N-CSRS 1 d686284dncsrs.htm NUVEEN ENERGY MLP TOTAL RETURN FUND Nuveen Energy MLP Total Return Fund

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number  

811-22482

Nuveen Energy MLP Total Return Fund

 

(Exact name of registrant as specified in charter)

Nuveen Investments

333 West Wacker Drive, Chicago, IL 60606

 

(Address of principal executive offices)  (Zip code)

Gifford R. Zimmerman

Nuveen Investments

333 West Wacker Drive, Chicago, IL 60606

 

(Name and address of agent for service)

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

Date of fiscal year end:   November 30                       

Date of reporting period:   May 31, 2019                    

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

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


ITEM 1. REPORTS TO STOCKHOLDERS.


LOGO

 

Closed-End Funds

 

31 May

2019

 

Nuveen Closed-End Funds

 

JMF    Nuveen Energy MLP Total Return Fund
JMLP    Nuveen All Cap Energy MLP Opportunities Fund

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (www.nuveen.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at www.nuveen.com/client-access.

Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800-257-8787 (select option #2) to let the Fund know you wish to continue receiving paper copies of your shareholder reports or you can set your delivery preference by logging into your Investor Center account at www.computershare.com/investor and click on “Communication Preferences”. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.

 

Semiannual Report


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NOT FDIC INSURED  MAY LOSE VALUE  NO BANK GUARANTEE

 

LOGO


Table of Contents

 

Chairman’s Letter to Shareholders

     4  

Portfolio Managers’ Comments

     5  

Common Share Information

     9  

Risk Considerations

     11  

Performance Overview and Holding Summaries

     12  

Shareholder Meeting Report

     16  

Portfolios of Investments

     17  

Statement of Assets and Liabilities

     21  

Statement of Operations

     22  

Statement of Changes in Net Assets

     23  

Statement of Cash Flows

     24  

Financial Highlights

     26  

Notes to Financial Statements

     28  

Additional Fund Information

     40  

Glossary of Terms Used in this Report

     41  

Reinvest Automatically, Easily and Conveniently

     42  

Annual Investment Management Agreement Approval Process

     43  

 

3


Chairman’s Letter to Shareholders

 

LOGO

Dear Shareholders,

The worries weighing on markets at the end of 2018 appeared to dissipate in early 2019 as positive economic and corporate earnings news, more dovish signals from central banks and trade progress boosted investor confidence. However, political noise and trade disputes continue to drive short-term market volatility and weigh on longer-term outlooks. Investors are concerned that increased tariffs and a protracted stalemate between the U.S. and its trading partners could dampen business and consumer sentiment, weakening spending and potentially impacting the global economy. Additionally, political uncertainty and the risk of policy error appear elevated. In the U.S. in particular, low interest rate levels and the widening federal deficit have constrained the available policy tools for countering recessionary pressures. As the current U.S. economic expansion has reached the 10-year mark this summer, it’s important to note that economic expansions don’t die of old age, but mature economic cycles can be more vulnerable to an exogenous shock.

Until a clearer picture on trade emerges, more bouts of market turbulence are likely in the meantime. While the downside risks warrant careful monitoring, we believe the likelihood of a near-term recession remains low. Global economic growth is moderating, with demand driven by the historically low unemployment in the U.S., Japan and across Europe. Central banks across the developed world continue to emphasize their readiness to adjust policy, and China’s authorities remain committed to keeping economic growth rates steady with fiscal and monetary policy.

The opportunity set may be narrower, but we believe there is still scope for gains in this environment. Patience and maintaining perspective can help you weather periodic market volatility. We encourage you to work with your financial advisor to assess short-term market movements in the context of your time horizon, risk tolerance and investment goals. On behalf of the other members of the Nuveen Fund Board, we look forward to continuing to earn your trust in the months and years ahead.

Sincerely,

 

LOGO

Terence J. Toth

Chairman of the Board

July 23, 2019

 

 

4


Portfolio Managers’ Comments

 

Nuveen Energy MLP Total Return Fund (JMF)

Nuveen All Cap Energy MLP Opportunities Fund (JMLP)

The Funds’ investment adviser is Nuveen Fund Advisors, LLC (NFAL), an affiliate of Nuveen, LLC. These Funds feature portfolio management by the MLP & Energy Infrastructure team of Advisory Research, Inc., which is a wholly-owned subsidiary of Piper Jaffray Companies. James J. Cunnane Jr., CFA, Managing Director and Chief Investment Officer for the MLP & Energy Infrastructure team and Quinn T. Kiley, Managing Director and Senior Portfolio Manager, manage the Funds.

On May 29, 2019, Piper Jaffray announced that it had entered into an agreement to sell the midstream energy business of Advisory Research, Inc., including its MLP & Energy Infrastructure team, to Tortoise Capital Advisors. NFAL is taking this development into account in its decisions and recommendations about the overall management and operations of these Funds.

Here they discuss their investment strategies and the performance of the Funds for the six-month reporting period ended May 31, 2019.

How did the Funds perform during this six-month reporting period ended May 31, 2019?

The tables in each Fund’s Performance Overview and Holding Summaries section of this report provide total returns for the six month, one-year, five-year and since inception periods, where applicable, ended May 31, 2019. Each Fund’s total returns at net asset value (NAV) are compared with the performance of a corresponding market index. The total return at NAV for JMF underperformed the Alerian MLP Index (“Index”), but outperformed the S&P 500® Index during the six-month reporting period. The total return at NAV for JMLP outperformed both the Index and S&P 500® Index during the six-month reporting period.

The Funds are taxed as “C” corporations, and unlike most other investment companies, they pay taxes on their own income. Consequently, as explained more fully later in the report, the Funds’ adjustments to their assets and liabilities to reflect the Funds’ projected tax payments can significantly impact Fund share performance. In the most recent six-month reporting period, those tax adjustments had a negative impact on the share performance of JMF and no impact on the share performance of JMLP.

The Funds employ leverage. In the most recent six-month reporting period, this leverage had a positive impact on the Funds’ total return. You should consider the Funds’ tax adjustments and leverage when comparing each Fund’s performance to the Index and S&P 500® Index, as neither index is leveraged nor affected by the tax treatment of gains or losses. As a result, the Funds’ total return performance could differ significantly from the actual returns of its portfolio and that of the indexes, even if the pre-tax adjustment performance of the Funds’ portfolio assets and the performance of the indexes were similar.

 

 

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her advisors.

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

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

 

5


Portfolio Managers’ Comments (continued)

 

We will divide the discussion of the various strategies used by and features of the Funds, and how each of them impacted the performance of the Funds’ shares during the six-month reporting period ended May 31, 2019, into the following sub-sections:

 

   

Impact of portfolio management strategies on Fund share performance

 

   

Impact of tax adjustments on Fund share performance

 

   

Impact of leverage on Fund share performance

Impact of the Funds’ primary portfolio investment strategies on Fund share performance.

Both Funds continue to invest primarily in publicly traded master limited partnership (MLPs) operating in the energy sector with the main objective of providing a tax-advantaged total return. The MLP universe has changed since JMF and JMLP were launched in 2011 and 2014, respectively. The number of MLPs rose and then retreated back to 2011 levels. The market capitalization of MLPs is larger today than it was in 2011, and the sector’s overall capitalization is more concentrated in a smaller number of issuers today than before. The recent decrease in the number of MLPs has been largely due to MLPs’ consolidations and conversions to corporations. While the Funds remain heavily invested in MLPs, we have acknowledged the changed environment by moderately increasing the Funds’ allocations to midstream energy infrastructure companies organized as corporations.

During the reporting period, the Funds were primarily invested in midstream MLPs that own pipelines and other infrastructure facilities. These assets provide an essential service to our economy: procuring, processing, storing and transporting the commodities and products that fuel every aspect of our lives.

MLPs rebounded to post a positive return for the reporting period ended May 31, 2019. MLP equity prices traded sharply lower in December 2018, driven by the end of the 2018 tax loss selling season, however prices quickly rebounded in January 2019. The subsequent months stand out versus recent comparable periods in recent years. After the January 2019 bounce there were no material negative announcements from the Federal Energy Regulatory Commission (FERC) or rating agencies as the reporting period progressed. The lack of negative announcements allowed investors to begin focusing more on relatively attractive MLP prices and fundamentals. In turn, the Fund’s MLPs outperformed the Alerian MLP Index as well as the broader S&P 500® benchmark for the six-month reporting period.

JMF’s portfolio outperformed the Index for the six-month reporting period ended May 31, 2019. The Fund benefited from its tilt towards higher yielding securities. One of those, NGL Energy Partners LP, was the top performing MLP in the Index. A detractor to Fund performance was due to not holding another high yielding security, Buckeye Partners, L.P., which performed strongly after its announced acquisition by a private equity firm.

JMLP’s portfolio performance outperformed the Index for the six-month reporting period ended May 31, 2019. JMLP’s strategy is differentiated from JMF in the following ways: 1) JMLP will not purchase the top ten constituents in the Index, and 2) JMLP will not purchase securities that are rated among the bottom 30% of the universe by quality, as defined by the sub-adviser’s “Quality Scorecard” process. The Fund benefited from an overweight position in NGL Energy Partners LP. A detractor to Fund performance was the underweight position of Buckeye Partners, L.P., which is one of the top ten constituents in the Index.

Impact of tax adjustments on the Funds’ share performance

Each Fund is treated as a “C” Corporation for U.S. federal income tax purposes and therefore is a taxable entity, meaning that in addition to recording a current tax expense on current year earnings and realized gains, they also record either a net deferred tax liability representing the future taxes projected to be payable on unrealized portfolio gains, or a net deferred tax asset representing the tax benefit projected to be associated with realized and unrealized portfolio losses. These tax adjustment entries on the Funds’ accounting records are intended to ensure that the Funds’ NAVs

 

6


 

take into account the future income tax that the Funds may be liable for based on unrealized appreciation as well as the tax benefit of losses that may be used to offset future earnings. Such entries will often have a “moderating impact” on the total returns of investment of the Funds’ shares during a particular measurement period. An increase in the value of a Fund’s portfolio investments will typically trigger an increase to the deferred tax liability or a reduction to the deferred tax asset that would partially offset the portfolio value increases; in contrast, a decrease in value of the Fund’s portfolio investments will typically trigger a reduction in a deferred tax liability and/or an increase to the deferred tax asset, which would tend to partially offset such portfolio value decreases.

During the reporting period for JMF, the projected future tax liability of the Fund increased, resulting in a negative contribution to NAV performance.

To the extent that a Fund has a deferred tax asset, consideration is given to whether or not a valuation allowance is required that would offset the tax asset. Accounting principles dictate that the determination of such a valuation allowance is based on whether there is a more-likely-than-not probability that some portion or all of the deferred tax asset will not be realized.

At November 30, 2017, JMLP had a valuation allowance to offset the deferred tax asset. This allowance still existed at May 31, 2019. As a result, there was no impact to NAV performance associated with the deferred tax asset or liability.

Further modifications of the Funds’ estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance could result in increases or decreases in the Fund’s net asset value per share, which could be material.

Impact of the Funds’ leverage strategies on performance

One important factor impacting the returns of the Funds’ common shares relative to their comparative benchmarks was the Funds’ use of leverage through bank borrowings. The Funds use leverage because our research has shown that, over time, leveraging provides opportunities for additional income and total return, particularly in the recent market environment where short-term market rates are at or near historical lows, meaning that the short-term rates the Fund has been paying on its leveraging instruments in recent years have been much lower than the interest the Fund has been earning on its portfolio securities that it has bought with the proceeds of that leverage.

However, use of leverage can expose Fund common shares to additional price volatility. When a Fund uses leverage, the Fund common shares will experience a greater increase in their net asset value if the securities acquired through the use of leverage increase in value, but will also experience a correspondingly larger decline in their net asset value if the securities acquired through leverage decline in value, which will make the shares’ net asset value more volatile, and total return performance more variable, over time.

In addition, common share income in levered funds will typically decrease in comparison to unlevered funds when short-term interest rates increase and increase when short-term interest rates decrease. Over the last few quarters, short-term interest rates have indeed increased from their extended lows after the 2007-09 financial crisis. This increase has reduced common share net income, and also reduced potential for long-term total returns. Nevertheless, the ability to effectively borrow at current short-term rates is still resulting in enhanced common share income, and management believes that the advantages of continuation of leverage outweigh the associated increase in risk and volatility described above.

For the six-month reporting period ended May 31, 2019, leverage had a positive impact on the total return performance of both Funds.

 

7


Portfolio Managers’ Comments (continued)

 

The Funds employ regulatory leverage through the use of bank borrowings. As of May 31, 2019, the Funds had outstanding bank borrowings as shown in the accompanying table.

 

     JMF        JMLP  

Bank Borrowings

  $ 156,100,000        $ 36,100,000  

As of May 31, 2019, the Funds’ leverage, expressed as a percentage of total managed assets, were as shown in the accompanying table.

 

     JMF        JMLP  

Effective Leverage*

    28.32        28.09

Regulatory Leverage*

    28.32        28.09
*

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. Regulatory leverage consists of preferred shares issued 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 effective leverage ratio. Regulatory leverage is subject to asset coverage limits set forth in the Investment Company Act of 1940.

Bank Borrowings

As noted above, the Funds employ leverage through the use of bank borrowings.

The Funds operate under established leverage guidelines. During the current reporting period, volatility in the MLP market caused the Funds to periodically reduce and increase the amount of their outstanding borrowings in order to maintain levels consistent with these guidelines. The Funds’ bank borrowing activities are as shown in the accompanying table.

 

    Current Reporting Period           Subsequent to the Close of
the Reporting Period
 
Fund   December 1, 2018     Draws     Paydowns     May 31, 2019     Average Balance
Outstanding
           Draws     Paydowns     July 26, 2019  

JMF

  $ 170,400,000     $     —     $ (14,300,000   $ 156,100,000     $ 157,972,527       $ 2,000,000     $     —     $ 158,100,000  

JMLP

  $ 37,750,000     $ 3,000,000     $ (4,650,000   $ 36,100,000     $ 34,842,308             $     —     $     —     $ 36,100,000  

Refer to Notes to Financial Statements, Note 7 – Borrowing Arrangements and Note 9 – Subsequent Events for further details.

During the reporting period, JMF and JMLP continued to utilize forward interest rate swap contracts to hedge the future interest expense of its leverage. During the reporting period, these swaps had a negative impact on the Funds’ overall performance.

 

8


Common Share

Information

 

DISTRIBUTION INFORMATION

The following information regarding the Funds’ distributions is current as of April 30, 2019.

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

The figures in the table below provide an estimate of the sources (for tax purposes) of each Fund’s distributions as of April 30, 2019. These source estimates include amounts currently estimated to be attributable to realized gains and/or returns of capital. The Funds attribute these non-income sources equally to each regular distribution throughout the fiscal year. The estimated information shown below is for the distributions paid on common shares for all prior months in the current fiscal year. These amounts should not be used for tax reporting purposes, and the distribution sources may differ for financial reporting than for tax reporting. The final determination of the tax characteristics of all distributions paid in 2018 will be made in early 2019 and reported to you on Form 1099-DIV. More details about the tax characteristics of each Fund’s distributions are available on www.nuveen.com/CEFdistributions.

