fund may under certain circumstances, be held personally liable for its obligations under the laws of the Commonwealth of Massachusetts, and no shareholder of the Acquiring Fund has, as such holder, any preemptive rights to acquire, purchase or
subscribe for any securities of the Acquiring Fund under the Acquiring Fund’s Declaration of Trust or By-Laws or the laws of the Commonwealth of Massachusetts.
(e) The Registration Statement is effective and, to such counsel’s knowledge, no stop
order under the 1933 Act pertaining thereto has been issued.
(f) To the knowledge of
such counsel, no consent, approval, authorization or order of any court or governmental authority of the United States or the Commonwealth of Massachusetts is required for consummation by the Acquiring Fund or the Merger Sub of the transactions
contemplated hereby, except as have been obtained, and except as may be required under any Massachusetts securities law, statute, rule or regulation, about which such counsel expresses no opinion.
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(g) The execution and delivery of this Agreement
by the Acquiring Fund and the Merger Sub did not, and the consummation by the Acquiring Fund and the Merger Sub of the transactions contemplated herein will not, violate the Acquiring Fund’s Declaration of Trust or By-Laws, any Acquiring Fund MFP Statement or any Acquiring Fund VRDP Statement (assuming the requisite approval of the Acquiring Fund’s shareholders has been obtained in accordance with the requirements of the
Acquiring Fund’s Declaration of Trust and By-Laws and each Acquiring Fund MFP Statement and each Acquiring Fund VRDP Statement) or the Merger Sub’s Certificate of Organization or LLC Agreement,
respectively.
Insofar as the opinions expressed above relate to or are dependent upon matters that are governed by the laws of the
Commonwealth of Massachusetts, Vedder Price P.C. may rely on the opinions of Morgan, Lewis & Bockius LLP.
8.8
The Acquiring Fund shall have received (i) an opinion from Vedder Price P.C., special counsel to each Target Fund, and (ii) an opinion from Morgan, Lewis & Bockius LLP, with respect
to matters governed by the laws of the Commonwealth of Massachusetts, each dated as of the Closing Date, substantially to the effect that:
(a) The Target Fund has been formed as a voluntary association with transferable shares of
beneficial interest commonly referred to as a “Massachusetts business trust,” and is existing under the laws of the Commonwealth of Massachusetts and, to such counsel’s knowledge, has the power as a business trust under its
Declaration of Trust and Massachusetts law applicable to business trusts to conduct its business as described in the definitive Joint Proxy Statement/Prospectus as filed with the Commission pursuant to Rule 497 under the 1933 Act.
(b) The Target Fund is registered as a closed-end
management investment company under the 1940 Act, and, to such counsel’s knowledge, such registration under the 1940 Act is in full force and effect.
(c) To the knowledge of such counsel, no consent, approval, authorization or order of any
court or governmental authority of the United States or the Commonwealth of Massachusetts is required for consummation by the Target Fund of the transactions contemplated hereby, except as have been obtained, and except as may be required under any
Massachusetts securities law, statute, rule or regulation, about which such counsel expresses no opinion.
(d)
To the knowledge of such counsel, the Target Fund has the power under its Declaration of Trust as a Massachusetts business trust to merge with and into the Merger Sub as contemplated by this Agreement.
(e) The execution and delivery of this Agreement by the Target Fund did not, and the
consummation by the Target Fund of the transactions contemplated herein will not, violate the Target Fund’s Declaration of Trust, By-Laws or if the Target Fund has any issued and outstanding AMTP Shares
or VRDP Shares as of the Closing, the applicable Target Fund Statement (assuming the requisite approval of the Target Fund’s shareholders has been obtained in accordance with the requirements of the Target Fund’s Declaration of Trust, By-Laws and, if applicable, Target Fund Statement).
Insofar as the opinions expressed above relate to
or are dependent upon matters that are governed by the laws of the Commonwealth of Massachusetts, Vedder Price P.C. may rely on the opinions of Morgan, Lewis & Bockius LLP.
8.9 With respect to each Merger, the Funds shall have received an opinion of Vedder Price
P.C., dated as of the Closing Date and addressed to the Acquiring Fund and the Target Fund, substantially to the effect that for federal income tax purposes:
(a) The merger of the Target Fund with and into the Merger Sub pursuant to applicable state
laws will constitute a “reorganization” within the meaning of Section 368(a) of the Code and the Acquiring Fund
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and the Target Fund will each be a “party to a reorganization,” within the meaning of Section 368(b) of the Code, with respect to the merger.
(b) No gain or loss will be recognized by the Acquiring Fund or the Merger Sub upon the
merger of the Target Fund with and into the Merger Sub pursuant to applicable state laws or upon the liquidation of the Merger Sub.
(c)
No gain or loss will be recognized by the Target Fund upon the merger of the Target Fund with and into the Merger Sub pursuant to applicable state laws.
(d) No gain or loss will be recognized by the Target Fund Shareholders upon the conversion of
all their Target Fund Shares solely into Acquiring Fund Shares in the merger of the Target Fund with and into the Merger Sub pursuant to applicable state laws, except to the extent the Target Fund Common Shareholders receive cash in lieu of a
fractional Acquiring Fund Common Share.
(e) The aggregate basis of the Acquiring Fund
Shares received by each Target Fund Shareholder pursuant to the merger (including any fractional Acquiring Fund Common Share to which a Target Fund Common Shareholder would be entitled) will be the same as the aggregate basis of the Target Fund
Shares that were converted into such Acquiring Fund Shares.
(f) The holding period of
the Acquiring Fund Shares received by each Target Fund Shareholder in the merger (including any fractional Acquiring Fund Common Share to which a Target Fund Common Shareholder would be entitled) will include the period during which the shares
of the Target Fund that were converted into such Acquiring Fund Shares were held by such shareholder, provided the Target Fund shares are held as capital assets at the time of the merger.
(g) The basis of the Target Fund’s assets received by the Merger Sub in the merger will
be the same as the basis of such assets in the hands of the Target Fund immediately before the merger.
(h)
The holding period of the assets of the Target Fund received by the Merger Sub in the merger will include the period during which those assets were held by the Target Fund.
No opinion will be expressed as to (1) the effect of the Mergers on the Target Funds, the Acquiring Fund, the Merger Sub or any Target
Fund Shareholder with respect to any asset (including, without limitation, any stock held in a passive foreign investment company as defined in Section 1297(a) of the Code) as to which any gain or loss is required to be recognized under federal
income tax principles (a) at the end of a taxable year (or on the termination thereof) or (b) upon the transfer of such asset regardless of whether such transfer would otherwise be a non-taxable
transaction under the Code, (2) the effect of the Mergers under the alternative minimum tax imposed under Section 55 of the Code on any direct or indirect shareholder of a Target Fund that is a corporation, and (3) any other federal
tax issues (except those set forth above) and all state, local or foreign tax issues of any kind. Such opinions will be based on customary assumptions and such representations as Vedder Price P.C. may reasonably request of the Funds and the Merger
Sub. Each Target Fund and the Acquiring Fund Parties will cooperate to make and certify the accuracy of such representations. Notwithstanding anything herein to the contrary, no Fund may waive the conditions set forth in this Section 8.9 with
respect to its Merger(s). Insofar as the opinions expressed above relate to or are dependent upon the classification of the Acquiring Fund AMTP Shares or Acquiring Fund VRDP Shares, as applicable, as equity for federal income tax purposes, Vedder
Price P.C. may rely on the opinions delivered to the Acquiring Fund by Sidley LLP and Stradley, Ronon, Stevens and Young, LLP with respect to such issue.
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ARTICLE IX
EXPENSES
9.1
The expenses incurred in connection with the Mergers (whether or not the Merger with respect to a Target Fund is consummated) will be allocated among and borne by all of the Funds ratably based on the
projected relative benefits to the common shareholders of each Fund, as common shareholders of the Acquiring Fund for a period equal to shareholders’ average holding period of shares for each Fund, and each Fund shall have accrued such expenses
as liabilities at or before the Valuation Time. Merger-related expenses include, without limitation, (a) expenses associated with the preparation and filing of the Registration Statement and other Proxy Materials; (b) postage;
(c) printing; (d) accounting fees; (e) legal fees; (f) proxy solicitation costs; and (g) other related administrative or operational costs.
9.2 Each party represents and warrants to the other parties that there is no person or entity
entitled to receive any broker’s fees or similar fees or commission payments in connection with structuring the transactions provided for herein.
9.3 Notwithstanding the foregoing, expenses will in any event be paid by the party directly
incurring such expenses if and to the extent that the payment by another party of such expenses would result in the disqualification of a Fund as a RIC under the Code.
ARTICLE X
ENTIRE
AGREEMENT
10.1 The parties agree that no party has made to any other party any
representation, warranty or covenant not set forth herein and that this Agreement constitutes the entire agreement between and among the parties.
ARTICLE XI
TERMINATION
11.1
With respect to each Merger, this Agreement may be terminated by the mutual agreement of the parties to such Merger, and such termination may be effected by the Chief Administrative Officer, President
or any Vice President of each Fund without further action by a Target Fund Board or the Acquiring Fund Board. In addition, with respect to each Merger, either Fund participating in such Merger may at its option terminate the Agreement at or before
the Closing due to:
(a) a breach by the
non-terminating party of any representation or warranty, or agreement to be performed at or before the Closing, if not cured within 30 days of the breach and prior to the Closing;
(b) a condition precedent to the obligations of the terminating party that has not been met
or waived and it reasonably appears that it will not or cannot be met; or
(c) a
determination by a Target Fund Board or the Acquiring Fund Board that the consummation of the transactions contemplated herein is not in the best interests of its respective Fund involved in the Merger(s).
11.2 In the event of any such termination, in the absence of willful default, there shall be
no liability for damages on the part of the Acquiring Fund Parties or a Target Fund. Notwithstanding any other provision of
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this Agreement to the contrary, the termination of this Agreement with respect to a Fund will have no effect on the obligation of that Fund to bear the portion of Merger-related expenses
allocated to it as provided in Section 9.1.
ARTICLE XII
AMENDMENTS
12.1
This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by the officers of each party subject to the prior review of each Fund’s counsel
and the authorization of each Fund’s Board of Trustees; provided, however, that following the meeting of the shareholders of a Fund called by such Fund pursuant to Section 5.2 of this Agreement, no such amendment, modification or
supplement may have the effect of changing the provisions for determining the number of Acquiring Fund Shares to be issued to the Target Fund Shareholders of the applicable Target Fund under this Agreement to the detriment of such shareholders
without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The article and section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement. The use of the terms “including” or “include” in this Agreement shall in all cases herein mean “including, without limitation” or
“include, without limitation,” respectively.
13.2 This Agreement may be
executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The execution and delivery of this Agreement may occur by facsimile or by email in portable
document format (PDF) or by other means of electronic signature and electronic transmission, including DocuSign or other similar method, and originals or copies of signatures executed and delivered by such methods shall have the full force and
effect of the original signatures.
13.3 This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
13.4 This Agreement
shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, and no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other
parties. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
13.5 It is expressly agreed that the obligations of each Fund
hereunder shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of such Fund personally, but shall bind only the property of the Fund, as provided in such Fund’s Declaration of Trust, which is on
file with the Secretary of the Commonwealth of Massachusetts. The execution and delivery of this Agreement have been authorized by each Fund’s Board of Trustees, and this Agreement has been signed by authorized officers of each Fund acting as
such. Neither the authorization by such trustees nor the execution and delivery by such officers will be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the property of
such Fund, as provided in the Fund’s Declaration of Trust.
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13.6 It is understood and agreed that the use of
a single agreement among the parties is for administrative convenience only and that this Agreement constitutes a separate agreement between each Target Fund and the Acquiring Fund Parties, as if each party had executed a separate document. No party
will have any liability for the obligations under this Agreement of any other party, and the liabilities of each party under this Agreement will be several and not joint.
13.7 The failure of any Target Fund or the Acquiring Fund Parties with respect to a Target
Fund to consummate a Merger shall not affect the validity of the other Merger, and the provisions of this Agreement shall be construed to effect this intent.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the date first
written above.
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NUVEEN MUNICIPAL CREDIT
INCOME FUND |
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By:
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Name: |
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Mark L. Winget |
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Title: |
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Vice President and Secretary |
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NUVEEN GEORGIA QUALITY
MUNICIPAL INCOME FUND |
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By:
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Name: |
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Mark L. Winget |
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Title: |
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Vice President and Secretary |
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NUVEEN OHIO QUALITY
MUNICIPAL INCOME FUND |
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By:
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Name: |
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Mark L. Winget |
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Title: |
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Vice President and Secretary |
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NMCIF MERGER SUB, LLC |
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By:
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Name: |
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Mark L. Winget |
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Title: |
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Vice President and Secretary |
[Signature Page to Agreement and Plan of Merger (NZF-NKG-NUO Merger)]
Schedule 7.6
Georgia Municipal
Amended and
Restated Master Custodian Agreement between Georgia Municipal and State Street Bank and Trust Company dated as of July 15, 2015, as amended
Investment Management Agreement by and between Georgia Municipal and Nuveen Fund Advisors, LLC dated October 1, 2014
Investment Sub-Advisory Agreement by and between Nuveen Fund Advisors, LLC and Nuveen Asset
Management, LLC dated as of October 1, 2014
Transfer Agency and Service Agreement by and between Georgia Municipal and Computershare
Inc. and Computershare Trust Company, N.A. dated as of June 15, 2017
Ohio Municipal
Amended and Restated Master Custodian Agreement between Ohio Municipal and State Street Bank and Trust Company dated as of July 15, 2015,
as amended
Investment Management Agreement by and between Ohio Municipal and Nuveen Fund Advisors, LLC dated October 1, 2014
Investment Sub-Advisory Agreement by and between Nuveen Fund Advisors, LLC and Nuveen Asset
Management, LLC dated as of October 1, 2014
Transfer Agency and Service Agreement by and between Ohio Municipal and Computershare
Inc. and Computershare Trust Company, N.A. dated as of June 15, 2017
APPENDIX B
FINANCIAL HIGHLIGHTS
Information contained in the tables below under the headings “Per Share Operating Performance” and “Ratios/Supplemental
Data” shows the operating performance for the most recent ten fiscal years for each Fund.
Georgia Municipal
The following Financial Highlights table is intended to help a prospective investor understand the Fund’s financial performance for the
periods shown. Certain information of the Fund reflects financial results for a single common share of the Fund. The total returns in the table represent the rate an investor would have earned or lost on an investment in common shares of the Fund
(assuming reinvestment of all dividends). The Fund’s financial statements as of and for the fiscal years ended May 31, 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015, including the financial highlights for the fiscal years then ended,
have been audited by KPMG LLP (“KPMG”), an independent registered public accounting firm. KPMG’s report, along with the Fund’s financial statements, is included in the Fund’s Annual Report. KPMG has not reviewed or examined
any records, transactions or events after the date of such reports. The information with respect to the fiscal periods ended May 31, 2014 and prior was audited by other auditors. A copy of the Annual Report may be obtained from www.sec.gov or
by visiting www.nuveen.com. The information contained in, or that can be accessed through the website is not part of this Joint Proxy Statement/Prospectus. Past results are not indicative of future performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year Ended May 31 |
|
| Per Share Operating Performance |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
| Beginning Common Share NAV |
|
$ |
14.41 |
|
|
$ |
13.95 |
|
|
$ |
13.86 |
|
|
$ |
13.32 |
|
|
$ |
13.80 |
|
|
$ |
14.40 |
|
|
$ |
13.98 |
|
|
$ |
13.98 |
|
|
$ |
14.58 |
|
|
$ |
14.71 |
|
| Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Investment Income (Loss) |
|
|
0.50 |
|
|
|
0.54 |
|
|
|
0.48 |
|
|
|
0.46 |
|
|
|
0.49 |
|
|
|
0.55 |
|
|
|
0.68 |
|
|
|
0.67 |
|
|
|
0.54 |
|
|
|
0.60 |
|
| Net Realized/Unrealized Gain (Loss) |
|
|
(2.07 |
) |
|
|
0.44 |
|
|
|
0.06 |
|
|
|
0.48 |
|
|
|
(0.46 |
) |
|
|
(0.55 |
) |
|
|
0.38 |
|
|
|
(0.03 |
) |
|
|
(0.50 |
) |
|
|
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
(1.57 |
) |
|
|
0.98 |
|
|
|
0.54 |
|
|
|
0.94 |
|
|
|
0.03 |
|
|
|
0.00 |
|
|
|
1.06 |
|
|
|
0.64 |
|
|
|
0.04 |
|
|
|
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less Distributions to Common Shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| From Net Investment Income |
|
|
(0.54 |
) |
|
|
(0.52 |
) |
|
|
(0.45 |
) |
|
|
(0.43 |
) |
|
|
(0.51 |
) |
|
|
(0.60 |
) |
|
|
(0.64 |
) |
|
|
(0.64 |
) |
|
|
(0.64 |
) |
|
|
(0.67 |
) |
| From Accumulated Net Realized Gains |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
(0.54 |
) |
|
|
(0.52 |
) |
|
|
(0.45 |
) |
|
|
(0.43 |
) |
|
|
(0.51 |
) |
|
|
(0.60 |
) |
|
|
(0.64 |
) |
|
|
(0.64 |
) |
|
|
(0.64 |
) |
|
|
(0.67 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Discount Per Share Repurchased and Retired |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.03 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
| Ending NAV |
|
$ |
12.30 |
|
|
|
14.41 |
|
|
|
13.95 |
|
|
|
13.86 |
|
|
|
13.32 |
|
|
|
13.80 |
|
|
|
14.40 |
|
|
$ |
13.98 |
|
|
$ |
13.98 |
|
|
$ |
14.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Share Price |
|
$ |
11.21 |
|
|
$ |
13.60 |
|
|
$ |
11.98 |
|
|
$ |
12.46 |
|
|
$ |
11.38 |
|
|
$ |
13.28 |
|
|
$ |
14.28 |
|
|
$ |
12.81 |
|
|
$ |
12.98 |
|
|
$ |
13.39 |
|
| Common Share Total Returns: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Based on NAV(a) |
|
|
(11.25 |
)% |
|
|
7.12 |
% |
|
|
3.90 |
% |
|
|
7.49 |
% |
|
|
0.22 |
% |
|
|
0.07 |
% |
|
|
7.80 |
% |
|
|
4.65 |
% |
|
|
0.56 |
% |
|
|
3.68 |
% |
| Based on Share Price(a) |
|
|
(14.09 |
)% |
|
|
18.24 |
% |
|
|
(0.33 |
)% |
|
|
13.72 |
% |
|
|
(10.74 |
)% |
|
|
(2.76 |
)% |
|
|
16.94 |
% |
|
|
3.76 |
% |
|
|
2.17 |
% |
|
|
(4.83 |
)% |
| SUPPLEMENTAL DATA/RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Net Assets Applicable to Common Shares (000) |
|
$ |
127,870 |
|
|
$ |
149,899 |
|
|
$ |
145,114 |
|
|
$ |
144,152 |
|
|
$ |
140,485 |
|
|
$ |
145,577 |
|
|
$ |
151,860 |
|
|
$ |
147,441 |
|
|
$ |
147,507 |
|
|
$ |
153,832 |
|
| Ratios to Average Net Assets(b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
1.54 |
% |
|
|
1.46 |
% |
|
|
2.13 |
% |
|
|
2.45 |
% |
|
|
2.19 |
% |
|
|
2.10 |
% |
|
|
1.60 |
% |
|
|
1.62 |
% |
|
|
3.03 |
% |
|
|
2.66 |
% |
| Net Investment Income (Loss) |
|
|
3.64 |
% |
|
|
3.78 |
% |
|
|
3.40 |
% |
|
|
3.50 |
% |
|
|
3.64 |
% |
|
|
3.94 |
% |
|
|
4.83 |
% |
|
|
4.77 |
% |
|
|
4.04 |
% |
|
|
4.09 |
% |
| Portfolio Turnover Rate(c) |
|
|
14 |
% |
|
|
7 |
% |
|
|
9 |
% |
|
|
20 |
% |
|
|
15 |
% |
|
|
13 |
% |
|
|
13 |
% |
|
|
7 |
% |
|
|
20 |
% |
|
|
18 |
% |
| Adjustable Rate MuniFund Term Preferred (AMTP) Shares at the End of Period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000)(d) |
|
$ |
58,500 |
|
|
$ |
58,500 |
|
|
$ |
58,500 |
|
|
$ |
58,500 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Asset Coverage Per $100,000 Share(e) |
|
$ |
318,581 |
|
|
$ |
356,238 |
|
|
$ |
348,058 |
|
|
$ |
346,414 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| MuniFund Term Preferred (MTP) Shares at the End of Period(f): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
74,945 |
|
| Asset Coverage Per $10 Share |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
30.53 |
|
| Variable MuniFund Term Preferred (VMTP) Shares at the End of Period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000)(d) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
82,000 |
|
|
$ |
82,000 |
|
|
$ |
75,000 |
|
|
$ |
75,000 |
|
|
$ |
75,000 |
|
|
$ |
— |
|
| Asset Coverage Per $100,000 Share(e) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
271,323 |
|
|
$ |
277,532 |
|
|
$ |
302,480 |
|
|
$ |
296,588 |
|
|
$ |
296,676 |
|
|
$ |
— |
|
| (a) |
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.
|
B-1
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.
| (b) |
• Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to
preferred shares issued by the Fund, where applicable. |
• The expense ratios reflect, among other things, all
interest expense and other costs related to preferred shares and/or 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, where applicable, as follows:
|
|
|
|
|
| Year Ended 5/31: |
|
|
|
|
| 2022 |
|
|
0.51 |
% |
| 2021 |
|
|
0.44 |
|
| 2020 |
|
|
1.09 |
|
| 2019 |
|
|
1.36 |
|
| 2018 |
|
|
1.11 |
|
| 2017 |
|
|
1.03 |
|
| 2016 |
|
|
0.55 |
|
| 2015 |
|
|
0.54 |
|
| 2014 |
|
|
1.89 |
|
| 2013 |
|
|
1.51 |
|
| (c) |
Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales divided by the average
long-term market value during the period. |
| (d) |
Aggregate Amount Outstanding: Aggregate amount outstanding represents the liquidation preference as of the end
of the relevant fiscal year. |
| (e) |
Asset Coverage Per $100,000: Asset coverage per $100,000 is calculated by subtracting the Fund’s
liabilities and indebtedness not represented by senior securities from the Fund’s total assets, dividing the result by the aggregate amount of the Fund’s senior securities representing indebtedness then outstanding (if applicable,) plus
the aggregate of the involuntary liquidation preference of the outstanding preferred shares, if applicable, and multiplying the result by 100,000. |
| (f) |
The Ending and Average Market Value Per Share for each Series of the Fund’s MTP Shares were as follows:
|
|
|
|
|
|
|
|
|
|
| |
|
2014 |
|
|
2013 |
|
| Series 2015 (NKG PRC) |
|
|
|
|
|
|
|
|
| Ending Market Value per Share |
|
$ |
— |
|
|
$ |
10.08 |
|
| Average Market Value per Share |
|
|
10.03 |
^^ |
|
|
10.08 |
|
| Series 2015-1 (NKG PRD)(g) |
|
|
|
|
|
|
|
|
| Ending Market Value per Share |
|
|
— |
|
|
|
10.10 |
|
| Average Market Value per Share |
|
|
10.04 |
^^ |
|
|
10.07 |
^ |
| Series 2015-2 (NKG PRE)(g) |
|
|
|
|
|
|
|
|
| Ending Market Value per Share |
|
|
— |
|
|
|
10.12 |
|
| Average Market Value per Share |
|
|
10.03 |
^^ |
|
|
10.07 |
^ |
| (g) |
MTP Shares issued in connection with the reorganizations. |
| ^ |
For the period July 9, 2012 (effective date of the reorganizations) through May 31, 2013.
|
| ^^ |
For the period June 1, 2013 through May 30, 2014. |
B-2
Ohio Municipal
The following Financial Highlights table is intended to help a prospective investor understand the Fund’s financial performance for the
periods shown. Certain information of the Fund reflects financial results for a single common share of the Fund. The total returns in the table represent the rate an investor would have earned or lost on an investment in common shares of the Fund
(assuming reinvestment of all dividends). The Fund’s financial statements as of and for the six month period March 1, 2022 through August 31, 2022, are unaudited. The Fund’s financial statements as of and for the fiscal years
ended February 28/29, 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015, including the financial highlights for the fiscal years then ended, have been audited by KPMG LLP (“KPMG”), an independent registered public accounting firm.
KPMG’s report, along with the Fund’s financial statements, is included in the Fund’s Annual Report. KPMG has not reviewed or examined any records, transactions or events after the date of such reports. The information with respect to
the fiscal periods ended February 28, 2014 and prior was audited by other auditors. The information with respect to the six months ended August 31, 2022 is unaudited and is included in the Fund’s 2022 Semi-Annual Report. A copy of the
Annual Report and the Semi-Annual Report may be obtained from www.sec.gov or by visiting www.nuveen.com. The information contained in, or that can be accessed through the website is not part of this Joint Proxy Statement/Prospectus. Past results are
not indicative of future performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Period Ended
August 31 |
|
|
Year Ended February 28/29 |
|
| Per Share Operating Performance |
|
2022(g) |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
| Beginning Common Share NAV |
|
$ |
16.59 |
|
|
|
17.37 |
|
|
$ |
17.81 |
|
|
$ |
16.26 |
|
|
$ |
16.12 |
|
|
$ |
16.34 |
|
|
$ |
17.16 |
|
|
$ |
17.01 |
|
|
$ |
16.02 |
|
|
$ |
17.64 |
|
|
$ |
17.17 |
|
| Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Investment Income (Loss) |
|
|
0.24 |
|
|
|
0.59 |
|
|
|
0.60 |
|
|
|
0.46 |
|
|
|
0.55 |
|
|
|
0.68 |
|
|
|
0.74 |
|
|
|
0.81 |
|
|
|
0.85 |
|
|
|
0.76 |
|
|
|
0.89 |
|
| Net Realized/Unrealized Gain (Loss) |
|
|
(1.86 |
) |
|
|
(0.75 |
) |
|
|
(0.46 |
) |
|
|
1.67 |
|
|
|
0.15 |
|
|
|
(0.19 |
) |
|
|
(0.81 |
) |
|
|
0.17 |
|
|
|
1.07 |
|
|
|
(1.39 |
) |
|
|
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
(1.62 |
) |
|
|
(0.16 |
) |
|
|
0.14 |
|
|
|
2.13 |
|
|
|
0.70 |
|
|
|
0.49 |
|
|
|
(0.07 |
) |
|
|
0.98 |
|
|
|
1.92 |
|
|
|
(0.63 |
) |
|
|
1.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less Distributions to Common Shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| From Net Investment Income |
|
|
(0.26 |
) |
|
|
(0.59 |
) |
|
|
(0.55 |
) |
|
|
(0.52 |
) |
|
|
(0.56 |
) |
|
|
(0.71 |
) |
|
|
(0.75 |
) |
|
|
(0.83 |
) |
|
|
(0.93 |
) |
|
|
(0.99 |
) |
|
|
(0.96 |
) |
| From Accumulated Net Realized Gains |
|
|
0.00 |
|
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
(0.06 |
) |
|
|
(0.03 |
) |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
(0.26 |
) |
|
|
(0.62 |
) |
|
|
(0.58 |
) |
|
|
(0.58 |
) |
|
|
(0.59 |
) |
|
|
(0.71 |
) |
|
|
(0.75 |
) |
|
|
(0.83 |
) |
|
|
(0.93 |
) |
|
|
(0.99 |
) |
|
|
(0.96 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Discount Per Share Repurchased and Retired |
|
$ |
0.00 |
|
|
|
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.03 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
| Ending NAV |
|
$ |
14.71 |
|
|
|
16.59 |
|
|
|
17.37 |
|
|
|
17.81 |
|
|
|
16.26 |
|
|
|
16.12 |
|
|
|
16.34 |
|
|
|
17.16 |
|
|
$ |
17.01 |
|
|
$ |
16.02 |
|
|
$ |
17.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Share Price |
|
$ |
12.64 |
|
|
|
14.72 |
|
|
$ |
15.14 |
|
|
$ |
15.41 |
|
|
$ |
14.24 |
|
|
$ |
14.14 |
|
|
$ |
14.97 |
|
|
$ |
15.44 |
|
|
$ |
15.40 |
|
|
$ |
14.75 |
|
|
$ |
17.79 |
|
| Common Share Total Returns: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Based on NAV(a) |
|
|
(9.83 |
)% |
|
|
(1.08 |
)% |
|
|
0.78 |
% |
|
|
13.39 |
% |
|
|
4.65 |
% |
|
|
2.98 |
% |
|
|
(0.49 |
)% |
|
|
5.95 |
% |
|
|
12.23 |
% |
|
|
(3.38 |
)% |
|
|
8.53 |
% |
| Based on Share Price(a) |
|
|
(12.44 |
)% |
|
|
1.03 |
% |
|
|
2.07 |
% |
|
|
12.40 |
% |
|
|
5.14 |
% |
|
|
(0.93 |
)% |
|
|
1.67 |
% |
|
|
5.96 |
% |
|
|
10.79 |
% |
|
|
(11.39 |
)% |
|
|
11.27 |
% |
B-3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Period Ended
August 31 |
|
|
Year Ended February 28/29 |
|
| Per Share Operating Performance |
|
2022(g) |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
| SUPPLEMENTAL DATA/RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Net Assets Applicable to Common Shares (000) |
|
$ |
269,012 |
|
|
|
303,831 |
|
|
$ |
318,135 |
|
|
$ |
326,286 |
|
|
$ |
297,774 |
|
|
$ |
298,629 |
|
|
$ |
302,690 |
|
|
$ |
317,856 |
|
|
$ |
315,142 |
|
|
$ |
296,668 |
|
|
$ |
172,898 |
|
| Ratios to Average Net Assets(b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
2.03 |
%* |
|
|
1.50 |
% |
|
|
1.73 |
% |
|
|
2.34 |
% |
|
|
2.35 |
% |
|
|
1.94 |
% |
|
|
1.79 |
% |
|
|
1.58 |
% |
|
|
1.62 |
% |
|
|
2.15 |
% |
|
|
1.76 |
% |
| Net Investment Income (Loss) |
|
|
3.08 |
%* |
|
|
3.36 |
% |
|
|
3.43 |
% |
|
|
2.70 |
% |
|
|
3.44 |
% |
|
|
4.10 |
% |
|
|
4.35 |
% |
|
|
4.83 |
% |
|
|
5.10 |
% |
|
|
5.45 |
% |
|
|
5.14 |
% |
| Portfolio Turnover Rate(c) |
|
|
17 |
% |
|
|
14 |
% |
|
|
6 |
% |
|
|
15 |
% |
|
|
12 |
% |
|
|
16 |
% |
|
|
8 |
% |
|
|
10 |
% |
|
|
15 |
% |
|
|
13 |
% |
|
|
13 |
% |
| MuniFund Term Preferred (MTP) Shares at the End of Period(f): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000) |
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Asset Coverage Per $10 Share |
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Variable MuniFund Term Preferred (VMTP) Shares at the End of Period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000)(d) |
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
73,500 |
|
| Asset Coverage Per $100,000 Share(e) |
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
335,236 |
|
| Variable Rate Demand Preferred (VRDP) Shares at the End of Period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000)(d) |
|
$ |
148,000 |
|
|
|
148,000 |
|
|
$ |
148,000 |
|
|
$ |
148,000 |
|
|
$ |
148,000 |
|
|
$ |
148,000 |
|
|
$ |
148,000 |
|
|
$ |
148,000 |
|
|
$ |
148,000 |
|
|
$ |
148,000 |
|
|
$ |
— |
|
| Asset Coverage Per $100,000 Share(e) |
|
$ |
281,765 |
|
|
|
305,291 |
|
|
$ |
314,956 |
|
|
$ |
320,463 |
|
|
$ |
301,199 |
|
|
$ |
301,776 |
|
|
$ |
304,520 |
|
|
$ |
314,768 |
|
|
$ |
312,934 |
|
|
$ |
300,451 |
|
|
$ |
— |
|
| (a) |
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.