Data as of April 30, 2019

 

     Current Quarter             Fiscal YTD  
     Estimated — Percentage of the Distribution             Estimated — Per Share Amounts  
Fund    Net
Investment
Income(1)
     Realized
Gains
     Return of
Capital(2)
             Total
Distributions
     Net
Investment
Income(1)
     Realized
Gains
     Return of
Capital(2)
 

JMF (FYE 11/30)

     0.00      0.00      100       $ 0.5000      $ 0.0000      $ 0.0000      $ 0.5000  

JMLP (FYE 11/30)

     0.00      0.00      100             $ 0.3750      $ 0.0000      $ 0.0000      $ 0.3750  

 

(1) 

NII is Net Investment Income. The funds may have current fiscal year earnings and profits, and if so, a portion or all of the distributions may be treated as ordinary dividend income.

(2) 

Return of Capital may represent unrealized gains, return of shareholders’ principal, or both.

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

Data as of April 30, 2019

 

                      Annualized           Cumulative  
Fund   Inception
Date
    Latest
Quarterly
Per Share
Distribution
           Current
Distribution
on
NAV
    1-Year
Return on
NAV
    Since Inception
Return on
NAV
           Calendar YTD
Distributions
on
NAV
    Calendar
YTD
Return
on NAV
 

JMF (FYE 11/30)

    2/23/2011       $0.2500         9.93     3.57     0.65       4.97     18.19

JMLP (FYE 11/30)

    3/26/2014       $0.1875               10.50     1.92     (8.16)             5.25     25.66

 

9


Common Share Information (continued)

 

COMMON SHARE EQUITY SHELF PROGRAM

During the current reporting period, JMLP was authorized by the Securities and Exchange Commission to issue additional common shares through an equity shelf program (Shelf Offering). Under this program, the Fund, subject to market conditions, may raise additional capital from time to time in varying amounts and offering methods at a net price at or above the Fund’s NAV per common share. The total amount of common shares authorized under this Shelf Offering are as shown in the accompanying table.

 

        JMLP*  

Additional authorized common shares

       3,100,000  
*

Represents additional authorized common shares for the period December 1, 2018 through March 29, 2019.

Refer to Notes to Financial Statements, Note 4 – Fund Shares, Common Equity Shelf Programs and Offering Costs for further details of Shelf Offerings and the Fund’s respective transactions.

COMMON SHARE REPURCHASES

During August 2018, the Funds’ Board of Trustees reauthorized an open-market share repurchase program, allowing each Fund to repurchase an aggregate of up to approximately 10% of its outstanding shares.

As of May 31, 2019, and since the inception of the Funds’ repurchase programs, the Funds have cumulatively repurchased and retired their outstanding shares as shown in the accompanying table.

 

     JMF        JMLP  

Common shares cumulatively repurchased and retired

              

Common shares authorized for repurchase

    4,080,000          1,350,000  

During the current reporting period, the Funds did not repurchase any of their outstanding common shares.

OTHER COMMON SHARE INFORMATION

As of May 31, 2019, and during the current reporting period, the Funds’ share prices were trading at a premium/(discount) to their NAVs as shown in the accompanying table.

 

     JMF        JMLP  

NAV

  $ 9.69        $ 6.85  

Share price

  $ 8.90        $ 6.17  

Premium/(Discount) to NAV

    (8.15 )%         (9.93 )% 

6-month average premium/(discount) to NAV

    (8.36 )%         (8.48 )% 

 

10


Risk

Considerations

 

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

Nuveen Energy MLP Total Return Fund (JMF)

Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. MLP Units are subject to energy sector concentration risk, limited voting rights, and heightened tax risk. Common stock returns often have experienced significant volatility. Leverage increases return volatility and magnifies the Fund’s potential return and its risks; there is no guarantee a fund’s leverage strategy will be successful. For these and other risks such as tax risk, please see the Fund’s web page at www.nuveen.com/JMF.

Nuveen All Cap Energy MLP Opportunities Fund (JMLP)

Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. MLP Units are subject to energy sector concentration risk, limited voting rights, and heightened tax risk. Common stock returns often have experienced significant volatility. Leverage increases return volatility and magnifies the Fund’s potential return and its risks; there is no guarantee a fund’s leverage strategy will be successful. For these and other risks, including tax risk and small capitalization risk, please see the Fund’s web page at www.nuveen.com/JMLP.

 

11


JMF     

Nuveen Energy MLP Total Return Fund

Performance Overview and Holding Summaries as of May 31, 2019

 

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

Average Annual Total Returns as of May 31, 2019

 

    Cumulative        Average Annual  
     6-Month        1-Year        5-Year        Since
Inception
 
JMF at Common Share NAV     1.73%          (6.44)%          (6.86)%          0.16%  
JMF at Common Share Price     2.05%          (11.59)%          (6.78)%          (0.96)%  
Alerian MLP Index     3.29%          (1.12)%          (6.62)%          1.55%  
S&P 500® Index     0.74%          3.78%          9.66%          11.75%  

Since inception returns are from 2/23/11. Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses, and assume reinvestment of distributions. Comparative index return information is provided for the Fund’s shares at NAV only. Indexes are not available for direct investment.

Common Share Price Performance — Weekly Closing Price

 

LOGO

 

12


 

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

 

Fund Allocation

(% of net assets)

 

Master Limited Partnerships & MLP Affiliates     114.7%  
Common Stocks     29.6%  
Repurchase Agreements     0.6%  
Other Assets Less Liabilities     (0.5)%  
Net Assets Plus Borrowings and Deferred Tax Liability, net     144.4%  
Borrowings     (39.5)%  
Deferred Tax Liability, net     (4.9)%  

Net Assets

    100%  

Portfolio Composition

(% of total investments)

 

Oil, Gas & Consumable Fuels     99.6%  
Repurchase Agreements     0.4%  
Total     100%  

Top Ten Issuers

(% of total long-term investments)

 

Energy Transfer LP     10.8%  
EnLink Midstream LLC     8.7%  
DCP Midstream LP     8.1%  
NGL Energy Partners LP     6.5%  
Western Midstream Partners LP     6.0%  
Andeavor Logistics LP     5.9%  
Crestwood Equity Partners LP     5.4%  
MPLX LP     4.6%  
Enable Midstream Partners LP     4.6%  
Targa Resources Corp.     4.5%  
 

 

13


JMLP     

Nuveen All Cap Energy MLP Opportunities Fund

Performance Overview and Holding Summaries as of May 31, 2019

 

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

Average Annual Total Returns as of May 31, 2019

 

    Cumulative        Average Annual  
     6-Month        1-Year        5-Year        Since
Inception
 
JMLP at Common Share NAV     4.13%          (9.30)%          (9.92)%          (8.77)%  
JMLP at Common Share Price     4.69%          (16.91)%          (11.80)%          (11.17)%  
Alerian MLP Index     3.29%          (1.12)%          (6.62)%          (4.72)%  
S&P 500® Index     0.74%          3.78%          9.66%          10.19%  

Since inception returns are from 3/26/14. Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses, and assume reinvestment of distributions. Comparative index return information is provided for the Fund’s shares at NAV only. Indexes are not available for direct investment.

Common Share Price Performance — Weekly Closing Price

 

LOGO

 

14


 

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

 

Fund Allocation

(% of net assets)

 

Master Limited Partnerships & MLP Affiliates     115.4%  
Common Stocks     23.5%  
Repurchase Agreements     0.6%  
Other Assets Less Liabilities     (0.5)%  

Net Assets Plus Borrowings

    139.0%  
Borrowings     (39.0)%  
Net Assets     100%  

Portfolio Composition

(% of total investments)

 

Oil, Gas & Consumable Fuels     99.6%  
Repurchase Agreements     0.4%  
Total     100%  

Top Ten Issuers

(% of total long-term investments)

 

EnLink Midstream LLC     8.2%  
DCP Midstream LP     8.1%  
Enable Midstream Partners LP     8.1%  
Crestwood Equity Partners LP     7.4%  
NGL Energy Partners LP     7.4%  
KNOT Offshore Partners LP     6.0%  
Genesis Energy LP     5.0%  
Global Partners LP     4.9%  
NuStar Energy LP     4.8%  
Targa Resources Corp.     4.4%  
 

 

15


Shareholder Meeting Report

 

The annual meeting of shareholders was held in the offices of Nuveen on April 10, 2019 for JMF and JMLP; at this meeting the shareholders were asked to elect Board Members.

 

        JMF        JMLP  
        Common
Shares
       Common
Shares
 

Approval of the Board Members was reached as follows:

         

Judith M. Stockdale

         

For

       34,831,711          11,089,544  

Withhold

       1,322,967          730,107  

Total

       36,154,678          11,819,651  

Carole E. Stone

         

For

       34,852,084          11,098,762  

Withhold

       1,302,594          720,889  

Total

       36,154,678          11,819,651  

Margaret L. Wolff

         

For

       34,879,913          11,094,929  

Withhold

       1,274,765          724,722  

Total

       36,154,678          11,819,651  

William C. Hunter

         

For

       34,811,320          11,100,319  

Withhold

       1,343,358          719,332  

Total

       36,154,678          11,819,651  

 

16


JMF   

Nuveen Energy MLP Total Return Fund

 

Portfolio of Investments    May 31, 2019

     (Unaudited)

 

Shares/Units     Description (1)                   Value  
 

LONG-TERM INVESTMENTS – 144.3% (99.6% of Total Investments)

       
 

MASTER LIMITED PARTNERSHIPS & MLP AFFILIATES – 114.7% (79.2% of Total Investments)

 

      Oil, Gas & Consumable Fuels – 114.7% (79.2% of Total Investments)                    
  965,477    

Andeavor Logistics LP

        $ 33,675,838  
  866,019    

Crestwood Equity Partners LP

          30,769,655  
  1,514,000    

DCP Midstream LP, (2)

          46,055,880  
  590,788    

Delek Logistics Partners LP

          18,095,836  
  2,001,365    

Enable Midstream Partners LP

          25,997,731  
  4,478,288    

Energy Transfer LP

          61,531,677  
  818,834    

Enterprise Products Partners LP

          22,837,280  
  1,159,257    

Genesis Energy LP

          25,294,988  
  642,250    

KNOT Offshore Partners LP, (3)

          12,099,990  
  863,415    

MPLX LP

          26,403,231  
  2,498,135    

NGL Energy Partners LP

          37,072,323  
  547,100    

PBF Logistics LP

          10,996,710  
  1,097,853    

Plains All American Pipeline LP

          24,822,456  
  554,025    

Summit Midstream Partners LP

          4,022,222  
  132,855    

Sunoco LP

          3,980,336  
  1,058,725    

Tallgrass Energy LP

          25,187,068  
  980,540    

USD Partners LP

          10,472,167  
  1,160,364    

Western Midstream Partners LP

                      33,871,026  
 

Total Oil, Gas & Consumable Fuels

                      453,186,414  
 

Total Master Limited Partnership & MLP Affiliates (cost $403,161,235)

                      453,186,414  
Shares     Description (1)                   Value  
 

COMMON STOCKS – 29.6% (20.4% of Total Investments)

       
      Oil, Gas & Consumable Fuels – 29.6% (20.4% of Total Investments)                    
  699,900    

Altus Midstream Company, (4)

        $ 3,205,541  
  630,503    

Enbridge Inc, (3)

          23,246,646  
  4,797,760    

EnLink Midstream LLC

          49,800,749  
  235,548    

ONEOK Inc, (3)

          14,985,564  
  664,005    

Targa Resources Corp.

                      25,537,632  
 

Total Oil, Gas & Consumable Fuels

                      113,570,591  
 

Total Common Stocks (cost $101,434,447)

                      116,776,132  
 

Total Long-Term Investments (cost $504,595,682)

                      569,962,546  
Principal
Amount (000)
    Description (1)   Coupon      Maturity      Value  
      SHORT-TERM INVESTMENTS – 0.6% (0.4% of Total Investments)                    
      REPURCHASE AGREEMENTS – 0.6% (0.4% of Total Investments)                    
$ 2,445    

Repurchase Agreement with Fixed Income Clearing Corporation,
dated 5/31/19, repurchase price $2,444,910,
collateralized by $2,410,000 U.S. Treasury Notes,
2.750%, due 8/31/23, value $2,496,386

    1.200%        6/03/19      $ 2,444,666  
 

Total Short-Term Investments (cost $2,444,666)

                      2,444,666  
 

Total Investments (cost $507,040,348) – 144.9%

                      572,407,212  
 

Borrowings – (39.5)% (5), (6)

                      (156,100,000
 

Deferred Tax Liability, net – (4.9)%

                      (19,252,967
 

Other Assets Less Liabilities – (0.5)% (7)

                      (1,937,642
 

Net Assets Applicable to Common Shares – 100%

                    $ 395,116,603  

 

17


JMF    Nuveen Energy MLP Total Return Fund (continued)
   Portfolio of Investments    May 31, 2019
   (Unaudited)

 

Investments in Derivatives

Interest Rate Swaps – OTC Uncleared

 

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

JPMorgan Chase Bank, N.A.

  $ 94,500,000       Receive       1-Month LIBOR       1.969     Monthly       6/01/18       7/01/25       7/01/27     $ (1,678,693   $ (1,678,693

 

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

 

(1)

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

 

(2)

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

 

(3)

All, or a portion of, distributions designated as ordinary income which is recognized as “Dividends” on the Statement of Operations.

 

(4)

Non-income producing; issuer has not declared a dividend within the past twelve months.

 

(5)

The Fund segregates 100% of its eligible investments (excluding any investments separately pledged as collateral for specific investments in derivatives, when applicable) in the Portfolio Investments as collateral for borrowings. As of the end of the reporting period, investments with a value of $378,570,666 have been pledged as collateral for borrowings.

 

(6)

Borrowings as a percentage of Total Investments is 27.3%.

 

(7)

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

 

(8)

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

 

LIBOR

London Inter-Bank Offered Rate

 

See accompanying notes to financial statements.

 

18


JMLP   

Nuveen All Cap Energy
MLP Opportunities Fund

 

Portfolio of Investments    May 31, 2019

     (Unaudited)

 

Shares/Units     Description (1)                   Value  
 

LONG-TERM INVESTMENTS – 138.9% (99.6% of Total Investments)

       
 

MASTER LIMITED PARTNERSHIPS & MLP AFFILIATES – 115.4% (82.8% of Total Investments)

 

      Oil, Gas & Consumable Fuels – 115.4% (82.8% of Total Investments)                    
  96,795    

Andeavor Logistics LP

        $ 3,376,210  
  267,664    

Crestwood Equity Partners LP

          9,510,102  
  343,048    

DCP Midstream LP

          10,435,520  
  146,645    

Delek Logistics Partners LP

          4,491,736  
  799,975    

Enable Midstream Partners LP

          10,391,675  
  355,975    

Energy Transfer LP

          4,891,097  
  294,805    

Genesis Energy LP

          6,432,645  
  318,605    

Global Partners LP

          6,333,867  
  265,885    

Hoegh LNG Partners LP, (2)

          4,551,951  
  173,590    

Holly Energy Partners LP

          4,615,758  
  410,190    

KNOT Offshore Partners LP, (2)

          7,727,980  
  636,833    

NGL Energy Partners LP

          9,450,602  
  227,100    

NuStar Energy LP

          6,122,616  
  200,000    

Oasis Midstream Partners LP

          3,920,000  
  156,425    

PBF Logistics LP

          3,144,143  
  303,485    

Summit Midstream Partners LP

          2,203,301  
  230,000    

Tallgrass Energy LP

          5,471,700  
  339,902    

USD Partners LP

                      3,630,153  
 

Total Oil, Gas & Consumable Fuels

                      106,701,056  
 

Total Master Limited Partnership & MLP Affiliates (cost $92,173,750)

                      106,701,056  
Shares     Description (1)                   Value  
 

COMMON STOCKS – 23.5% (16.8% of Total Investments)

       
      Oil, Gas & Consumable Fuels – 23.5% (16.8% of Total Investments)                    
  153,500    

Altus Midstream Company, (3)

        $ 703,030  
  130,295    

Enbridge Inc, (2)

          4,803,976  
  1,019,050    

EnLink Midstream LLC

          10,577,739  
  145,645    

Targa Resources Corp.

                      5,601,507  
 

Total Oil, Gas & Consumable Fuels

                      20,983,222  
 

Total Common Stocks (cost $22,946,030)

                      21,686,252  
 

Total Long-Term Investments (cost $115,119,780)

                      128,387,308  
Principal
Amount (000)
    Description (1)   Coupon      Maturity      Value  
      SHORT-TERM INVESTMENTS – 0.6% (0.4% of Total Investments)                    
      REPURCHASE AGREEMENTS – 0.6% (0.4% of Total Investments)                    
$ 574    

Repurchase Agreement with Fixed Income Clearing Corporation,
dated 5/31/19, repurchase price $574,344,
collateralized by $570,000 U.S. Treasury Notes,
2.750%, due 8/31/23, value $590,432

    1.200%        6/03/19      $ 574,287  
 

Total Short-Term Investments (cost $574,287)

                      574,287  
 

Total Investments (cost $115,694,067) – 139.5%

                      128,961,595  
 

Borrowings – (39.0)% (4), (5)

                      (36,100,000
 

Other Assets Less Liabilities – (0.5)% (6)

                      (434,036
 

Net Assets Applicable to Common Shares – 100%

                    $ 92,427,559  

 

19


JMLP    Nuveen All Cap Energy MLP Opportunities Fund (continued)
   Portfolio of Investments    May 31, 2019
   (Unaudited)

 

Investments in Derivatives

Interest Rate Swaps – OTC Uncleared

 

Counterparty   Notional
Amount
    Fund
Pay/Receive
Floating Rate
    Floating Rate Index     Fixed Rate
(Annualized)
    Fixed Rate
Payment
Frequency
    Effective
Date (7)
    Optional
Termination
Date
    Maturity
Date
    Value     Unrealized
Appreciation
(Depreciation)
 

Morgan Stanley Capital Services LLC

  $ 21,000,000       Receive       1-Month LIBOR       2.042     Monthly       6/01/18       7/01/25       7/01/27     $ (474,883   $ (474,883

 

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

 

(1)

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

 

(2)

All, or a portion of, distributions designated as ordinary income which is recognized as “Dividends” on the Statement of Operations.

 

(3)

Non-income producing; issuer has not declared a dividend within the past twelve months.

 

(4)

The Fund segregates 100% of its eligible investments (excluding any investments separately pledged as collateral for specific investments in derivatives, when applicable) in the Portfolio Investments as collateral for borrowings. As of the end of the reporting period, investments with a value of $106,957,950 have been pledged as collateral for borrowings.

 

(5)

Borrowings as a percentage of Total Investments is 28.0%.

 

(6)

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

 

(7)

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

 

LIBOR

London Inter-Bank Offered Rate

 

See accompanying notes to financial statements.

 

20


Statement of Assets and Liabilities

May 31, 2019

(Unaudited)

 

      JMF        JMLP  

Assets

       

Long-term investments, at value (cost $504,595,682 and $115,119,780, respectively)

   $ 569,962,546        $ 128,387,308  

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

     2,444,666          574,287  

Cash collateral at brokers for investments in swaps(1)

              270,241  

Receivable for:

       

Dividends

     293,659          60,685  

Income tax refund

     1,014,003           

Interest

     81          19  

Other assets

     68,244          13,475  

Total assets

     573,783,199          129,306,015  

Liabilities

       

Borrowings

     156,100,000          36,100,000  

Unrealized depreciation on interest rate swaps

     1,678,693          474,883  

Payable for:

       

Interest

     429,479          97,768  

Federal income tax

     29,677           

State income tax

     332,933          8,989  

Deferred tax liability, net

     19,252,967           

Accrued expenses:

       

State franchise tax

     33,818          9,578  

Management fees

     506,908          118,816  

Trustees fees

     66,185          9,956  

Other

     235,936          58,466  

Total liabilities

     178,666,596          36,878,456  

Net assets applicable to common shares

   $ 395,116,603        $ 92,427,559  

Common shares outstanding

     40,786,741          13,500,221  

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

   $ 9.69        $ 6.85  

Net assets applicable to common shares consist of:

                   

Common shares, $0.01 par value per share

   $ 407,867        $ 135,002  

Paid-in surplus

     349,919,147          179,891,128  

Total distributable earnings, net of tax

     44,789,589          (87,598,571

Net assets applicable to common shares

   $ 395,116,603        $ 92,427,559  

Authorized common shares

     Unlimited          Unlimited  
(1)

Cash pledged to collateralize the net payment obligations for investments in derivatives.

 

See accompanying notes to financial statements.

 

21


Statement of Operations

Six Months Ended May 31, 2019

 

      JMF        JMLP  

Investment Income

       

Distributions from Master Limited Partnerships (“MLPs”)

   $ 24,591,132        $ 5,583,246  

Less: Return of capital on distributions from MLPs

     (24,591,132        (5,583,246

Dividends(1)

     (926,629        (666,154

Interest

     6,692          2,548  

Tax withheld

     (104,224        (21,538

Total investment income

     (1,024,161        (685,144

Expenses

       

Management fees

     (2,990,528        (684,192

Interest expense on borrowings

     (2,578,078        (569,851

Custodian fees

     (34,688        (14,956

Trustees fees

     (11,525        (2,600

Professional fees

     (78,716        (66,808

Shareholder reporting expenses

     (27,174        (12,903

Shareholder servicing agent fees

     (17        (54

Stock exchange listing fees

     (5,693        (3,902

Investor relations expenses

     (20,206        (4,764

Franchise tax expenses

     (41,343        (28,963

Other

     (46,151        (40,930

Total expenses

     (5,834,119        (1,429,923

Net investment income (loss) before taxes

     (6,858,280        (2,115,067

Deferred tax benefit

     1,756,224           

Current tax (expense)/benefit

     (99,958         

Net investment income (loss)

     (5,202,014        (2,115,067

Realized and Unrealized Gain (Loss)

       

Net realized gain (loss) from:

       

Investments before taxes

     (4,985,725        (4,045,771

Swaps before taxes

     230,209          43,704  

Deferred tax (expense)/benefit

     1,217,761           

Net realized gain (loss) from investments

     (3,537,755        (4,002,067

Change in net unrealized appreciation (depreciation) of:

       

Investments before taxes

     29,304,398          11,554,410  

Swaps before taxes

     (6,127,961        (1,363,061

Deferred tax (expense)/benefit

     (5,934,869         

Change in net unrealized appreciation (depreciation) of investments

     17,241,568          10,191,349  

Net realized and unrealized gain (loss)

     13,703,813          6,189,282  

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

   $ 8,501,799        $ 4,074,215  
(1)

See Notes to Financial Statements, Note 1 – General Information and Significant Accounting Policies, Investment Income for more information.

 

See accompanying notes to financial statements.

 

22


Statement of Changes in Net Assets

 

     JMF        JMLP  
      Six Months
Ended
5/31/19
       Year Ended
11/30/18
       Six Months
Ended
5/31/19
       Year Ended
11/30/18
 

Operations

                 

Net investment income (loss)

   $ (5,202,014      $ 15,701,613        $ (2,115,067      $ (2,446,329

Net realized gain (loss) from:

                 

Investments

     (3,767,964        (19,941,948        (4,045,771        (11,291,525

Swaps

     230,209          68,212          43,704          9,147  

Change in net unrealized appreciation (depreciation) of:

                 

Investments

     23,369,529          8,036,272          11,554,410          6,642,195  

Swaps

     (6,127,961        3,318,282          (1,363,061        746,546  

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

     8,501,799          7,182,431          4,074,215          (6,339,966

Distributions to Common Shareholders

                 

Dividends

              (21,108,108                  

Return of capital

     (20,393,371        (23,571,772        (5,062,583        (11,086,585

Decrease in net assets from distributions to common shareholders

     (20,393,371        (44,679,880        (5,062,583        (11,086,585

Capital Share Transactions

                 

Common shares:

                 

Proceeds from shelf offering, net of offering costs

              7,353,662                   2,713,917  

Proceeds from shares issued to shareholders due to reinvestment of distributions

                                 

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

              7,353,662                   2,713,917  

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

     (11,891,572        (30,143,787        (988,368        (14,712,634

Net assets applicable to common shares at the beginning of period

     407,008,175          437,151,962          93,415,927          108,128,561  

Net assets applicable to common shares at the end of period

   $ 395,116,603        $ 407,008,175        $ 92,427,559        $ 93,415,927  

 

See accompanying notes to financial statements.

 

23


Statement of Cash Flows

Six Months Ended May 31, 2019

(Unaudited)

 

      JMF        JMLP  

Cash Flows from Operating Activities:

       

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

   $ 8,501,799        $ 4,074,215  

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

       

Purchases of investments

     (20,577,826        (8,877,590

Proceeds from sales of investments

     34,234,815          12,192,783  

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

     3,432,831          247,164  

Return of capital distributions from MLPs

     24,591,132          5,583,246  

(Increase) Decrease in:

       

Receivable for interest

     90          5  

Receivable for income tax refund

     (1,014,003         

Receivable for dividends

     (293,659        (60,685

Other assets

     3,204          307  

Increase (Decrease) in:

       

Deferred tax liability, net

     3,974,887           

Payable for interest

     (9,986        (178

Payable for federal income tax

     29,677           

Payable for state income tax

     70,281           

Accrued state franchise tax expense

     6,504          6,102  

Accrued management fees

     (6,866        (1,158

Accrued trustees fees

     (5,899        (1,467

Accrued other expenses

     (51,215        (32,638

Net realized (gain) loss from investments before taxes

     4,985,725          4,045,771  

Change in net unrealized appreciation (depreciation) of:

       

Investments before taxes

     (29,304,398        (11,554,410

Swaps before taxes

     6,127,961          1,363,061  

Net cash provided by (used in) operating activities

     34,695,054          6,984,528  

Cash Flow from Financing Activities:

       

Proceeds from borrowings

              3,000,000  

Repayments of borrowings

     (14,300,000        (4,650,000

Increase (Decrease) in cash overdraft

     (1,683        (1,704

Cash distributions paid to common shareholders

     (20,393,371        (5,062,583

Net cash provided by (used in) financing activities

     (34,695,054        (6,714,287

Net Increase (Decrease) in Cash and Cash Collateral at Brokers

              270,241  

Cash and cash collateral at brokers at the beginning of period

               

Cash and cash collateral at brokers at the end of period

   $        $ 270,241  
Supplemental Disclosures of Cash Flow Information    JMF        JMLP  

Cash paid for interest on borrowings (excluding borrowing costs)

   $ 2,588,064        $ 570,029  

Net cash paid (received) for taxes

     34,839          22,861  

 

See accompanying notes to financial statements.

 

24


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25


Financial Highlights

 

Selected data for a common share outstanding throughout each period:

 

           Investment Operations      Less Distributions to
Common Shareholders
     Common Share  
     Beginning
Common
Share
NAV
     Net
Investment
Income
(Loss)(a)
     Net
Realized/
Unrealized
Gain (Loss)
     Total      From
Net
Investment
Income
     Return
of
Capital
     Total      Offering
Costs
     Premium
from
Shares
Sold
through
Shelf
Offering
     Ending
NAV
     Ending
Share
Price
 

JMF

 

Year Ended 11/30:

 

2019(h)

  $ 9.98      $ (0.13    $ 0.34      $ 0.21      $      $ (0.50    $ (0.50    $      $      $ 9.69      $ 8.90  

2018

    10.90        0.39        (0.21      0.18        (0.52      (0.58      (1.10                    9.98        9.19  

2017

    13.42        (0.13      (1.04      (1.17      (0.18      (1.17      (1.35               — **       10.90        10.57  

2016

    13.45        (0.12      1.44        1.32               (1.35      (1.35                    13.42        13.32  

2015

    22.10        (0.08      (7.23      (7.31             (1.34      (1.34                    13.45        11.91  

2014

    20.22        (0.32      3.48        3.16        (0.12      (1.16      (1.28                    22.10        20.72  

JMLP

 

Year Ended 11/30:

 

2019(h)

    6.92        (0.16      0.47        0.31               (0.38      (0.38                    6.85        6.17  

2018

    8.21        (0.18      (0.28      (0.46             (0.83      (0.83                    6.92        6.24  

2017

    9.55        (0.07      (0.29      (0.36             (0.98      (0.98             **       8.21        8.02  

2016

    8.94        (0.05      1.69        1.64               (1.03      (1.03                    9.55        9.80  

2015

    18.52        (0.12      (8.09      (8.21             (1.37      (1.37                    8.94        8.35  

2014(g)

    19.10        (0.27      0.73        0.46        (0.21      (0.79      (1.00      (0.04             18.52        16.35  

 

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

JMF

 

Year Ended 11/30:

 

2019(h)

  $ 156,100        $ 3,531  

2018

    170,400          3,389  

2017

    175,000          3,498  

2016

    185,550          3,857  

2015

    199,000          3,666  

2014

    315,000          3,768  

JMLP

 

Year Ended 11/30:

 

2019(h)

    36,100          3,560  

2018

    37,750          3,475  

2017

    41,500          3,606  

2016

    39,000          4,124  

2015

    41,800          3,727  

2014(g)

    85,000          3,780  

 

(a)

Per share Net Investment Income (Loss) is calculated using the average daily shares method.

(b)

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

Total Return Based on Common Share Price is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized.