| (b) |
• Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to
preferred shares issued by the Fund, where applicable. |
• The expense ratios reflect, among other things, all
interest expense and other costs related to preferred shares and/or 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, where applicable, as follows:
|
|
|
|
|
| Period Ended 8/31: |
|
|
|
|
| 2022(g) |
|
|
1.00 |
%* |
| Year Ended 2/28-2/29: |
|
|
|
|
| 2022 |
|
|
0.52 |
% |
| 2021 |
|
|
0.71 |
|
| 2020 |
|
|
1.20 |
|
| 2019 |
|
|
1.28 |
|
| 2018 |
|
|
0.90 |
|
| 2017 |
|
|
0.77 |
|
| 2016 |
|
|
0.55 |
|
| 2015 |
|
|
0.57 |
|
| 2014 |
|
|
1.05 |
|
| 2013 |
|
|
0.61 |
|
| (c) |
Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales divided by the average
long-term market value during the period. |
| (d) |
Aggregate Amount Outstanding: Aggregate amount outstanding represents the liquidation preference as of the end
of the relevant fiscal year. |
| (e) |
Asset Coverage Per $100,000: Asset coverage per $100,000 is calculated by subtracting the Fund’s
liabilities and indebtedness not represented by senior securities from the Fund’s total assets, dividing the result by the aggregate amount of the Fund’s senior securities representing indebtedness then outstanding (if applicable,) plus
the aggregate of the involuntary liquidation preference of the outstanding preferred shares, if applicable, and multiplying the result by 100,000. |
B-4
| (f) |
The Ending and Average Market Value Per Share for each Series of the Fund’s MTP Shares were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
| Series 2014 (NUO PRACL) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Market Value per Share |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Average Market Value per Share |
|
|
— |
|
|
|
— |
|
|
|
10.01 |
^ |
|
|
— |
|
| Series 2015 (NUO PRCCL) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Market Value per Share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Average Market Value per Share |
|
|
— |
|
|
|
— |
|
|
|
10.03 |
^ |
|
|
— |
|
| Series 2016 (NUO PRDCL) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Market Value per Share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Average Market Value per Share |
|
|
— |
|
|
|
— |
|
|
|
10.06 |
^ |
|
|
— |
|
| ^ |
For the period April 8, 2013 (effective date of the reorganization) through October 7, 2013.
|
| (g) |
Unaudited. For the six months ended August 31, 2022. |
B-5
Acquiring Fund
The following Financial Highlights table is intended to help a prospective investor understand the Acquiring Fund’s financial performance
for the periods shown. Certain information of the Acquiring Fund reflects financial results for a single common share of the Acquiring Fund. The total returns in the table represent the rate an investor would have earned or lost on an investment in
common shares of the Fund (assuming reinvestment of all dividends). The Acquiring Fund’s financial statements as of and for the six month period from November 1, 2021 through April 30, 2022, are unaudited. The Fund’s financial statements
as of and for the fiscal years ended October 31, 2021, 2020, 2019, 2018, 2017, 2016, 2015 and 2014, including the financial highlights for the fiscal years then ended, have been audited by KPMG LLP (“KPMG”), an independent registered
public accounting firm. KPMG’s report, along with the Acquiring Fund’s financial statements, is included in the Acquiring Fund’s Annual Report. KPMG has not reviewed or examined any records, transactions or events after the date of
such reports. The information with respect to the fiscal periods ended October 31, 2013 and prior was audited by other auditors. The information with respect to six months ended April 30, 2022 is unaudited and is included in the Fund’s 2022
Semi-Annual Report. A copy of the Annual Report and the Semi-Annual Report may be obtained from www.sec.gov or by visiting www.nuveen.com. The information contained in, or that can be accessed through the website is not part of this Joint Proxy
Statement/Prospectus. Past results are not indicative of future performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Period Ended
April 30 |
|
|
Year Ended October 31 |
|
| Per Share Operating
Performance |
|
2022(e) |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
2012 |
|
| Beginning Common Share NAV |
|
$ |
16.98 |
|
|
$ |
15.96 |
|
|
$ |
16.63 |
|
|
$ |
15.07 |
|
|
$ |
16.03 |
|
|
$ |
16.34 |
|
|
$ |
15.75 |
|
|
$ |
15.82 |
|
|
$ |
14.32 |
|
|
$ |
15.99 |
|
|
$ |
14.53 |
|
| Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Investment Income (Loss) |
|
|
0.38 |
|
|
|
0.78 |
|
|
|
0.80 |
|
|
|
0.75 |
|
|
|
0.81 |
|
|
|
0.87 |
|
|
|
0.72 |
|
|
|
0.83 |
|
|
|
0.72 |
|
|
|
0.71 |
|
|
|
0.78 |
|
| Net Realized/Unrealized Gain (Loss) |
|
|
(2.64 |
) |
|
|
1.03 |
|
|
|
(0.71 |
) |
|
|
1.60 |
|
|
|
(0.94 |
) |
|
|
(0.29 |
) |
|
|
0.74 |
|
|
|
(0.13 |
) |
|
|
1.47 |
|
|
|
(1.63 |
) |
|
|
1.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
(2.26 |
) |
|
|
1.81 |
|
|
|
0.09 |
|
|
|
2.35 |
|
|
|
(0.13 |
) |
|
|
0.58 |
|
|
|
1.46 |
|
|
|
0.70 |
|
|
|
2.19 |
|
|
|
(0.92 |
) |
|
|
2.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less Distributions to Common Shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| From Net Investment Income |
|
|
(0.39 |
) |
|
|
(0.79 |
) |
|
|
(0.76 |
) |
|
|
(0.79 |
) |
|
|
(0.83 |
) |
|
|
(0.89 |
) |
|
|
(0.87 |
) |
|
|
(0.78 |
) |
|
|
(0.72 |
) |
|
|
(0.75 |
) |
|
|
(0.95 |
) |
| From Accumulated Net Realized Gains |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
* |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
(0.39 |
) |
|
|
(0.79 |
) |
|
|
(0.76 |
) |
|
|
(0.79 |
) |
|
|
(0.83 |
) |
|
|
(0.89 |
) |
|
|
(0.87 |
) |
|
|
(0.78 |
) |
|
|
(0.72 |
) |
|
|
(0.75 |
) |
|
|
(0.99 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Discount Per Common Share Repurchased and Retired |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.01 |
|
|
|
0.00 |
* |
|
|
0.00 |
|
|
|
0.00 |
|
| Discount Per Common Share Repurchased through Tender Offer |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.03 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending NAV |
|
$ |
14.33 |
|
|
$ |
16.98 |
|
|
$ |
15.96 |
|
|
$ |
16.63 |
|
|
$ |
15.07 |
|
|
$ |
16.03 |
|
|
$ |
16.34 |
|
|
$ |
15.75 |
|
|
$ |
15.82 |
|
|
$ |
14.32 |
|
|
$ |
15.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Share Price |
|
$ |
13.20 |
|
|
$ |
16.73 |
|
|
$ |
14.74 |
|
|
$ |
16.03 |
|
|
$ |
13.29 |
|
|
$ |
15.01 |
|
|
$ |
14.82 |
|
|
$ |
13.86 |
|
|
$ |
13.80 |
|
|
$ |
12.66 |
|
|
$ |
15.73 |
|
| Common Share Total Returns: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Based on NAV(a) |
|
|
(13.54 |
)% |
|
|
11.45 |
% |
|
|
0.58 |
% |
|
|
15.90 |
% |
|
|
(0.85 |
)% |
|
|
3.88 |
% |
|
|
9.36 |
% |
|
|
4.57 |
% |
|
|
15.90 |
% |
|
|
(5.93 |
)% |
|
|
17.33 |
% |
| Based on Share Price(a) |
|
|
(19.10 |
)% |
|
|
19.05 |
% |
|
|
(3.34 |
)% |
|
|
27.08 |
% |
|
|
(6.21 |
)% |
|
|
7.61 |
% |
|
|
13.26 |
% |
|
|
6.21 |
% |
|
|
15.07 |
% |
|
|
(15.08 |
)% |
|
|
18.48 |
% |
B-6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Period Ended
April 30 |
|
|
Year Ended October 31 |
|
| Per Share Operating
Performance |
|
2022(e) |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
2012 |
|
| SUPPLEMENTAL DATA/RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Net Assets Applicable to Common Shares (000) |
|
$ |
2,037,682 |
|
|
$ |
2,414,104 |
|
|
$ |
2,267,965 |
|
|
$ |
2,364,022 |
|
|
$ |
2,141,680 |
|
|
$ |
2,278,904 |
|
|
$ |
2,321,756 |
|
|
$ |
571,790 |
|
|
$ |
574,721 |
|
|
$ |
578,508 |
|
|
$ |
645,993 |
|
| Ratios to Average Net Assets Applicable to Common Shares Before Reimbursement(b): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
1.74 |
%** |
|
|
1.61 |
% |
|
|
2.04 |
% |
|
|
2.60 |
% |
|
|
2.43 |
% |
|
|
2.12 |
% |
|
|
1.86 |
% |
|
|
1.48 |
% |
|
|
1.73 |
% |
|
|
1.71 |
% |
|
|
1.76 |
% |
| Net Investment Income (Loss) |
|
|
4.66 |
%** |
|
|
4.60 |
% |
|
|
4.95 |
% |
|
|
4.68 |
% |
|
|
5.17 |
% |
|
|
5.58 |
% |
|
|
5.03 |
% |
|
|
5.24 |
% |
|
|
4.78 |
% |
|
|
4.66 |
% |
|
|
5.06 |
% |
| Ratios to Average Net Assets Applicable to Common Shares After Reimbursement(b): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
2.11 |
%(d) |
|
|
1.81 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
| Net Investment Income (Loss) |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
5.59 |
%(d) |
|
|
5.08 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
| Portfolio Turnover Rate(c) |
|
|
22 |
% |
|
|
15 |
% |
|
|
21 |
% |
|
|
12 |
% |
|
|
25 |
% |
|
|
21 |
% |
|
|
20 |
% |
|
|
26 |
% |
|
|
14 |
% |
|
|
14 |
% |
|
|
22 |
% |
| Institutional MuniFund Term Preferred (iMTP) Shares at the End of Period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
150,000 |
|
|
$ |
150,000 |
|
|
$ |
150,000 |
|
|
$ |
— |
|
|
$ |
— |
|
| Asset Coverage Per $5,000 Share |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
14,570 |
|
|
$ |
17,376 |
|
|
$ |
17,440 |
|
|
$ |
— |
|
|
$ |
— |
|
| MuniFund Term Preferred (MTP) Shares at the End of Period(f): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
70,000 |
|
|
$ |
70,000 |
|
| Asset Coverage Per $10 Share |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
34.19 |
|
|
$ |
37.01 |
|
| Variable MuniFund Term Preferred (VMTP) Shares at the End of Period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000)(h) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
336,000 |
|
|
$ |
336,000 |
|
|
$ |
81,000 |
|
|
$ |
81,000 |
|
|
$ |
169,200 |
|
|
$ |
169,200 |
|
| Asset Coverage Per $100,000 Share(i) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
287,873 |
|
|
$ |
291,406 |
|
|
$ |
347,528 |
|
|
$ |
348,797 |
|
|
$ |
341,851 |
|
|
$ |
370,064 |
|
| MuniFund Preferred (MFP) Shares at the End of Period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000)(h) |
|
$ |
641,000 |
|
|
$ |
641,000 |
|
|
$ |
641,000 |
|
|
$ |
641,000 |
|
|
$ |
641,000 |
|
|
$ |
150,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Asset Coverage Per $100,000 Share(i) |
|
$ |
248,953 |
|
|
$ |
276,470 |
|
|
$ |
265,787 |
|
|
$ |
272,809 |
|
|
$ |
256,556 |
|
|
$ |
287,873 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Variable Rate Demand Preferred (VRDP) Shares at the End of Period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Amount Outstanding (000)(h) |
|
$ |
727,000 |
|
|
$ |
727,000 |
|
|
$ |
727,000 |
|
|
$ |
727,000 |
|
|
$ |
727,000 |
|
|
$ |
727,000 |
|
|
$ |
727,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Asset Coverage Per $100,000 Share(i) |
|
$ |
248,953 |
|
|
$ |
276,470 |
|
|
$ |
265,787 |
|
|
$ |
272,809 |
|
|
$ |
256,556 |
|
|
$ |
287,873 |
|
|
$ |
291,406 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| iMTP, MTP, VMTP, MFP and/or VRDP Shares at the End of Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset Coverage Per $1 Liquidation Preference |
|
$ |
2.49 |
|
|
$ |
2.76 |
|
|
$ |
2.66 |
|
|
$ |
2.73 |
|
|
$ |
2.57 |
|
|
$ |
2.88 |
|
|
$ |
2.91 |
|
|
$ |
3.48 |
|
|
$ |
3.49 |
|
|
$ |
3.42 |
|
|
$ |
3.70 |
|
| (a) |
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.
|
B-7
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 gain 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.
| (b) |
Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to
preferred shares issued by the Fund, where applicable. |
The expense ratios reflect, among other things, all interest
expense and other costs related to preferred shares and/or 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,
where applicable, as follows:
|
|
|
|
|
| Period Ended 4/30: |
|
|
|
|
| 2022(e) |
|
|
0.69 |
%** |
| Year Ended 10/31: |
|
|
|
|
| 2021 |
|
|
0.62 |
% |
| 2020 |
|
|
1.01 |
|
| 2019 |
|
|
1.55 |
|
| 2018 |
|
|
1.38 |
|
| 2017 |
|
|
1.09 |
|
| 2016 |
|
|
0.84 |
|
| 2015 |
|
|
0.46 |
|
| 2014 |
|
|
0.72 |
|
| 2013 |
|
|
0.75 |
|
| 2012 |
|
|
0.77 |
|
| (c) |
Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales divided by the average
long-term market value during the period. |
| (d) |
During the fiscal year ended October 31, 2017 Nuveen Fund Advisors voluntarily reimbursed the Fund for certain
expenses incurred in connection with its reorganization. |
| (e) |
Unaudited. For the six months ended April 30, 2022. |
| * |
Rounds to less than $.01 per share. |
| N/A |
Fund no longer has a contractual reimbursement agreement with Nuveen Fund Advisors. |
| (f) |
The Ending and Average Market Value Per Share for each Series of the Fund’s MTP Shares were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2014 |
|
|
2013 |
|
|
2012 |
|
| Series 2016 (NZF PRC) |
|
|
|
|
|
|
|
|
|
|
|
|
| Ending Market Value Per Share |
|
$ |
— |
|
|
$ |
10.10 |
|
|
$ |
10.14 |
|
| Average Market Value Per Share |
|
|
10.05 |
(g) |
|
$ |
10.10 |
|
|
$ |
10.12 |
|
| (g) |
For the period November 1, 2013 through April 11, 2014. |
| (h) |
Aggregate Amount Outstanding: Aggregate amount outstanding represents the liquidation preference as of the end
of the relevant fiscal year. |
| (i) |
Asset Coverage Per $100,000: Asset coverage per $100,000 is calculated by subtracting the Fund’s
liabilities and indebtedness not represented by senior securities from the Fund’s total assets, dividing the result by the aggregate amount of the Fund’s senior securities representing indebtedness then outstanding (if applicable,) plus
the aggregate of the involuntary liquidation preference of the outstanding preferred shares, if applicable, and multiplying the result by 100,000. |
B-8
APPENDIX C
NUMBER OF BOARD AND COMMITTEE MEETINGS
HELD DURING EACH FUND’S LAST FISCAL YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fund |
|
Regular
Board
Meeting |
|
|
Special
Board
Meeting |
|
|
Executive
Committee
Meeting |
|
|
Dividend
Committee
Meeting |
|
|
Compliance,
Risk
Management
and
Regulatory
Oversight
Committee
Meeting |
|
|
Audit
Committee
Meeting |
|
|
Nominating
and
Governance
Committee
Meeting |
|
|
Closed-End
Funds
Committee |
|
| Georgia Municipal |
|
|
5 |
|
|
|
11 |
|
|
|
0 |
|
|
|
9 |
|
|
|
4 |
|
|
|
4 |
|
|
|
6 |
|
|
|
4 |
|
| Ohio Municipal |
|
|
5 |
|
|
|
8 |
|
|
|
0 |
|
|
|
9 |
|
|
|
4 |
|
|
|
4 |
|
|
|
8 |
|
|
|
4 |
|
| Acquiring Fund |
|
|
5 |
|
|
|
7 |
|
|
|
0 |
|
|
|
8 |
|
|
|
4 |
|
|
|
4 |
|
|
|
8 |
|
|
|
4 |
|
C-1
Nuveen Investments
333 West
Wacker Drive
Chicago, Illinois 60606-1286
(800) 257-8787
EVERY SHAREHOLDER’S VOTE IS IMPORTANT
|
|
|
|
|
|
|
EASY VOTING OPTIONS: |
|
|
|
|
|
|
|
|
|
VOTE ON THE INTERNET
Log on to:
www.proxy-direct.com
or scan the QR code Follow the on-screen
instructions available 24 hours |
|
|
|
|
|
|
|
VOTE BY PHONE
Call 1-800-337-3503 Follow the recorded
instructions available 24 hours |
|
|
|
|
|
|
|
VOTE BY MAIL
Vote, sign and date this Proxy Card and return
in the postage-paid envelope |
|
|
|
| Please detach at perforation before mailing.
|
|
|
|
VOTE AT THE VIRTUAL MEETING
at the following Website:
meetnow.global/MXXWK2V
on February 8, 2023 at 2:00 p.m.,
Central Time.
To participate in the Virtual Meeting, enter the 14-digit control number
from the shaded box on this card. |
NUVEEN GEORGIA QUALITY MUNICIPAL INCOME FUND
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
FEBRUARY 8, 2023
COMMON SHARES
THIS PROXY IS BEING SOLICITED BY
THE BOARD OF TRUSTEES. The undersigned shareholder(s) of Nuveen Georgia Quality Municipal Income Fund, a Massachusetts business trust, revoking previous proxies, hereby appoints Kevin J. McCarthy, Mark L. Winget and John M. McCann, or any one of
them, as true and lawful attorneys with power of substitution of each, to vote all shares of Nuveen Georgia Quality Municipal Income Fund that the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held virtually at the
following Website: meetnow.global/MXXWK2V, on February 8, 2023, at 2:00 p.m., Central Time, and at any and all adjournments or postponements thereof as indicated on the reverse side. To participate in the virtual meeting, enter the 14-digit control number from the shaded box on this card. In their discretion, the proxy holders named above are authorized to vote upon such other matters as may properly come before the meeting or any adjournment
or postponement thereof.
Receipt of the Notice of Annual Meeting of Shareholders and the accompanying Joint Proxy Statement/Prospectus is hereby acknowledged.
The shares of Nuveen Georgia Quality Municipal Income Fund represented hereby will be voted as indicated or FOR the proposal if no choice is indicated.
|
|
|
|
|
|
|
|
|
VOTE VIA THE INTERNET: www.proxy-direct.com
VOTE VIA THE TELEPHONE:
1-800-337-3503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLEASE SIGN, DATE ON THE REVERSE SIDE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
NKG_33038_111722
EVERY SHAREHOLDER’S VOTE IS IMPORTANT!
VOTE THIS PROXY CARD TODAY!
Important
Notice Regarding the Availability of Proxy Materials for
Nuveen Georgia Quality Municipal Income Fund
Annual Meeting of Shareholders to Be Held Virtually on February 8, 2023.
The Joint Proxy Statement/Prospectus for this meeting is available at:
https://www.nuveenproxy.com/Closed-End-Fund-Proxy-Information
IF YOU VOTE ON THE INTERNET OR BY TELEPHONE,
YOU NEED NOT RETURN THIS PROXY CARD
Please detach
at perforation before mailing.
In their discretion, the proxy holders are authorized to vote upon such other matters as may properly come before the meeting or
any adjournments or postponements thereof.
Properly executed proxies will be voted as specified. If no other specification is made, such shares will be voted
“FOR” the proposal.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE: X
|
|
|
|
|
|
|
|
|
| A |
|
Proposal THE BOARD RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL. |
|
|
|
|
|
|
|
|
|
|
|
| 1. |
|
To approve an Agreement and Plan of Merger pursuant to which Nuveen Georgia Quality Municipal Income Fund (the “Target Fund”) would be merged with and into NMCIF Merger Sub, LLC, a Massachusetts
limited liability company and wholly-owned subsidiary of Nuveen Municipal Credit Income Fund (the “Acquiring Fund”), with the issued and outstanding common and preferred shares of the Target Fund being converted into newly issued common
and preferred shares of the Acquiring Fund. |
|
FOR ☐ |
|
AGAINST ☐ |
|
ABSTAIN ☐ |
|
|
|
|
|
| 2. |
|
Election of Board Members: |
|
FOR |
|
AGAINST |
|
ALL FOR |
|
|
Class I: Class
II: |
|
ALL |
|
ALL |
|
EXCEPT |
|
|
01. Robert L. Young 02. Amy B.R. Lancellotta 03. John K.
Nelson 04. Terence J. Toth |
|
☐ |
|
☐ |
|
☐ |
|
|
|
|
|
|
|
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark the box “FOR ALL EXCEPT” and write the nominee’s number(s) on the line
provided. ____________________________ |
|
|
|
|
|
|
| B |
|
Authorized Signatures — This section must be completed for your vote to be counted. — Sign and Date Below |
| Note: |
Please sign exactly as your name(s) appear(s) on this Proxy Card, and date it. When shares are held jointly, each holder
should sign. When signing as attorney, executor, guardian, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature. |
|
|
|
|
|
|
|
|
|
| Date (mm/dd/yyyy) — Please print date below |
|
|
|
Signature 1 — Please keep signature within the box |
|
|
|
Signature 2 — Please keep signature within the box |
| / / |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
xxxxxxxxxxxxxx |
|
NKG 33038 |
|
M xxxxxxxx |
|
+ |
EVERY SHAREHOLDER’S VOTE IS IMPORTANT
|
|
|
| EASY VOTING OPTIONS: |
|
|
|
|
VOTE ON THE INTERNET
Log on to:
www.proxy-direct.com
or scan the QR code Follow the on-screen
instructions available 24 hours |
|
|
VOTE BY PHONE
Call 1-800-337-3503 Follow the recorded
instructions available 24 hours |
|
|
|
|
VOTE BY MAIL
Vote, sign and date this Proxy Card and return
in the postage-paid envelope |
|
|
|
|
VOTE AT THE VIRTUAL MEETING
at the following Website:
meetnow.global/MXXWK2V on February 8, 2023 at
2:00 p.m., Central Time.
To participate in the Virtual Meeting, enter
the 14-digit control number from the shaded box on this card. |
Please detach at perforation before mailing.
|
|
|
|
|
|
|
NUVEEN OHIO QUALITY MUNICIPAL INCOME FUND
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
FEBRUARY 8, 2023 |
|
|
COMMON SHARES
THIS PROXY IS
BEING SOLICITED BY THE BOARD OF TRUSTEES. The undersigned shareholder(s) of Nuveen Ohio Quality Municipal Income Fund, a Massachusetts business trust, revoking previous proxies, hereby appoints Kevin J. McCarthy, Mark L. Winget and John
M. McCann, or any one of them, as true and lawful attorneys with power of substitution of each, to vote all shares of Nuveen Ohio Quality Municipal Income Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders to be
held virtually at the following Website: meetnow.global/MXXWK2V, on February 8, 2023, at 2:00 p.m., Central Time, and at any and all adjournments or postponements thereof as indicated on the reverse side. To participate in the virtual meeting, enter
the 14-digit control number from the shaded box on this card. In their discretion, the proxy holders named above are authorized to vote upon such other matters as may properly come before the meeting or any adjournment or postponement thereof.
Receipt of the Notice of Special Meeting of Shareholders and the accompanying Joint Proxy Statement/Prospectus is hereby acknowledged. The shares of Nuveen Ohio
Quality Municipal Income Fund represented hereby will be voted as indicated or FOR the proposal if no choice is indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
VOTE VIA THE INTERNET: www.proxy-direct.com |
|
|
|
|
VOTE VIA THE TELEPHONE: 1-800-337-3503 |
PLEASE SIGN, DATE ON THE REVERSE SIDE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
NUO_33038_111722
EVERY SHAREHOLDER’S VOTE IS IMPORTANT!
VOTE THIS PROXY CARD TODAY!
Important
Notice Regarding the Availability of Proxy Materials for
Nuveen Ohio Quality Municipal Income Fund
Special Meeting of Shareholders to Be Held Virtually on February 8, 2023.
The Joint Proxy Statement/Prospectus for this meeting is available at:
http://www.nuveenproxy.com/Closed-End-Fund-Proxy-Information
IF YOU VOTE ON THE INTERNET OR BY TELEPHONE,
YOU NEED NOT RETURN THIS PROXY CARD
Please detach at perforation before mailing.
In their discretion, the proxy holders are authorized to vote upon such other matters as may properly come before the meeting or any
adjournments or postponements thereof.