 

26


            Common Share Supplemental Data/
Ratios Applicable to Common Shares
 
Common Share
Total Returns
          Ratios to Average Net Assets
Before Reimbursement/
Income Taxes/
Tax Benefit (Expense)(e)
    Ratios to Average Net Assets
After Reimbursement/
Income Taxes/
Tax Benefit (Expense)(d)(e)
    Ratios
to Average
Net Assets
       
Based
on
NAV(b)
    Based
on
Share
Price(b)
    Ending
Net
Assets
(000)
    Expenses     Net
Investment
Income (Loss)
    Expenses     Net
Investment
Income (Loss)
    Current and
Deferred Tax
Benefit
(Expense)
    Portfolio
Turnover
Rate(f)
 
                                                                     
               
  1.73     2.05   $ 395,117       (2.86 )%*      (3.36 )%*      (3.60 )%*      (2.95 )%*      (0.75 )%      4
  0.83       (3.98     407,008       (2.56     (2.12     (0.03     3.41       2.53       23  
  (9.44     (11.44     437,152       (2.23     (1.67     3.45       (1.05     5.68       12  
  12.27       27.51       530,132       (1.99     (1.46     (8.10     (1.05     (6.11     28  
  (34.43     (37.51     530,525       (1.95     (0.68     22.29 (c)      (0.42 )(c)      24.23       18  
  15.67       13.67       871,905       (1.84     (1.45     (10.38     (1.47     (8.54     6  
                                                                     
               
  4.13       4.69       92,428       (3.03 )*      (4.48 )*      (3.03 )*      (4.48 )*      0.00       7  
  (6.91     (13.77     93,416       (2.86     (2.21     (2.86     (2.21     0.00       24  
  (4.22     (8.91     108,129       (2.32     (0.76     (2.33     (0.77     (0.01     24  
  22.62       34.48       121,823       (2.15     (0.59     (2.14     (0.58     0.01       37  
  (46.47     (43.24     114,004       (2.02     (1.42     (0.16     (0.85     1.86       37  
  1.97       (13.76     236,281       (1.77 )*      (1.40 )*      (3.13 )*      (1.82 )*      (1.36     25  

 

(c)

During the fiscal year ended November 30, 2015, the Adviser voluntarily reimbursed the Fund for certain expenses incurred in connection with an equity shelf program. As a result, the Expenses and Net Investment Income (Loss) Ratios to Average Net Assets reflect this voluntary expense reimbursement from Adviser. The Expenses and Net Investment Income (Loss) Ratios to Average Net Assets excluding this expense reimbursement after income taxes/tax benefit (expenses) from the Adviser were as follows:

 

Ratios to Average Net Assets  
JMF   Expenses     Net Investment
Income (Loss)
 

Year Ended 11/30:

   

2015

    22.27 %     (0.44 )%

 

(d)

Expense ratios include the current and deferred tax benefit (expense) allocated to net investment income (loss) and the deferred tax benefit (expense) allocated to realized and unrealized gain (loss). Net Investment Income (Loss) ratios exclude the deferred tax benefit (expense) allocated to realized and unrealized gain (loss).

(e)     •

Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to borrowings, as described in Note 7 – Borrowing Arrangements.

 

Each ratio includes the effect of all interest expense paid and other costs related to borrowings as follows:

 

Ratios of Borrowings Interest Expense
to Average Net Assets
 

JMF

 

Year Ended 11/30:

 

2019(h)

    (1.26 )%* 

2018

    (1.00

2017

    (0.68

2016

    (0.45

2015

    (0.37

2014

    (0.32
Ratios of Borrowings Interest Expense
to Average Net Assets
 

JMLP

 

Year Ended 11/30:

 

2019(h)

    (1.21 )%* 

2018

    (0.95

2017

    (0.62

2016

    (0.40

2015

    (0.34

2014(g)

    (0.29 )* 
 

 

(f)

Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales (as disclosed in Note 5 – Investment Transactions) divided by the average long-term market value during the period.

(g)

For the period March 26, 2014 (commencement of operations) through November 30, 2014.

(h)

For the six months ended May 31, 2019.

*

Annualized.

**

Rounds to less than $0.01.

 

See accompanying notes to financial statements.

 

27


Notes to

Financial Statements

(Unaudited)

 

1. General Information and Significant Accounting Policies

General Information

Fund Information

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

 

   

Nuveen Energy MLP Total Return Fund (JMF)

 

   

Nuveen All Cap Energy MLP Opportunities Fund (JMLP)

The Funds are registered under the Investment Company Act of 1940 (the “1940 Act”), as amended, as non-diversified closed-end management investment companies. JMF and JMLP were each organized as a Massachusetts business trust on September 27, 2010 and July 25, 2013, respectively.

The end of the reporting period for the Funds is May 31, 2019, and the period covered by these Notes to Financial Statements is the six months ended May 31, 2019 (the “current fiscal period”).

Investment Adviser

The Funds’ investment adviser is Nuveen Fund Advisors, LLC (the “Adviser”), a subsidiary of Nuveen, LLC (“Nuveen”). Nuveen is the investment management arm of Teachers Insurance and Annuity Association of America (TIAA). The Adviser has overall responsibility for management of the Funds, oversees the management of the Funds’ portfolios, manages the Funds’ business affairs and provides certain clerical, bookkeeping and other administrative services, and, if necessary, asset allocation decisions. The Adviser has entered into sub-advisory agreements with Advisory Research Inc., (the “Sub-Adviser”), a wholly-owned subsidiary of Piper Jaffray Companies, under which the Sub-Adviser’s MLP & Energy Infrastructure team manages the investment portfolios of the Funds.

On May 29, 2019, Piper Jaffray announced that it had entered into an agreement to sell the midstream energy business of Advisory Research, Inc., including its MLP & Energy Infrastructure team, to Tortoise Capital Advisors. Nuveen Fund Advisors, LLC, an affiliate of Nuveen, is taking this development into account in its decisions and recommendations about the overall management and operations of these Funds.

Investment Objectives and Principal Investment Strategies

JMF’s investment objective is to provide tax-advantaged total return. The Fund seeks to achieve its investment objective by investing primarily in a portfolio of master limited partnerships (“MLPs”) in the energy sector. Under normal market circumstances, the Fund will invest at least 80% of its managed assets (as defined in Note 6 – Management Fees and Other Transactions with Affiliates) in MLPs in the energy sector. The Fund considers investments in MLPs to include investments that offer economic exposure to publicly traded and private MLPs in the form of equity securities of MLPs, securities of entities holding primarily general partner or managing member interests in MLPs, securities that are derivatives of interests in MLPs and debt securities of MLPs. Further, the Fund considers an entity to be part of the energy sector if it derives at least 50% of its revenues from the business of exploring, developing, producing, gathering, transporting, processing, storing, refining, distributing, mining or marketing natural gas, natural gas liquids, crude oil, refined petroleum products or coal.

JMLP’s investment objective is to provide a high level of total return including current distributions and capital appreciation. Under normal circumstances, the Fund will invest at least 80% of its managed assets in energy MLPs. The Fund considers investments in MLPs to include investments that offer economic exposure to publicly traded MLPs and private investments that have MLP characteristics, but are not publicly traded. The Fund considers an MLP to be part of the energy sector if it derives at least 50% of its revenues from the business of exploring, developing, producing, transporting, gathering and processing, storing, refining, distributing, mining or marketing of natural gas, natural gas liquids (including propane), crude oil, refined petroleum products or coal. The Fund will invest at least 60% of its managed assets in small and mid cap energy MLPs. The Fund considers an MLP to be small cap if its market capitalization at the time of investment is less than the capitalization limit for the small cap MLPs included in the Solactive Junior MLP Composite Index immediately after its first reconstitution in each calendar quarter. The Fund considers an MLP to be large cap if its market capitalization at the time of investment is greater than the median market capitalization of the Alerian Large Cap MLP Index immediately after its first reconstitution in each calendar year. The Fund considers an MLP to be mid cap if its market capitalization at the time of investment is less than the median market capitalization of the Alerian Large Cap MLP Index and greater than the capitalization limit for the Solactive Junior MLP Composite Index. The Fund’s capitalization thresholds will change over time as the composition of these indices change.

Significant Accounting Policies

Each Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) Topic 946 “Financial Services-Investment Companies.” The following is a summary of significant accounting policies

 

28


 

followed by the Funds in the preparation of their financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Investment Transactions

Investment transactions are recorded on a trade date basis. Realized gains and losses from investment transactions are determined on the specific identification method, which is the same basis used for federal income tax purposes.

Investment Income

Dividend income from corporate securities is recorded on the ex-dividend date or, for foreign securities, when information is available. A portion of the dividend income reported may in fact be return of capital; however, such information is not available until after the reporting period. Each Fund will therefore estimate how much of corporate distributions received is to be treated as dividend income using prior year information. Once the true nature of the corporate distributions becomes available, true-up adjustments will be made to dividend income in the subsequent reporting period. These adjustments may cause dividend income to be presented as a negative number on the Statement of Operations. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded at fair value. Interest income is recorded on an accrual basis.

Each Fund records the character of distributions received from MLPs based on estimates made at the time such distributions are received. These estimates are based upon a historical review of information available from each MLP and other industry sources. Each Fund’s characterization of the estimates may subsequently be revised based on information received from MLPs after their tax reporting periods conclude. Distributions, recognized as “Distributions from MLPs” on the Statement of Operations, are offset by amounts characterized as return of capital from the MLP entities, which are recognized as “Return of capital on distributions from MLPs” on the Statement of Operations. During the current fiscal period, each Fund estimated and characterized 100% of its distributions from MLPs as return of capital, unless otherwise noted in their Portfolio of Investments.

Professional Fees

Professional fees presented on the Statement of Operations consist of legal fees incurred in the normal course of operations, audit fees, tax consulting fees and, in some cases, workout expenditures. Workout expenditures are incurred in an attempt to protect or enhance an investment or to pursue other claims or legal actions on behalf of Fund shareholders. If a refund is received for workout expenditures paid in a prior reporting period, such amounts will be recognized as “Legal fee refund” on the Statement of Operations.

Income Taxes

Each Fund is treated as a regular corporation, or “C” corporation, for U.S. federal income tax purposes. Accordingly, each Fund is generally subject to U.S. federal income tax on its taxable income at statutory rates applicable to corporations (currently at a maximum rate of 21%). The estimated effective state income tax rate for JMF and JMLP are 2.99% and 1.39%, respectively. Current tax expense may include non-deductible interest and penalties.

Each Fund’s income tax provision consists of the following as of the end of the reporting period:

 

     JMF        JMLP  

Current tax expense (benefit):

      

Federal

  $ 29,677        $  

State

    70,281           

Total current tax expense (benefit)

  $ 99,958        $  

Deferred tax expense (benefit):

      

Federal

  $ 2,670,363        $  

State

    290,521           

Total deferred tax expense (benefit)

  $ 2,960,884        $  

The reconciliation between the federal statutory income tax rate of 21% and the effective tax rate on net investment income (loss) and realized and unrealized gain (loss) follows:

 

    JMF           JMLP  
Description   Amount      Rate            Amount      Rate  

Application of statutory income tax rate

  $ 2,428,154        21.00     $ 855,585        21.00

State income taxes, net of federal benefit

    346,043        2.99         (56,672      (1.39

Effect of permanent differences – Dividends Received Deduction

    149,566        1.29         133,006        3.26  

Effect of valuation allowance

                   (976,619      (23.97

Effect of statutory rate reduction from 35% to 21%

                           

Other

    137,079        1.19               44,700        1.10  

Total income tax expense (benefit)

  $ 3,060,842        26.47           $       

 

29


Notes to Financial Statements (continued)

(Unaudited)

 

Each Fund invests its assets primarily in MLPs, which generally are treated as partnerships for federal income tax purposes. As a limited partner in the MLPs, each Fund includes its allocable share of the MLPs’ taxable income in computing its own taxable income. Each Fund’s tax expense or benefit is recognized on the Statement of Operations based on the component of income or gains (losses) to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Such temporary differences are principally: (i) taxes on unrealized gains/(losses), which are attributable to the temporary difference between fair market value and tax basis, (ii) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes and (iii) the net tax benefit of accumulated net operating losses. Deferred tax assets and liabilities are measured using effective tax rates expected to apply to taxable income in the years such temporary differences are realized or otherwise settled. To the extent a Fund has a deferred tax asset, consideration is given to whether or not a valuation allowance is required. The determination of whether a valuation allowance is required is based on the evaluation criterion provided by ASC 740, Income Taxes (“ASC 740”) that it is more-likely-than-not that some portion or all of the deferred tax asset will not be realized. Among the factors considered in assessing each Fund’s valuation allowance: the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods and the associated risk that operating and capital loss carryforwards may expire unused. Significant appreciation or depreciation of Fund assets subsequent to the reporting period can impact future determinations of whether a deferred tax asset is more-likely-than-not to be realized, which in turn may result in adjustments to the valuation allowance reported in the tables below.

Components of the Funds’ deferred tax assets and liabilities as of the end of the reporting period, are as follows:

 

    JMF        JMLP  
Description   Deferred
Benefit
(Liability)
       Deferred
Benefit
(Liability)
 
Deferred tax assets:       

Federal net operating loss carryforward

  $ 11,520,368        $ 9,861,375  

Federal capital loss carryforward

    4,551,724          14,499,705  

State net operating and capital loss carryforward (tax basis)

    2,952,634          2,550,191  

Accumulated net unrealized loss on investments (tax basis)

              

Accumulated net unrealized loss on swaps (tax basis)

    401,667          115,636  

Tax credit carryforward – AMT

              

Foreign Tax Credit

    267,564           

Other

    772,223          161,131  
    $ 20,466,180        $ 27,188,038  
Deferred tax liabilities:       

Accumulated net unrealized gain on swaps (tax basis)

  $        $  

Accumulated net unrealized gain on investments (tax basis)

    (38,512,336        (7,033,102
    $ (38,512,336      $ (7,033,102
Net deferred taxes before valuation allowance   $ (18,046,156      $ 20,154,936  

Less: valuation allowance

    (1,206,811        (20,154,936

Net deferred tax assets (liabilities)

  $ (19,252,967      $  
Changes in the valuation allowance were as follows:

 

Balance at the beginning of period

  $ 1,206,811        $ 21,131,555  

Initial allowance recorded

              

Provision to return

             91,716  

Release of valuation allowance

             (1,070,732

Increase of valuation allowance

              

Change in state tax deferred rate

             2,397  

Balance at the end of period

  $ 1,206,811        $ 20,154,936  

As of May 31, 2019, the Funds’ tax year end to date, the Funds had net operating loss carryforwards available for federal income tax purposes to be applied against future taxable income, if any. If not applied, the carryforwards will expire as follows:

 

Net Operating Loss Carryforwards:   JMF        JMLP  

Expiration:

      

November 30, 2035

  $        $ 18,213,944  

November 30, 2036

             5,995,088  

November 30, 2037

    20,576,828          8,076,328  

No expiration

    34,282,068          14,673,570  

Total

  $ 54,858,896        $ 46,958,930  

 

30


 

As of May 31, 2019, the Funds’ tax year end to date, the Funds had unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as follows:

 

     JMF        JMLP  

Expiration:

      

November 30, 2020

  $        $ 10,562,055  

November 30, 2021

    11,665,096          34,789,250  

November 30, 2022

             14,075,458  

November 30, 2023

    10,009,778          9,619,452  

November 30, 2024

              

Total

  $ 21,674,874        $ 69,046,215  

As of May 31, 2019, JMF had AMT credit carryforwards of $1,014,003 reflected on the Statement of Assets and Liabilities as an income tax refund. This amount will be fully refundable by November 30, 2022.

For all open tax years and all major taxing jurisdictions, management of the Funds has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). Furthermore, management of the Funds is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

The tables below present the cost and unrealized appreciation (depreciation) of each Fund’s investment portfolio, as determined on a federal income tax basis, as of May 31, 2019.

For purposes of this disclosure, derivative tax cost is generally the sum of any upfront fees or premiums exchanged and any amounts unrealized for income statement reporting but realized in income and/or capital gains for tax reporting. If a particular derivative category does not disclose any tax unrealized appreciation or depreciation, the change in value of those derivatives have generally been fully realized for tax purposes.

 

     JMF        JMLP  

Tax cost of investments

  $ 409,031,636        $ 99,804,120  

Gross unrealized:

      

Appreciation

  $ 199,823,268        $ 40,339,755  

Depreciation

    (36,447,692        (11,182,280

Net unrealized appreciation (depreciation) of investments

  $ 163,375,576        $ 29,157,475  
     JMF        JMLP  

Tax cost of swaps

  $        $  

Net unrealized appreciation (depreciation) of swaps

    (1,678,693        (474,883

Dividends and Distributions to Common Shareholders

Distributions to common shareholders are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.

Each Fund uses a cash flow-based distribution approach, designed to provide attractive quarterly distributions throughout the year, in amounts based on each Fund’s net cash flow received from portfolio investments. Net cash flow consists primarily of distributions received from each Fund’s investments in shares of energy MLPs, less payments on any of its leveraging instruments and other Fund expenses. Currently, each Fund intends to distribute substantially all of its net distributable cash flow received without sourcing incremental amounts from other components, such as realized or unrealized capital gains and/or returns of Fund principal.

For purposes of determining the income tax characterization of each Fund’s distributions, the amount of each Fund’s distributions attributable to each Fund’s earnings and profits for federal income tax purposes are characterized to Fund shareholders as taxable ordinary dividends, while the amount of distributions in excess of each Fund’s earnings and profits for federal income tax purposes are characterized as a return of capital. Each Fund will calculate its earnings and profits based on its taxable period ended November 30 and will report the character of its distributions to shareholders shortly after the end of the calendar year. The primary components of each Fund’s annual earnings and profits calculation are: income, loss and other flow-through items (including earnings and profits adjustments) reported by each MLP held by each Fund on the MLP’s Schedule K-1, realized gain or loss on sales of Fund investments and deductible operating expenses.

Each Fund treats distributions from any given MLP holding as a return of capital to the extent of each Fund’s income tax basis in that MLP, and will reduce its basis in that MLP holding by the amount of such distribution so treated as a return of capital. In contrast, each Fund will recognize income (and thereby increase its earnings and profits) if and to the extent that it receives a distribution from an MLP holding that exceeds its income tax basis in that MLP holding.

 

31


Notes to Financial Statements (continued)

(Unaudited)

 

The character of each Fund’s distributions for U.S. GAAP purposes, which can often differ from the tax character, is based on estimates of the sources of those distributions (which can be from a combination of income and/or a return of capital) made at the time such distributions are received, which in turn are based upon a historical review of information available from each MLP and other industry sources. Each Fund’s accounting characterization of the estimates may subsequently be revised based on information received from MLPs after their tax reporting periods conclude. It is currently estimated that a significant portion of each Fund’s distributions during the current fiscal period, will be characterized for U.S. GAAP purposes as a return of capital.

Compensation

The Funds pay no compensation directly to those of its trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Funds’ Board of Trustees (the “Board”) has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen-advised funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen-advised funds.

Indemnifications

Under the Funds’ organizational documents, their officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.

Netting Agreements

In the ordinary course of business, the Funds may enter into transactions subject to enforceable master repurchase agreements, International Swaps and Derivatives Association, Inc. (ISDA) master agreements or other similar arrangements (“netting agreements”). Generally, the right to offset in netting agreements allows each Fund to offset certain securities and derivatives with a specific counterparty, when applicable, with any collateral received or delivered to that counterparty based on the terms of the agreements. Generally, each Fund manages its cash collateral and securities collateral on a counterparty basis.

The Funds’ investments subject to netting agreements as of the end of the reporting period, if any, are further described in Note 3 – Portfolio Securities and Investments in Derivatives.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the current fiscal period. Actual results may differ from those estimates.

2. Investment Valuation and Fair Value Measurements

The fair valuation input levels as described below are for fair value measurement purposes.

Fair value is defined as the price that would be received upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The following is a summary of the three-tiered hierarchy of valuation input levels.

 

Level 1 –   Inputs are unadjusted and prices are determined using quoted prices in active markets for identical securities.
Level 2 –   Prices are determined using other significant observable inputs (including quoted prices for similar securities, interest rates, credit spreads, etc.).
Level 3 –   Prices are determined using significant unobservable inputs (including management’s assumptions in determining the fair value of investments).

Common stocks and other equity-type securities, such as MLPs, are valued at the last sales price on the securities exchange on which such securities are primarily traded and are generally classified as Level 1. Securities primarily traded on the Nasdaq National Market (“Nasdaq”) are valued at the Nasdaq Official Closing Price and are generally classified as Level 1. However, securities traded on a securities exchange or Nasdaq for which there were no transactions on a given day or securities not listed on a securities exchange or Nasdaq are valued at the quoted bid price and are generally classified as Level 2.

 

32


 

Prices of swap contracts are provided by an independent pricing service (“pricing service”) approved by the Board. The pricing service establishes a security’s fair value using methods that may include consideration of the following: evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor’s credit characteristics considered relevant. These securities are generally classified as Level 2. In pricing certain securities, particularly less liquid and lower quality securities, the pricing service may consider information about a security, its issuer or market activity provided by the Adviser. These investments are generally classified as Level 2 or Level 3 depending on the observability of the significant inputs.

Repurchase agreements are valued at contract amount plus accrued interest, which approximates market value. These securities are generally classified as Level 2.

Certain securities may not be able to be priced by the pre-established pricing methods as described above. Such securities may be valued by the Board and/or its appointee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; debt securities that have gone into default and for which there is no current market quotation; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of a Fund’s net asset value (“NAV”) (as may be the case in non-U.S. markets on which the security is primarily traded) or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, is not deemed to reflect the security’s fair value. As a general principle, the fair value of a security would appear to be the amount that the owner might reasonably expect to receive for it in a current sale. A variety of factors may be considered in determining the fair value of such securities, which may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor’s credit characteristics considered relevant. These securities are generally classified as Level 2 or Level 3 depending on the observability of the significant inputs. Regardless of the method employed to value a particular security, all valuations are subject to review by the Board and/or its appointee.

The inputs or methodologies used for valuing securities are not an indication of the risks associated with investing in those securities. The following is a summary of each Fund’s fair value measurements as of the end of the reporting period:

 

JMF    Level 1      Level 2      Level 3      Total  

Long-Term Investments*:

           

Master Limited Partnerships & MLP Affiliates

   $ 453,186,414      $      $      $ 453,186,414  

Common Stocks

     116,776,132                      116,776,132  

Short-Term Investments:

           

Repurchase Agreements

            2,444,666               2,444,666  

Investments in Derivatives:

           

Interest Rate Swaps**

            (1,678,693             (1,678,693

Total

   $ 569,962,546      $ 765,973      $      $ 570,728,519  
JMLP                                

Long-Term Investments*:

           

Master Limited Partnerships & MLP Affiliates

   $ 106,701,056      $      $      $ 106,701,056  

Common Stocks

     21,686,252                      21,686,252  

Short-Term Investments:

           

Repurchase Agreements

            574,287               574,287  

Investments in Derivatives:

           

Interest Rate Swaps**

            (474,883             (474,883 )  

Total

   $ 128,387,308      $ 99,404      $      $ 128,486,712  
*

Refer to the Fund’s Portfolio of Investments for industry classifications.

**

Represents net unrealized appreciation (depreciation) as reported in the Fund’s Portfolio of Investments.

 

33


Notes to Financial Statements (continued)

(Unaudited)

 

3. Portfolio Securities and Investments in Derivatives

Portfolio Securities

Master Limited Partnerships

An MLP consists of a general partner and limited partners (or in the case of MLPs organized as limited liability companies, a managing member and members). The general partner or managing member typically controls the operations and management of the MLP and has an ownership stake in the MLP. The limited partners or members, through their ownership of limited partner or member interests, provide capital to the entity, which are intended to have no role in the operation and management of the entity and receive cash distributions.

Each Fund may purchase both domestic and international MLPs. Each Fund’s investment in MLPs may include ownership of MLP common units and MLP subordinated units. Each Fund also may purchase MLP I-Shares (together with the MLPs, the “MLP Entities”). MLP I-Shares are pay-in-kind securities created as a means to facilitate institutional ownership of MLPs by simplifying the tax and administrative implications of the MLP structure. Generally, when an MLP pays its quarterly cash distribution to unitholders, holders of I-Shares do not receive a cash distribution; rather, they receive a dividend of additional I-Shares from the MLP of comparable value to the cash distribution paid to each unitholder. Each Fund may purchase interests in MLP Entities on an exchange or may utilize non-public market transactions to obtain its holdings, including but not limited to privately negotiated purchases of securities from the issuers themselves, broker-dealers or other qualified institutional buyers.

Repurchase Agreements

In connection with transactions in repurchase agreements, it is each Fund’s policy that its custodian take possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest, at all times. If the counterparty defaults, and the fair value of the collateral declines, realization of the collateral may be delayed or limited.

The following table presents the repurchase agreements for the Funds that are subject to netting agreements as of the end of the reporting period, and the collateral delivered related to those repurchase agreements.

 

Fund    Counterparty    Short-Term
Investments, at Value
       Collateral
Pledged (From)
Counterparty*
       Net
Exposure
 
JMF   

Fixed Income Clearing Corporation

   $ 2,444,666        $ (2,444,666      $  
JMLP   

Fixed Income Clearing Corporation

   $ 574,287        $ (574,287      $  
*

As of the end of the reporting period, the value of the collateral pledged from the counterparty exceeded the value of the repurchase agreements. Refer to the Fund’s Portfolio of Investments for details on the repurchase agreements.

Investments in Derivatives

Each Fund is authorized to invest in certain derivative instruments such as futures, options and swap contracts. Each Fund limits its investments in futures, options on futures and swap contracts to the extent necessary for the Adviser to claim the exclusion from registration by the Commodity Futures Trading Commission as a commodity pool operator with respect to the Fund. The Funds record derivative instruments at fair value with changes in fair value recognized on the Statement of Operations, when applicable. Even though the Funds’ investments in derivatives may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes.

Interest Rate Swap Contracts

Interest rate swap contracts involve a Fund’s agreement with the counterparty to pay or receive a fixed rate payment in exchange for the counterparty receiving or paying a variable rate payment. Forward interest rate swap contracts involve a Fund’s agreement with a counterparty to pay, in the future, a fixed or variable rate payment in exchange for the counterparty paying the Fund a variable or fixed rate payment, the accruals for which begin at a specified date in the future (the “effective date”).

The amount of the payment obligation for an interest rate swap is based on the notional amount and the termination date of the swap contract. Interest rate swap contracts do not involve the delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to the swap counterparty on such transactions is limited to the net amount of interest payments that the Fund is to receive.

Interest rate swap contracts are valued daily. Upon entering into an interest rate swap contract (and beginning on the effective date for a forward interest rate swap contract), the Fund accrues the fixed rate payment expected to be paid or received and the variable rate payment expected to be received or paid on the interest rate swap contracts on a daily basis, and recognizes the daily change in the fair value of the Fund’s contractual rights and obligations under the contracts. For an over-the-counter (“OTC”) swap that is not cleared through a clearing house (“OTC Uncleared”), the amount recorded on these transactions is recognized on the Statement of Assets and Liabilities as a component of “Unrealized appreciation or depreciation on interest rate swaps.”

 

34


 

Upon the execution of an OTC swap cleared through a clearing house (“OTC Cleared”), the Fund is obligated to deposit cash or eligible securities, also known as “initial margin,” into an account at its clearing broker equal to a specified percentage of the contract amount. Cash deposited by the Fund to cover initial margin requirements on open swap contracts, if any, is recognized as a component of “Cash collateral at brokers for investments in swaps” on the Statement of Assets and Liabilities. Investments in OTC Cleared swaps obligate the Fund and the clearing broker to settle monies on a daily basis representing changes in the prior day’s “mark-to-market” of the swap contract. If the Fund has unrealized appreciation, the clearing broker will credit the Fund’s account with an amount equal to the appreciation. Conversely, if the Fund has unrealized depreciation, the clearing broker will debit the Fund’s account with an amount equal to the depreciation. These daily cash settlements are also known as “variation margin.” Variation margin for OTC Cleared swaps is recognized as a receivable and/or payable for “Variation margin on swap contracts” on the Statement of Assets and Liabilities. Upon the execution of an OTC Uncleared swap, neither the Fund nor the counterparty is required to deposit initial margin as the trades are recorded bilaterally between both parties to the swap contract, and the terms of the variation margin are subject to a predetermined threshold negotiated by the Fund and the counterparty. Variation margin for OTC Uncleared swaps is recognized as a component of “Unrealized appreciation or depreciation on interest rate swaps” as described in the preceding paragraph.

The net amount of periodic payments settled in cash are recognized as a component of “Net realized gain (loss) from swaps before taxes” on the Statement of Operations, in addition to the net realized gain or loss recorded upon the termination of the swap contract. For tax purposes, payments expected to be received or paid on the swap contracts are treated as ordinary income or expense, respectively. Changes in the value of the swap contracts during the fiscal period are recognized as a component of “Change in net unrealized appreciation (depreciation) of swaps before taxes” on the Statement of Operations. In certain instances, payments are made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap agreements and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). Payments received or made at the beginning of the measurement period, if any, are recognized as “Interest rate swaps premiums paid and/or received” on the Statement of Assets and Liabilities.

During the current fiscal period, the Funds continued to utilize forward interest rate swap contracts to hedge the future interest expense of its leverage.