Properly executed proxies will be voted as specified. If no other specification is made, such shares will be voted
“FOR” the proposal.
|
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal THE BOARD RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL. |
|
|
|
|
|
|
| 1. |
|
To approve an Agreement and Plan of Merger pursuant to which Nuveen Ohio
Quality Municipal Income Fund (the “Target Fund”) would be merged with and into NMCIF Merger Sub, LLC, a Massachusetts limited liability company and wholly-owned subsidiary of Nuveen Municipal Credit Income Fund (the “Acquiring
Fund”), with the issued and outstanding common and preferred shares of the Target Fund being converted into newly issued common and preferred shares of the Acquiring Fund. |
|
FOR ☐ |
|
AGAINST ☐ |
|
ABSTAIN ☐ |
|
|
|
|
Authorized Signatures — This section must be completed for your vote to be counted. — Sign and Date Below |
| Note: |
Please sign exactly as your name(s) appear(s) on this Proxy Card, and date it. When shares are held jointly, each
holder should sign. When signing as attorney, executor, guardian, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature. |
|
|
|
|
|
|
|
|
|
| Date (mm/dd/yyyy) — Please print date below |
|
|
|
Signature 1 — Please keep signature within the box |
|
|
|
Signature 2 — Please keep signature within the box |
| / /
|
|
|
|
|
|
|
|
|
|
|
|
|
|
xxxxxxxxxxxxxx |
|
NUO
33038 M xxxxxxxx
|
EVERY SHAREHOLDER’S VOTE IS IMPORTANT!
Please
detach at perforation before mailing.
|
|
|
|
|
|
|
NUVEEN MUNICIPAL CREDIT INCOME FUND
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
FEBRUARY 8, 2023 |
|
|
PREFERRED SHARES
THIS PROXY IS BEING
SOLICITED BY THE BOARD OF TRUSTEES. The undersigned shareholder(s) of Nuveen Municipal Credit Income Fund, a Massachusetts business trust, revoking previous proxies, hereby appoints Kevin J. McCarthy, Mark L. Winget and John M. McCann, or any
one of them, as true and lawful attorneys with power of substitution of each, to vote all shares of Nuveen Municipal Credit Income Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders to be held virtually at the
following Website: meetnow.global/MXXWK2V, on February 8, 2023, at 2:00 p.m., Central Time, and at any and all adjournments or postponements thereof as indicated on the reverse side. To participate in the virtual meeting, enter the 14-digit control number from the shaded box on this card. In their discretion, the proxy holders named above are authorized to vote upon such other matters as may properly come before the meeting or any adjournment
or postponement thereof.
Receipt of the Notice of Special Meeting of Shareholders and the accompanying Joint Proxy Statement/Prospectus is hereby acknowledged.
The shares of Nuveen Municipal Credit Income Fund represented hereby will be voted as indicated or FOR the proposal if no choice is indicated.
PLEASE SIGN, DATE ON THE REVERSE SIDE AND
RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
NZF_33038_111722_Pref
EVERY SHAREHOLDER’S VOTE IS IMPORTANT!
VOTE THIS PROXY CARD TODAY!
Important Notice Regarding the Availability of Proxy Materials for
Nuveen Municipal Credit Income Fund
Special
Meeting of Shareholders to Be Held Virtually on February 8, 2023.
The Joint Proxy Statement/Prospectus for this meeting is available at:
https://www.nuveenproxy.com/Closed-End-Fund-Proxy-Information
Please detach at perforation before mailing.
In their discretion, the proxy holders are authorized to vote upon such other matters as may properly come before the meeting or any adjournment or
postponement thereof..
Properly executed proxies will be voted as specified. If no other specification is made, such shares will be voted “FOR” the
proposal.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE: ☒
|
|
|
|
|
|
|
|
|
| A |
|
Proposal THE BOARD RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
| 1. |
|
To approve an Agreement and Plan of Merger pursuant to which Nuveen Georgia Quality Municipal Income Fund and Nuveen Ohio Quality Municipal Income Fund (the “Target Funds”) would be merged with
and into NMCIF Merger Sub, LLC, a Massachusetts limited liability company and wholly-owned subsidiary of Nuveen Municipal Credit Income Fund (the “Acquiring Fund”), with the issued and outstanding common and preferred shares of the Target
Funds being converted into newly issued common and preferred shares of the Acquiring Fund. |
|
☐ |
|
☐ |
|
☐ |
| |
|
|
|
|
|
|
|
|
| B |
|
Authorized Signatures — This section must be completed for your vote to be counted. — Sign and Date Below |
|
|
|
|
|
|
|
|
|
| Note: |
|
Please sign exactly as your name(s) appear(s) on this Proxy Card, and date it. When shares are held jointly, each holder should sign. When signing as attorney, executor, guardian, administrator, trustee,
officer of corporation or other entity or in another representative capacity, please give the full title under the signature. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Date (mm/dd/yyyy) — Please print date below |
|
|
|
Signature 1 — Please keep signature within the box |
|
|
|
Signature 2 — Please keep signature within the box |
| / /
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
xxxxxxxxxxxxxx |
|
NZF 33038 |
|
M xxxxxxxx |
|
|
The information contained in this Statement of Additional Information is not complete
and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Statement of Additional Information is not an offer to sell these securities, and it is not a
solicitation of an offer to buy these securities, in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION,
DATED DECEMBER 16, 2022
STATEMENT OF ADDITIONAL INFORMATION
RELATING TO THE MERGER OF
NUVEEN GEORGIA QUALITY MUNICIPAL INCOME FUND (NKG)
NUVEEN OHIO QUALITY MUNICIPAL INCOME FUND (NUO)
AND
NUVEEN MUNICIPAL
CREDIT INCOME FUND (NZF)
(EACH, A “FUND” AND COLLECTIVELY, THE “FUNDS”)
This Statement of Additional Information (“SAI”) is available to common shareholders of Nuveen Georgia Quality Municipal Income Fund
(“Georgia Municipal” or a “Target Fund”) and Nuveen Ohio Quality Municipal Income Fund (“Ohio Municipal” or a “Target Fund”), and preferred shareholders of Nuveen Municipal Credit Income Fund (the
“Acquiring Fund”), in connection with the proposed merger of each Target Fund with and into a wholly-owned subsidiary of the Acquiring Fund. With respect to each merger, the Agreement and Plan of Merger provides for: (1) the merger of
the Target Fund with and into NMCIF Merger Sub, LLC, a Massachusetts limited liability company and a wholly-owned subsidiary of the Acquiring Fund, and (ii) the conversion of each issued and outstanding common and preferred share of beneficial
interest of the Target Fund into newly issued common and preferred shares of beneficial interest, par value $0.01 per share, of the Acquiring Fund (the, “Merger”).
This SAI is not a prospectus and should be read in conjunction with the Joint Proxy Statement/Prospectus dated [●], 2022 and filed on Form N-14 with the Securities and Exchange Commission (“SEC”) relating to the proposed Mergers of the Target Funds into the Acquiring Fund (the “Joint Proxy Statement/Prospectus”). A copy of
the Joint Proxy Statement/Prospectus and other information may be obtained without charge by calling (800) 257-8787 or from the Funds’ website (http://www.nuveen.com). The information contained in,
or that can be accessed through, the Funds’ website is not part of the Joint Proxy Statement/Prospectus or this SAI. You may also obtain a copy of the Joint Proxy Statement/Prospectus on the website of the SEC (http://www.sec.gov). Capitalized
terms used but not defined in this SAI have the meanings assigned to them in the Joint Proxy Statement/Prospectus.
This SAI is dated
[●], 2022.
TABLE OF CONTENTS
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INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the information contained in the Joint Proxy Statement/Prospectus concerning the investment objectives
and policies of the Funds. The investment policies described below, except as set forth under “Investment Restrictions” or as otherwise noted, are not fundamental policies and may be changed by a Fund’s Board of Trustees (each, a
“Board” or the “Board,” and each trustee, a “Board Member”), without the approval of shareholders.
The
Funds have similar investment objectives, but there are differences. Each Target Fund is a state-specific municipal fund that seeks to provide current income exempt from regular federal income tax and the income tax of a single state. In contrast,
the Acquiring Fund is a national municipal fund that seeks to provide current income exempt from regular federal income tax.
Georgia
Municipal’s investment objectives are current income exempt from regular federal and Georgia income tax and the enhancement of portfolio value relative to the municipal bond market by investing in
tax-exempt municipal bonds that the Fund’s investment adviser or sub-adviser believes are underrated or undervalued or that represent municipal market sectors that
are undervalued. As a fundamental policy, under normal circumstances, Georgia Municipal will invest at least 80% of its Assets (as defined below) in municipal securities and other related investments the income from which is exempt from regular
federal and Georgia income taxes.
Ohio Municipal’s primary investment objective is current income exempt from both regular federal
income taxes and Ohio personal income taxes, and its secondary investment objective is the enhancement of portfolio value relative to the Ohio municipal bond market through investments in tax-exempt Ohio
municipal obligations that, in the opinion of the Fund’s investment adviser or sub-adviser are underrated or undervalued or that represent municipal market sectors that are undervalued. As a fundamental
policy, under normal circumstances, Ohio Municipal will invest at least 80% of its Assets, in municipal securities and other related investments the income from which is exempt from regular federal and Ohio income taxes.
The Acquiring Fund’s investment objectives are to provide current income exempt from regular federal income tax and to enhance portfolio
value relative to the municipal bond market by investing in tax-exempt municipal bonds that the Fund’s investment adviser or sub-adviser believes are underrated or
undervalued or that represent municipal market sectors that are undervalued. Under normal circumstances, the Acquiring Fund will invest at least 80% of its Assets in municipal securities and other related investments, the income from which is exempt
from regular federal income taxes.
As a non-fundamental policy, under normal circumstances,
the Acquiring Fund may invest up to 55% of its Managed Assets (as defined below) in securities that, at the time of investment, are rated below the three highest grades (Baa or BBB or lower) by at least one NRSRO or unrated securities judged to be
of comparable quality by the Fund’s sub-adviser. As a non-fundamental investment policy, under normal circumstances, each Target Fund will invest at least 80% of
its Managed Assets in investment grade quality municipal securities. A security is considered investment grade if, at the time of investment, it is rated within the four highest letter grades (Baa or BBB or better) by at least one NRSRO that rates
such security (even if rated lower by another), or if it is unrated but judged to be of comparable quality by the Fund’s investment adviser or sub-adviser. Under normal circumstances, each Target Fund may
invest up to 20% of its Managed Assets in municipal securities that, at the time of investment, are rated below investment grade (Ba or BB or lower) by all NRSROs or are unrated but judged to be of comparable quality by the Fund’s investment
adviser or sub-adviser. As a non-fundamental policy, under normal circumstances, each Fund will limit the amount of securities subject to the federal alternative minimum
tax (“AMT Bonds”) to no more than 20% of Managed Assets.
Georgia Municipal emphasizes investments in municipal securities
with long- or intermediate-term maturities. Georgia Municipal buys municipal securities with different maturities and intends to maintain an
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average portfolio maturity of 15 to 30 years, although this may be shortened depending on market conditions. As a result, the Fund’s portfolio may include long-term and intermediate-term
municipal securities. Ohio Municipal emphasizes investments in municipal securities with long- or intermediate-term maturities. Ohio Municipal generally invests in municipal securities with different maturities to maintain an average portfolio
maturity of 15 to 30 years, although this may be shortened depending on market conditions. The Acquiring Fund generally invests in municipal securities with long-term maturities in order to maintain an average effective maturity of 15 to 30 years,
including the effects of leverage, but the average effective maturity of obligations held by the Fund may be lengthened or shortened as a result of portfolio transactions effected by the Fund’s investment adviser and/or the Fund’s sub-adviser, depending on market conditions and on an assessment by the portfolio manager of which segments of the municipal securities markets offer the most favorable relative investment values and opportunities
for tax-exempt income and total return.
Each Fund defines “Assets” as the net assets of
the Fund plus the amount of any borrowings for investment purposes. Each Fund defines “Managed Assets” as the total assets of the Fund, minus the sum of its accrued liabilities (other than Fund liabilities incurred for the express purpose
of creating leverage). Total assets for this purpose shall include assets attributable to the Fund’s use of leverage (whether or not those assets are reflected in the Fund’s financial statements for purposes of generally accepted
accounting principles), and derivatives will be valued at their market value.
With respect to Georgia Municipal, under normal
circumstances:
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Georgia Municipal will invest at least 80% of its Managed Assets in municipal securities that at the time of
investment are investment grade quality. A security is considered investment grade quality if it is rated within the four highest letter grades (Baa or BBB or better) by at least one NRSRO that rates such security (even if it is rated lower by
another), or if it is unrated by any NRSRO but judged to be of comparable quality by the Fund’s sub-adviser. |
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Georgia Municipal may invest up to 20% of its Managed Assets in municipal securities that at the time of
investment are rated below investment grade or are unrated by any NRSRO but judged to be of comparable quality by the Fund’s sub-adviser. |
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No more than 10% of the Georgia Municipal’s Managed Assets may be invested in municipal securities rated
below B-/B3 or that are unrated but judged to be of comparable quality by the Fund’s sub-adviser. |
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The Fund may invest up to 20% of its Managed Assets in AMT Bonds. |
With respect to Ohio Municipal, under normal circumstances:
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Ohio Municipal will invest at least 80% of its Managed Assets in investment grade municipal securities that, at
the time of investment, are rated within the four highest grades (Baa or BBB or better) by at least one NRSRO or are unrated but judged to be of comparable quality by the Fund’s investment adviser. |
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Ohio Municipal may invest up to 20% of its Managed Assets in municipal securities that at the time of investment
are rated below investment grade (Ba or BB or lower) or are unrated but judged to be of comparable quality by the Fund’s investment adviser. |
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No more than 10% of Ohio Municipal’s Managed Assets may be invested in municipal securities rated below B3/B- or that are unrated but judged to be of comparable quality by the Fund’s investment adviser. |
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Ohio Municipal may not enter into a futures contract or related options or forward contracts if more than 30% of
its Managed Assets would be represented by futures contracts or more than 5% of its Managed Assets would be committed to initial margin deposits and premiums on futures contracts or related options. |
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Ohio Municipal may invest up to 20% of its Managed Assets in municipal securities that pay interest that is
taxable under the federal alternative minimum tax applicable to individuals. |
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Ohio Municipal may invest up to 15% of its Managed Assets in inverse floating rate securities.
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Ohio Municipal may invest up to 10% of its Managed Assets in securities of other open- or closed-end investment companies (including exchange-traded funds (“ETFs”)) that invest primarily in municipal securities of the types in which the Fund may invest directly. |
With respect to the Acquiring Fund, under normal circumstances:
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The Acquiring Fund may invest up to 20% of its Managed Assets in AMT Bonds. |
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The Acquiring Fund may invest up to 15% of its Managed Assets in inverse floating rate securities.
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The Acquiring Fund may not enter into a futures contract or related options or forward contracts if more than 30%
of the Fund’s Managed Assets would be represented by futures contracts or more than 5% of the Fund’s Managed Assets would be committed to initial margin deposits and premiums on futures contracts or related options. |
The foregoing policies apply only at the time of any new investment.
Each Fund is classified as “diversified” under the Investment Company Act of 1940, as amended (the “1940 Act”).
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PORTFOLIO COMPOSITION
The following information supplements the discussion of the Acquiring Fund’s investment objectives, principal investment strategies,
policies and techniques that appears in the Joint Proxy Statement/Prospectus. Additional information concerning principal investment strategies of the Acquiring Fund, and other investment strategies that may be used by the Acquiring Fund, is set
forth below.
References in this section to the Fund apply to the Acquiring Fund.
Municipal Securities
General. The Fund may invest in various municipal securities, including municipal bonds and notes, other
securities issued to finance and refinance public projects, and other related securities and derivative instruments creating exposure to municipal bonds, notes and securities that provide for the payment of interest income that is exempt from
regular federal income tax. Municipal securities are generally debt obligations issued by state and local governmental entities and may be issued by U.S. territories and possessions to finance or refinance public projects such as roads, schools, and
water supply systems. Municipal securities may also be issued on behalf of private entities or for private activities, such as housing, medical and educational facility construction, or for privately owned transportation, electric utility and
pollution control projects. Municipal securities may be issued on a long-term basis to provide permanent financing. The repayment of such debt may be secured generally by a pledge of the full faith and credit taxing power of the issuer, a limited or
special tax, or any other revenue source including project revenues, which may include tolls, fees and other user charges, lease payments and mortgage payments. Municipal securities may also be issued to finance projects on a short-term interim
basis, anticipating repayment with the proceeds of the later issuance of long-term debt. Municipal securities may be issued and purchased in the form of bonds, notes, leases or certificates of participation; structured as callable or non-callable; with payment forms including fixed coupon, variable rate, zero coupon, capital appreciation bonds, tender option bonds, and residual interest bonds or inverse floating rate securities; or acquired
through investments in pooled vehicles, partnerships or other investment companies. Inverse floating rate securities are securities that pay interest at rates that vary inversely with changes in prevailing short-term
tax-exempt interest rates and represent a leveraged investment in an underlying municipal security, which may increase the effective leverage of the Fund.
The Fund may invest in municipal bonds issued by U.S. territories and possessions (such as Puerto Rico or Guam) the income from which is
exempt from regular federal income tax. The yields on municipal securities depend on a variety of factors, including prevailing interest rates and the condition of the general money market and the municipal bond market, the size of a particular
offering, the maturity of the obligation and the rating of the issue. The market value of municipal securities will vary with changes in interest rate levels and as a result of changing evaluations of the ability of their issuers to meet interest
and principal payments.
Tobacco Settlement Bonds. The Fund may invest in tobacco settlement bonds, which
are municipal securities that are backed solely by expected revenues to be derived from lawsuits involving tobacco related deaths and illnesses which were settled between certain states and U.S. tobacco companies. Tobacco settlement bonds are
secured by an issuing state’s proportionate share in the Master Settlement Agreement (“MSA”). The MSA is an agreement, reached out of court in November 1998 between 46 states and nearly all of the U.S. tobacco manufacturers. The MSA
provides for annual payments in perpetuity by the manufacturers to the states in exchange for releasing all claims against the manufacturers and a pledge of no further litigation. Tobacco manufacturers pay into a master escrow trust based on their
market share, and each state receives a fixed percentage of the payment as set forth in the MSA. A number of states have securitized the future flow of those payments by selling bonds pursuant to indentures or through distinct governmental entities
created for such purpose. The principal and interest payments on the bonds are backed by the future revenue flow related to the MSA. Annual payments on the bonds, and thus risk to the Fund, are highly dependent on the receipt of future settlement
payments to the state or its governmental entity.
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The actual amount of future settlement payments is further dependent on many factors, including,
but not limited to, annual domestic cigarette shipments, reduced cigarette consumption, increased taxes on cigarettes, inflation, financial capability of tobacco companies, continuing litigation and the possibility of tobacco manufacturer
bankruptcy. The initial and annual payments made by the tobacco companies will be adjusted based on a number of factors, the most important of which is domestic cigarette consumption. If the volume of cigarettes shipped in the United States by
manufacturers participating in the settlement decreases significantly, payments due from them will also decrease. Demand for cigarettes in the United States could continue to decline due to price increases needed to recoup the cost of payments by
tobacco companies. Demand could also be affected by anti-smoking campaigns, tax increases, reduced advertising, and enforcement of laws prohibiting sales to minors; elimination of certain sales venues such as vending machines; and the spread of
local ordinances restricting smoking in public places. As a result, payments made by tobacco manufacturers could be negatively impacted if the decrease in tobacco consumption is significantly greater than the forecasted decline. A market share loss
by the MSA companies to non-MSA participating tobacco manufacturers would cause a downward adjustment in the payment amounts. A participating manufacturer filing for bankruptcy also could cause delays or
reductions in bond payments. The MSA itself has been subject to legal challenges and has, to date, withstood those challenges.
Municipal Leases and Certificates of Participation. The Fund also may purchase municipal securities that
represent lease obligations and certificates of participation in such leases. These carry special risks because the issuer of the securities may not be obligated to appropriate money annually to make payments under the lease. A municipal lease is an
obligation in the form of a lease or installment purchase that is issued by a state or local government to acquire equipment and facilities. Income from such obligations generally is exempt from state and local taxes in the state of issuance. Leases
and installment purchase or conditional sale contracts (which normally provide for title to the leased asset to pass eventually to the governmental issuer) have evolved as a means for governmental issuers to acquire property and equipment without
meeting the constitutional and statutory requirements for the issuance of debt. The debt issuance limitations are deemed to be inapplicable because of the inclusion in many leases or contracts of
“non-appropriation” clauses that relieve the governmental issuer of any obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the appropriate
legislative body on a yearly or other periodic basis. In addition, such leases or contracts may be subject to the temporary abatement of payments in the event the issuer is prevented from maintaining occupancy of the leased premises or utilizing the
leased equipment or facilities.
Although the obligations may be secured by the leased equipment or facilities, the disposition of the
property in the event of non-appropriation or foreclosure might prove difficult, time consuming and costly, and result in a delay in recovering, or the failure to recover fully, the Fund’s original
investment. To the extent that the Fund invests in unrated municipal leases or participates in such leases, the credit quality rating and risk of cancellation of such unrated leases will be monitored on an ongoing basis. In order to reduce this
risk, the Fund will purchase municipal securities representing lease obligations only where Nuveen Fund Advisors, LLC (“Nuveen Fund Advisors” or the “Adviser”) and/or Nuveen Asset Management, LLC (“Nuveen Asset
Management” or the “Sub-Adviser”) believes the issuer has a strong incentive to continue making appropriations until maturity.
A certificate of participation represents an undivided interest in an unmanaged pool of municipal leases, an installment purchase agreement or
other instruments. The certificates typically are issued by a municipal agency, a trust or other entity that has received an assignment of the payments to be made by the state or political subdivision under such leases or installment purchase
agreements. Such certificates provide the Fund with the right to a pro rata undivided interest in the underlying municipal securities. In addition, such participations generally provide the Fund with the right to demand payment, on not more
than seven days’ notice, of all or any part of the Fund’s participation interest in the underlying municipal securities, plus accrued interest.
Municipal Notes. Municipal securities in the form of notes generally are used to provide for short-term capital
needs, in anticipation of an issuer’s receipt of other revenues or financing, and typically have maturities of
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up to three years. Such instruments may include tax anticipation notes, revenue anticipation notes, bond anticipation notes, tax and revenue anticipation notes and construction loan notes. Tax
anticipation notes are issued to finance the working capital needs of governments. Generally, they are issued in anticipation of various tax revenues, such as income, sales, property, use and business taxes, and are payable from these specific
future taxes. Revenue anticipation notes are issued in expectation of receipt of other kinds of revenue, such as federal revenues available under federal revenue sharing programs. Bond anticipation notes are issued to provide interim financing until
long-term bond financing can be arranged. In most cases, the long-term bonds then provide the funds needed for repayment of the bond anticipation notes. Tax and revenue anticipation notes combine the funding sources of both tax anticipation notes
and revenue anticipation notes. Construction loan notes are sold to provide construction financing. Mortgage notes insured by the Federal Housing Authority secure these notes; however, the proceeds from the insurance may be less than the economic
equivalent of the payment of principal and interest on the mortgage note if there has been a default. The anticipated revenues from taxes, grants or bond financing generally secure the obligations of an issuer of municipal notes. However, an
investment in such instruments presents a risk that the anticipated revenues will not be received or that such revenues will be insufficient to satisfy the issuer’s payment obligations under the notes or that refinancing will be otherwise
unavailable.
Pre-Refunded Municipal Securities. The principal of,
and interest on, pre-refunded municipal securities are no longer paid from the original revenue source for the securities. Instead, the source of such payments is typically an escrow fund consisting of U.S.
government securities. The assets in the escrow fund are derived from the proceeds of refunding bonds issued by the same issuer as the pre-refunded municipal securities. Issuers of municipal securities use
this advance refunding technique to obtain more favorable terms with respect to securities that are not yet subject to call or redemption by the issuer. For example, advance refunding enables an issuer to refinance debt at lower market interest
rates, restructure debt to improve cash flow or eliminate restrictive covenants in the indenture or other governing instrument for the pre-refunded municipal securities. However, except for a change in the
revenue source from which principal and interest payments are made, the pre-refunded municipal securities remain outstanding on their original terms until they mature or are redeemed by the issuer.
Private Activity Bonds. Private activity bonds are issued by or on behalf of public authorities to obtain funds
to provide privately operated housing facilities, airport, mass transit or port facilities, sewage disposal, solid waste disposal or hazardous waste treatment or disposal facilities and certain local facilities for water supply, gas or electricity.
Other types of private activity bonds, the proceeds of which are used for the construction, equipment, repair or improvement of privately operated industrial or commercial facilities, may constitute municipal securities, although the current federal
tax laws place substantial limitations on the size of such issues.
Inverse Floating Rate Securities. The
Fund may invest in inverse floating rate securities. Inverse floating rate securities are securities whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index. Generally, inverse floating
rate securities represent beneficial interests in a special purpose trust, commonly referred to as a “tender option bond trust” (“TOB trust”), that holds municipal bonds. The TOB trust typically sells two classes of beneficial
interests or securities: floating rate securities (sometimes referred to as short-term floaters or tender option bonds, and inverse floating rate securities (sometimes referred to as inverse floaters). Both classes of beneficial interests are
represented by certificates or receipts. The floating rate securities have first priority on the cash flow from the municipal bonds held by the TOB trust. In this structure, the floating rate security holders have the option, at periodic short-term
intervals, to tender their securities to the trust for purchase and to receive the face value thereof plus accrued interest. The obligation of the trust to repurchase tendered securities is supported by a remarketing agent and by a liquidity
provider. As consideration for providing this support, the remarketing agent and the liquidity provider receive periodic fees. The holder of the short-term floater effectively holds a demand obligation that bears interest at the prevailing
short-term, tax-exempt rate. However, the trust is not obligated to purchase tendered short-term
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floaters in the event of certain defaults with respect to the underlying municipal bonds or a significant downgrade in the credit rating assigned to the bond issuer.
As the holder of an inverse floating rate investment, the Fund receives the residual cash flow from the TOB trust. Because the holder of the
short-term floater is generally assured liquidity at the face value of the security plus accrued interest, the holder of the inverse floater assumes the interest rate cash flow risk and the market value risk associated with the municipal bond
deposited into the TOB trust. The volatility of the interest cash flow and the residual market value will vary with the degree to which the trust is leveraged. This is expressed in the ratio of the total face value of the short-term floaters to the
value of the inverse floaters that are issued by the TOB trust, and can exceed three times for more “highly leveraged” trusts. All voting rights and decisions to be made with respect to any other rights relating to the municipal bonds held
in the TOB trust are passed through, pro rata, to the holders of the short-term floaters and to the Fund as the holder of the associated inverse floaters.
Because any increases in the interest rate on the short-term floaters issued by a TOB trust would reduce the residual interest paid on the
associated inverse floaters, and because fluctuations in the value of the municipal bond deposited in the TOB trust would affect only the value of the inverse floater and not the value of the short-term floater issued by the trust so long as the
value of the municipal bond held by the trust exceeded the face amount of short-term floaters outstanding, the value of inverse floaters is generally more volatile than that of an otherwise comparable municipal bond held on an unleveraged basis
outside a TOB trust. Inverse floaters generally will underperform the market of fixed-rate bonds in a rising interest rate environment (i.e., when bond values are falling), but will tend to outperform the market of fixed-rate bonds when interest
rates decline or remain relatively stable. Although volatile in value and return, inverse floaters typically offer the potential for yields higher than those available on fixed-rate bonds with comparable credit quality, coupon, call provisions and
maturity. Inverse floaters have varying degrees of liquidity or illiquidity based primarily upon the inverse floater holder’s ability to sell the underlying bonds deposited in the TOB trust at an attractive price.
The Fund may invest in inverse floating rate securities issued by TOB trusts in which the liquidity providers have recourse to the Fund
pursuant to a separate shortfall and forbearance agreement. Such an agreement would require the Fund to reimburse the liquidity provider, among other circumstances, upon termination of the TOB trust for the difference between the liquidation value
of the bonds held in the trust and the principal amount and accrued interest due to the holders of floating rate securities issued by the trust. The Fund will enter into such a recourse agreement (1) when the liquidity provider requires such a
recourse agreement because the level of leverage in the TOB trust exceeds the level that the liquidity provider is willing to support absent such an agreement; and/or (2) to seek to prevent the liquidity provider from collapsing the trust in
the event the municipal bond held in the trust has declined in value to the point where it may cease to exceed the face amount of outstanding short-term floaters. In an instance where the Fund has entered such a recourse agreement, the Fund may
suffer a loss that exceeds the amount of its original investment in the inverse floating rate securities; such loss could be as great as that original investment amount plus the face amount of the floating rate securities issued by the trust plus
accrued interest thereon.
The Fund may invest in both inverse floating rate securities and floating rate securities issued by the same
TOB trust.
Floating Rate Securities. The Fund may also invest in short-term floating rate securities, as
described above, issued by TOB trusts. Generally, the interest rate earned will be based upon the market rates for municipal securities with maturities or remarketing provisions that are comparable in duration to the periodic interval of the tender
option, which may vary from weekly, to monthly, to other periods of up to one year. Since the tender option feature provides a shorter term than the final maturity or first call date of the underlying municipal bond deposited in the trust, the Fund,
as the holder of the floating rate securities, relies upon the terms of the remarketing and liquidity agreements with the financial institution that acts as remarketing agent and./or liquidity provider as well as the credit strength of that
institution. As further assurance of liquidity, the terms of the TOB
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trust provide for a liquidation of the municipal bond deposited in the trust and the application of the proceeds to pay off the floating rate securities. The TOB trusts that are organized to
issue both short-term floating rate securities and inverse floaters generally include liquidation triggers to protect the investor in the floating rate securities.
Special Taxing Districts. Special taxing districts are organized to plan and finance infrastructure developments
to induce residential, commercial and industrial growth and redevelopment. The bond financing methods such as tax increment finance, tax assessment, special services district and Mello-Roos bonds generally are payable solely from taxes or other
revenues attributable to the specific projects financed by the bonds without recourse to the credit or taxing power of related or overlapping municipalities. They often are exposed to real estate development-related risks and can have more taxpayer
concentration risk than general tax-supported bonds, such as general obligation bonds. Further, the fees, special taxes, or tax allocations and other revenues that are established to secure such financings
generally are limited as to the rate or amount that may be levied or assessed and are not subject to increase pursuant to rate covenants or municipal or corporate guarantees. The bonds could default if development failed to progress as anticipated
or if larger taxpayers failed to pay the assessments, fees and taxes as provided in the financing plans of the districts.
London
Interbank Offered Rate (“LIBOR”) Replacement. LIBOR is an index rate that historically has been widely used in lending transactions and remains a common reference rate for setting the floating interest rate on
private loans. The use of the LIBOR will begin to be phased out in the near future, which may adversely affect the Fund’s investments whose value is tied to LIBOR. While the Secured Overnight Financing Rate (“SOFR”) has been
recommended as the replacement rate for LIBOR, and some product markets have adopted the use of SOFR, LIBOR may still be used as a reference rate until such time that private markets have fully transitioned to using SOFR or other alternative
reference rates recommended by applicable market regulators. The transition process away from LIBOR may involve, among other things, increased volatility or illiquidity in markets for instruments that currently rely on LIBOR. The potential effect of
a discontinuation of LIBOR on the Fund’s investments will vary depending on, among other things: (1) existing fallback provisions that provide a replacement reference rate if LIBOR is no longer available; (2) termination provisions in
individual contracts; and (3) how, and when industry participants develop and adopt new reference rates and fallbacks for both legacy and new products and instruments held by the Fund. Accordingly, it is difficult to predict the full impact of
the transition away from LIBOR until it is clearer how the Fund’s products and instruments will be impacted by this transition.
Hedging
Strategies and Other Uses of Derivatives
The Fund may use certain derivative instruments in pursuit of its investment objectives.
Such instruments include financial futures contracts, forward contracts, swap contracts (including interest rate swaps, credit default swaps and municipal market date rate locks (“MMD Rate Locks”)), options on financial futures, options on
swap contracts or other derivative instruments. The credit default swaps in which the Fund may invest include index credit default swaps (“CDX”) and single-name credit default swaps (“CDS”). A CDX is a portfolio of credit default
swaps with similar characteristics, such as credit default swaps on high-yield bonds. Certain CDX indices are subject to mandatory central clearing and exchange trading, which may reduce counterparty credit risk and increase liquidity compared to
other credit default swaps or CDX transactions. Unlike other types of credit default swaps, single-name CDS do not have the benefit of diversification across many issuers. Interest rate swaps involve the exchange by the Fund with a counterparty of
their respective commitments to pay or receive interest, such as an exchange of fixed-rate payments for floating rate payments. The Fund will usually enter into interest rate swaps on a net basis; that is, the two payment streams will be netted out
in a cash settlement on the payment date or dates specified in the instrument, with the Fund receiving or paying, as the case may be, only the net amount of the two payments.
The Fund may periodically engage in hedging transactions, and otherwise use various types of derivative instruments, described below, to
reduce risk, to effectively gain particular market exposures, to seek to enhance
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returns, and to reduce transaction costs, among other reasons. The Fund will value derivative instruments at market/fair value for purposes of calculating compliance with the Fund’s 80%
investment policy in investments the income from which is exempt from regular federal income tax.
“Hedging” is a term used for
various methods of seeking to preserve portfolio capital value by offsetting price changes in one investment through making another investment whose price should tend to move in the opposite direction.
A “derivative” is a financial contract whose value is based on (or “derived” from) a traditional security (such as a stock
or a bond), an asset (such as a commodity like gold), or a market index (such as the Bloomberg Municipal Bond Index). Some forms of derivatives may trade on exchanges, while non-standardized derivatives, which
tend to be more specialized and complex, trade in “over-the-counter” or a
one-on-one basis. It may be desirable and possible in various market environments to partially hedge the portfolio against fluctuations in market value due to market
interest rate or credit quality fluctuations, or instead to gain a desired investment exposure, by entering into various types of derivative transactions, including financial futures and index futures as well as related put and call options on such
instruments, structured notes, or interest rate swaps on taxable or tax-exempt securities or indexes (which may be “forward-starting”), credit default swaps, and options on interest rate swaps, among
others.
These transactions present certain risks. In particular, the imperfect correlation between price movements in the futures
contract and price movements in the securities being hedged creates the possibility that losses on the hedge by the Fund may be greater than gains in the value of the securities in the Fund’s portfolio. In addition, futures and options markets
may not be liquid in all circumstances. As a result, in volatile markets, the Fund may not be able to close out the transaction without incurring losses substantially greater than the initial deposit. Finally, the potential deposit requirements in
futures contracts create an ongoing greater potential financial risk than do options transactions, where the exposure is limited to the cost of the initial premium. Losses due to hedging transactions will reduce yield. Net gains, if any, from
hedging and other portfolio transactions will be distributed as taxable distributions to shareholders. Successful implementation of most hedging strategies will generate taxable income.
The Fund will invest in these instruments only in markets believed by the Adviser and/or the
Sub-Adviser to be active and sufficiently liquid.
There is no assurance that these derivative
strategies will be available at any time or that the Adviser and/or the Sub-Adviser will determine to use them for the Fund or, if used, that the strategies will be successful.
Swap Transactions. The Fund may enter into total return, interest rate and credit default swap agreements and
interest rate caps, floors and collars. The Fund may also enter into options on the foregoing types of swap agreements (“swap options”).
The Fund may enter into swap transactions for any purpose consistent with its investment objectives and strategies, such as for the purpose of
attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, as a duration management technique, to attempt to reduce risk arising
from the ownership of a particular instrument, or to gain exposure to certain sectors or markets in the most economical way possible.
Swap agreements are two party contracts entered into primarily by institutional investors for a specified period of time. In a standard swap
transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on a particular predetermined asset, reference rate or index. The gross returns to be exchanged or swapped between the parties are
generally calculated with respect to a notional amount, e.g., the return on or increase in value of a particular dollar amount invested at a particular interest rate or in a basket of securities representing a particular index. The notional amount
of the swap agreement generally is only used as a basis upon which to calculate the obligations that the parties to the swap agreement have agreed to exchange.
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Some, but not all, swaps may be cleared, in which case a central clearing counterparty stands
between each buyer and seller and effectively guarantees performance of each contract, to the extent of its available resources for such purpose. Uncleared swaps have no such protection; each party bears the risk that its direct counterparty will
default.
Interest Rate Swaps, Caps, Collars and Floors. Interest rate swaps are bilateral contracts in
which each party agrees to make periodic payments to the other party based on different referenced interest rates (e.g., a fixed rate and a floating rate) applied to a specified notional amount. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate floor. The purchase of an interest rate cap entitles
the purchaser, to the extent that a specified index rises above a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate cap. Interest rate collars involve selling a cap
and purchasing a floor or vice versa to protect the Fund against interest rate movements exceeding given minimum or maximum levels.
Depending on the state of interest rates in general, the Fund’s use of interest rate swaps could enhance or harm the overall performance
of common shares. To the extent interest rates decline, the value of the interest rate swap could decline, and could result in a decline in the net asset value of common shares. In addition, if the counterparty to an interest rate swap defaults, the
Fund would not be able to use the anticipated net receipts under the swap to offset the interest payments on borrowings or the dividend payments on any outstanding preferred shares. Depending on whether the Fund would be entitled to receive net
payments from the counterparty on the swap, which in turn would depend on the general state of short-term interest rates at that point in time, such a default could negatively impact the performance of common shares. In addition, at the time an
interest rate swap transaction reaches its scheduled termination date, there is a risk that the Fund would not be able to obtain a replacement transaction or that the terms of the replacement would not be as favorable as on the expiring transaction.
If this occurs, it could have a negative impact on the performance of common shares. The Fund could be required to prepay the principal amount of any borrowings. Such redemption or prepayment would likely result in the Fund seeking to terminate
early all or a portion of any swap transaction. Early termination of a swap could result in a termination payment by or to the Fund.
Total Return Swaps. In a total return swap, one party agrees to pay the other the “total return” of a
defined underlying asset during a specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets. A total return swap may be applied to any underlying asset but is most
commonly used with equity indices, single stocks, bonds and defined baskets of loans and mortgages. The Fund might enter into a total return swap involving an underlying index or basket of securities to create exposure to a potentially
widely-diversified range of securities in a single trade. An index total return swap can be used by the Adviser and/or the Sub-Adviser to assume risk, without the complications of buying the component
securities from what may not always be the most liquid of markets.
Credit Default Swaps. A credit
default swap is a bilateral contract that enables an investor to buy or sell protection against a defined-issuer credit event. The Fund may enter into credit default swap agreements either as a buyer or a seller. The Fund may buy protection to
attempt to mitigate the risk of default or credit quality deterioration in an individual security or a segment of the debt securities market to which it has exposure, or to take a “short” position in individual bonds or market segments
which it does not own. The Fund may sell protection in an attempt to gain exposure to the credit quality characteristics of particular bonds or market segments without investing directly in those bonds or market segments.
As the buyer of protection in a credit default swap, the Fund would pay a premium (by means of an upfront payment or a periodic stream of
payments over the term of the agreement) in return for the right to deliver a referenced bond or group of bonds to the protection seller and receive the full notional or par value (or other agreed upon value) upon a default (or similar event) by the
issuer(s) of the underlying referenced obligation(s). If no default occurs, the protection seller would keep the stream of payments and would have no
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further obligation to the Fund. Thus, the cost to the Fund would be the premium paid with respect to the agreement. If a credit event occurs, however, the Fund may elect to receive the full
notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity that may have little or no value. The Fund bears the risk that the protection seller may fail to satisfy its payment obligations.
If the Fund is a seller of protection in a credit default swap and no credit event occurs, the Fund would generally receive an up-front payment or a periodic stream of payments over the term of the swap. If a credit event occurs, however, generally the Fund would have to pay the buyer the full notional value of the swap in exchange for an
equal face amount of deliverable obligations of the reference entity that may have little or no value. As the protection seller, the Fund effectively adds leverage to its portfolio because, in addition to being subject to investment exposure on its
total net assets, the Fund is subject to investment exposure on the notional amount of the swap. Thus, the Fund bears the same risk as it would by buying the reference obligation(s) directly, plus the additional risks related to obtaining investment
exposure through a derivative instrument discussed below under “—Risks Associated with Swap Transactions.”
MMD Rate
Locks. An MMD Rate Lock permits the Fund to lock in a specified municipal interest rate for a portion of its portfolio to preserve a return on a particular investment or a portion of its portfolio as a duration management
technique or to protect against any increase in the price of securities to be purchased at a later date. By using an MMD Rate Lock, the Fund can create a synthetic long or short position, allowing the Fund to select what the manager believes is an
attractive part of the yield curve. The Fund will ordinarily use these transactions as a hedge or for duration or risk management although it is permitted to enter into them to enhance income or gain or to increase the Fund’s yield, for
example, during periods of steep interest rate yield curves (i.e., wide differences between short term and long term interest rates).
Swap Options. A swap option is a contract that gives a counterparty the right (but not the obligation), in
return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement at some designated future time on specified terms. A cash-settled option on a swap gives the purchaser
the right, in return for the premium paid, to receive an amount of cash equal to the value of the underlying swap as of the exercise date. The Fund may write (sell) and purchase put and call swap options. Depending on the terms of the particular
option agreement, the Fund generally would incur a greater degree of risk when it writes a swap option than when it purchases a swap option. When the Fund purchases a swap option, it risks losing only the amount of the premium it has paid should it
decide to let the option expire unexercised. However, when the Fund writes a swap option, upon exercise of the option the Fund would become obligated according to the terms of the underlying agreement.
Risks Associated with Swap Transactions. The use of swap transactions is a highly specialized activity which
involves strategies and risks different from those associated with ordinary portfolio security transactions.
Futures and Options on
Futures. A futures contract is an agreement between two parties to buy and sell a security, index or interest rate (each a “financial instrument”) for a set price on a future date. Certain futures contracts, such
as futures contracts relating to individual securities, call for making or taking delivery of the underlying financial instrument. However, these contracts generally are closed out before delivery by entering into an offsetting purchase or sale of a
matching futures contract (same exchange, underlying financial instrument, and delivery month). Other futures contracts, such as futures contracts on interest rates and indices, do not call for making or taking delivery of the underlying financial
instrument, but rather are agreements pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the financial instrument at the close of the last trading day of the contract and
the price at which the contract was originally written. These contracts also may be settled by entering into an offsetting futures contract.
Unlike when the Fund purchases or sells a security, no price is paid or received by the Fund upon the purchase or sale of a futures contract.
Initially, the Fund will be required to deposit with the futures broker,
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known as a futures commission merchant (“FCM”), an amount of cash or securities equal to a varying specified percentage of the contract amount. This amount is known as initial margin.
The margin deposit is intended to ensure completion of the contract. Minimum initial margin requirements are established by the futures exchanges and may be revised. In addition, FCMs may establish margin deposit requirements that are higher than
the exchange minimums. Cash held in the margin account generally is not income producing. However, coupon bearing securities, such as Treasury securities, held in margin accounts generally will earn income and may generate taxable income for federal
income tax purposes that would be includable in the taxable income of the Fund and, to the extent distributed, would be taxable to shareholders. Subsequent payments to and from the FCM, called variation margin, will be made on a daily basis as the
price of the underlying financial instrument fluctuates, making the futures contract more or less valuable, a process known as marking the contract to market. Changes in variation margin are recorded by the Fund as unrealized gains or losses. At any
time prior to expiration of the futures contract, the Fund may elect to close the position by taking an opposite position that will operate to terminate its position in the futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund, and the Fund realizes a gain or loss. In the event of the bankruptcy or insolvency of an FCM that holds margin on behalf of the Fund, the Fund may be entitled to the return of margin
owed to it only in proportion to the amount received by the FCM’s other customers, potentially resulting in losses to the Fund. Futures transactions also involve brokerage costs.
A futures option gives the purchaser of such option the right, in return for the premium paid, to assume a long position (call) or short
position (put) in a futures contract at a specified exercise price at any time during the period of the option. Upon exercise of a call option, the purchaser acquires a long position in the futures contract and the writer is assigned the opposite
short position. Upon the exercise of a put option, the opposite is true.
Bond Futures and Forward
Contracts. Bond futures contracts are agreements in which one party agrees to deliver to the other an amount of cash equal to a specific dollar amount times the difference between the value of a specific bond at the close
of the last trading day of the contract and the price at which the agreement is made. No physical delivery of securities is made. Forward contracts are agreements to purchase or sell a specified security or currency at a specified future date (or
within a specified time period) and price set at the time of the contract. Forward contracts are usually entered into with banks, foreign exchange dealers or broker-dealers and are usually for less than one year, but may be renewed. Forward
contracts are generally purchased or sold in over-the-counter (“OTC”) transactions.
Parties to a futures contract must make “initial margin” deposits to secure performance of the contract. There are also requirements
to make “variation margin” deposits from time to time as the value of the futures contract fluctuates.
Options on Currency
Futures Contracts. Currency futures contracts are standardized agreements between two parties to buy and sell a specific amount of a currency at a set price on a future date. While similar to currency forward contracts,
currency futures contracts are traded on commodities exchanges and are standardized as to contract size and delivery date. An option on a currency futures contract gives the holder of the option the right to buy or sell a position in a currency
futures contract, at a set price and on or before a specified expiration date. Trading options on international (non-U.S.) currency futures contracts is relatively new. The ability to establish and close out
positions on such options is subject to the maintenance of a liquid secondary market.
Index Futures. A tax-exempt bond index which assigns relative values to the tax-exempt bonds included in the index is traded on the Chicago Board of Trade. The index fluctuates with changes in
the market values of all tax-exempt bonds included rather than a single bond. An index future is a bilateral agreement pursuant to which two parties agree to take or make delivery of an amount of cash –
rather than any security – equal to a specified dollar amount times the difference between the index value at the close of the last trading day of the contract and the price at which the index future was originally written. Thus, an index
future is similar to traditional financial futures except that settlement is made in cash.
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Index Options. The Fund may also purchase put or call options on
U.S. government or tax-exempt bond index futures and enter into closing transactions with respect to such options to terminate an existing position. Options on index futures are similar to options on debt
instruments except that an option on an index future gives the purchaser the right, in return for the premium paid, to assume a position in an index contract rather than an underlying security at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance of the writer’s futures margin account
which represents the amount by which the market price of the index futures contract, at exercise, is less than the exercise price of the option on the index future.
Bond index futures and options transactions would be subject to risks similar to transactions in financial futures and options thereon as
described above.
Limitations on the Use of Futures, Options on Futures and Swaps. The Adviser has claimed,
with respect to the Fund, the exclusion from the definition of “commodity pool operator” under the Commodity Exchange Act (“CEA”) provided by CFTC Regulation 4.5 and is therefore not currently subject to registration or
regulation as such under the CEA with respect to the Fund. In addition, the Sub-Adviser has claimed the exemption from registration as a commodity trading advisor provided by CFTC Regulation 4.14(a)(8) and is
therefore not currently subject to registration or regulation as such under the CEA with respect to the Fund. In February 2012, the CFTC announced substantial amendments to certain exemptions, and to the conditions for reliance on those exemptions,
from registration as a commodity pool operator. Under amendments to the exemption provided under CFTC Regulation 4.5, if the Fund uses futures, options on futures, or swaps other than for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums on these positions (after taking into account unrealized profits and unrealized losses on any such positions and excluding the amount by which options that are “in-the-money” at the time of purchase are “in-the-money”) may not exceed 5% of the Fund’s net asset
value, or alternatively, the aggregate net notional value of those positions may not exceed 100% of the Fund’s net asset value (after taking into account unrealized profits and unrealized losses on any such positions). The CFTC amendments to
Regulation 4.5 took effect on December 31, 2012, and the Fund intends to comply with amended Regulation 4.5’s requirements such that the Adviser will not be required to register as a commodity pool operator with the CFTC with respect to
the Fund. The Fund reserves the right to employ futures, options on futures and swaps to the extent allowed by CFTC regulations in effect from time to time and in accordance with the Fund’s policies. However, the requirements for qualification
as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), may limit the extent to which the Fund may employ futures, options on futures or swaps.
Illiquid Securities
The Fund may invest
in illiquid securities (i.e., securities that are not readily marketable), including, but not limited to, restricted securities (securities the disposition of which is restricted under the federal securities laws), securities that may only be resold
pursuant to Rule 144A under the Securities Act of 1933, as amended, that are deemed to be illiquid and certain repurchase agreements with maturities in excess of seven days.
Other Investment Companies
The Fund may
invest in securities of other open- or closed-end investment companies (including ETFs) that invest primarily in securities of the types in which the Fund may invest directly. As a shareholder in another
investment company, the Fund will bear its ratable share of that investment company’s expenses and would remain subject to payment of its own advisory and administrative fees with respect to assets so invested. Common shareholders would
therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies.
The Adviser and/or the Sub-Adviser will take expenses into account when evaluating the investment merits of an investment in an investment company relative to available investments. In addition, the securities of
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other investment companies may also be leveraged and will therefore be subject to leverage risk. The net asset value and market value of leveraged shares will be more volatile, and the yield to
common shareholders will tend to fluctuate more than the yield generated by unleveraged shares.
Exchange-Traded
Funds. The Fund may invest in ETFs. ETFs are a type of index fund or actively-managed fund bought and sold on a securities exchange. An ETF trades like common stock and represents a portfolio of securities designed to
track a particular market index. The Fund could purchase an ETF to gain exposure to all or a portion of the U.S. market, a foreign market, a region, a commodity, a currency, or to any other index that an ETF tracks. The risks of owning an ETF
generally reflect the risks of owning the underlying securities they are designed to track, although lack of liquidity in an ETF could result in it being more volatile and ETFs have management fees that increase their costs. An ETF may fail to
accurately track the returns of the market segment or index that it is designed to track, and the price of an ETF’s shares may fluctuate. In addition, because they, unlike traditional mutual funds, are traded on an exchange, ETFs are subject to
the following risks: (i) the performance of the ETF may not replicate the performance of the underlying index that it is designed to track; (ii) the market price of the ETF’s shares may trade at a premium or discount to the ETF’s
net asset value; (iii) an active trading market for an ETF may not develop or be maintained; and (iv) there is no assurance that the requirements of the exchange necessary to maintain the listing of the ETF will continue to be met or
remain unchanged. Trading in an ETF may be halted if the trading in one or more of the ETF’s underlying securities is halted, which could result in the ETF being more volatile. In the event substantial market or other disruptions affecting ETFs
should occur in the future, the liquidity and value of the Fund’s shares could also be substantially and adversely affected.
Exchange-Traded Notes. The Fund may invest in exchange-traded notes (“ETNs”). ETNs are a type of
senior, unsecured, unsubordinated debt security issued by financial institutions that combines both aspects of bonds and ETFs. An ETN’s returns are based on the performance of a market index minus fees and expenses. Similar to ETFs, ETNs are
listed on an exchange and traded in the secondary market. However, unlike an ETF, an ETN can be held until the ETN’s maturity, at which time the issuer will pay a return linked to the performance of the market index to which the ETN is linked
minus certain fees.
Unlike regular bonds, ETNs do not make periodic interest payments and principal is not protected. ETNs are subject to
credit risk and the value of an ETN may drop due to a downgrade in the issuer’s credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may also be influenced by time to maturity, level of
supply and demand for the ETN, volatility and lack of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer’s credit rating, and economic, legal, political, or geographic events that affect the
referenced underlying asset. When the Fund invests in ETNs it will bear its proportionate share of any fees and expenses borne by the ETN. The Fund’s decision to sell its ETN holdings may be limited by the availability of a secondary market. In
addition, although an ETN may be listed on an exchange, the issuer may not be required to maintain the listing and there can be no assurance that a secondary market will exist for an ETN. ETNs are also subject to tax risk. No assurance can be given
that the Internal Revenue Service (“IRS”) will accept, or a court will uphold, how the Fund characterizes and treats ETNs for federal income tax purposes.
Further, the IRS and Congress have considered proposals that would change the timing and character of income and gains from ETNs.
An ETN that is tied to a specific market benchmark or strategy may not be able to replicate and maintain exactly the composition and relative
weighting of securities, commodities or other components in the applicable market benchmark or strategy. Some ETNs that use leverage can, at times, be relatively illiquid and, thus, they may be difficult to purchase or sell at a fair price.
Leveraged ETNs are subject to the same risk as other instruments that use leverage in any form.
The market value of ETN shares may differ
from their market benchmark or strategy. This difference in price may be due to the fact that the supply and demand in the market for ETN shares at any point in time is not
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always identical to the supply and demand in the market for the securities, commodities or other components underlying the market benchmark or strategy that the ETN seeks to track. As a result,
there may be times when an ETN share trades at a premium or discount to its market benchmark or strategy.
Portfolio Trading and Turnover Rate
Portfolio trading may be undertaken to accomplish the investment objectives of the Fund in relation to actual and anticipated movements in
interest rates. In addition, a security may be sold and another of comparable quality purchased at approximately the same time to take advantage of what Nuveen Asset Management believes to be a temporary price disparity between the two securities.
Temporary price disparities between two comparable securities may result from supply and demand imbalances where, for example, a temporary oversupply of certain bonds may cause a temporarily low price for such bonds, as compared with other bonds of
like quality and characteristics. The Fund may also engage to a limited extent in short-term trading consistent with its investment objectives. Securities may be sold in anticipation of a market decline (a rise in interest rates) or purchased in
anticipation of a market rise (a decline in interest rates) and later sold, but the Fund will not engage in trading solely to recognize gain.
Subject to the foregoing, the Fund will attempt to achieve its investment objectives by prudent selection of municipal securities with a view
to holding them for investment. While there can be no assurance thereof, the Fund anticipates that its annual portfolio turnover rate will generally not exceed 25% under normal circumstances. However, there are no limits on the Fund’s rate of
portfolio turnover, and investments may be sold without regard to length of time held when, in Nuveen Asset Management’s opinion, investment considerations warrant such action. A higher portfolio turnover rate would result in correspondingly
greater brokerage commissions and other transactional expenses that are borne by the Fund. Although these commissions and expenses are not reflected in the Fund’s total annual expenses, they will be reflected in the Fund’s total return. In
addition, high portfolio turnover may result in the realization of net short-term capital gains by the Fund which, when distributed to shareholders, will be taxable as ordinary income for federal income tax purposes or may result in greater amounts
of net capital gain distributions. See “Federal Income Tax Matters.”
Cash Equivalents and Short-Term Investments
The Fund may invest in cash, cash equivalents, and a variety of short-term instruments in such proportions as warranted by prevailing market
conditions and the Fund’s principal investment strategies.
The Fund may temporarily invest without limit in such instruments for
liquidity purposes, or in an attempt to respond to adverse market, economic, political or other conditions. During such periods, the Fund may not be able to achieve its investment objectives. In addition, such instruments may generate taxable income
for federal income tax purposes, which would be includable in the taxable income of the Fund and, to the extent distributed, would be taxable to shareholders.
The Fund will only invest in short-term instruments that are U.S. dollar-denominated.
Short-term instruments include obligations of the U.S. government or its agencies or instrumentalities (see “U.S. Government
Securities”) and, without limitation, the following:
(1) Certificates of
Deposit. The Fund may invest in certificates of deposit issued against funds deposited in a bank or savings and loan association. Such certificates are for a definite period of time, earn a specified rate of return, and
are normally negotiable. If such certificates of deposit are nonnegotiable, they will be considered illiquid securities and be subject to the Fund’s 15% restriction on investments in illiquid securities. Pursuant to the certificate of deposit,
the issuer agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Under current FDIC regulations, the maximum insurance payable as to any one certificate of deposit is $250,000; therefore,
certificates of deposit purchased by the Fund may not be fully insured.
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(2) Repurchase
Agreements. The Fund may invest in repurchase agreements which involve purchases of debt securities. In such an action, at the time the Fund purchases the security, it simultaneously agrees to resell and redeliver the
security to the seller, who also simultaneously agrees to buy back the security at a fixed price and time. This assures a predetermined yield for the Fund during its holding period since the resale price is always greater than the purchase price and
reflects an agreed-upon market rate. Such actions afford an opportunity for the Fund to invest temporarily available cash. The Fund may enter into repurchase agreements only with respect to certain obligations. For the Fund, collateral may consist
of any debt security which is an eligible investment for the Fund entering into the repurchase agreement. The Fund’s custodian will hold the securities underlying any repurchase agreement, or the securities will be part of the Federal
Reserve/Treasury Book Entry System. The market value of the collateral underlying the repurchase agreement will be determined on each business day. If at any time the market value of the collateral falls below the repurchase price under the
repurchase agreement (including any accrued interest), the appropriate Fund will promptly receive additional collateral (so the total collateral is an amount at least equal to the repurchase price plus accrued interest). Repurchase agreements may be
considered loans to the seller, collateralized by the underlying securities. The risk to the Fund is limited to the ability of the seller to pay the agreed-upon sum on the repurchase date; in the event of default, the repurchase agreement provides
that the affected Fund is entitled to sell the underlying collateral.
If the value of the collateral declines after the agreement is
entered into, however, and if the seller defaults under a repurchase agreement when the value of the underlying collateral is less than the repurchase price, the Fund could incur a loss of both principal and interest. The portfolio managers monitor
the value of the collateral at the time the action is entered into and at all times during the term of the repurchase agreement. The portfolio managers do so in an effort to determine that the value of the collateral always equals or exceeds the
agreed-upon repurchase price to be paid to the Fund. If the seller were to be subject to a federal bankruptcy proceeding, the ability of the Fund to liquidate the collateral could be delayed or impaired because of certain provisions of the
bankruptcy laws.
(3) Commercial Paper. The Fund may invest
in commercial paper, which are short-term unsecured promissory notes issued by corporations to finance their current operations. Issues of commercial paper normally have maturities of less than nine months and fixed rates of return. The Fund may
purchase commercial paper consisting of issues rated at the time of purchase within the two highest rating categories by S&P, Fitch or Moody’s, or which have been assigned an equivalent rating by another NRSRO. The Fund also may invest in
commercial paper that is not rated but that is determined by the Adviser and/or the Sub-Adviser to be of comparable quality to instruments that are so rated.