The average notional amount of interest rate swap contracts outstanding during the current fiscal period was as follows:

 

     JMF        JMLP  

Average notional amount of interest rate swap contracts outstanding*

  $ 94,500,000        $ 21,000,000  
*

The average notional amount is calculated based on the outstanding notional at the beginning of the fiscal period and at the end of each fiscal quarter within the current fiscal period.

The following table presents the fair value of all swap contracts held by the Funds as of the end of the reporting period, the location of these instruments on the Statement of Assets and Liabilities and the primary underlying risk exposure.

 

        

Location on the Statement of Assets and Liabilities

 
Underlying
Risk Exposure
   Derivative
Instrument
 

Asset Derivatives

         

(Liability) Derivatives

 
  Location    Value            Location    Value  
JMF               
Interest rate    Swaps (OTC Uncleared)  

   $             Unrealized depreciation on interest rate swaps    $ (1,678,693
JMLP               
Interest rate    Swaps (OTC Uncleared)  

   $            

Unrealized depreciation on interest rate swaps

   $ (474,883

The following table presents the Funds’ swap contracts subject to netting agreements and the collateral delivered related to those swap contracts as of the end of the reporting period.

 

Fund    Counterparty    Gross
Unrealized
Appreciation on
Interest Rate
Swaps**
     Gross
Unrealized
(Depreciation) on
Interest Rate
Swaps**
     Net Unrealized
Appreciation
(Depreciation) on
Interest Rate
Swaps
     Collateral
Pledged
to (from)
Counterparty
     Net
Exposure
 
JMF    JPMorgan Chase Bank, N.A.    $      $ (1,678,693    $ (1,678,693    $ 1,020,591      $ (658,102
JMLP    Morgan Stanley Capital Services LLC    $      $ (474,883    $ (474,883    $ 262,830      $ (212,053
**

Represents gross unrealized appreciation (depreciation) for the counterparty as reported in the Fund’s Portfolio of Investments.

 

35


Notes to Financial Statements (continued)

(Unaudited)

 

The following table presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized on swap contracts on the Statement of Operations during the current fiscal period, and the primary underlying risk exposure.

 

Fund      Underlying
Risk Exposure
     Derivative
Instrument
     Net Realized
Gain/(Loss)
from Swaps
Before Taxes
       Change in Net
Unrealized
Appreciation
(Depreciation)
of Swaps
Before Taxes
 
JMF      Interest rate      Swaps      $ 230,209        $ (6,127,961
JMLP      Interest rate      Swaps      $ 43,704        $ (1,363,061

Market and Counterparty Credit Risk

In the normal course of business each Fund may invest in financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to the transaction to perform (counterparty credit risk). The potential loss could exceed the value of the financial assets recorded on the financial statements. Financial assets, which potentially expose each Fund to counterparty credit risk, consist principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of each Fund’s exposure to counterparty credit risk in respect to these financial assets approximates their carrying value as recorded on the Statement of Assets and Liabilities.

Each Fund helps manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations and by having the Adviser monitor the financial stability of the counterparties. Additionally, counterparties may be required to pledge collateral daily (based on the daily valuation of the financial asset) on behalf of each Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when each Fund has an unrealized loss, the Funds have instructed the custodian to pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the valuations fluctuate, either up or down, by at least the pre-determined threshold amount.

4. Fund Shares

Common Shares Equity Shelf Programs and Offering Costs

The following Funds have each filed registration statements with the Securities and Exchange Commission (“SEC”) authorizing each Fund to issue additional common shares through one or more equity shelf programs (“Shelf Offering”), which became effective with the SEC during prior fiscal periods.

Under these Shelf Offerings, the Funds, subject to market conditions, may raise additional equity capital by issuing additional common shares from time to time in varying amounts and by different offering methods at a net price at or above the Fund’s NAV per common share. In the event a Fund’s Shelf Offering registration statement is no longer current, the Fund may not issue additional common shares until a post-effective amendment to the registration statement has been filed with the SEC.

Additional authorized common shares, shares sold and offering proceeds, net of offering costs under each Fund’s Shelf Offering during each Fund’s current and prior fiscal period were as follows:

 

       JMF      JMLP  
       

Six Months
Ended
5/31/19

    

Year
Ended
11/30/18*

    

Six Months
Ended
5/31/19**

    

Year
Ended
11/30/18

 

Additional authorized common shares

              9,800,000               3,100,000  

Common shares sold

              688,792               337,500  

Offering proceeds, net of offering costs

     $      $ 7,353,662      $      $ 2,713,917  
*

Represents additional authorized common shares for the period December 1, 2017 through September 28, 2018.

**

Represents additional authorized common shares for the period December 1, 2018 through March 29, 2019.

Costs incurred by the Funds in connection with their initial shelf registration were recorded as a prepaid expense and recognized as “Deferred offering costs” on the Statement of Assets and Liabilities. These costs are amortized pro rata as shares are sold and are recognized as a component of “Proceeds from shelf offering, net of offering costs” on the Statement of Changes in Net Assets. Any deferred offering costs remaining one year after effectiveness of the initial shelf registration will be expensed. Costs incurred by the Funds to keep the shelf registration current are expensed as incurred and recognized as a component of “shelf offering expenses” on the Statement of Operations.

 

36


 

Common Share Transactions

Transactions in common shares during the Funds’ current and prior fiscal period were as follows:

 

       JMF      JMLP  
       

Six Months
Ended
5/31/19

    

Year
Ended
11/30/18

    

Six Months
Ended
5/31/19

    

Year
Ended
11/30/18

 

Shares:

             

Sold through shelf offering

              688,792               337,500  

Issued to shareholders due to reinvestment of distributions

                             

Weighted average share:

             

Premium to NAV per shelf offering share sold

            1.63           1.57

5. Investment Transactions

Long-term purchases and sales (excluding derivative transactions, where applicable) during the current fiscal period were as follows:

 

     JMF        JMLP  

Purchases

  $ 20,577,826        $ 8,877,590  

Sales

    34,234,815          12,192,783  

6. Management Fees and Other Transactions with Affiliates

Management Fees

Each Fund’s management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Sub-Adviser is compensated for its services to the Funds from the management fees paid to the Adviser.

Each Fund’s management fee consists of two components – a fund-level fee, based only on the amount of assets within each individual Fund, and a complex-level fee, based on the aggregate amount of all eligible fund assets managed by the Adviser. This pricing structure enables Fund shareholders to benefit from growth in the assets within their respective Fund as well as from growth in the amount of complex-wide assets managed by the Adviser.

The annual fund-level fee, payable monthly, for each Fund is calculated according to the following schedule:

 

Average Daily Managed Assets*      Fund-Level Fee Rate  

For the first $500 million

       0.9000

For the next $500 million

       0.8750  

For the next $500 million

       0.8500  

For the next $500 million

       0.8250  

For managed assets over $2 billion

       0.8000  

 

37


Notes to Financial Statements (continued)

(Unaudited)

 

The annual complex-level fee, payable monthly, for each Fund is calculated by multiplying the current complex-wide fee rate, determined according to the following schedule by the Fund’s daily managed assets:

 

Complex-Level Eligible Asset Breakpoint Level*      Effective Complex-Level Fee
Rate at Breakpoint Level
 

$55 billion

       0.2000

$56 billion

       0.1996  

$57 billion

       0.1989  

$60 billion

       0.1961  

$63 billion

       0.1931  

$66 billion

       0.1900  

$71 billion

       0.1851  

$76 billion

       0.1806  

$80 billion

       0.1773  

$91 billion

       0.1691  

$125 billion

       0.1599  

$200 billion

       0.1505  

$250 billion

       0.1469  

$300 billion

       0.1445  
*

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. As of May 31, 2019, the complex-level fee for each Fund was 0.1580%.

7. Borrowing Arrangements

Each Fund has entered into a borrowing arrangement (“Borrowings”) as a means of leverage.

The Funds have entered into a credit agreement with a bank and its affiliate. Each Fund’s maximum commitment amount under its Borrowings is as follows:

 

     JMF        JMLP  

Maximum commitment amount

  $ 230,000,000        $ 60,000,000  

As of the end of the reporting period, each Fund’s outstanding balance on its Borrowings was a follows:

 

     JMF        JMLP  

Outstanding balance on Borrowings

  $ 156,100,000        $ 36,100,000  

Interest charged on these Borrowings is at a rate per annum equal to the 1-Month LIBOR (London Inter-Bank Offered Rate) plus 0.75% for JMF and plus 0.70% for JMLP. The Funds also accrue a commitment fee of 0.15% per annum on the daily undrawn portion of the Borrowings unless the undrawn portion of the Borrowings on that day is less than 40% of the maximum commitment amount.

During the current fiscal period, the average daily balance outstanding and average annual interest rate on each Fund’s Borrowings were as follows:

 

     JMF        JMLP  

Average daily balance outstanding

  $ 157,972,527        $ 34,842,308  

Average annual interest rate

    3.23        3.18

Other Borrowings Information for the Funds

In order to maintain the Borrowings, the Funds must meet certain collateral, asset coverage and other requirements. Borrowings outstanding are fully secured by eligible securities held in each Fund’s Portfolio of Investments.

Each Fund’s Borrowings outstanding is recognized as “Borrowings” on the Statement of Assets and Liabilities. Interest expense incurred on the borrowed amount and undrawn balance are recognized as a component of “Interest expense on borrowings” on the Statement of Operations.

 

38


 

Inter-Fund Borrowing and Lending

The SEC has granted an exemptive order permitting registered open-end and closed-end Nuveen funds to participate in an inter-fund lending facility whereby the Nuveen funds may directly lend to and borrow money from each other for temporary purposes (e.g., to satisfy redemption requests or when a sale of securities “fails,” resulting in an unanticipated cash shortfall) (the “Inter-Fund Program”). The closed-end Nuveen funds, including the Funds covered by this shareholder report, 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 day’s 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 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.

During the current reporting period, none of the Funds covered by this shareholder report have entered into any inter-fund loan activity.

8. New Accounting Pronouncements

Fair Value Measurement: Disclosure Framework

During August 2018, the FASB issued ASU 2018-13 (“ASU 2018-13”), Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements. ASU 2018-13 modifies the disclosures required by Topic 820, Fair Value Measurements. The amendments in ASU 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. During the current reporting period, management early implemented this guidance. This implementation did not have a material impact on the Fund’s financial statements.

9. Subsequent Events

Borrowing Arrangements

Subsequent to the current fiscal period, JMF increased the outstanding balance on its Borrowings to $158,100,000.

 

39


Additional Fund

Information

 

Board of Trustees      
Margo Cook*   Jack B. Evans   William C. Hunter   Albin F. Moschner   John K. Nelson
Judith M. Stockdale   Carole E. Stone   Terence J. Toth   Margaret L. Wolff   Robert L. Young

 

*

Interested Board Member.

 

         

Fund Manager

Nuveen Fund Advisors, LLC

333 West Wacker Drive

Chicago, IL 60606

 

Custodian

State Street Bank
& Trust Company

One Lincoln Street

Boston, MA 02111

 

Legal Counsel

Chapman and Cutler LLP

Chicago, IL 60603

 

Independent Registered
Public Accounting Firm

PricewaterhouseCoopers LLP

One North Wacker Drive

Chicago, IL 60606

 

Transfer Agent and
Shareholder Services

Computershare Trust
Company, N.A.
250 Royall Street
Canton, MA 02021
(800) 257-8787

 

 

 

Portfolio of Investments Information

Each Fund is required to file its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its report on Form N-PORT. You may obtain this information on the SEC’s website at http://www.sec.gov.

Nuveen Funds’ Proxy Voting Information

You may obtain (i) information regarding how each fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30, without charge, upon request, by calling Nuveen toll-free at (800) 257-8787 or on Nuveen’s website at www.nuveen.com and (ii) a description of the policies and procedures that each fund used to determine how to vote proxies relating to portfolio securities without charge, upon request, by calling Nuveen toll free at (800) 257-8787. You may also obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov.

 

 

CEO Certification Disclosure

Each Fund’s Chief Executive Officer (CEO) has submitted to the New York Stock Exchange (NYSE) the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the SEC the certification of its CEO and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act.

 

 

Common Share Repurchases

Each Fund intends to repurchase, through its open-market share repurchase program, shares of its own common stock at such times and in such amounts as is deemed advisable. During the period covered by this report, each Fund repurchased shares of its common stock, as shown in the accompanying table. Any future repurchases will be reported to shareholders in the next annual or semi-annual report.

 

     JMF        JMLP  

Common shares repurchased

              

FINRA BrokerCheck

The Financial Industry Regulatory Authority (FINRA) provides information regarding the disciplinary history of FINRA member firms and associated investment professionals. This information as well as an investor brochure describing FINRA BrokerCheck is available to the public by calling the FINRA BrokerCheck Hotline number at (800) 289-9999 or by visiting www.FINRA.org.

 

40


Glossary of Terms

Used in this Report

 

 

Alerian MLP Index: A composite of the 50 most prominent energy Master Limited Partnerships. The index, which is calculated using a float-adjusted, capitalization-weighted methodology, is disseminated real-time on a price-return basis, and the corresponding total-return index is disseminated daily. The index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.

 

 

Average Annual Total Return: This is a commonly used method to express an investment’s performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment’s actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered.

 

 

Effective Leverage: Effective leverage is a fund’s effective economic leverage, and includes both regulatory leverage (see Leverage) and the leverage effects of certain derivative investments in the fund’s portfolio.

 

 

Leverage: Leverage is created whenever a fund has investment exposure (both reward and/or risk) equivalent to more than 100% of the investment capital.

 

 

Net Asset Value (NAV) Per Share: A fund’s Net Assets is equal to its total assets (securities, cash, accrued earnings and receivables) less its total liabilities. NAV per share is equal to the fund’s Net Assets divided by its number of shares outstanding.

 

 

Regulatory Leverage: Regulatory Leverage consists of preferred shares issued by or borrowings of a fund. Both of these are part of a fund’s capital structure. Regulatory leverage is subject to asset coverage limits set in the Investment Company Act of 1940.

 

 

S&P 500®: An unmanaged index generally considered representative of the U.S. stock market. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.

 

41


Reinvest Automatically,

Easily and Conveniently

 

Nuveen makes reinvesting easy. A phone call is all it takes to set up your reinvestment account.

 

 

Nuveen Closed-End Funds Automatic Reinvestment Plan

Nuveen Closed-End Fund allows you to conveniently reinvest distributions in additional Fund shares. By choosing to reinvest, you’ll be able to invest money regularly and automatically, and watch your investment grow through the power of compounding. Just like distributions in cash, there may be times when income or capital gains taxes may be payable on distributions that are reinvested. It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market.

Easy and convenient

To make recordkeeping easy and convenient, each month you’ll receive a statement showing your total distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own.