U.S. Government Securities
U.S.
government securities include: (1) U.S. Treasury obligations, which differ in their interest rates, maturities and times of issuance: U.S. Treasury bills (maturities of one year or less), U.S. Treasury notes (maturities of one year to ten
years) and U.S. Treasury bonds (generally maturities of greater than ten years); and (2) obligations issued or guaranteed by U.S. government agencies and instrumentalities that are supported by any of the following: (i) the full faith and
credit of the U.S. Treasury, (ii) the right of the issuer to borrow an amount limited to a specific line of credit from the U.S. Treasury, (iii) discretionary authority of the U.S. government to purchase certain obligations of the U.S.
government agency or instrumentality or (iv) the credit of the agency or instrumentality. The Fund also may invest in any other security or agreement collateralized or otherwise secured by U.S. government securities. Agencies and
instrumentalities of the U.S. government include but are not limited to: Federal Land Banks, Federal Financing Banks, Banks for Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks, Federal Home Loan Banks, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association, the Student Loan Marketing Association, the United States Postal Service, the Small Business Administration, the Tennessee Valley
Authority and any other enterprise established or sponsored by the U.S. government. Because the U.S. government generally is not obligated to provide support to its instrumentalities, the Fund will invest in
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obligations issued by these instrumentalities only if the Adviser determines that the credit risk with respect to such obligations is minimal.
Short-Term Tax-Exempt Fixed-Income Securities
Short-term tax-exempt fixed-income securities are securities that are exempt from regular federal
income tax and mature within three years or less from the date of issuance. Short-term tax-exempt fixed-income securities are defined to include, without limitation, the following:
(1) Bond Anticipation Notes (“BANs”) are usually general obligations of state and
local governmental issuers which are sold to obtain interim financing for projects that will eventually be funded through the sale of long-term debt obligations or bonds. The ability of an issuer to meet its obligations on its BANs is primarily
dependent on the issuer’s access to the long-term municipal bond market and the likelihood that the proceeds of such bond sales will be used to pay the principal and interest on the BANs.
(2) Tax Anticipation Notes (“TANs”) are issued by state and local governments to
finance the current operations of such governments. Repayment is generally to be derived from specific future tax revenues. TANs are usually general obligations of the issuer. A weakness in an issuer’s capacity to raise taxes due to, among
other things, a decline in its tax base or a rise in delinquencies could adversely affect the issuer’s ability to meet its obligations on outstanding TANs.
(3) Revenue Anticipation Notes (“RANs”) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will be used to repay the notes. In general, they also constitute general obligations of the issuer. A decline in the receipt of projected revenues, such as anticipated
revenues from another level of government, could adversely affect an issuer’s ability to meet its obligations on outstanding RANs. In addition, the possibility that the revenues would, when received, be used to meet other obligations could
affect the ability of the issuer to pay the principal and interest on RANs.
(4) Construction loan notes are issued to provide construction financing for specific projects.
Frequently, these notes are redeemed with funds obtained from the Federal Housing Administration.
(5) Bank notes are notes issued by local government bodies and agencies, such as those
described above to commercial banks as evidence of borrowings. The purposes for which the notes are issued are varied, but they are frequently issued to meet short-term working capital or capital project needs. These notes may have risks similar to
the risks associated with TANs and RANs.
(6) Tax-exempt commercial paper (“Municipal
Paper”) represents very short-term unsecured, negotiable promissory notes, issued by states, municipalities and their agencies. Payment of principal and interest on issues of municipal paper may be made from various sources to the extent the
funds are available therefrom. Maturities of Municipal Paper generally will be shorter than the maturities of TANs, BANs or RANs. There is a limited secondary market for issues of Municipal Paper.
Certain municipal securities may carry variable or floating rates of interest whereby the rate of interest is not fixed but varies with
changes in specified market rates or indices, such as a bank prime rate or a tax-exempt money market index.
While the various types of notes described above as a group represent the major portion of the short-term
tax-exempt note market, other types of notes are available in the marketplace, and the Fund may invest in such other types of notes to the extent permitted under its investment objectives, policies and
limitations. Such notes may be issued for different purposes and may be secured differently from those mentioned above.
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When-Issued and Delayed Delivery Transactions
The Fund may buy and sell securities on a when-issued or delayed delivery basis, making payment or taking delivery at a later date, normally
within 15 to 45 days of the trade date. On such transactions, the payment obligation and the interest rate are fixed at the time the buyer enters into the commitment. Income generated by any liquid assets held to cover commitments to purchase
securities on a when-issued and delayed-delivery basis which provide taxable income for federal income tax purposes is includable in the taxable income of the Fund and, to the extent distributed, will be taxable to shareholders. The commitment to
purchase securities on a when-issued, delayed delivery or forward basis may involve an element of risk because no interest accrues on the bonds prior to settlement and, at the time of delivery, the market value may be less than cost.
Structured Notes
The Fund may utilize
structured notes and similar instruments for investment purposes and also for hedging purposes. Structured notes are privately negotiated debt obligations where the principal and/or interest is determined by reference to the performance of a
benchmark asset, market or interest rate (an “embedded index”), such as selected securities, an index of securities or specified interest rates, or the differential performance of two assets or markets. The terms of such structured
instruments normally provide that their principal and/or interest payments are to be adjusted upwards or downwards (but not ordinarily below zero) to reflect changes in the embedded index while the structured instruments are outstanding. As a
result, the interest and/or principal payments that may be made on a structured product may vary widely, depending upon a variety of factors, including the volatility of the embedded index and the effect of changes in the embedded index on principal
and/or interest payments. The rate of return on structured notes may be determined by applying a multiplier to the performance or differential performance of the referenced index or indices or other assets. Application of a multiplier involves
leverage that will serve to magnify the potential for gain and the risk of loss.
Zero Coupon Bonds and Other Original Issue Discount Instruments
A zero coupon bond is a bond that typically does not pay interest either for the entire life of the obligation or for an initial
period after the issuance of the obligation. When held to its maturity, the holder receives the par value of the zero coupon bond, which generates a return equal to the difference between the purchase price and its maturity value. A zero coupon bond
is normally issued and traded at a deep discount from face value. This original issue discount (“OID”) approximates the total amount of interest the security will accrue and compound prior to its maturity and reflects the payment deferral
and credit risk associated with the instrument. Because zero coupon securities and other OID instruments do not pay cash interest at regular intervals, the instruments’ ongoing accruals require ongoing judgments concerning the collectability of
deferred payments and the value of any associated collateral. As a result, these securities may be subject to greater value fluctuations and less liquidity in the event of adverse market conditions than comparably rated securities that pay cash on a
current basis. Because zero coupon bonds, and OID instruments generally, allow an issuer to avoid or delay the need to generate cash to meet current interest payments, they may involve greater payment deferral and credit risk than coupon loans and
bonds that pay interest currently or in cash. The Fund generally will be required to distribute dividends to shareholders representing the income of these instruments as it accrues, even though the Fund will not receive all of the income on a
current basis or in cash. Thus, the Fund may have to sell other investments, including when it may not be advisable to do so, and use the cash proceeds to make income distributions to its shareholders. For accounting purposes, these cash
distributions to shareholders will not be treated as a return of capital.
Further, the Adviser collects management fees on the value of a
zero coupon bond or OID instrument attributable to the ongoing noncash accrual of interest over the life of the bond or other instrument. As a result, the Adviser receives nonrefundable cash payments based on such noncash accruals while investors
incur the risk that such noncash accruals ultimately may not be realized.
S-18
INVESTMENT RESTRICTIONS
In addition to (1) each Fund’s investment objectives; (2) Georgia Municipal’s policy to invest at least 80% of its Assets
in municipal securities and other related investments the income from which is exempt from regular federal and Georgia income taxes; (3) Ohio Municipal’s policy to invest at least 80% of its Assets, in municipal securities and other
related investments the income from which is exempt from regular federal and Ohio income taxes and (4) the Acquiring Fund’s policy to invest, under normal circumstances, at least 80% of its Assets in municipal securities and other related
investments, the income from which is exempt from regular federal income taxes, the following are fundamental policies for the Funds and may not be changed without the approval of the holders of a majority of the outstanding common and preferred
shares voting together as a single class, and the approval of the holders of a majority of the outstanding preferred shares, voting separately as a single class. When used with respect to particular shares of a Fund, a “majority of the
outstanding” shares means (1) 67% or more of the shares present at a meeting, if the holders of more than 50% of the shares are present in person or represented by proxy, or (2) more than 50% of the shares, whichever is less.
Except as described below, each Fund may not:
|
|
|
|
|
|
|
| |
|
Georgia
Municipal(1) |
|
Ohio
Municipal(1) |
|
Acquiring Fund(1) |
| (1) |
|
Issue senior securities, as defined in the 1940 Act, other than preferred shares, except to the extent permitted under the 1940 Act and except as otherwise described in the
Prospectus.(2) |
|
Issue senior securities, as defined in the 1940 Act, other than preferred shares, except to the extent such issuance might be involved with respect to borrowings described under subparagraph (2) below [or with respect to
transactions involving futures contracts or the writing of options within the limits described below in “Portfolio Turnover—Financial Futures and Options Transactions” and “Capital Stock—Asset Maintenance—MuniPreferred
Basic Maintenance Amount”.(2)] |
|
Issue senior securities, as defined in the 1940 Act, other than preferred shares, except to the extent permitted by the 1940 Act and as otherwise described in the
Prospectus.(2) |
|
|
|
|
| (2) |
|
Borrow money, except from banks for temporary or emergency purposes or for repurchase of its shares, and then only in an amount not exceeding one-third of the value of the Fund’s total
assets (including the amount borrowed) less the Fund’s liabilities (other than borrowings).(2)(3) |
|
Borrow money, except from banks for temporary or emergency purposes or for repurchase of its shares, and then only in an amount not exceeding one-third of the value of the Fund’s total
assets including the amount borrowed. While any such borrowings exceed 5% of the Fund’s total assets, no additional purchases of investment securities will be made.(2)(3) |
|
Borrow money, except from banks for temporary or emergency purposes or for repurchase of its shares, and then only in an amount not exceeding one-third of the value of the Fund’s total
assets (including the amount borrowed) less the Fund’s liabilities (other than borrowings).(2)(3) |
S-19
|
|
|
|
|
|
|
| |
|
Georgia
Municipal(1) |
|
Ohio
Municipal(1) |
|
Acquiring Fund(1) |
| (3) |
|
Act as underwriter of another issuer’s securities, except to the extent that the Fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) in
connection with the purchase and sale of portfolio securities. |
|
Underwrite any issue of securities, except to the extent that the purchase of Municipal Obligations in accordance with its investment objectives, policies and limitations may be deemed to be an underwriting. |
|
Act as underwriter of another issuer’s securities, except to the extent that the Fund may be deemed to be an underwriter within the meaning of the Securities Act in connection with the purchase and sale of portfolio
securities. |
|
|
|
|
| (4) |
|
Invest more than 25% of its total assets in securities of issuers in any one industry; provided, however, that such limitation shall not apply to municipal bonds other than those municipal bonds backed only by the assets and
revenues of non-governmental users.(4) |
|
Invest more than 25% of its total assets in securities of issuers in any one industry; provided, however, that such limitation shall not apply to Municipal Obligations other than those Municipal Obligations backed only by the assets
and revenues of non-governmental users, nor shall it apply to Municipal Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.(4) |
|
Invest more than 25% of its total assets in securities of issuers in any one industry, provided, however, that such limitation shall not apply to municipal securities other than those municipal securities backed only by the assets
and revenues of non-governmental users.(4) |
|
|
|
|
| (5) |
|
Purchase or sell real estate, but this shall not prevent the Fund from investing in municipal bonds secured by real estate or interests therein or foreclosing upon and selling such security. |
|
Purchase or sell real estate, but this shall not prevent the Fund from investing in Municipal Obligations secured by real estate or interests therein or foreclosing upon and selling such security. |
|
Purchase or sell real estate, but this shall not prevent the Fund from investing in municipal securities secured by real estate or interests therein or foreclosing upon and selling such real estate. |
|
|
|
|
| (6) |
|
Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options, futures contracts, derivative instruments or
from investing in securities or other instruments backed by physical commodities). |
|
Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options, futures contracts or derivative instruments
or from investing in securities or other instruments backed by physical commodities). |
|
Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options, futures contracts or derivative instruments
or from investing in securities or other instruments backed by physical commodities). |
|
|
|
|
| (7) |
|
Make loans, except as permitted by the 1940 Act and exemptive orders granted under, the 1940 Act.(5) |
|
Make loans, except as permitted by the 1940 Act and exemptive orders granted under the 1940 Act.(5) |
|
Make loans, except as permitted by the 1940 Act and exemptive orders granted under the 1940 Act.(5) |
S-20
|
|
|
|
|
|
|
| |
|
Georgia
Municipal(1) |
|
Ohio
Municipal(1) |
|
Acquiring Fund(1) |
| (8) |
|
Purchase any securities (other than obligations issued or guaranteed by the United States Government or by its agencies or instrumentalities), if as a result more than 5% of the Fund’s total assets would then be invested in
securities of a single issuer or if as a result the Fund would hold more than 10% of the outstanding voting securities of any single issuer; provided that, with respect to 50% of the Fund’s assets, the Fund may invest up to 25% of its assets in
the securities of any one issuer. |
|
Invest more than 5% of its total assets in securities of any one issuer, except that this limitation shall not apply to securities of the United States Government, its agencies and instrumentalities or to the investment of 25% of
its total assets. |
|
Invest more than 5% of its total assets in securities of any one issuer, except that this limitation shall not apply to bonds issued by the United States Government, its agencies and instrumentalities or to the investment of 25% of
its total assets. |
|
|
|
|
| (9) |
|
— |
|
Pledge, mortgage or hypothecate its assets, except that to secure borrowings permitted by subparagraph (2) above, it may pledge securities having a market value at the time of pledge not exceeding 20% of the value of the
Fund’s total assets. |
|
— |
|
|
|
|
| (10) |
|
— |
|
Invest more than 10% of its total assets in repurchase agreements maturing in more than seven days. |
|
— |
|
|
|
|
| (11) |
|
— |
|
Purchase or retain the securities of any issuer other than the securities of the Fund if, to the Fund’s knowledge, those directors of the Fund, or those officers and directors of the Adviser, who individually own beneficially
more than 1⁄2 of 1% of the outstanding securities of such issuer, together own beneficially more than 5% of such outstanding securities. |
|
— |
|
|
|
|
| (12) |
|
— |
|
— |
|
Issue debt securities that rank senior to preferred shares other than for temporary or emergency purposes. |
| (1) |
This table presents the fundamental investment restrictions of each Fund as they appear in the respective
Fund’s most recent registration statement, as the same may subsequently have been modified with the approval of the holders of a majority of the Fund’s outstanding voting securities. Accordingly, the use of certain defined terms in the
table does not necessarily correspond with defined terms used elsewhere in this SAI. |
| (2) |
Section 18(c) of the 1940 Act generally limits a registered
closed-end investment company to issuing one class of senior securities representing indebtedness and one class of senior securities representing stock, except that the class of indebtedness or stock may be
|
S-21
| |
issued in one or more series, and promissory notes or other evidences of indebtedness issued in consideration of any loan, extension, or renewal thereof, made by a bank or other person and
privately arranged, and not intended to be publicly distributed, are not deemed a separate class of senior securities. |
| (3) |
Section 18(a) of the 1940 Act generally prohibits a registered
closed-end fund from incurring borrowings if, immediately thereafter, the aggregate amount of its borrowings exceeds 33 1/3% of its total assets. The Funds have not applied for, and currently do not intend to
apply for, any exemptive relief that would allow it to borrow outside of the limits of the 1940 Act. |
| (4) |
For purposes of this restriction, governments and their political subdivisions are not members of any industry.
|
| (5) |
Section 21 of the 1940 Act makes it unlawful for a registered investment company, like the Funds, to lend
money or other property if (i) the investment company’s policies set forth in its registration statement do not permit such a loan or (ii) the borrower controls or is under common control with the investment company.
|
For the purpose of applying the limitation set forth in subparagraph (8) above for the each Fund, an issuer
shall be deemed the sole issuer of a security when its assets and revenues are separate from other governmental entities and its securities are backed only by its assets and revenues. Similarly, in the case of a
non-governmental issuer, such as an industrial corporation or a privately owned or operated hospital, if the security is backed only by the assets and revenues of the
non-governmental issuer, then such non-governmental issuer would be deemed to be the sole issuer. Where a security is also backed by the enforceable obligation of a
superior or unrelated governmental or other entity (other than a bond insurer), it shall also be included in the computation of securities owned that are issued by such governmental or other entity. Where a security is guaranteed by a governmental
entity or some other facility, such as a bank guarantee or letter of credit, such a guarantee or letter of credit would be considered a separate security and would be treated as an issue of such government, other entity or bank. When a municipal
security is insured by bond insurance, it shall not be considered a security that is issued or guaranteed by the insurer; instead, the issuer of such municipal security will be determined in accordance with the principles set forth above. The
foregoing restrictions do not limit the percentage of the Fund’s assets that may be invested in municipal securities insured by any given insurer.
Each Fund is diversified for purposes of the 1940 Act. Consequently, as to 75% of each Fund’s total assets, a Fund may not
(1) purchase the securities of any one issuer (other than cash, securities of other investment companies and securities issued by the U.S. government or its agencies or instrumentalities) if immediately after such purchase, more than 5% of the
value of the Fund’s total assets would be invested in securities of such issuer or (2) purchase more than 10% of the outstanding voting securities of such issuer.
Subject to certain exemptions under the 1940 Act, each Fund may invest only up to 10% of its Managed Assets in the aggregate in shares of
other investment companies and only up to 5% of its Managed Assets in any one investment company, provided the investment does not represent more than 3% of the voting stock of the acquired investment company at the time such shares are purchased.
As a stockholder in any investment company, the Fund will bear its ratable share of that investment company’s expenses, and will remain subject to payment of the Fund’s management, advisory and administrative fees with respect to assets so
invested. Holders of common shares would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. In addition, the securities of other investment companies may also be leveraged and will therefore be
subject to the same leverage risks described herein. As described in the Prospectus in the section entitled “Risk Factors”, the net asset value and market value of leveraged shares will be more volatile and the yield to shareholders will
tend to fluctuate more than the yield generated by unleveraged shares.
In addition to the foregoing fundamental investment policies, each
Fund is also subject to the following non-fundamental restrictions and policies, which may be changed by the Board of Trustees:
Each Fund may not:
(1) Sell securities short, unless the Fund owns or has the right to obtain securities
equivalent in kind and amount to the securities sold at no added cost, and provided that transactions in options, futures contracts, options on futures contracts, or other derivative instruments are not deemed to constitute selling securities short.
(2) Invest in securities of other open- or
closed-end investment companies (including ETFs) except in compliance with the Investment Company Act of 1940 or any exemptive relief obtained thereunder.
S-22
(3) Enter into futures contracts or related
options or forward contracts, if more than 30% of the Fund’s net assets would be represented by futures contracts or more than 5% of the Fund’s net assets would be committed to initial margin deposits and premiums on futures contracts and
related options.
(4) Purchase securities when borrowings exceed 5% of its total assets if
and so long as preferred shares are outstanding.
(5) Purchase securities of companies for
the purpose of exercising control, except that the Fund may invest up to 5% of its net assets in tax-exempt or taxable fixed-income securities or equity securities for the purpose of acquiring control of an
issuer whose municipal bonds (a) the Fund already owns and (b) have deteriorated or are expected shortly to deteriorate significantly in credit quality, provided the Adviser determines that such investment should enable the Fund to better
maximize the value of its existing investment in such issuer.
(6) Invest in defaulted
securities or in the securities of an issuer that is in bankruptcy at the time of investment, provided however, pursuant to the Sub-Adviser’s policy regarding municipal workouts, the Fund
may invest in defaulted securities from an issuer of a security it already owns, or some other party, to help facilitate a favorable resolution to a municipal workout.
The restrictions and other limitations set forth above will apply only at the time of purchase of securities and will not be considered
violated unless an excess or deficiency occurs or exists immediately after and as a result of an acquisition of securities.
Investment
grade quality securities are those that are, at the time of investment, either (i) rated by one of the NRSROs that rate such securities within the four highest letter grades (Baa or BBB or better) by at least one NRSRO that rates such
securities or (ii) unrated by any NRSRO but judged to be of comparable quality by a Fund’s sub-adviser. Investment grade securities may include split-rated securities.
Portfolio Turnover
Portfolio trading
may be undertaken to accomplish each Fund’s investment objectives. In addition, a security may be sold and another of comparable quality purchased at approximately the same time to take advantage of what the Adviser and/or Sub-Adviser believes to be a temporary price disparity between the two securities. Temporary price disparities between two comparable securities may result from supply and demand imbalances where, for example, a
temporary oversupply of certain securities may cause a temporarily low price for such securities, as compared with other securities of like quality and characteristics. Each Fund may also engage to a limited extent in short-term trading consistent
with its investment objectives. Securities may be sold in anticipation of a market decline (a rise in interest rates) or purchased in anticipation of a market rise (a decline in interest rates) and later sold, but each Fund will not engage in
trading solely to recognize a gain.
Each Fund may engage in portfolio trading when considered appropriate, but short-term trading
will not be used as the primary means of achieving a Fund’s investment objectives. Although a Fund cannot accurately predict its annual portfolio turnover rate, it is generally not expected to exceed 25% under normal circumstances. However,
there are no limits on a Fund’s rate of portfolio turnover, and investments may be sold without regard to length of time held when, in the Adviser’s and/or Sub-Adviser’s opinion, investment
considerations warrant such action. A higher portfolio turnover rate would result in correspondingly greater brokerage commissions and other transactional expenses that are borne by each Fund. Please refer to “Proposal No. 1—A.
Synopsis—Material Federal Income Tax Consequences of the Mergers” in the Joint Proxy Statement/Prospectus for a discussion of anticipated turnover of the Fund in connection with the Mergers.
S-23
For the fiscal years ended May 31, 2022 and May 31, 2021, the portfolio turnover rates
of Georgia Municipal were as follows:
|
|
|
| Georgia Municipal |
| 2022 |
|
2021 |
| 14% |
|
7% |
For the fiscal years ended February 28, 2022 and February 28, 2021, the portfolio turnover rates of
Ohio Municipal were as follows:
|
|
|
| Ohio Municipal |
| 2022 |
|
2021 |
| 14% |
|
6% |
For the fiscal years ended October 31, 2021 and October 31, 2020, the portfolio turnover rates of
the Acquiring Fund were as follows:
|
|
|
| Acquiring Fund |
| 2021 |
|
2020 |
| 15% |
|
21% |
There are no limits on the rate of portfolio turnover, and investments may be sold without regard to length of
time held when investment considerations warrant such action. A higher portfolio turnover rate may result in correspondingly greater brokerage commissions and other transactional expenses that are borne by each Fund. In addition, high portfolio
turnover may result in the realization of net short-term capital gains by a Fund which, when distributed to shareholders, will be taxable as ordinary income for federal income tax purposes or may result in greater amounts of net capital gain
distributions.
S-24
INVESTMENT ADVISER AND
SUB-ADVISER
Investment Adviser
Nuveen Fund Advisors is the investment adviser to each Fund and is responsible for overseeing each Fund’s overall investment strategy,
including the use of leverage, and its implementation. Nuveen Fund Advisors also is responsible for the ongoing monitoring of any sub-adviser to the Funds, managing each Fund’s business affairs and
providing certain clerical, bookkeeping and other administrative services to the Funds. Nuveen Fund Advisors is located at 333 West Wacker Drive, Chicago, Illinois 60606.
Nuveen Fund Advisors, a registered investment adviser, is a subsidiary of Nuveen, the investment management arm of Teachers Insurance and
Annuity Association of America (“TIAA”). TIAA is a life insurance company founded in 1918 by the Carnegie Foundation for the Advancement of Teaching and is the companion organization of College Retirement Equities Fund. As of
September 30, 2022, Nuveen managed approximately $1.1 trillion in assets, of which approximately $149.2 billion was managed by Nuveen Fund Advisors.
Unless earlier terminated as described below, each Fund’s Investment Management Agreement with Nuveen Fund Advisors will remain in effect
until August 1, 2023. Each Investment Management Agreement continues in effect from year to year so long as such continuation is approved at least annually by: (1) the Board or the vote of a majority of the outstanding voting securities of
the Fund; and (2) a majority of the Board Members who are not interested persons of any party to the Investment Management Agreement, cast in person at a meeting called for the purpose of voting on such approval. Each Investment Management
Agreement may be terminated at any time, without penalty, by either the Fund or Nuveen Fund Advisors upon 60 days’ written notice and is automatically terminated in the event of its assignment, as defined in the 1940 Act.
Pursuant to each Investment Management Agreement, each Fund has agreed to pay an annual management fee for the overall advisory and
administrative services and general office facilities provided by Nuveen Fund Advisors. Each Fund’s management fee is separated into two components—a complex-level component, based on the aggregate amount of Nuveen-branded closed- and open-end registered investment companies organized in the United States, and a specific fund-level component, based only on the amount of assets within the Fund. This pricing structure enables the Funds’
shareholders to benefit from growth in the assets within each individual fund as well as from growth in the amount of complex-wide assets managed by Nuveen Fund Advisors.
The total dollar amounts paid to Nuveen Fund Advisors by each Fund under each Fund’s Investment Management Agreement for each Fund’s
last three fiscal years are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Georgia Municipal |
|
2022 |
|
|
2021 |
|
|
2020 |
|
| Gross Advisory Fees |
|
$ |
1,336,674 |
|
|
$ |
1,360,798 |
|
|
$ |
1,357,649 |
|
| Waiver |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Advisory Fees |
|
$ |
1,336,674 |
|
|
$ |
1,360,798 |
|
|
$ |
1,357,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ohio Municipal |
|
2022 |
|
|
2021 |
|
|
2020 |
|
| Gross Advisory Fees |
|
$ |
2,892,568 |
|
|
$ |
2,909,601 |
|
|
$ |
2,868,873 |
|
| Waiver |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Advisory Fees |
|
$ |
2,892,568 |
|
|
$ |
2,909,601 |
|
|
$ |
2,868,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquiring Fund |
|
2021 |
|
|
2020 |
|
|
2019 |
|
| Gross Advisory Fees |
|
$ |
22,807,444 |
|
|
$ |
22,163,781 |
|
|
$ |
22,236,437 |
|
| Waiver |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Advisory Fees |
|
$ |
22,807,444 |
|
|
$ |
22,163,781 |
|
|
$ |
22,236,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-25
Sub-Adviser
Nuveen Fund Advisors has selected its wholly owned subsidiary, Nuveen Asset Management, located at 333 West Wacker Drive, Chicago, Illinois
60606, to serve as the sub-adviser to each of the Funds pursuant to a Sub-Advisory Agreement between Nuveen Fund Advisors and Nuveen Asset Management. Nuveen Asset
Management, a registered investment adviser, oversees day-to-day operations and manages the investment of the Funds’ assets on a discretionary basis, subject to the
supervision of Nuveen Fund Advisors. Pursuant to each Sub-Advisory Agreement, Nuveen Asset Management is compensated for the services it provides to the Funds with a portion of the management fee Nuveen Fund
Advisors receives from each Fund. Nuveen Fund Advisors and Nuveen Asset Management retain the right to reallocate investment advisory responsibilities and fees between themselves in the future.
For the services provided pursuant to Georgia Municipal’s, Ohio Municipal’s and the Acquiring Fund’s Sub-Advisory Agreements, Nuveen Fund Advisors pays Nuveen Asset Management a portfolio management fee, payable monthly, equal to 38.4615%, 38.4615% and 42.8572%, respectively, of the management fee (net of
applicable breakpoints, waivers and reimbursements) paid by the Funds to Nuveen Fund Advisors.
The total dollar amounts paid to Nuveen
Asset Management by Nuveen Fund Advisors during each Fund’s last three fiscal years are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Georgia Municipal |
|
2022 |
|
|
2021 |
|
|
2020 |
|
| Sub-Advisory Fees |
|
$ |
514,105 |
|
|
$ |
523,383 |
|
|
$ |
522,172 |
|
|
|
|
|
| Ohio Municipal |
|
2022 |
|
|
2021 |
|
|
2020 |
|
| Sub-Advisory Fees |
|
$ |
1,112,525 |
|
|
$ |
1,119,076 |
|
|
$ |
1,103,411 |
|
|
|
|
|
| Acquiring Fund |
|
2021 |
|
|
2020 |
|
|
2019 |
|
| Sub-Advisory Fees |
|
$ |
9,774,632 |
|
|
$ |
9,528,829 |
|
|
$ |
9,529,914 |
|
S-26
PORTFOLIO MANAGERS
Unless otherwise indicated, the information below is provided as of the date of this SAI.
Portfolio Management. Daniel J. Close, CFA, is the portfolio manager of the Target Funds. Scott R. Romans, PhD,
is the portfolio manager of the Acquiring Fund. Mr. Romans will manage the combined fund upon completion of the Merger.
In addition
to managing the Funds, the following portfolio managers are also primarily responsible for the day-to-day portfolio management of the following accounts, as of
May 31, 2022 for Mr. Close and October 31, 2022 for Mr. Romans:
|
|
|
|
|
|
|
| Portfolio Manager |
|
Type of Account Managed |
|
Number of
Accounts |
|
Assets* |
| Scott R. Romans |
|
Registered Investment Companies |
|
10 |
|
$9.73 billion |
|
|
Other Pooled Investment Vehicles |
|
0 |
|
0 |
|
|
Other Accounts |
|
0 |
|
0 |
|
|
|
|
| Daniel J. Close |
|
Registered Investment Companies |
|
9 |
|
$5.42 billion |
|
|
Other Pooled Investment Vehicles |
|
19 |
|
$4.55 billion |
|
|
Other Accounts |
|
38 |
|
$12.23 billion |
| * |
None of the assets in these accounts is subject to an advisory fee based on performance. |
Compensation
Portfolio manager compensation consists primarily of base pay, an annual cash bonus and long-term incentive payments.
Portfolio managers are compensated through a combination of base salary and variable components consisting of (i) a cash bonus;
(ii) a long-term performance award; and (iii) participation in a profits interest plan.
Base
salary. A portfolio manager’s base salary is determined based upon an analysis of the portfolio manager’s general performance, experience and market levels of base pay for such position.
Cash bonus. A portfolio manager is eligible to receive an annual cash bonus that is based on three variables:
risk-adjusted investment performance relative to benchmark generally measured over the most recent one, three and five year periods (unless the portfolio manager’s tenure is shorter), ranking versus Morningstar peer funds generally measured
over the most recent one, three and five year periods (unless the portfolio manager’s tenure is shorter), and management and peer reviews.
Long-term performance award. A portfolio manager is eligible to receive a long-term performance award that vests
after three years. The amount of the award when granted is based on the same factors used in determining the cash bonus. The value of the award at the completion of the three-year vesting period is adjusted based on the risk-adjusted investment
performance of Fund(s) managed by the portfolio manager during the vesting period and the performance of the TIAA organization as a whole.
Profits interest plan. Portfolio managers are eligible to receive profits interests in Nuveen Asset Management
and its affiliate, Teachers Advisors, LLC, which vest over time and entitle their holders to a percentage of the firms’ annual profits. Profits interests are allocated to each portfolio manager based on such person’s overall contribution
to the firms.
S-27
There are generally no differences between the methods used to determine compensation with
respect to the Funds and the other accounts shown in the table above.
Potential Material Conflicts of Interest
Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one account. More specifically, portfolio managers who manage multiple accounts are presented with a number of potential conflicts, including,
among others, those discussed below.
The management of multiple accounts may result in a portfolio manager devoting unequal time and
attention to the management of each account. Nuveen Asset Management seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most accounts
managed by a portfolio manager in a particular investment strategy are managed using the same investment models.
If a portfolio manager
identifies a limited investment opportunity which may be suitable for more than one account, an account may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible accounts.
To deal with these situations, Nuveen Asset Management has adopted procedures for allocating limited opportunities across multiple accounts.
With respect to many of its clients’ accounts, Nuveen Asset Management determines which broker to use to execute transaction orders,
consistent with its duty to seek best execution of the transaction. However, with respect to certain other accounts, Nuveen Asset Management may be limited by the client with respect to the selection of brokers or may be instructed to direct trades
through a particular broker. In these cases, Nuveen Asset Management may place separate, non-simultaneous transactions for a Fund and other accounts which may temporarily affect the market price of the
security or the execution of the transaction, or both, to the detriment of a Fund or the other accounts.
Some clients are subject to
different regulations. As a consequence of this difference in regulatory requirements, some clients may not be permitted to engage in all the investment techniques or transactions or to engage in these transactions to the same extent as the other
accounts managed by the portfolio manager. Finally, the appearance of a conflict of interest may arise where Nuveen Asset Management has an incentive, such as a performance-based management fee, which relates to the management of some accounts, with
respect to which a portfolio manager has day-to-day management responsibilities.
Nuveen Asset Management has adopted certain compliance procedures which are designed to address these types of conflicts common among
investment managers. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
Conflicts of interest may also arise when the Sub-Adviser invests one or more of its client accounts
in different or multiple parts of the same issuer’s capital structure, including investments in public versus private securities, debt versus equity, or senior versus junior/subordinated debt, or otherwise where there are different or
inconsistent rights or benefits. Decisions or actions such as investing, trading, proxy voting, exercising, waiving or amending rights or covenants, workout activity, or serving on a board, committee or other involvement in governance may result in
conflicts of interest between clients holding different securities or investments. Generally, individual portfolio managers will seek to act in a manner that they believe serves the best interest of the accounts they manage. In cases where a
portfolio manager or team faces a conflict among its client accounts, it will seek to act in a manner that it believes best reflects its overall fiduciary duty, which may result in relative advantages or disadvantages for particular accounts.
S-28
Beneficial Ownership of Securities. The following table sets
forth the dollar range of equity securities beneficially owned by the Funds’ portfolio manager as of May 31, 2022 for Mr. Close and October 31, 2022 for Mr. Romans:
|
|
|
|
|
|
|
| Portfolio Manager |
|
Dollar Range
of
Equity
Securities
Beneficially
Owned in
Georgia Municipal |
|
Dollar Range
of
Equity
Securities
Beneficially
Owned in
Ohio Municipal |
|
Dollar Range
of
Equity
Securities
Beneficially
Owned in the
Acquiring Fund |
| Scott R. Romans |
|
$0 |
|
$0 |
|
$0 |
| Daniel J. Close |
|
$0 |
|
$0 |
|
$0 |
Code of Ethics
The Fund, Nuveen Fund Advisors, Nuveen Asset Management, Nuveen and other related entities have adopted codes of ethics (the “Code of
Ethics”) that essentially prohibit certain of their personnel, including each Fund’s portfolio manager, from engaging in personal investments that compete or interfere with, or attempt to take advantage of a client’s, including the
Funds’, anticipated or actual portfolio transactions, and are designed to assure that the interests of clients, including Fund shareholders, are placed before the interests of personnel in connection with personal investment transactions.
Personnel subject to the Code of Ethics may purchase shares of the Funds and may generally invest in securities in which the Funds may also invest subject to the restrictions set forth in the Code of Ethics. Text-only versions of the Code of Ethics
of the Funds, Nuveen Fund Advisors, Nuveen Asset Management and Nuveen can be viewed online or downloaded from the EDGAR Database on the SEC’s Internet website at www.sec.gov.
S-29
PROXY VOTING POLICIES AND PROCEDURES
The Funds invest primarily in municipal securities. On rare occasions a Fund may acquire, directly or through a special purpose vehicle,
equity securities of a municipal bond issuer whose bonds the Fund already owns when such bonds have deteriorated or are expected shortly to deteriorate significantly in credit quality. The purpose of acquiring equity securities generally will be to
acquire control of the municipal bond issuer and to seek to prevent the credit deterioration or facilitate the liquidation or other workout of the distressed issuer’s credit problem. In the course of exercising control of a distressed municipal
issuer, Nuveen Asset Management may pursue the Fund’s interests in a variety of ways, which may entail negotiating and executing consents, agreements and other arrangements, and otherwise influencing the management of the issuer. Nuveen Asset
Management does not consider such activities proxy voting for purposes of Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended, but nevertheless provides reports to a Fund’s Board on its
control activities on a quarterly basis.
In the rare event that a municipal issuer held by a Fund were to issue a proxy, or that the Fund
were to receive a proxy issued by a cash management security, Nuveen Asset Management would either engage an independent third party to determine how the proxy should be voted or vote the proxy with the consent, or based on the instructions, of the
Board or its representative. In the case of a conflict of interest, the proxy would be submitted to the Board to determine how the proxy should be voted. A member of Nuveen Asset Management’s legal department would oversee the administration of
the voting and ensure that records were maintained in accordance with Rule 206(4)-6, reports were filed with the SEC on Form N-PX, and the results were
provided to the Board and made available to shareholders as required by applicable rules. Nuveen Asset Management’s proxy voting policies and procedures are attached hereto as Appendix C. If applicable, information
regarding how each Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling (800) 257-8787 or from the Fund’s website at http://www.nuveen.com, and on the SEC’s website at http://www.sec.gov.
S-30
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board and Nuveen Fund Advisors, Nuveen Asset Management is responsible for decisions to purchase and sell
securities for the Funds, the negotiation of the prices to be paid and the allocation of transactions among various dealer firms. Transactions on stock exchanges involve the payment by the Funds of brokerage commissions. There generally is no stated
commission in the case of securities traded in the OTC market, but the prices paid by the Funds usually include an undisclosed dealer commission or mark-up. Transactions in the OTC market can also be placed
with broker-dealers who act as agents and charge brokerage commissions for effecting OTC transactions. Each Fund may place its OTC transactions either directly with principal market makers, or with broker-dealers if that is consistent with Nuveen
Asset Management’s obligation to obtain best qualitative execution. In certain instances, the Funds may make purchases of underwritten issues at prices that include underwriting fees.
Portfolio securities may be purchased directly from an underwriter or in the OTC market from the principal dealers in such securities, unless
it appears that a better price or execution may be obtained through other means. Portfolio securities will not be purchased from Nuveen Investments or its affiliates or affiliates of Nuveen Asset Management except in compliance with the 1940 Act.
It is Nuveen Asset Management’s policy to seek the best execution under the circumstances of each trade. Nuveen Asset Management
will evaluate price as the primary consideration, with the financial condition, reputation and responsiveness of the dealer considered secondary in determining best execution. Given the best execution obtainable, it will be Nuveen Asset
Management’s practice to select dealers that, in addition, furnish research information (primarily credit analyses of issuers and general economic reports) and statistical and other services to Nuveen Asset Management. It is not possible to
place a dollar value on information and statistical and other services received from dealers. Since it is only supplementary to Nuveen Asset Management’s own research efforts, the receipt of research information is not expected to reduce
significantly Nuveen Asset Management’s expenses. While Nuveen Asset Management will be primarily responsible for the placement of the business of the Funds, Nuveen Asset Management’s policies and practices in this regard must be
consistent with the foregoing and will, at all times, be subject to review by the Board of the Funds.
Nuveen Asset Management may manage
other investment accounts and investment companies for other clients that may invest in the same types of securities as the Funds and that may have investment objectives similar to those of the Funds. Nuveen Asset Management seeks to allocate
portfolio transactions equitably whenever concurrent decisions are made to purchase or sell assets or securities by each Fund and another advisory account. If an aggregated order cannot be filled completely, allocations will generally be made on a
pro rata basis. An order may not be allocated on a pro rata basis where, for example (i) consideration is given to portfolio managers who have been instrumental in developing or negotiating a particular investment;
(ii) consideration is given to an account with specialized investment policies that coincide with the particulars of a specific investment; (iii) pro rata allocation would result in odd-lot or
de minimis amounts being allocated to a portfolio or other client; or (iv) Nuveen Asset Management reasonably determines that departure from a pro rata allocation is advisable. There may also be instances where a Fund will not
participate at all in a transaction that is allocated among other accounts. While these allocation procedures could have a detrimental effect on the price or amount of the securities available to the Fund from time to time, it is the opinion of the
Board that the benefits available from Nuveen Asset Management’s management outweigh any disadvantage that may arise from Nuveen Asset Management’s larger management activities and its need to allocate securities.
S-31
The information in the table below reflects the aggregate brokerage commission paid by each
Target Fund and the Acquiring Fund for the last three fiscal years:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2022 |
|
|
2021 |
|
|
2020 |
|
| Georgia Municipal |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2022 |
|
|
2021 |
|
|
2020 |
|
| Ohio Municipal |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2021 |
|
|
2020 |
|
|
2019 |
|
| Acquiring Fund |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
During its most recently completed fiscal year, no Fund paid commissions in return for research services or
held any securities of its regular broker-dealers.
Under the 1940 Act, the Funds may not purchase portfolio securities from any
underwriting syndicate of which Nuveen Securities, LLC is a member except under certain limited conditions set forth in Rule 10f-3. The Rule sets forth requirements relating to, among other things, the
terms of a security purchased by the Funds, the amount of securities that may be purchased in any one issue and the assets of the Funds that may be invested in a particular issue. In addition, purchases of securities made pursuant to the terms of
the Rule must be approved at least quarterly by each Fund’s Board, including a majority of the independent trustees.
S-32
REPURCHASE OF FUND SHARES; CONVERSION TO OPEN-END FUND
The Acquiring Fund is a closed-end investment
company, and as such its shareholders will not have the right to cause the Fund to redeem their shares. Instead, the Acquiring Fund’s common shares will trade in the open market at a price that will be a function of several factors, including
dividend levels (which are in turn affected by expenses), net asset value, dividend stability, relative demand for and supply of such shares in the market, general market and economic conditions, and other factors. Because shares of a closed-end investment company may frequently trade at prices lower than net asset value, the Acquiring Fund’s Board has currently determined that, at least annually, it will consider action that might be taken
to reduce or eliminate any material discount from net asset value in respect of common shares, which may include the repurchase of such shares in the open market or in private transactions, the making of a tender offer for such shares at net asset
value, or the conversion of the Fund to an open-end investment company. However, there can be no assurance that the Board will decide to take any of these actions, or that share repurchases or tender offers,
if undertaken, will reduce market discount.
Subject to its investment limitations, the Acquiring Fund may borrow to finance the
repurchase of shares or to make a tender offer. Interest on any borrowings to finance share repurchase transactions or the accumulation of cash by the Fund in anticipation of share repurchases or tenders will reduce the Fund’s net income. Any
share repurchase, tender offer or borrowing that might be approved by the Board would have to comply with the Securities Exchange Act of 1934 and the 1940 Act and the rules and regulations thereunder.
Although the decision to take action in response to a discount from net asset value will be made by the Board at the time it considers such
issue, it is the Board’s current policy, which may be changed by the Board, not to authorize repurchases of common shares or a tender offer for such shares if (1) such transactions, if consummated, would (a) result in the delisting of
the common shares from the New York Stock Exchange (the “NYSE”), or (b) impair the Fund’s status as a regulated investment company under the Code (which would make the Fund a taxable entity, causing the Fund’s taxable income
to be taxed at the fund level in addition to the taxation of shareholders who receive dividends from the Fund), or as a registered closed-end investment company under the 1940 Act; (2) the Fund would not
be able to liquidate portfolio securities in an orderly manner and consistent with the Fund’s investment objectives and policies in order to repurchase shares; or (3) there is, in the Board’s judgment, any (a) material legal
action or proceeding instituted or threatened challenging such transactions or otherwise materially adversely affecting the Fund, (b) general suspension of or limitation on prices for trading securities on the NYSE, (c) declaration of a
banking moratorium by federal or state authorities or any suspension of payment by United States or state banks in which the Fund invests, (d) material limitation affecting the Fund or the issuers of its portfolio securities by federal or state
authorities on the extension of credit by lending institutions or on the exchange of non-U.S. currency, (e) commencement of war, armed hostilities or other international or national calamity directly or
indirectly involving the United States or (f) other event or condition that would have a material adverse effect (including any adverse tax effect) on the Acquiring Fund or its shareholders if shares were repurchased. The Board may in the
future modify these conditions in light of experience.
The repurchase by the Acquiring Fund of its shares at prices below net asset value
will result in an increase in the net asset value of those shares that remain outstanding. However, there can be no assurance that share repurchases or tenders at or below net asset value will result in the Fund’s shares trading at a price
equal to their net asset value. Nevertheless, the fact that the Fund’s shares may be the subject of repurchase or tender offers at net asset value from time to time, or that the Fund may be converted to an
open-end investment company, may reduce any spread between market price and net asset value that might otherwise exist.
In addition, a purchase by the Acquiring Fund of its common shares will decrease the Fund’s total assets, which would likely have the
effect of increasing the Fund’s expense ratio.
Conversion to an open-end company would
require the approval of the holders of at least two-thirds of the Acquiring Fund’s common shares, unless the conversion has been approved by the requisite vote of the Board
S-33
Members, in which case a majority vote of the requisite holders would be required. See the Joint Proxy Statement/Prospectus under “Additional Information About the Acquiring
Fund—Certain Provisions in the Acquiring Fund’s Declaration of Trust and By-Laws” for a discussion of voting requirements applicable to conversion of the Fund to an open-end investment company. If the Fund converted to an open-end investment company, the Fund’s common shares would no longer be listed on the NYSE. In contrast to a closed-end investment company, shareholders of an open-end investment company may require the company to redeem their shares on any business day (except in certain
circumstances as authorized by or under the 1940 Act or rules thereunder) at their net asset value, less such redemption charge, if any, as might be in effect at the time of redemption. In order to avoid maintaining large cash positions or
liquidating favorable investments to meet redemptions, open-end investment companies typically engage in a continuous offering of their shares. Open-end investment
companies are thus subject to periodic asset in-flows and out-flows that can complicate portfolio management. The Board may at any time propose conversion of the Fund to
an open-end investment company depending upon its judgment as to the advisability of such action in light of circumstances then prevailing.
Before deciding whether to take any action if the Acquiring Fund’s common shares trade below net asset value, the Board would consider
all relevant factors, including the extent and duration of the discount, the liquidity of the Fund’s portfolio, the impact of any action that might be taken on the Fund or its shareholders, and market considerations. Based on these
considerations, even if the Fund’s shares should trade at a discount, the Board may determine that, in the interest of the Fund and its shareholders, no action should be taken.
S-34
FEDERAL INCOME TAX MATTERS
The following is a general summary of certain federal income tax consequences that may be relevant to a shareholder that acquires, holds
and/or disposes of shares of the Acquiring Fund. Substantially similar consequences would be relevant to a shareholder that acquires, holds and/or disposes of shares of the Target Fund. This discussion addresses only federal income tax consequences
to U.S. shareholders who hold their shares as capital assets and does not address all of the federal income tax consequences that may be relevant to particular shareholders in light of their individual circumstances. This discussion also does not
address the tax consequences to shareholders who are subject to special rules, including, without limitation, shareholders with large positions in the Acquiring Fund, financial institutions, insurance companies, dealers in securities or foreign
currencies, foreign holders, persons who hold their shares as or in a hedge against currency risk, a constructive sale, conversion transaction or other integrated transaction, holders who are subject to the federal alternative minimum tax (except as
discussed below), investors with “applicable financial statements” within the meaning of section 451(b) of the Internal Revenue Code of 1986, as amended (the “Code”) or tax-exempt or tax-advantaged plans, accounts, or entities. In addition, the discussion does not address any state, local or foreign tax consequences. The discussion reflects applicable federal income tax laws of the United States
as of the date of this SAI, which tax laws may be changed or subject to new interpretations by the courts or the Internal Revenue Service (“IRS”) retroactively or prospectively. No attempt is made to present a detailed explanation of all
federal income tax concerns affecting the Acquiring Fund and its shareholders, and the discussion set forth herein does not constitute tax advice. Investors are urged to consult their own tax advisers to determine the specific tax consequences to
them of investing in the Acquiring Fund, including the applicable federal, state, local and foreign tax consequences to them and the effect of possible changes in tax laws.
If a partnership holds shares of the Acquiring Fund, the tax treatment of a partner will generally depend upon the status of the partner and
the activities of the partnership. The discussion below may not be applicable to an investor who is a partner in a partnership holding Acquiring Fund shares. Such investors should consult their own tax adviser regarding the tax consequences of
acquiring, owning and disposing of shares of the Acquiring Fund.
The Acquiring Fund has elected to be treated, and intends to continue to
qualify each year, as a regulated investment company under Subchapter M of the Code and to satisfy conditions which enable its dividends that are attributable to interest on municipal securities to be exempt from federal income tax in the hands of
owners of its shares, subject to the possible application of the federal alternative minimum tax.
To qualify for the favorable federal
income tax treatment generally accorded to regulated investment companies, the Acquiring Fund must, among other things, (i) derive in each taxable year at least 90% of its gross income from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock, securities or non-U.S. currencies, other income derived with respect to its business of investing in such stock, securities or currencies,
and net income derived from interests in “qualified publicly traded partnerships,” as defined in the Code; (ii) diversify its holdings so that, at the end of each quarter of each taxable year, (a) at least 50% of the value of the
Acquiring Fund’s assets is represented by cash and cash items (including receivables), U.S. government securities, the securities of other regulated investment companies and other securities, with such other securities of any one issuer limited
for the purposes of this calculation to an amount not greater than 5% of the value of the Acquiring Fund’s total assets and not greater than 10% of the outstanding voting securities of such issuer, and (b) not more than 25% of the value of
its total assets is invested in the securities (other than U.S. government securities or the securities of other regulated investment companies) of a single issuer, or two or more issuers that the Acquiring Fund controls and are engaged in the same,
similar or related trades or businesses, or the securities of one or more qualified publicly traded partnerships; and (iii) distribute each year an amount equal to or greater than the sum of 90% of its investment company taxable income (as that
term is defined in the Code, but without regard to the deduction for dividends paid) and 90% of its net tax-exempt interest.
S-35
If the Acquiring Fund failed to qualify as a regulated investment company in any taxable year,
the Acquiring Fund would be taxed in the same manner as a regular corporation on its taxable income (even if such income were distributed to its shareholders), and distributions to shareholders would not be deductible by the Acquiring Fund in
computing its taxable income. Additionally, all distributions out of the Acquiring Fund’s current and accumulated earnings and profits (including distributions from net capital gains and net tax-exempt
interest) would be taxed to shareholders as ordinary dividend income. Such distributions generally would be eligible (i) to be treated as “qualified dividend income,” as discussed below in the case of noncorporate shareholders, and
(ii) for the dividends-received deduction under section 243 of the Code (the “Dividends Received Deduction”) in the case of corporate shareholders, provided certain holding period and other requirements under the Code are
satisfied.
The Acquiring Fund intends to continue to qualify to pay “exempt-interest” dividends, as defined in the Code, by
satisfying the requirement that, at the close of each quarter of its taxable year, at least 50% of the value of its total assets consist of tax-exempt state and local bonds. Exempt-interest dividends are
dividends or any part thereof (other than a capital gain dividend) paid by the Acquiring Fund which are attributable to interest on state and local bonds that pay interest exempt from regular federal income tax and are so reported by the Acquiring
Fund. Exempt-interest dividends will be exempt from federal income tax, subject to the possible application of the federal alternative minimum tax.
As a regulated investment company, the Acquiring Fund generally will not be subject to federal income tax on its investment company taxable
income and net capital gains (the excess of net long-term capital gains over net short-term capital losses), if any, that it distributes to shareholders. The Acquiring Fund may retain for investment its net capital gains. However, if the Acquiring
Fund retains any net capital gains or any investment company taxable income, it will be subject to federal income tax at regular corporate rates on the amount retained. If the Acquiring Fund retains any net capital gains, it may designate the
retained amount as undistributed capital gains in a notice to its shareholders who, if subject to federal income tax on long-term capital gains, (i) will be required to include in income for federal income tax purposes, as long-term capital
gains, their share of such undistributed amount, and (ii) will be entitled to credit their proportionate shares of the federal income tax paid by the Acquiring Fund on such undistributed amount against their federal income tax liabilities, if
any, and to claim refunds to the extent the credit exceeds such liabilities. For federal income tax purposes, the basis of shares owned by a shareholder of the Acquiring Fund will be increased by an amount equal to the difference between the amount
of undistributed capital gains included in the shareholder’s gross income and the federal income tax deemed paid by the shareholder under clause (ii) of the preceding sentence. The Acquiring Fund intends to distribute to its shareholders,
at least annually, substantially all of its investment company taxable income (determined without regard to the deduction for dividends paid) and the net capital gains not otherwise retained by the Acquiring Fund.
Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4%
federal excise tax. To prevent imposition of the excise tax, the Acquiring Fund must distribute during each calendar year an amount at least equal to the sum of (i) 98% of its ordinary taxable income (not taking into account any capital gains
or losses) for the calendar year, (ii) 98.2% of its capital gains in excess of its capital losses (adjusted for certain ordinary losses) for the one-year period ending October 31 of the calendar
year, and (iii) any ordinary taxable income and capital gains for previous years that were not distributed during those years and on which the Acquiring Fund paid no federal income tax. To prevent application of the excise tax, the Acquiring
Fund intends to make distributions in accordance with the calendar year distribution requirement.
The Acquiring Fund may acquire
municipal obligations and other debt securities that are market discount bonds. A market discount bond is a security acquired in the secondary market at a price below its redemption value (or its adjusted issue price if it is also an original-issue
discount bond). If the Acquiring Fund invests in a market discount bond, it will be required to treat any gain recognized on the disposition of such market discount bond as ordinary taxable income to the extent of the accrued market discount unless
the Acquiring Fund elects to include the market discount in taxable income as it accrues.
S-36
If the Acquiring Fund invests in certain pay-in-kind securities, zero coupon securities, deferred interest securities or, in general, any other securities with original-issue discount (or with market discount if the Acquiring Fund elects to include
market discount in income currently), the Acquiring Fund must accrue income on such investments for each taxable year, which generally will be prior to the receipt of the corresponding cash payments. However, the Acquiring Fund must distribute to
shareholders, at least annually, all or substantially all of its investment company taxable income (determined without regard to the deduction for dividends paid) and net tax-exempt interest, including such
income it is required to accrue, to continue to qualify as a regulated investment company and (with respect to taxable income) to avoid federal income and excise taxes. Therefore, the Acquiring Fund may have to dispose of its portfolio securities
under disadvantageous circumstances to generate cash, or it may have to leverage itself by borrowing the cash, to satisfy these distribution requirements.
The Acquiring Fund’s investment in lower rated or unrated debt securities may present issues for the Acquiring Fund if the issuers of
these securities default on their obligations because the federal income tax consequences to a holder of such securities are not certain.
A portion of the Acquiring Fund’s expenditures that would otherwise be deductible may not be allowed as deductions by reason of the
Acquiring Fund’s investment in municipal securities (with such disallowed portion, in general, being the same percentage of the Acquiring Fund’s aggregate expenses as the percentage of the Acquiring Fund’s aggregate income (other than
capital gain income) that constitutes exempt-interest income). A similar disallowance rule also applies to interest expense paid or incurred by the Acquiring Fund, if any. Such disallowed deductions, if any, will reduce the amount that the Acquiring
Fund can report as exempt-interest dividends by the disallowed amount. Income distributions by the Acquiring Fund in excess of the amount of the Acquiring Fund’s exempt-interest dividends may be taxable as ordinary income.
Under section 163(j) of the Code, the amount of business interest that a taxpayer can deduct for any year is generally limited to the
taxpayer’s (i) business interest income (which is the amount of interest includible in the gross income of the taxpayer which is properly allocable to a trade or business, but does not include investment income) plus (ii) 30% of adjusted
taxable income (but not less than zero) plus (iii) floor plan financing interest. The IRS has issued regulations clarifying that all interest expense and interest income of a regulated investment company is treated as properly allocable to a
trade or business for purposes of the limitation on the deductibility of business interest. As a result, this limitation may impact the Acquiring Fund’s ability to use leverage (e.g., borrow money, issue debt securities, etc.). Shareholders of
the Acquiring Fund may also be subject to this limitation. The Acquiring Fund is permitted to pass-through its net business interest income (generally the Fund’s business interest income less applicable expenses and deductions) as a
“section 163(j) interest dividend.” The amount passed through to shareholders is considered interest income and can be used to determine such shareholder’s business interest deduction under Code section 163(j), if any, subject to
holding period requirements and other limitations. The Acquiring Fund may choose not to report such section 163(j) interest dividends.
Distributions to shareholders of net investment income received by the Acquiring Fund from investments that generate taxable income, if any,
and of net short-term capital gains realized by the Acquiring Fund, if any, will be taxable to its shareholders as ordinary income. Distributions by the Acquiring Fund of net capital gains (i.e., the excess of net long-term capital gains over net
short-term capital losses), if any, are taxable as long-term capital gains, regardless of the length of time the shareholder has owned the shares with respect to which such distributions are made. The amount of taxable income allocable to the
Acquiring Fund’s shares will depend upon the amount of such income realized by the Acquiring Fund, but it is not generally expected to be significant. Taxable distributions are subject to federal income tax whether reinvested in additional
shares of the Acquiring Fund or paid in cash.
Distributions, if any, in excess of the Acquiring Fund’s current and accumulated
earnings and profits will first reduce the adjusted tax basis of a shareholder’s shares and, after that basis has been reduced to zero, will constitute capital gain to the shareholder (assuming the shares are held as a capital asset).
“Qualified dividend
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income” received by noncorporate shareholders is taxed for federal income tax purposes at rates equivalent to long-term capital gains tax rates, which reach a maximum of 20%. Qualified
dividend income generally includes dividends from domestic corporations and dividends from non-U.S. corporations that meet certain specified criteria. As long as the Acquiring Fund qualifies as a regulated
investment company under the Code, it is not expected that any part of its distributions to shareholders from its investments will qualify for the Dividends Received Deduction available to corporate shareholders or as qualified dividend income in
the case of noncorporate shareholders.