How shares are purchased

The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the greater of the net asset value or 95% of the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. If the Plan Agent begins purchasing Fund shares on the open market while shares are trading below net asset value, but the Fund’s shares subsequently trade at or above their net asset value before the Plan Agent is able to complete its purchases, the Plan Agent may cease open-market purchases and may invest the uninvested portion of the distribution in newly-issued Fund shares at a price equal to the greater of the shares’ net asset value or 95% of the shares’ market value on the last business day immediately prior to the purchase date. Distributions received to purchase shares in the open market will normally be invested shortly after the distribution payment date. No interest will be paid on distributions awaiting reinvestment. Because the market price of the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions.

Flexible

You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change. You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your investment advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan. The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time.

Call today to start reinvesting distributions

For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787.

 

 

42


 

Annual Investment Management Agreement Approval Process

(Unaudited)

 

Nuveen Energy MLP Total Return Fund (JMF)

Nuveen All Cap Energy MLP Opportunities Fund (JMLP)

At a meeting held on May 21-23, 2019 (the “May Meeting”), the Board of Trustees (each, a “Board” and each Trustee, a “Board Member”) of each Fund, including the Board Members who are not “interested persons” (as defined under the Investment Company Act of 1940 (the “1940 Act”)) (the “Independent Board Members”), approved, for its respective Fund, the renewal of the management agreement (each, an “Investment Management Agreement”) with Nuveen Fund Advisors, LLC (the “Adviser”) pursuant to which the Adviser serves as investment adviser to such Fund and the sub-advisory agreement (each, a “Sub-Advisory Agreement”) with Advisory Research, Inc. (the “Sub-Adviser”) pursuant to which the Sub-Adviser serves as the sub-adviser to such Fund. Following an initial two-year period, the Board, including the Independent Board Members, is required under the 1940 Act to review and approve each Investment Management Agreement and Sub-Advisory Agreement on behalf of the applicable Fund on an annual basis. The Investment Management Agreements and Sub-Advisory Agreements are collectively referred to as the “Advisory Agreements” and the Adviser and the Sub-Adviser are collectively, the “Fund Advisers” and each, a “Fund Adviser.”

In response to a request on behalf of the Independent Board Members by independent legal counsel, the Board received and reviewed prior to the May Meeting extensive materials specifically prepared for the annual review of Advisory Agreements by the Adviser as well as by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data. The materials provided in connection with the annual review covered a breadth of subject matter including, but not limited to, a description of the nature, extent and quality of services provided by the Fund Advisers; a review of the Sub-Adviser and investment team; an analysis of fund performance in absolute terms and as compared to the performance of certain peer funds and benchmarks with a focus on any performance outliers; an analysis of the fees and expense ratios of the Nuveen funds in absolute terms and as compared to those of certain peer funds with a focus on any expense outliers; a description of portfolio manager compensation; a review of the secondary market trading of shares of the Nuveen closed-end funds (including, among other things, an analysis of performance, distribution and valuation and capital raising trends in the broader closed-end fund market and in particular with respect to Nuveen closed-end funds; a review of the leverage management actions taken on behalf of the Nuveen closed-end funds and their resulting impact on performance; and a description of the distribution management process and any capital management activities); a review of the performance of various service providers; a description of various initiatives Nuveen had undertaken or continued during the year for the benefit of particular fund(s) and/or the complex; a description of the profitability or financial data of Nuveen and the Sub-Adviser; and a description of indirect benefits received by the Fund Advisers as a result of their relationships with the Nuveen funds. The Board Members held an in-person meeting on April 17-18, 2019 (the “April Meeting”), in part, to review and discuss the performance of the Nuveen funds and the Adviser’s evaluation of the various sub-advisers to the Nuveen funds. The Independent Board Members asked questions and requested additional information that was provided for the May Meeting.

The information prepared specifically for the annual review of the Advisory Agreements supplemented the information provided to the Board and its committees throughout the year. The Board and its committees met regularly during the year and the information provided and topics discussed were relevant to the review of the Advisory Agreements. Some of these reports and other data included, among other things, materials that outlined the investment performance of the Nuveen funds; strategic plans of the Adviser which may impact the services it provides to the Nuveen funds; the review of the Nuveen funds and applicable investment teams; the management of leverage financing for closed-end funds; the secondary market trading of the closed-end funds and any actions to address discounts; compliance, regulatory and risk management matters; the trading practices of the various sub-advisers; valuation of securities; fund expenses; and overall market and regulatory developments. The Board further continued its practice of seeking to meet periodically with the various sub-advisers to the Nuveen funds and their investment teams, when feasible. The Independent Board Members considered the review of the Advisory Agreements to be an ongoing process and employed the accumulated information, knowledge, and experience the Board Members had gained during their tenure on the boards governing the Nuveen funds and working with the Fund Advisers in their review of the Advisory Agreements. The contractual arrangements are a result of multiple years of review, negotiation and information provided in connection with the boards’ annual review of the Nuveen funds’ advisory arrangements and oversight of the Nuveen funds.

 

43


Annual Investment Management Agreement Approval Process (continued)

(Unaudited)

 

The Independent Board Members were advised by independent legal counsel during the annual review process as well as throughout the year, including meeting in executive sessions with such counsel at which no representatives from the Adviser or the Sub-Adviser were present. In connection with their annual review, the Independent Board Members also received a memorandum from independent legal counsel outlining their fiduciary duties and legal standards in reviewing the Advisory Agreements.

In deciding to renew the Advisory Agreements, the Independent Board Members did not identify a particular factor or information as determinative or controlling, but rather the decision reflected the comprehensive consideration of all the information provided, and each Board Member may have attributed different levels of importance to the various factors and information considered in connection with the approval process. The following summarizes the principal factors and information, but not all the factors, the Board considered in deciding to renew the Advisory Agreements and its conclusions.

 

A.   Nature, Extent and Quality of Services

In evaluating the renewal of the Advisory Agreements, the Independent Board Members received and considered information regarding the nature, extent and quality of the applicable Fund Adviser’s services provided to the respective Fund with particular focus on the services and enhancements to such services provided during the last year. The Board recognized that the Adviser provides a comprehensive set of services necessary to operate the Nuveen funds in a highly regulated industry and noted that the scope of such services has expanded over the years as a result of regulatory, market and other developments, such as the development of the liquidity management program and expanded compliance programs. Some of the functions the Adviser is responsible for include, but are not limited to: product management (such as analyzing a fund’s position in the marketplace, setting dividends, preparing shareholder and intermediary communications and other due diligence support); investment oversight (such as analyzing fund performance, sub-advisers and investment teams and analyzing trade executions of portfolio transactions, soft dollar practices and securities lending activities); securities valuation services (such as executing the daily valuation process for portfolio securities and developing and recommending changes to valuation policies and procedures); risk management (such as overseeing operational and investment risks, including stress testing); fund administration (such as preparing fund tax returns and other tax compliance services, overseeing the Nuveen funds’ independent public accountants and other service providers; managing fund budgets and expenses; and helping to fulfill the funds’ regulatory filing requirements); oversight of shareholder services and transfer agency functions (such as oversight and liaison of transfer agent service providers which include registered shareholder customer service and transaction processing); Board relations services (such as organizing and administering Board and committee meetings, preparing various reports to the Board and committees and providing other support services); compliance and regulatory oversight services (such as developing and maintaining a compliance program to ensure compliance with applicable laws and regulations, monitoring compliance with applicable fund policies and procedures and adherence to investment restrictions, and evaluating the compliance programs of the Nuveen fund sub-advisers and certain other service providers); legal support and oversight of outside law firms (such as with respect to filing and updating registration statements; maintaining various regulatory registrations; and providing legal interpretations regarding fund activities, applicable regulations and implementation of policies and procedures); and leverage, capital and distribution management services. In reviewing the scope and quality of services, the Board recognized the continued efforts and resources the Adviser and its affiliates have employed to continue to enhance their services for the benefit of the complex as well as particular Nuveen funds over recent years. Such service enhancements have included, but are not limited to:

 

   

Fund Improvements and Product Management Initiatives – continuing to proactively manage the Nuveen fund complex as a whole and at the individual fund level with an aim to enhance the shareholder outcomes through, among other things, repositioning funds, merging funds, reviewing and updating investment policies and benchmarks, modifying the composition of certain portfolio management teams and analyzing various data to help devise such improvements;

 

   

Capital Initiatives – continuing to invest capital to support new funds with initial capital as well as to facilitate modifications to the strategies or structure of existing funds;

 

44


 

 

   

Compliance Program Initiatives – continuing efforts to enhance the compliance program through, among other things, internally integrating various portfolio management teams and aligning compliance support accordingly, completing a comprehensive review of existing policies and procedures and revising such policies and procedures as appropriate, enhancing compliance-related technologies and workflows, and optimizing compliance shared services across the organization and affiliates;

 

   

Risk Management and Valuation Services – continuing efforts to strengthen the risk management functions, including through, among other things, enhancing the interaction and reporting between the investment risk management team and various affiliates, increasing the efficiency of risk monitoring performed on the Nuveen funds through improved reporting, continuing to implement risk programs designed to provide a more disciplined and consistent approach to identifying and mitigating operational risks, continuing progress on implementing a liquidity program that complies with the new liquidity regulatory requirements and continuing to oversee the daily valuation process;

 

   

Additional Compliance Services – continuing investment of time and resources necessary to develop the compliance policies and procedures and other related tools necessary to meet the various new regulatory requirements affecting the Nuveen funds that have been adopted over recent years;

 

   

Government Relations – continuing efforts of various Nuveen teams and affiliates to advocate and communicate their positions with lawmakers and other regulatory bodies on issues that will impact the Nuveen funds;

 

   

Business Continuity, Disaster Recovery and Information Services – establishing an information security program to help identify and manage information security risks, periodically testing disaster recovery plans, maintaining and updating business continuity plans and providing reports to the Board, at least annually, addressing, among other things, management’s security risk assessment, cyber risk profile, incident tracking and other relevant information technology risk-related reports;

 

   

Expanded Dividend Management Services – continuing to expand the services necessary to manage the dividends among the varying types of Nuveen funds that have developed as the Nuveen complex has grown in size and scope; and with respect specifically to closed-end funds, such initiatives also included:

•• Leverage Management Services – continuing to actively manage leverage including developing new leverage instruments, refinancing existing leverage and negotiating reductions in associated leverage expenses;

•• Capital Management Services – ongoing capital management efforts through a share repurchase program as well as a shelf offering program that raises additional equity capital in seeking to enhance shareholder value;

•• Data and Market Analytics – continuing focus on analyzing data and market analytics to better understand the ownership cycles and secondary market experience of closed-end funds; and

•• Closed-end Fund Investor Relations Program – maintaining the closed-end fund investor relations program which, among other things, raises awareness, provides educational materials and cultivates advocacy for closed-end funds and the Nuveen closed-end fund product line.

In addition to the services provided by the Adviser, the Board also considered the risks borne by the Adviser and its affiliates in managing the Nuveen funds, including entrepreneurial, operational, reputational, regulatory and litigation risks.

The Board further considered the division of responsibilities between the Adviser and the Sub-Adviser and recognized that the Sub-Adviser and its investment personnel generally are responsible for the management of each Fund’s portfolio. The Board noted that the Adviser oversees the Sub-Adviser and considered an analysis of the Sub-Adviser provided by the Adviser which included, among other things, the Sub-Adviser’s assets under management and changes thereto, a summary of the investment team and changes thereto, the investment approach of the team and the performance of the Nuveen funds sub-advised by the Sub-Adviser over various periods. The Board further considered at the May Meeting or prior meetings evaluations of the Sub-Adviser’s compliance program and trade execution. The Board noted that the Adviser recommended the renewal of the Sub-Advisory Agreements.

 

45


Annual Investment Management Agreement Approval Process (continued)

(Unaudited)

 

Based on its review, the Board determined, in the exercise of its reasonable business judgment, that it was satisfied with the nature, extent and quality of services provided to the respective Funds under each applicable Advisory Agreement.

 

B.   The Investment Performance of the Funds and Fund Advisers

In evaluating the quality of the services provided by the Fund Advisers, the Board also received and considered the investment performance of the Nuveen funds they advise. In this regard, the Board reviewed Fund performance over the quarter, one-, three- and five-year periods ending December 31, 2018 (or for shorter periods available in the case of Nuveen All Cap Energy MLP Opportunities Fund (the “All Cap Fund”), which was not in existence for part of the foregoing timeframe), as well as performance data for the first quarter of 2019 ending March 29, 2019. Unless otherwise indicated, the performance data referenced below reflects the periods ended December 31, 2018. The Board considered the Adviser’s analysis of each fund’s performance, with particular focus on funds that were considered performance outliers and the factors contributing to their performance. The Board also noted that it received performance data of the Nuveen funds during its quarterly meetings throughout the year and took into account the discussions that occurred at these Board meetings regarding fund performance. In this regard, in its evaluation of Nuveen fund performance at meetings throughout the year, the Board considered performance information for the funds for different time periods, both absolute and relative to appropriate benchmarks and peers, with particular attention to information indicating underperformance of the respective funds and discussed with the Adviser the reasons for such underperformance.

The Board reviewed both absolute and relative fund performance during the annual review. With respect to the latter, the Board considered fund performance in comparison to the performance of peer funds (the “Performance Peer Group”) and recognized and/or customized benchmarks (i.e., generally benchmarks derived from multiple recognized benchmarks). In considering performance data, the Board is aware of certain inherent limitations with such data, including that differences between the objective(s), strategies and other characteristics of the Nuveen funds compared to the respective Performance Peer Group and/or benchmark(s) (such as differences in the use of leverage) will necessarily contribute to differences in performance results and limit the value of the comparative information. To assist the Board in its review of the comparability of the relative performance, the Adviser has ranked the relevancy of the peer group to the funds as low, medium or high. Depending on the facts and circumstances, however, the Board may be satisfied with a fund’s performance notwithstanding that its performance may be below its benchmark or peer group for certain periods. In addition, the performance data may vary significantly depending on the end date selected, and shareholders may evaluate fund performance based on their own holding period which may differ from the performance periods reviewed by the Board leading to different results. Further, the Board considered a fund’s performance in light of the overall financial market conditions during the respective periods. As noted above, the Board reviewed, among other things, Nuveen fund performance over various periods ended December 31, 2018, and the Board was aware of the market decline in the fourth quarter of 2018 and considered performance from the first quarter of 2019 as well. The Board also noted that a shorter period of underperformance may significantly impact longer term performance.

In addition to the foregoing, the Board recognized the importance of secondary market trading to shareholders and considered the evaluation of premiums and discounts at which the shares of the Nuveen closed-end funds trade to be a continuing priority for the Board. The Board and/or its Closed-end Fund committee consider premium and discount data at each quarterly meeting throughout the year as well as during the annual review.

In their review of performance, the Independent Board Members focused, in particular, on the Adviser’s analysis of Nuveen funds determined to be underperforming performance outliers. The Board recognized that some periods of underperformance may only be temporary while other periods of underperformance may indicate a broader issue that may require a corrective action. Accordingly, with respect to any Nuveen funds for which the Board had identified performance issues, the Board monitors such funds closely until performance improves, discusses with the Adviser the reasons for such results, considers whether any steps are necessary or appropriate to address such issues, and reviews the results of any efforts undertaken.

 

46


 

The Board’s determinations with respect to each Fund are summarized below.

For Nuveen Energy MLP Total Return Fund (the “Total Return Fund”), the Board noted that the Fund ranked in the first quartile of its Performance Peer Group in the one- and five-year periods and the third quartile in the three-year period. Although the Fund’s performance was below the performance of its benchmark in the one- and five-year periods, the Fund outperformed its benchmark over the three-year period. The Board was satisfied with the Fund’s overall performance.

For the All Cap Fund, the Board noted that although the Fund’s performance was below its benchmark and ranked in the fourth quartile of its Performance Peer Group in the one-year period, the Fund outperformed its benchmark and ranked in the first quartile for the three-year period. The Board was satisfied with the Fund’s overall performance.

 

C.   Fees, Expenses and Profitability

 

  1.    Fees   and Expenses

In its annual review, the Board considered the fees paid to the Fund Advisers and the total operating expense ratio of each Nuveen fund. More specifically, the Independent Board Members reviewed, among other things, each fund’s gross and net management fee rates and net total expense ratio in relation to those of a comparable universe of funds (the “Peer Universe”) established by Broadridge. The Independent Board Members reviewed the methodology Broadridge employed to establish its Peer Universe and recognized that differences between the applicable fund and its respective Peer Universe as well as changes to the composition of the Peer Universe from year to year may limit some of the value of the comparative data. The Independent Board Members also considered a fund’s operating expense ratio as it more directly reflected the shareholder’s costs in investing in the respective fund.

In their review, the Independent Board Members considered, in particular, each fund with a net expense ratio (excluding investment-related costs of leverage) of six basis points or higher compared to that of its peer average (each, an “Expense Outlier Fund”), and an analysis as to the factors contributing to each such fund’s higher relative net expense ratio. In addition, although the Board reviewed a fund’s total net expenses both including and excluding investment-related expenses (i.e., leverage costs) and taxes for certain of the closed-end funds, the Board recognized that leverage expenses will vary across the Nuveen funds and in comparison to peers because of differences in the forms and terms of leverage employed by the respective fund. Accordingly, in reviewing the comparative data between a fund and its peers, the Board generally considered the fund’s net expense ratio and fees (excluding leverage costs and leveraged assets) to be higher if they were over 10 basis points higher, slightly higher if they were 6 to 10 basis points higher, in line if they were within approximately 5 basis points higher than the peer average and below if they were below the peer average of the Peer Universe. The Independent Board Members also considered, in relevant part, a fund’s net management fee and net total expense ratio in light of its performance history.

In their review of the fee arrangements for the Nuveen funds, the Independent Board Members considered the management fee schedules, including the complex-wide and fund-level breakpoint schedules, as applicable. The Board noted that across the Nuveen fund complex, the complex-wide fee breakpoints reduced fees by $51.5 million and fund-level breakpoints reduced fees by $55.1 million in 2018.

With respect to the Sub-Adviser, the Board considered the sub-advisory fee paid to the Sub-Adviser, including any breakpoint schedule, and as described below, comparative data of the fees the Sub-Adviser charges to other clients, if any.

The Independent Board Members noted that the Total Return Fund had a net management fee and a net expense ratio below its respective peer average. The Independent Board Members noted that the All Cap Fund had a net management fee below its peer average and a net expense ratio in line with its peer average. Based on its review of the information provided, the Board determined that each Fund’s management fees (as applicable) to a Fund Adviser were reasonable in light of the nature, extent and quality of services provided to the Fund.

 

  2.    Comparisons   with the Fees of Other Clients

In determining the appropriateness of fees, the Board also reviewed information regarding the fee rates the respective Fund Advisers charged to certain other types of clients and the type of services provided to these other clients. With respect to the

 

47


Annual Investment Management Agreement Approval Process (continued)

(Unaudited)

 

Adviser and/or affiliated sub-advisers, such other clients may include: retail and institutional managed accounts; hedge funds; sub-advised funds outside the Nuveen family; foreign investment companies offered by Nuveen; collective investment trusts; and certain funds advised by an affiliated sub-adviser. The Board further noted that the Adviser also advised and an affiliated sub-adviser sub-advised certain exchange-traded funds sponsored by Nuveen.

In addition to the comparative fee data, the Board also reviewed, among other things, a description of the different levels of services provided to the clients noted above compared to the services provided to the Nuveen funds as well as the differences in portfolio investment policies, investor profiles, account sizes and regulatory requirements, all of which contribute to the variations in the fee schedules. The Board noted, among other things, the wide range of services in addition to investment management services provided to the Nuveen funds when the Adviser is principally responsible for all aspects of operating the funds, including the increased regulatory requirements that must be met in managing the funds, the larger account sizes of managed accounts and hedge funds and the increased entrepreneurial, legal and regulatory risks that the Adviser incurs in sponsoring and managing the funds. In general, higher fee levels reflect higher levels of service provided by the Adviser, increased investment management complexity, greater product management requirements, and higher levels of business risk or some combination of these factors. The Board concluded the varying levels of fees were justified given, among other things, the inherent differences in the products and the level of services provided to the Nuveen funds versus other clients, the differing regulatory requirements and legal liabilities and the entrepreneurial, legal and regulatory risks incurred in sponsoring and advising a registered investment company.

The Board recognized that each Fund had an unaffiliated sub-adviser. With respect to the Sub-Adviser, the Independent Board Members reviewed the pricing schedule or average fee rates that the Sub-Adviser charges for other clients. The Independent Board Members noted that the Sub-Advisory Agreements, including the fees thereunder, were the result of arm’s length negotiations and the respective fees were reasonable in relation to the fees the Sub-Adviser assessed other clients.

 

  3.    Profitability   of Fund Advisers

In conjunction with their review of fees, the Independent Board Members considered information regarding Nuveen’s level of profitability for its advisory services to the Nuveen funds for the calendar years 2018 and 2017. The Board reviewed, among other things, Nuveen’s net margins (pre-tax) (both including and excluding distribution expenses); gross and net revenue margins (pre- and post-tax); revenues, expenses, and net income (pre-tax and after-tax and before distribution) of Nuveen for fund advisory services; and comparative profitability data comparing the adjusted margins of Nuveen compared to the adjusted margins of certain peers with publicly available data and with the most comparable assets under management (based on asset size and asset composition) for each of the last two calendar years. The Board also reviewed the revenues and expenses the Adviser derived from its exchange-traded fund product line that was launched in 2016. The Independent Board Members noted that Nuveen’s net margins were higher in 2018 than the previous year and considered the key drivers behind the revenue and expense changes that impacted Nuveen’s net margins between the years. The Board considered the costs of investments in the Nuveen business, including the investment of seed capital in certain Nuveen funds and additional investments in infrastructure and technology. The Independent Board Members also noted that Nuveen’s adjusted margins from its relationships with the Nuveen funds were on the low range compared to the adjusted margins of the peers; however, the Independent Board Members recognized the inherent limitations of the comparative data of other publicly traded peers given that the calculation of profitability is rather subjective and numerous factors (such as types of funds, business mix, cost of capital, methodology to allocate expenses and other factors) can have a significant impact on the results.

The Independent Board Members also reviewed a description of the expense allocation methodology employed to develop the financial information and a summary of the history of changes to the methodology over the ten-year period from 2008 to 2018, and recognized that other reasonable allocation methodologies could be employed and lead to significantly different results. The Board noted that two Independent Board Members, along with independent counsel, serve as the Board’s liaisons to review profitability and discuss any proposed changes to the methodology prior to the full Board’s review.

Aside from Nuveen’s profitability, the Board recognized that the Adviser is a subsidiary of Nuveen, LLC, the investment management arm of Teachers Insurance and Annuity Association of America (“TIAA”). As such, the Board also reviewed a

 

48


 

balance sheet for TIAA reflecting its assets, liabilities and capital and contingency reserves for the 2018 and 2017 calendar years to consider the financial strength of TIAA having recognized the importance of having an adviser with significant resources.

In addition to Nuveen, the Independent Board Members also considered the profitability of the Sub-Adviser from its relationships with the Nuveen funds. In this regard, the Independent Board Members considered a profitability and margin analysis for the Sub-Adviser, including revenues, expenses and operating margins for its advisory services to each Fund for the calendar years 2018 and 2017.

In evaluating the reasonableness of the compensation, the Independent Board Members also considered any other ancillary benefits derived by the respective Fund Adviser from its relationship with the Nuveen funds as discussed in further detail below.

Based on a consideration of all the information provided, the Board noted that Nuveen’s and the Sub-Adviser’s level of profitability was acceptable and not unreasonable in light of the services provided.

 

D.   Economies of Scale and Whether Fee Levels Reflect These Economies of Scale

With respect to economies of scale, the Independent Board Members noted that although economies of scale are difficult to measure, the Adviser shares the benefits of economies of scale in various ways including breakpoints in the management fee schedule (subject to limited exceptions), fee waivers and/or expense limitations, the pricing of Nuveen funds at scale at inception and investments in its business which can enhance the services provided to the funds for the fees paid. With respect to breakpoint schedules, because the Board had previously recognized that economies of scale may occur not only when the assets of a particular Nuveen fund grow but also when the assets in the complex grow, the Nuveen funds generally pay the Adviser a management fee comprised of a fund-level component and a complex-level component each with its own breakpoint schedule, subject to certain exceptions. In general terms, the breakpoint schedule at the fund level reduces fees as assets in the particular fund pass certain thresholds and the breakpoint schedule at the complex level reduces fees on the Nuveen funds as the eligible assets in the complex pass certain thresholds. The Independent Board Members reviewed, among other things, the fund-level and complex-level fee schedules. In addition, with respect to the Nuveen closed-end funds, the Independent Board Members noted that, although such funds may from time-to-time make additional share offerings, the growth of their assets would occur primarily through the appreciation of such funds’ investment portfolios.

In addition, the Independent Board Members recognized the Adviser’s continued reinvestment in its business through, among other things, investments in its business infrastructure and information technology, portfolio accounting system as well as other systems and platforms that will, among other things, support growth, simplify and enhance information sharing, and enhance the investment process to the benefit of all of the Nuveen funds.

Based on its review, the Board concluded that the current fee arrangements together with the Adviser’s reinvestment in its business appropriately shared any economies of scale with shareholders.

 

E.   Indirect Benefits

The Independent Board Members received and considered information regarding other benefits the respective Fund Adviser or its affiliates may receive as a result of their relationship with the Nuveen funds. The Board considered that an affiliate of the Adviser serves as co-manager in the initial public offerings of new closed-end funds for which it may receive revenue and serves as an underwriter on shelf offerings of existing closed-end funds for which it receives compensation. In addition, the Independent Board Members also noted that the Sub-Adviser engages in soft dollar transactions pursuant to which it may receive the benefit of research products and other services provided by broker-dealers executing portfolio transactions on behalf of the applicable Nuveen funds.

The Board, however, noted that the benefits for the Sub-Adviser when transacting in fixed-income securities may be more limited as such securities generally trade on a principal basis and therefore do not generate brokerage commissions. Further, the Board noted that although the Sub-Adviser may benefit from the receipt of research and other services that it may otherwise have to pay for out of its own resources, the research may also benefit the Nuveen funds to the extent it enhances

 

49


Annual Investment Management Agreement Approval Process (continued)

(Unaudited)

 

the ability of the Sub-Adviser to manage such funds or is acquired through the commissions paid on portfolio transactions of other clients.

Based on their review, the Board concluded that any indirect benefits received by a Fund Adviser as a result of its relationship with the Funds were reasonable and within acceptable parameters.

 

F.   Other Considerations

The Board Members did not identify any single factor discussed previously as all-important or controlling. The Board Members, including the Independent Board Members, concluded that the terms of each Advisory Agreement were fair and reasonable, that the respective Fund Adviser’s fees were reasonable in light of the services provided to each Fund and that the Advisory Agreements be renewed.

 

50


Notes

 

 

51


LOGO

 

Nuveen:

Serving Investors for Generations

Since 1898, financial advisors and their clients have relied on Nuveen to provide dependable investment solutions through continued adherence to proven, long-term investing principles. Today, we offer a range of high quality solutions designed to be integral components of a well-diversified core portfolio.

Focused on meeting investor needs.

Nuveen is the investment manager of TIAA. We have grown into one of the world’s premier global asset managers, with specialist knowledge across all major asset classes and particular strength in solutions that provide income for investors and that draw on our expertise in alternatives and responsible investing. Nuveen is driven not only by the independent investment processes across the firm, but also the insights, risk management, analytics and other tools and resources that a truly world-class platform provides. As a global asset manager, our mission is to work in partnership with our clients to create solutions which help them secure their financial future.

Find out how we can help you.

To learn more about how the products and services of Nuveen may be able to help you meet your financial goals, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Investors should consider the investment objective and policies, risk considerations, charges and expenses of any investment carefully. Where applicable, be sure to obtain a prospectus, which contains this and other relevant information. To obtain a prospectus, please contact your securities representative or Nuveen, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money.

Learn more about Nuveen Funds at: www.nuveen.com/closed-end-funds

 

 

Nuveen Investments, LLC member of FINRA and SIPC  | 
333 West Wacker Drive  | Chicago, IL 60606  |  www.nuveen.com
     LOGO  
ESA-A-0519D         894609-INV-B-07/20


Item 2. Code of Ethics.

Not applicable to this filing.

Item 3. Audit Committee Financial Expert.

Not applicable to this filing.

Item 4. Principal Accountant Fees and Services.

Not applicable to this filing.

Item 5. Audit Committee of Listed Registrants.

Not applicable to this filing.

Item 6. Schedule of Investments.

(a) See Portfolio of Investments in Item 1.

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to this filing.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to this filing.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board implemented after the registrant last provided disclosure in response to this item.

Item 11. Controls and Procedures.

 

(a)

The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (17 CFR 240.13a-15(b) or 240.15d-15(b)).

 

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies

Not Applicable

Item 13. Exhibits.

File the exhibits listed below as part of this Form.

(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable to this filing.

(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: See EX-99.CERT attached hereto.

(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable.

(a)(4) Change in the registrant’s independent public accountant. Not applicable.

(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2 (b) under the 1940 Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an Exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registration specifically incorporates it by reference: See EX-99.906 CERT attached hereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Nuveen Energy MLP Total Return Fund

 

By (Signature and Title)   

/s/ Gifford R. Zimmerman

  
   Gifford R. Zimmerman   
   Vice President and Secretary   

Date: August 8, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)   

/s/ Cedric H. Antosiewicz

  
   Cedric H. Antosiewicz   
   Chief Administrative Officer   
   (principal executive officer)   

Date: August 8, 2019

 

By (Signature and Title)   

/s/ E. Scott Wickerham

  
   E. Scott Wickerham   
   Vice President and Controller   
   (principal financial officer)   

Date: August 8, 2019