Earnings and profits for the current year are generally treated, for federal income tax purposes,
as first being used to pay distributions on preferred shares, if any, and then to the extent remaining, if any, to pay distributions on the common shares.
If the Acquiring Fund utilizes leverage through borrowings, or otherwise, asset coverage limitations imposed by the 1940 Act as well as
additional restrictions that may be imposed by certain lenders on the payment of dividends or distributions potentially could limit or eliminate the Acquiring Fund’s ability to make distributions on its common shares and/or preferred shares, if
any, until the asset coverage is restored. These limitations could prevent the Acquiring Fund from distributing at least 90% of its investment company taxable income and tax-exempt interest as is required
under the Code and therefore might jeopardize the Acquiring Fund’s qualification as a regulated investment company and/or might subject the Acquiring Fund to a nondeductible 4% federal excise tax. Upon any failure to meet the asset coverage
requirements imposed by the 1940 Act, the Acquiring Fund may, in its sole discretion and to the extent permitted under the 1940 Act, purchase or redeem its outstanding preferred shares, if any, in order to maintain or restore the requisite asset
coverage and avoid the adverse consequences to the Acquiring Fund and its shareholders of failing to meet the distribution requirements. However, there can be no assurance that any such action would achieve these objectives. The Acquiring Fund
endeavors to avoid restrictions on its ability to distribute dividends.
The Code provides that interest on indebtedness incurred or
continued to purchase or carry the Acquiring Fund’s shares to which exempt-interest dividends are allocated is not deductible. Under rules used by the IRS for determining when borrowed funds are considered used for the purpose of purchasing or
carrying particular assets, the purchase or ownership of shares may be considered to have been made with borrowed funds, even though such funds are not directly used for the purchase or ownership of such shares.
The interest on private activity bonds in most instances is not federally tax-exempt to a person who
is a “substantial user” of a facility financed by such bonds or a “related person” of such “substantial user.” As a result, the Acquiring Fund may not be an appropriate investment for a shareholder who is considered
either a “substantial user” or a “related person” within the meaning of the Code. In general, a “substantial user” of a facility includes a “nonexempt person who regularly uses a part of such facility in his trade
or business.” “Related persons” are in general defined to include persons among whom there exists a relationship, either by family or business, which would result in a disallowance of losses in transactions among them under various
provisions of the Code (or if they are members of the same controlled group of corporations under the Code), including a partnership and each of its partners (and certain members of their families), an S corporation and each of its shareholders (and
certain members of their families) and various combinations of these and other relationships. The foregoing is not a complete description of all of the provisions of the Code covering the definitions of “substantial user” and “related
person.”
Although dividends generally will be treated as distributed when paid, dividends declared in October, November or December,
payable to shareholders of record on a specified date in one of those months and paid during the following January, will be treated as having been distributed by the Acquiring Fund (and received by the shareholders) on December 31 of the year
declared.
Certain of the Acquiring Fund’s investment practices are subject to special provisions of the Code that, among other
things, may defer the use of certain deductions or losses of the Acquiring Fund, affect the holding
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period of securities held by the Acquiring Fund and alter the character of the gains or losses realized by the Acquiring Fund. These provisions may also require the Acquiring Fund to recognize
income or gain without receiving cash with which to make distributions in the amounts necessary to satisfy the requirements for maintaining regulated investment company status and for avoiding federal income and excise taxes. The Acquiring Fund will
monitor its transactions and may make certain tax elections in order to mitigate the effect of these rules and prevent disqualification of the Acquiring Fund as a regulated investment company.
The sale, exchange or redemption of shares of the Acquiring Fund normally will result in capital gains or losses to shareholders who hold
their shares as capital assets. Generally, a shareholder’s gain or loss will be long-term capital gains or losses if the shares have been held for more than one year, even though the increase in value in such shares is attributable to tax-exempt interest income. The gain or loss on shares held for one year or less will generally be treated as short-term capital gains or losses. Current federal income tax law taxes both long-term and short-term
capital gains of corporations at the same rates applicable to ordinary income. However, for noncorporate taxpayers, long-term capital gains are currently taxed at a maximum federal income tax rate of 20%, while short-term capital gains are currently
taxed at ordinary income rates. Any loss on the sale of shares that have been held for six months or less will be disallowed to the extent of any distribution of exempt-interest dividends received with respect to such shares, unless the shares are
of a regulated investment company that declares exempt-interest dividends on a daily basis in an amount equal to at least 90% of its net tax-exempt interest and distributes such dividends on a monthly or more
frequent basis. If a shareholder sells or otherwise disposes of shares before holding them for more than six months, any loss on the sale or disposition will be treated as a long-term capital loss to the extent of any net capital gain dividends
received (and undistributed net capital gain designated by the Acquiring Fund that is deemed to be received) by the shareholder with respect to such shares. Any loss realized on a sale or exchange of shares of the Acquiring Fund will be disallowed
to the extent those shares of the Acquiring Fund are replaced by other substantially identical shares of the Acquiring Fund or other substantially identical stock or securities (including through reinvestment of dividends) within a period of 61 days
beginning 30 days before and ending 30 days after the date of disposition of the original shares. In that event, the basis of the replacement stock or securities will be adjusted to reflect the disallowed loss. The deductibility of capital losses is
subject to limitation.
Federal income tax law imposes an alternative minimum tax with respect to individuals, trusts and estates.
Interest on certain “private activity” bonds is included as an item of tax preference in determining the amount of a taxpayer’s alternative minimum taxable income. Pursuant to a non-fundamental
investment policy, the Acquiring Fund may invest up to 20% of its Managed Assets in AMT Bonds. To the extent that the Acquiring Fund receives income from municipal securities subject to the federal alternative minimum tax, a portion of the dividends
paid by the Acquiring Fund, although otherwise exempt from federal income tax, would be taxable to its shareholders to the extent that their tax liability is determined under the federal alternative minimum tax. The Acquiring Fund will annually
provide a report indicating the percentage of the Acquiring Fund’s income attributable to municipal securities subject to the federal alternative minimum tax applicable to individuals. For taxable years beginning after December 31, 2022,
exempt-interest dividends may also affect the corporate alternative minimum tax liability of some corporate shareholders.
Certain
noncorporate shareholders are subject to an additional 3.8% tax on some or all of their “net investment income,” which includes items of gross income that are attributable to interest, dividends, original-issue discount and market discount
(but not including tax-exempt interest and exempt-interest dividends), as well as net gain from the disposition of certain property. This tax generally applies to the extent net investment income, when added
to other modified adjusted gross income, exceeds $200,000 for an unmarried individual, $250,000 for a married taxpayer filing a joint return (or a surviving spouse) or $125,000 for a married individual filing a separate return. Shareholders should
consult their tax advisers regarding the applicability of this tax in respect of their shares.
Tax-exempt income, including exempt-interest dividends paid by the Acquiring Fund, is taken into
account in calculating the amount of Social Security and railroad retirement benefits that may be subject to federal income tax.
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The Acquiring Fund may be required to withhold federal income tax at a rate of 24% from all
distributions (including exempt-interest dividends) and redemption proceeds payable to shareholders who fail to provide the Acquiring Fund with their correct taxpayer identification number or to make required certifications, or who have been
notified (or the Acquiring Fund has been notified) by the IRS that they are subject to backup withholding. Corporate shareholders and certain other shareholders specified in the Code generally are exempt from such backup withholding. This
withholding is not an additional tax. Any amounts withheld may be credited against the shareholder’s federal income tax liability, provided the required information is furnished to the IRS.
The Foreign Account Tax Compliance Act (“FATCA”) generally requires the Acquiring Fund to obtain information sufficient to identify
the status of each of its shareholders. If a shareholder fails to provide this information or otherwise fails to comply with FATCA, the Acquiring Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on
Acquiring Fund dividends and distributions and redemption proceeds. The Acquiring Fund may disclose the information that it receives from (or concerning) its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA, related intergovernmental agreements or other applicable laws or regulations. Investors are urged to consult their own tax advisers regarding the applicability of FATCA and any other
reporting requirements with respect to the investor’s own situation, including investments through an intermediary.
Pursuant to
proposed regulations, the Treasury Department has indicated its intent to eliminate the requirements under FATCA of withholding on gross proceeds from the sale, exchange, maturity or other disposition of relevant financial instruments (including
redemptions of stock). The Treasury Department has indicated that taxpayers may rely on these proposed regulations pending their finalization.
The Code provides that every shareholder required to file a tax return must include for information purposes on such return the amount of tax-exempt interest received during the taxable year, including any exempt-interest dividends received from the Acquiring Fund.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The custodian of each Funds’ assets is State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111. The
custodian performs custodial, fund accounting and portfolio accounting services. With respect to each Fund’s common shares and Georgia Municipal’s Adjustable Rate MuniFund Term Preferred Shares, the transfer, shareholder services and
dividend disbursing agent is Computershare Inc. and Computershare Trust Company, N.A., 150 Royall Street, Canton, Massachusetts 02021. The Bank of New York Mellon, 240 Greenwich Street, New York, New York 10286, acts as the tender agent, transfer
agent and registrar, dividend disbursing agent and paying agent, calculation agent and redemption price disbursing agent with respect to Ohio Municipal’s Variable Rate Demand Preferred Shares and the Acquiring Fund’s MuniFund Preferred
Shares and Variable Rate Demand Preferred Shares.
SUPPLEMENTAL FINANCIAL INFORMATION AND EXPERTS
The financial statements and financial highlights of each Fund have been audited by KPMG LLP (“KPMG”), an independent registered
public accounting firm, as set forth in their reports thereon. In reliance upon such reports given on the authority of KPMG as experts in accounting and auditing, the audited financial statements and financial highlights and related independent
registered public accounting firm’s report for (i) Georgia Municipal, contained in Georgia Municipal’s Annual Report for the fiscal year ended
May 31, 2022 (as filed August 8, 2022) (File No.
811-21152); (ii) Ohio Municipal, contained in Ohio Municipal’s Annual Report for the fiscal year ended February 28, 2022 (as filed May 6,
2022) (File No. 811-06385) and (iii) the Acquiring Fund, contained in the Acquiring Fund’s Annual Report
for the fiscal year ended October 31, 2021 (as filed January 6, 2022) (File No. 811-10345), are incorporated herein by reference. The principal business address
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of KPMG is 200 East Randolph Street, Chicago, Illinois 60601. In addition, (i) the unaudited financial statements and financial highlights for Ohio Municipal, contained in Ohio
Municipal’s Semi-Annual Report for the period ended August 31, 2022 (File No. 811-06385) and (ii) the
unaudited financial statements and financial highlights for the Acquiring Fund contained in the Acquiring Fund’s Semi-Annual Report for the period ended
April 30, 2022 (File No. 811-10345), are incorporated by herein by reference.
Comparative fee tables showing the various fees and expenses of investing in common shares of the Target Funds, and the fees and expenses of
the Acquiring Fund on a pro forma basis after giving effect to the proposed Merger, is included under the heading “Proposal No. 1—A. Synopsis—Comparative Expense Information” in the Joint Proxy Statement/Prospectus.
The Mergers will not result in a material change to each Target Fund’s investment portfolio due to the investment restrictions of the
Acquiring Fund. As a result, a schedule of investments of each Target Fund modified to show the effects of the change is not required and is not included. Notwithstanding the foregoing, changes may be made to each Target Fund’s portfolio in
advance of the Mergers and/or the Acquiring Fund’s portfolio following the Mergers.
There are no material differences in the
accounting policies of the Target Funds as compared to those of the Acquiring Fund.
ADDITIONAL
INFORMATION
A Registration Statement on Form N-14, including amendments thereto, relating to
the common shares of the Acquiring Fund offered hereby, has been filed by the Acquiring Fund with the SEC. The Joint Proxy Statement/Prospectus and this SAI do not contain all of the information set forth in the Registration Statement, including any
exhibits and schedules thereto. For further information with respect to the Acquiring Fund and the common shares offered hereby, reference is made to the Acquiring Fund’s Registration Statement. Statements contained in the Joint Proxy
Statement/Prospectus and this SAI as to the contents of any contract or other document referred to herein are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by such reference. Copies of the Registration Statement may be inspected without charge at the SEC’s principal office in Washington, D.C., and copies of all or any part
thereof may be obtained from the SEC upon the payment of certain fees prescribed by the SEC.
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APPENDIX A
Ratings of Investments
S&P Global Ratings —A brief description of the applicable S&P Global Ratings, a subsidiary of S&P Global Inc.
previously McGraw Hill Financial, Inc. (“Standard & Poor’s” or “S&P”), rating symbols and their meanings (as published by S&P) follows:
A S&P Global Ratings issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific
financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors,
insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects Standard & Poor’s view of the obligor’s capacity and willingness to
meet its financial commitments as they come due, and may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default. NR indicates that a rating has not been assigned or is no longer
assigned.
Issue credit ratings can be either long-term or short-term. Short-term ratings are generally assigned to those obligations
considered short-term in the relevant market. In the U.S., for example, that means obligations with an original maturity of no more than 365 days—including commercial paper. Short-term ratings are also used to indicate the creditworthiness of
an obligor with respect to put features on long-term obligations. Medium-term notes are assigned long-term ratings.
LONG-TERM ISSUE CREDIT RATINGS
Issue credit ratings are based in varying degrees, on S&P’s analysis of the following considerations:
1. Likelihood of payment—capacity and willingness of the obligor to meet its financial
commitment on an obligation in accordance with the terms of the obligation;
2. Nature of
and provisions of the obligation; and
3. Protection afforded by, and relative position
of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors’ rights.
Issue ratings are an assessment of default risk, but may incorporate an assessment of relative seniority or ultimate recovery in the event of
default. Junior obligations are typically rated lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above. (Such differentiation applies when an entity has both senior and subordinated obligations, secured and
unsecured obligations, or operating company and holding company obligations.)
AAA
An obligation rated ‘AAA’ has the highest rating assigned by S&P Global Ratings. The obligor’s capacity to meet its
financial commitment on the obligation is extremely strong.
AA
An obligation rated ‘AA’ differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its
financial commitment on the obligation is very strong.
A-1
A
An obligation rated ‘A’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.
BBB
An obligation rated
‘BBB’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
BB, B, CCC, CC, and C
Obligations rated ‘BB’, ‘B’, ‘CCC’, ‘CC’, and ‘C’ are regarded as having significant
speculative characteristics. ‘BB’ indicates the least degree of speculation and ‘C’ the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties
or major exposures to adverse conditions.
BB
An obligation rated ‘BB’ is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.
B
An obligation rated
‘B’ is more vulnerable to nonpayment than obligations rated ‘BB’, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely
impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.
CCC
An obligation rated ‘CCC’ is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
CC
An obligation rated
‘CC’ is currently highly vulnerable to nonpayment. The ‘CC’ rating is used when a default has not yet occurred, but S&P Global Ratings expects default to be a virtual certainty, regardless of the anticipated time to default.
C
An obligation rated
‘C’ is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared to obligations that are rated higher.
D
An obligation rated
‘D’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless
S&P Global
A-2
Ratings believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The
‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is
lowered to ‘D’ if it is subject to a distressed debt restructuring.
Plus (+) or minus (-). The ratings from ‘AA’ to
‘CCC’ may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
SHORT-TERM ISSUE
CREDIT RATINGS
A-1
A short-term obligation rated ‘A-1’ is rated in the highest category by S&P Global
Ratings. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial
commitment on these obligations is extremely strong.
A-2
A short-term obligation rated ‘A-2’ is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory.
A-3
A short-term obligation rated ‘A-3’ exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
B
A short-term obligation
rated ‘B’ is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties which could lead to the
obligor’s inadequate capacity to meet its financial commitments.
C
A short-term obligation rated ‘C’ is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and
economic conditions for the obligor to meet its financial commitment on the obligation.
D
A short-term obligation rated ‘D’ is in default or in breach of an imputed promise. For
non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made
within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of a similar
action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’ if it is subject to a distressed debt restructuring.
A-3
MUNICIPAL SHORT-TERM NOTE RATINGS DEFINITIONS
A S&P Global Ratings U.S. municipal note rating reflects S&P Global Ratings’ opinion about the liquidity factors and market
access risks unique to the notes. Notes due in three years or less will likely receive a note rating. Notes with an original maturity of more than three years will most likely receive a long-term debt rating.
In determining which type of rating, if any, to assign, S&P Global Ratings’ analysis will review the following considerations:
1. Amortization schedule—the larger the final maturity relative to other maturities, the
more likely it will be treated as a note; and
2. Source of payment—the more dependent
the issue is on the market for its refinancing, the more likely it will be treated as a note.
Note rating symbols are as follows:
SP-1
Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2
Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the
notes.
SP-3
Speculative capacity to pay principal and interest.
D
‘D’ is assigned
upon failure to pay the note when due, completion of a distressed debt restructuring, or the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay
provisions.
Moody’s Investors Service, Inc.—A brief description of the applicable Moody’s Investors Service, Inc.
(“Moody’s”) rating symbols and their meanings (as published by Moody’s) follows:
LONG-TERM OBLIGATION RATINGS
Moody’s long-term ratings are assigned to issuers or obligations with an original maturity of one year or more and reflect both on the
likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default.
Aaa
Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
Aa
Obligations rated Aa are
judged to be of high quality and are subject to very low credit risk.
A-4
A
Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.
Baa
Obligations rated Baa are
judged to be medium-grade and subject to moderate credit risk. They are considered medium grade and as such may possess certain speculative characteristics.
Ba
Obligations rated Ba are
judged to be speculative and are subject to substantial credit risk.
B
Obligations rated B are considered speculative and are subject to high credit risk.
Caa
Obligations rated Caa are
judged to be speculative, of poor standing, and are subject to very high credit risk.
Ca
Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and
interest.
C
Obligations
rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.
Note: Moody’s appends
numerical modifiers 1,2, and 3 to each generic rating classification from Aaa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
SHORT-TERM OBLIGATION RATINGS
Moody’s short-term ratings are assigned to obligations with an original maturity of thirteen months or less and reflect the likelihood of
a default on contractually promised payments. Moody’s employs the following designations to indicate the relative repayment ability of rated issuers:
P-1
Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt
obligations.
P-2
Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt
obligations.
P-3
Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term
obligations.
A-5
NP
Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.
Note: Canadian issuers rated P-1 or P-2 have their short-term ratings enhanced
by the senior-most long-term rating of the issuer, its guarantor or support-provider.
U.S. MUNICIPAL SHORT-TERM OBLIGATION RATINGS
We use the Municipal Investment Grade (MIG) scale for US municipal cash flow notes, bond anticipation notes and certain other short-term
obligations, which typically mature in three years or less. Under certain circumstances, we use the MIG scale for bond anticipation notes with maturities of up to five years.
MIG 1
This designation denotes
superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.
MIG 2
This designation denotes
strong credit quality. Margins of protection are ample, although not as large as in the preceding group.
MIG 3
This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is
likely to be less well-established.
SG
This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.
Fitch Ratings, Inc.—A brief description of the applicable Fitch Ratings, Inc. (“Fitch”) ratings symbols and meanings (as
published by Fitch) follows:
Rated entities in a number of sectors, including financial and
non-financial corporations, sovereigns, insurance companies and certain sectors within public finance, are generally assigned Issuer Default Ratings (IDRs). IDRs are also assigned to certain entities or
enterprises in global infrastructure project finance and public finance. IDRs opine on an entity’s relative vulnerability to default on financial obligations.
The “threshold” default risk addressed by the IDR is generally that of the financial obligations whose non-payment would best reflect the uncured failure of that entity. As such, IDRs also address relative vulnerability to bankruptcy, administrative receivership or similar concepts.
In aggregate, IDRs provide an ordinal ranking of issuers based on the agency’s view of their relative vulnerability to default, rather
than a prediction of a specific percentage likelihood of default.
LONG-TERM CREDIT RATINGS
AAA
Highest credit quality.
‘AAA’ ratings denote the lowest expectation of default risk. They are assigned only in case of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable
events.
A-6
AA
Very high credit quality. ‘AA’ ratings denote expectations of a very low default risk. They indicate very strong capacity for
payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
A
High credit quality. ‘A’ ratings denote expectations of low default risk. The capacity for payment of financial commitments is
considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.
BBB
Good credit quality.
‘BBB’ ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.
BB
Speculative. ‘BB’
ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists which supports the servicing of financial
commitments.
B
Highly
speculative. ‘B’ ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the
business and economic environment.
CCC
Substantial credit risk. Very low margin for safety. Default is a real possibility.
CC
Very high levels of credit
risk. Default of some kind appears probable.
C
Near Default. A Default or default-like process has begun, or the issuer is in standstill, or for a closed funding vehicle, payment capacity
is irrevocably impaired. Conditions that are indicative of a ‘C’ category rating for an issuer include:
a. the issuer has entered into a grace or cure period following
non-payment of a material financial obligation;
b. the issuer has entered into a temporary negotiated waiver or standstill agreement following
a payment default on a material financial obligation; or
c. the formal announcement by
the issuer or their agent of a distressed debt exchange
A-7
d. A closed financing vehicle where payment
capacity is irrevocably impaired such that it is not expected to pay interest and/or principal in full during the life of the transaction, but where no payment default is imminent.
RD
Restricted default.
‘RD’ ratings indicate an issuer that in Fitch Ratings’ opinion has experienced an uncured payment default on a bond, loan or other material financial obligation but which has not entered into bankruptcy filings, administration,
receivership, liquidation or other formal winding-up procedure, and which has not otherwise ceased business. This would include:
a. the selective payment default on a specific class or currency of debt;
b. the uncured expiry of any applicable grace period, cure period or default forbearance
period following a payment default on a bank loan, capital markets security or other material financial obligation;
c. the extension of multiple waivers or forbearance periods upon a payment default on one or
more material financial obligations, either in series or in parallel; or
d. execution of
a distressed debt exchange on one or more material financial obligations.
D
Default. ‘D’ ratings indicate an issuer that in Fitch Ratings’ opinion has entered into bankruptcy filings, administration,
receivership, liquidation or other formal winding-up procedure, or which has otherwise ceased business. Default ratings are not assigned prospectively to entities or their obligations; within this context,
nonpayment on an instrument that contains a deferral feature or grace period will generally not be considered a default until after the expiration of the deferral or grace period, unless a default is otherwise driven by bankruptcy or other similar
circumstance, or by a distressed debt exchange.
In all cases, the assignment of a default rating reflects the agency’s opinion as to
the most appropriate rating category consistent with the rest of its universe of ratings, and may differ from the definition of default under the terms of an issuer’s financial obligations or local commercial practice.
Note: The modifiers “+” or “-” may be appended to a rating to denote relative status within major rating categories. Such suffixes are not
added to the ‘AAA’ Long-Term IDR category, or to Long-Term IDR categories below ‘CCC’.
SHORT-TERM OBLIGATION RATINGS
A short-term issuer or obligation rating is based in all cases on the short-term vulnerability to default of the rated entity or security
stream and relates to the capacity to meet financial obligations in accordance with the documentation governing the relevant obligation. Short-Term Ratings are assigned to obligations whose initial maturity is viewed as “short term” based
on market convention. Typically, this means up to 13 months for corporate, sovereign, and structured obligations, and up to 36 months for obligations in U.S. public finance markets.
F1
Highest short-term credit
quality. Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added “+” to denote any exceptionally strong credit feature.
A-8
F2
Good short-term credit quality. Good intrinsic capacity for timely payment of financial commitments.
F3
Fair short-term credit
quality. The intrinsic capacity for timely payment of financial commitments is adequate.
B
Speculative short-term credit quality. Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to
near-term adverse changes in financial and economic conditions.
C
High short-term default risk. Default is a real possibility.
RD
Restricted default.
Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Applicable to entity ratings only.
D
Default. Indicates a
broad-based default event for an entity, or the default of a short-term obligation.
Specific limitations relevant to the issuer credit
rating scales include:
| |
• |
|
The ratings do not predict a specific percentage of default likelihood over any given time period.
|
| |
• |
|
The ratings do not opine on the market value of any issuer’s securities or stock, or the likelihood that
this value may change. |
| |
• |
|
The ratings do not opine on the liquidity of the issuer’s securities or stock. |
| |
• |
|
The ratings do not opine on the possible loss severity on an obligation should an issuer default, except in the
following cases: |
| |
• |
|
Ratings assigned to individual obligations of issuers in corporate finance, banks,
non-bank financial institutions, insurance and covered bonds. |
| |
• |
|
In limited circumstances for U.S. public finance obligations where Chapter 9 of the Bankruptcy Code provides
reliably superior prospects for ultimate recovery to local government obligations that benefit from a statutory lien on revenues or during the pendency of a bankruptcy proceeding under the Code if there is sufficient visibility on potential recovery
prospects. |
| |
• |
|
The ratings do not opine on the suitability of an issuer as counterparty to trade credit. |
| |
• |
|
The ratings do not opine on any quality related to an issuer’s business, operational or financial profile
other than the agency’s opinion on its relative vulnerability to default. For the avoidance of doubt, not all defaults will be considered a default for rating purposes. Typically, a default relates to a liability payable to an unaffiliated,
outside investor. |
| |
• |
|
The ratings do not opine on any quality related to a transaction’s profile other than the agency’s
opinion on the relative vulnerability to default of an issuer and/or of each rated tranche or security. |
| |
• |
|
The ratings do not predict a specific percentage of extraordinary support likelihood over any given period.
|
| |
• |
|
The ratings do not opine on the suitability of any security for investment or any other purposes.
|
A-9
Ratings assigned by Fitch Ratings articulate an opinion on discrete and specific areas of risk.
The above list is not exhaustive, and is provided for the reader’s convenience.
RATING WATCHES AND RATING OUTLOOKS
Rating Watch
Rating
Watches indicate that there is a heightened probability of a rating change and the likely direction of such a change. These are designated as “Positive”, indicating a rating could stay at its present level or potentially be upgraded,
“Negative”, to indicate that a rating could stay at its present level or potentially be downgraded, or “Evolving”, if ratings may be raised, lowered or affirmed. However, ratings that are not on Rating Watch can be raised or
lowered without being placed on Rating Watch first, if circumstances warrant such an action.
A Rating Watch is typically event-driven
and, as such, it is generally resolved over a relatively short period. The event driving the Watch may be either anticipated or have already occurred, but in both cases, the exact rating implications remain undetermined. The Watch period is
typically used to gather further information and/or subject the information to further analysis. A Rating Watch must be reviewed and a RAC be published every six months after a rating has been placed on Rating Watch, except in the case
described below.
Additionally, a Watch may be used where the rating implications are already clear, but where a triggering event (e.g.
shareholder or regulatory approval) exists. The Watch will typically extend to cover the period until the triggering event is resolved or its outcome is predictable with a high enough degree of certainty to permit resolution of the Watch. In these
cases, where it has previously been communicated within the RAC that the Rating Watch will be resolved upon an event and where there are no material changes to the respective rating up to the event, the Rating Watch may not be reviewed within the
six months interval. In any case the affected ratings (and the Rating Watch) will remain subject to an annual review cycle.
Rating
Outlook
Rating Outlooks indicate the direction a rating is likely to move over a one- to two-year period. They reflect financial or other trends that have not yet reached the level that would trigger a rating action, but which may do so if such trends continue. A Positive Rating Outlook indicates an
upward trend on the rating scale. Conversely, a Negative Rating Outlook signals a negative trend on the rating scale. Positive or Negative rating Outlooks do not imply that a rating change is inevitable and, similarly, ratings with Stable Outlooks
can be raised or lowered without a prior revision to the Outlook, if circumstances warrant such an action. Occasionally, where the fundamental trend has strong, conflicting elements of both positive and negative, the Rating Outlook may be described
as Evolving.
Outlooks are currently applied on the long-term scale to issuer ratings in corporate finance (including sovereigns,
industrials, utilities, financial institutions and insurance companies) and public finance outside the U.S.; to issue ratings in public finance in the U.S.; to certain issues in project finance; to Insurer Financial Strength Ratings; to issuer
and/or issue ratings in a number of National Rating scales; and to the ratings of structured finance transactions. Outlooks are not applied to ratings assigned on the short-term scale and are typically do not apply to ratings in the ‘CCC’,
‘CC’ and ‘C’ categories since the volatility of these ratings is very high and outlooks would be of limited informational value. Defaulted ratings typically do not carry an Outlook.
STANDARD RATING ACTIONS
|
|
|
| Assignment (New Rating)* |
|
A rating has been assigned to a previously unrated issuer or issue. |
|
|
| Publication (Publish)* |
|
Initial public announcement of a rating on the agency’s website, although not necessarily the first rating assigned. This action denotes when a |
A-10
|
|
|
|
|
previously private rating is published. In cases where the publication coincides with a rating change, Fitch will only publish the changed rating. The rating history during the time when the rating was private will not be
published. |
|
|
| Affirmed* |
|
The rating has been reviewed and no change has been deemed necessary. Ratings affirmations may also include an affirmation of, or change to, an Outlook when an outlook is used. |
|
|
| Upgrade* |
|
The rating has been raised in the scale. |
|
|
| Downgrade* |
|
The rating has been lowered in the scale. |
|
|
| Review-No Action* |
|
The rating has been reviewed by a credit rating committee with no change in rating or Outlook. As of the review date, the credit rating committee determined that nothing had sufficiently changed to warrant a new rating action.
Such review will be published on the agency’s website, but a RAC will not be issued. |
|
|
|
Matured*/Paid-In-Full |
|
a. ‘Matured’—This action is used when an issue has reached the
end of its repayment term and rating coverage is discontinued. Denoted as ‘NR’. This indicates that a previously rated issue has been repaid, but other issues of the same program (rated or unrated) may remain outstanding. For the
convenience of investors, Fitch may also include issues relating to a rated issuer or transaction that are not and have not been rated on its section of the web page relating to the respective issuer or transaction.
b. ‘Paid-In-Full’—This action indicates that the issue has been paid in full. As the issue no longer exists, it is therefore no longer rated. Denoted as
‘PIF’. |
|
|
| Pre-refunded* |
|
Assigned to long-term US Public Finance issues after Fitch assesses refunding escrow. |
|
|
| Upgrade* |
|
The rating has been raised in the scale. |
|
|
| Withdrawn* |
|
The rating has been withdrawn and the issue or issuer is no longer rated by Fitch. Withdrawals may occur for one or several of the
following reasons:
• Incorrect or insufficient information.
• Bankruptcy of the rated
entity, debt restructuring or default.
• Reorganization of rated entity (e.g. merger or acquisition of rated entity or rated entity no
longer exists). • The debt
instrument was taken private.
• Withdrawal of a guarantor rating.
• An Expected Rating that is no
longer expected to convert to a Final Rating.
• Criteria or policy change.
• Bonds were pre-refunded, repaid early (off schedule), or canceled. This includes cases where the issuer has no debt outstanding and is no longer issuing debt.
• Ratings are no longer
considered relevant to the agency’s coverage. |
A-11
|
|
|
|
|
• Commercial reasons.
• Other reasons.
When a public rating is withdrawn, Fitch will issue a RAC that details the current rating and Outlook or Watch status (if applicable), a statement that the
rating is withdrawn and the reason for the withdrawal. Withdrawals cannot be used to forestall a rating action. Every effort is therefore made to ensure that the rating opinion upon withdrawal reflects an updated view. Where significant elements of
uncertainty remain (for example, a rating for an entity subject to a takeover bid) or where information is otherwise insufficient to support a revised opinion, the agency attempts when possible to indicate in the withdrawal disclosure the likely
direction and scale of any rating movement had coverage been maintained.Ratings that have been withdrawn will be indicated by the symbol ‘WD’. |
|
|
| Under Critical Observation |
|
The rating has been placed “Under Criteria Observation” upon the publication of new or revised criteria that is applicable to
the rating, where the new or revised criteria has yet to be applied to the rating and where the criteria could result in a rating change when applied but the impact is not yet known.
The status of UCO will be resolved after the application of the new or revised criteria,
which must be completed within six months from the publication date of the new or revised criteria.
The status of UCO will be resolved after the application of the new or revised criteria, which must be completed within six months from the publication date of
the new or revised criteria. UCO is only applicable to private and public
international credit ratings. It is not applicable to National Ratings, Non-Credit Scale Ratings, Credit Opinions or Rating Assessment Services. It is not applicable to ratings status Paid in Full, Matured,
Withdrawn or Not Rated. |
|
|
| Criteria Observation Removed |
|
UCO can be addressed and removed by a subsequent rating action such as affirmation, upgrade or downgrade; with these actions, the annual review requirement is also met. Where a rating action has not been taken, a Criteria
Observation Removed action may be taken if it has been determined that the rating would not change due to the application of the new criteria. The Criteria Observation Removed action does not satisfy Fitch’s minimum annual credit review
requirement. |
|
|
| Recovery Rating Revision |
|
Change to an issue’s Recovery Rating. |
|
|
| Rating Modifier Actions |
|
Modifiers include Rating Outlooks, and Rating Watches. |
|
|
| Rating Watch Maintained* |
|
The issue or issuer has been reviewed and remains on active Rating Watch status. |
|
|
| Rating Watch On* |
|
The issue or issuer has been placed on active Rating Watch status. |
|
|
| Rating Watch Revision* |
|
Rating Watch status has changed. |
|
|
| Support Floor Rating Revision |
|
Applicable only to Support ratings related to Financial Institutions, which are amended only with this action. |
A-12
|
|
|
|
|
| Under Review* |
|
Applicable to ratings that may undergo a change in scale not related to changes in fundamental credit quality. Final action will be “Revision Rating” |
|
|
| Outlook Revision * |
|
Outlook revisions (e.g. to Rating Outlook Stable from Rating Outlook Positive) are used to indicate changes in the ratings trend. In structured finance transactions, the Outlook may be revised independently of a full review of
the underlying rating. An Outlook revision may also be used when a series of potential event risks has been identified, none of which individually warrants a Rating Watch but which cumulatively indicate heightened probability of a rating change over
the following one to two years. A revision to the Outlook may also be appropriate where a specific event has been identified that could lead to a change in ratings, but where the conditions and implications of that event are largely unclear and
subject to high execution risk over a one- to two-year period. |
| * |
A rating action must be recorded for each rating in a required cycle to be considered compliant with Fitch
policy concerning aging of ratings. Not all Ratings or Data Actions, or changes in rating modifiers, will meet this requirement. Actions of Reviews that meet this requirement are noted with an “ * ” in the above definitions.
|
A-13
APPENDIX B
TAXABLE EQUIVALENT YIELD TABLE
The taxable equivalent yield is the current yield you would need to earn on a taxable investment in order to equal a stated tax-free yield on a municipal investment. To assist you to more easily compare municipal investments like the Funds with taxable alternative investments, the table below presents the approximate taxable equivalent
yields for individuals for a range of hypothetical tax-free yields, assuming the stated marginal federal income tax rates for 2022 listed below. This table should not be considered a representation or
guarantee of future results.
2022 Taxable Equivalent of Tax-Free Yields*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-Return
Bracket |
|
Joint-Return
Bracket |
|
Federal
Tax
Rate |
|
|
4.00% |
|
|
4.50% |
|
|
5.00% |
|
|
5.50% |
|
|
6.00% |
|
|
6.50% |
|
|
7.00% |
|
|
7.50% |
|
| 0-$10,275 |
|
0-$20,550 |
|
|
10 |
% |
|
|
4.44 |
% |
|
|
5.00 |
% |
|
|
5.56 |
% |
|
|
6.11 |
% |
|
|
6.67 |
% |
|
|
7.22 |
% |
|
|
7.78 |
% |
|
|
8.33 |
% |
| $10,276-$41,775 |
|
$20,551-$83,550 |
|
|
12 |
% |
|
|
4.55 |
% |
|
|
5.11 |
% |
|
|
5.68 |
% |
|
|
6.25 |
% |
|
|
6.82 |
% |
|
|
7.39 |
% |
|
|
7.95 |
% |
|
|
8.52 |
% |
| $41,776-$89,075 |
|
$83,551-$178,150 |
|
|
22 |
% |
|
|
5.13 |
% |
|
|
5.77 |
% |
|
|
6.41 |
% |
|
|
7.05 |
% |
|
|
7.69 |
% |
|
|
8.33 |
% |
|
|
8.97 |
% |
|
|
9.62 |
% |
| $89,076-$170,050 |
|
$178,151-$340,100 |
|
|
24 |
% |
|
|
5.26 |
% |
|
|
5.92 |
% |
|
|
6.58 |
% |
|
|
7.24 |
% |
|
|
7.89 |
% |
|
|
8.55 |
% |
|
|
9.21 |
% |
|
|
9.87 |
% |
| $170,051-$215,950 |
|
$340,101-$431,900 |
|
|
32 |
% |
|
|
5.88 |
% |
|
|
6.62 |
% |
|
|
7.35 |
% |
|
|
8.09 |
% |
|
|
8.82 |
% |
|
|
9.56 |
% |
|
|
10.29 |
% |
|
|
11.03 |
% |
| $215,951-$539,900 |
|
$431,901-$647,850 |
|
|
35 |
% |
|
|
6.15 |
% |
|
|
6.92 |
% |
|
|
7.69 |
% |
|
|
8.46 |
% |
|
|
9.23 |
% |
|
|
10.00 |
% |
|
|
10.77 |
% |
|
|
11.54 |
% |
| Over $539,900 |
|
Over $647,850 |
|
|
37 |
% |
|
|
6.35 |
% |
|
|
7.14 |
% |
|
|
7.94 |
% |
|
|
8.73 |
% |
|
|
9.52 |
% |
|
|
10.32 |
% |
|
|
11.11 |
% |
|
|
11.90 |
% |
| * |
Please note that the table does not reflect (i) any federal limitations on the amounts of allowable
itemized deductions, phase-outs of personal or dependent exemption credits or other allowable credits, (ii) any state or local taxes imposed or (iii) any alternative minimum taxes or any taxes other than regular federal individual income
taxes. |
B-1
APPENDIX C
NUVEEN PROXY VOTING POLICY
Policy
Purpose and Statement
Proxy voting is the primary means by which shareholders may influence a publicly traded company’s
governance and operations and thus create the potential for value and positive long-term investment performance. When an SEC registered investment adviser has proxy voting authority, the adviser has a fiduciary duty to vote proxies in the best
interests of its clients and must not subrogate its clients’ interests to its own. In their capacity as fiduciaries and investment advisers, Nuveen Asset Management, LLC (“NAM”), Teachers Advisors, LLC (“TAL”)
and TIAA-CREF Investment Management, LLC (“TCIM”), (each an “Adviser” and collectively, the “Advisers”), vote proxies for the Portfolio Companies held by their respective clients, including
investment companies and other pooled investment vehicles, institutional and retail separate accounts, and other clients as applicable. The Advisers have adopted this Policy, the Nuveen Proxy Voting Guidelines, and the Nuveen Proxy Voting Conflicts
of Interest Policy for voting the proxies of the Portfolio Companies they manage. The Advisers leverage the expertise and services of an internal group referred to as the Responsible Investing Team (RI Team) to administer the Advisers’ proxy
voting. The RI Team adheres to the Advisers’ Proxy Voting Guidelines which are reasonably designed to ensure that the Advisers vote client securities in the best interests of the Advisers’ clients.
Policy Statement
Proxy voting is a key component of a Portfolio Company’s corporate governance program and is the primary method for exercising
shareholder rights and influencing the Portfolio Company’s behavior. Nuveen makes informed voting decisions in compliance with Rule 206(4)-6 (the “Rule”) of the Investment Advisers Act of
1940, as amended (the “Advisers Act”) and applicable laws and regulations, (e.g., the Employee Retirement Income Security Act of 1974, “ERISA”).
Enforcement
As provided in the TIAA
Code of Business Conduct, all employees are expected to comply with applicable laws and regulations, as well as the relevant policies, procedures and compliance manuals that apply to Nuveen’s business activities. Violation of this Policy may
result in disciplinary action up to and including termination of employment.
Terms and Definitions
Advisory Personnel includes the Adviser’s portfolio managers and/or research analysts.
Proxy Voting Guidelines (the ‘‘Guidelines’’) are a set of
pre-determined principles setting forth the manner in which the Advisers intend to vote on specific voting categories, and serve to assist clients, Portfolio Companies, and other interested parties in
understanding how the Advisers intend to vote on proxy-related matters. The Guidelines are not exhaustive and do not necessarily dictate how the Advisers will ultimately vote with respect to any proposal or resolution.
Portfolio Company includes any publicly traded company held in an account that is managed by an Adviser.
Policy Requirements
Investment
advisers, in accordance with the Rule, are required to (i) adopt and implement written policies and procedures that are reasonably designed to ensure that proxies are voted in the best interest of clients, and
C-1
address resolution of material conflicts that may arise, (ii) describe their proxy voting procedures to their clients and provide copies on request, and (iii) disclose to clients how
they may obtain information on how the Advisers voted their proxies.
The Nuveen Proxy Voting Committee (the
“Committee”), the Advisers, the RI Team and Nuveen Compliance are subject to the respective requirements outlined below under Roles and Responsibilities.
Although it is the general policy to vote all applicable proxies received in a timely fashion with respect to securities selected by an
Adviser for current clients, the Adviser may refrain from voting in certain circumstances where such voting would be disadvantageous, materially burdensome or impractical, or otherwise inconsistent with the overall best interest of clients.
Roles and Responsibilities
Nuveen
Proxy Voting Committee
The purpose of the Committee is to establish a governance framework to oversee the proxy voting activities
of the Advisers in accordance with the Policy. The Committee has delegated responsibility for the implementation and ongoing administration of the Policy to the RI Team, subject to the Committee’s ultimate oversight and responsibility as
outlined in the Committee’s Proxy Voting Charter.
Advisers
1. Advisory Personnel maintain the ultimate decision-making authority with respect to how
proxies will be voted, unless otherwise instructed by a client, and may determine to vote contrary to the Guidelines and/or a vote recommendation of the RI Team if such Advisory Personnel determines it is in the best interest of the Adviser’s
clients to do so. The rationale for all such contrary vote determinations will be documented and maintained.
2. When voting proxies for different groups of client accounts, Advisory Personnel may vote
proxies held by the respective client accounts differently depending on the facts and circumstances specific to such client accounts. The rationale for all such vote determinations will be documented and maintained.
3. Advisory Personnel must comply with the Nuveen Proxy Voting Conflicts of Interest Policy
with respect to potential material conflicts of interest.
Responsible Investing Team
1. Performs
day-to-day administration of the Advisers’ proxy voting processes.
2. Seeks to vote proxies in adherence to the Guidelines, which have been constructed in a
manner intended to align with the best interests of clients. In applying the Guidelines, the RI Team, on behalf of the Advisers, takes into account several factors, including, but not limited to:
| |
• |
|
Input from Advisory Personnel |
| |
• |
|
Specific Portfolio Company context, including environmental, social and governance practices, and financial
performance. |
3. Delivers copies of the Advisers’ Policy to clients
and prospective clients upon request in a timely manner, as appropriate.
C-2
4. Assists with the disclosure of proxy votes as
applicable on corporate website and elsewhere as required by applicable regulations.
5. Prepares reports of proxies voted on behalf of the Advisers’ investment company clients
to their Boards or committees thereof, as applicable.
6. Performs an annual vote
reconciliation for review by the Committee.
7. Arranges the annual service provider due
diligence, including a review of the service provider’s potential conflicts of interests, and presents the results to the Committee.
8. Facilitates quarterly Committee meetings, including agenda and meeting minute preparation.
9. Complies with the Nuveen Proxy Voting Conflicts of Interest Policy with respect to
potential material conflicts of interest.
10. Creates and retains certain records in
accordance with Nuveen’s Record Management program.
11. Oversees the proxy voting
service provider in making and retaining certain records as required under applicable regulation.
12. Assesses, in cooperation with Advisory Personnel, whether securities on loan should be
recalled in order to vote their proxies.
Nuveen Compliance
1. Ensures proper disclosure of Advisers’ Policy to clients as required by regulation or
otherwise.
2. Ensures proper disclosure to clients of how they may obtain information on
how the Advisers voted their proxies.
3. Assists the RI Team with arranging the annual
service provider due diligence and presenting the results to the Committee.
4. Monitors
for compliance with this Policy and retains records relating to its monitoring activities pursuant to Nuveen’s Records Management program.
Governance
Review and Approval
This Policy will be reviewed at least annually and will be updated sooner if substantive changes are necessary. The Policy
Leader, the Committee and the NEFI Compliance Committee are responsible for the review and approval of this Policy.
Implementation
Nuveen has established the Committee to provide centralized management and oversight of the proxy voting process administered by
the RI Team for the Advisers in accordance with its Proxy Voting Committee Charter and this Policy.
Exceptions
Any request for a proposed exception or variation to this Policy will be submitted to the Committee for approval and reported to the
appropriate governance committee(s), where appropriate.
October 1, 2022
C-3
PART C
OTHER INFORMATION
Item 15.
Indemnification
Section 4 of Article XII of Registrant’s Declaration of Trust, as amended, provides as follows:
Subject to the exceptions and limitations contained in this Section 4, every person who is, or has been, a Trustee, officer, employee or
agent of the Trust, including persons who serve at the request of the Trust as directors, trustees, officers, employees or agents of another organization in which the Trust has an interest as a shareholder, creditor or otherwise (hereinafter
referred to as a “Covered Person”), shall be indemnified by the Trust to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been such a Trustee, director, officer, employee or agent and against amounts paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding was brought that he engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a payment by a Covered Person, unless there has been either a determination that such Covered Person did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office by the court or other body approving the settlement or other disposition or a reasonable determination, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that he did not engage in such conduct:
(i) by a
vote of a majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not affect
any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be such a Covered Person and shall inure to the benefit of the heirs, executors and administrators of such a person.
Nothing contained herein shall affect any rights to indemnification to which Trust personnel other than Covered Persons may be entitled by contract or otherwise under law.
C-1
Expenses of preparation and presentation of a defense to any claim, action, suit or proceeding
subject to a claim for indemnification under this Section 4 shall be advanced by the Trust prior to final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined
that he is not entitled to indemnification under this Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the matter) or independent legal counsel in a written opinion shall determine, based upon a review of the readily available facts (as opposed to a full trial-type inquiry), that
there is reason to believe that the recipient ultimately will be found entitled to indemnification.
As used in this Section 4, a
“Disinterested Trustee” is one (x) who is not an Interested Person of the Trust (including, as such Disinterested Trustee, anyone who has been exempted from being an Interested Person by any rule, regulation or order of the
Commission), and (y) against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending.
As used in this Section 4, the words “claim,” “action,” “suit” or “proceeding” shall apply to all
claims, actions, suits, proceedings (civil, criminal, administrative or other, including appeals), actual or threatened; and the word “liability” and “expenses” shall include without limitation, attorneys’ fees, costs,
judgments, amounts paid in settlement, fines, penalties and other liabilities.
The trustees and officers of the Registrant are covered by
joint errors and omissions insurance policies against liability and expenses of claims of wrongful acts arising out of their position with the Registrant and other Nuveen funds, subject to such policies’ coverage limits, exclusions and
retention.
Insofar as the indemnification for liabilities arising under the Securities Act of 1933, as amended, (the “1933
Act”) may be permitted to the officers, trustees or controlling persons of the Registrant pursuant to the Declaration of Trust of the Registrant or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by an officer or trustee or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such officer, trustee or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such issue.
C-2
Item 16. Exhibits
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| (1) |
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Declaration of Trust, dated March 21, 2001.(1) |
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| (1)(b) |
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Certificate of Amendment to Declaration of Trust of Registrant, dated February 17, 2010. (1) |
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| (1)(c) |
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Certificate of Name Change Amendment to Declaration of Trust of Registrant, effective as of April 11, 2016.(2) |
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| (1)(d) |
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Certificate of Name Change Amendment to Declaration of Trust of Registrant, effective as of December 28, 2016.
(13) |
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| (2)(a) |
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Amended and Restated By-Laws of Registrant, dated October 5, 2020. (3) |
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| (2)(b) |
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Amendment to the Amended and Restated By-Laws of Registrant, dated February 24,
2022. (14) |
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| (3) |
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Not applicable. |
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| (4) |
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Form of Agreement and Plan of Merger is filed herewith as Appendix A to the Joint Proxy Statement/Prospectus constituting Part A of the Registration Statement. |
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| (5) |
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Not applicable. |
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| (6)(a) |
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Investment Management Agreement, dated April 11, 2016. (2) |
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| (6)(b) |
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Renewal of Investment Management Agreement, dated July 27, 2016. (4) |
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| (6)(c) |
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Renewal of Investment Management Agreement, dated July 24, 2017. (5) |
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| (6)(d) |
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Renewal of Investment Management Agreement, dated July 24, 2018. (6) |
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| (6)(e) |
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Continuance of Investment Management Agreement, dated July 30, 2019. (7) |
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| (6)(f) |
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Continuance of Investment Management Agreement, dated July 30, 2020. (8) |
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| 6(g) |
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Continuance of Investment Management Agreement, dated July 30, 2021. (9) |
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| (6)(h) |
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Continuance of Investment Management Agreement, dated July 29, 2022. (17) |
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| (6)(i) |
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Investment Sub-Advisory Agreement, dated April 11, 2016. (2) |
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| (6)(j) |
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Notice of Continuance of Investment Sub-Advisory Agreement, dated July 28, 2016.
(4) |
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| (6)(k) |
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Notice of Continuance of Investment Sub-Advisory Agreement, dated July 24, 2017.
(5) |
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| (6)(l) |
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Notice of Continuance of Investment Sub-Advisory Agreement, dated July 24, 2018.
(6) |
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| (6)(m) |
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Notice of Continuance of Investment Sub-Advisory Agreement, dated July 24,
2019.(7) |
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| (6)(n) |
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Notice of Continuance of Investment Sub-Advisory Agreement, dated July 31, 2020.
(8) |
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| (6)(o) |
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Notice of Continuance of Investment Sub-Advisory Agreement, dated July 30, 2021.
(9) |
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| (6)(p) |
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Notice of Continuance of Investment Sub-Advisory Agreement, dated July 29, 2022.
(17) |
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| (6)(q) |
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Rule 12d1-4 Investment Agreement between RiverNorth Funds as Acquiring Funds and Nuveen CEFs as Acquiring
Funds, dated January 19, 2022. (15) |
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| (7) |
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Not applicable. |
C-3
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| (8) |
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Not applicable. |
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| (9)(a) |
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Amended and Restated Master Custodian Agreement between the Nuveen Investment Companies and State Street Bank and Trust Company, dated July 15,
2015. (10) |
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| (9)(b) |
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Amendment and revised Appendix A to Amended and Restated Master Custodian Agreement, dated July 31, 2020. (11) |
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| (9)(c) |
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Amendment and revised Appendix A to Amended and Restated Master Custodian Agreement, dated October 7, 2021. (16) |
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| (10) |
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Not applicable. |
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| (11) |
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Opinion and Consent of Counsel is filed herewith. |
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| (12) |
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Opinion and Consent of Vedder Price P.C. supporting the tax matters discussed in the Joint Proxy Statement/Prospectus.* |
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| (13)(a) |
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Transfer Agency and Service Agreement, dated June
15, 2017 between Registrant and Computershare Inc. and Computershare Trust Company, N.A. (5) |
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| (13)(b) |
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Amended and Restated Schedule A to the Transfer Agency Agreement dated July
20, 2020 to the Transfer Agency and Service Agreement dated June 15, 2017 between the Registrant and ComputerShare Inc. and ComputerShare Trust Company, N.A. (12) |
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| (14) |
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Consent of Independent Auditor is filed herewith. |
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| (15) |
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Not applicable. |
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| (16) |
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Powers of Attorney. (17) |
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| (17) |
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Form of Proxy is filed herein and appears following the Joint Proxy Statement/Prospectus constituting Part A of the Registration Statement. |
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| (18) |
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Calculation of Filing Fee Tables is filed herewith. |
* To be filed by amendment.
(1) Filed on January 6, 2011 as an exhibit to the Registrant’s Registration Statement on Form N-2 (File No. 333-171576) and incorporated by reference herein.
(2) Filed on May 19, 2016 as an exhibit to
Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-14 (File No. 333-206628) and incorporated by reference herein.
(3) Filed on October 6, 2020 as an exhibit to the Registrant’s Form 8-K (File
No. 811-10345) and incorporated by reference herein.
(4) Filed on December 13, 2016 as an exhibit to
Nuveen Preferred & Income Opportunities Fund’s Registration Statement on Form N-14 (File No. 333-215072) and incorporated by reference herein.
(5) Filed on November 16, 2017 as an exhibit to Post-Effective Amendment No. 1 to Nuveen California AMT-Free
Quality Municipal Income Fund’s Registration Statement on Form N-2 (File No. 333-184971) and incorporated by reference herein.
(6) Filed on October 1, 2018 as an exhibit to Nuveen Dow 30SM Dynamic Overwrite Fund’s Registration Statement on Form
N-2 (File No. 333-226218) and incorporated by reference herein.
C-4
(7) Filed on March 11, 2020 as an exhibit to Pre-Effective Amendment
No. 1 to Nuveen California AMT-Free Quality Municipal Income Fund’s Registration Statement on Form N-2 (File
No. 333-225399) and incorporated by reference herein.
(8) Filed on August 24, 2020 as an exhibit to
Nuveen California Municipal Value Fund’s Registration Statement on Form N-14 (File No. 333-248308) and incorporated by reference herein.
(9) Filed on August 26, 2021 as an exhibit to Nuveen Dynamic Municipal Opportunities Fund’s Registration Statement on Form N-2 (File No. 333-259086) and incorporated by reference herein.
(10) Filed
on October 2, 2015 as an exhibit to Pre-Effective Amendment No. 1 to Registrant’s Registration Statement on Form N-14 (File
No. 333-206628) and incorporated by reference herein.
(11) Filed on September 1, 2020 as an exhibit to
Post-Effective Amendment No. 1 to Nuveen AMT-Free Municipal Value Fund’s Registration Statement on Form N-2 (File
No. 333-223524) and incorporated by reference herein.
(12) Filed on July 27, 2020 as an exhibit to Pre-Effective Amendment No. 3 to Nuveen Dynamic Municipal Opportunities Fund’s Registration Statement on Form N-2 (File
No. 333-234592) and incorporated by reference herein.
(13) Filed on January 21, 2022 as an exhibit to
the Registrant’s Registration Statement on Form N-14 (File No. 333-262286) and incorporated by reference herein.
(14) Filed on February 25, 2022 as an exhibit to the Registrant’s Form 8-K (File No. 811-10345) and incorporated by reference herein.
(15) Filed on March 3, 2022 as an exhibit to the
Registrant’s Registration Statement on Form N-14 (File No. 333-262286) and incorporated by reference herein.
(16) Filed on July 29, 2022 as an exhibit to Post-Effective Amendment No. 2 to Nuveen Enhanced High Yield Municipal Bond Fund’s Registration
Statement on Form N-2 (File No. 333-231722) and incorporated by reference herein.
(17) Filed on November 10, 2022 as an exhibit to the Registrant’s Registration Statement on Form N-14 (File No. 333-268294) and incorporated by reference
herein.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering of the securities
registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will contain the
information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under paragraph
(1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act, each post-effective amendment shall be
deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees that executed opinion of counsel supporting the tax
matters discussed in the Joint Proxy Statement/Prospectus will be filed with the Securities and Exchange Commission following the closing of the Mergers.
C-5
SIGNATURES
As required by the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Chicago and the State of Illinois, on the 16th day of December, 2022.
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| NUVEEN MUNICIPAL CREDIT INCOME FUND |
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| By: |
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/s/ Mark L. Winget |
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Mark L. Winget |
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Vice President and Secretary |
As required by the Securities Act of 1933, this Registrant’s registration statement has been signed
by the following persons in the capacities and on the dates indicated:
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| Signature |
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Capacity |
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Date |
| /s/ David J. Lamb |
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Chief Administrative Officer
(principal executive officer) |
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| David J. Lamb |
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| /s/ E. Scott Wickerham |
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Vice President and Controller
(principal financial and accounting officer) |
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| E. Scott Wickerham |
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| |
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Chairman of the Board and Trustee |
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By: /s/ Mark L. Winget |
| Terence J. Toth* |
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Mark L. Winget |
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Attorney-in-Fact |
| |
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Trustee |
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December 16, 2022 |
| Jack B. Evans* |
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| |
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Trustee |
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| William C. Hunter* |
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Trustee |
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| Amy B.R. Lancellotta* |
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| |
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Trustee |
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| Joanne T. Medero |
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| |
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Trustee |
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| Albin F. Moschner* |
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| |
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Trustee |
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| John K. Nelson* |
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| |
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Trustee |
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| Judith M. Stockdale* |
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| Signature |
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Capacity |
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Date |
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Trustee |
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| Carole E. Stone* |
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| |
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| |
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Trustee |
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| Margaret L. Wolff* |
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| |
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Trustee |
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| Matthew Thornton III* |
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| |
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Trustee |
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| Robert L. Young* |
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| * |
An original power of attorney authorizing, among others, Mark L. Winget, Kevin J. McCarthy and Mark J.
Czarniecki to execute this registration statement, and amendments thereto, for each of the trustees of the Registrant on whose behalf this registration statement is filed, has been executed and is incorporated by reference herein.
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EXHIBIT INDEX
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| Exhibit No. |
|
Name of Exhibit |
|
|
| (11) |
|
Opinion and Consent of Counsel. |
|
|
| (14) |
|
Consent of Independent Auditor. |
|
|
| (18) |
|
Calculation of Filing Fee Tables. |
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