Correspondence 0001193125-24-181284 from NUVEEN MUNICIPAL TRUST/MA (CIK 0001020660)
NUVEEN MUNICIPAL TRUST/MA (CIK 0001020660)
Date: July 19, 2024 · CIK: 0001020660 · Accession: 0001193125-24-181284
AI Filing Summary & Sentiment
File numbers found in text: 811-05309, 811-07619, 811-07873, 811-08333, 811-09037, 811-21979
Letter
VIA EDGAR CORRESPONDENCE United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. (File numbers listed in Exhibit A)
Re: SOX Review for Nuveen Fund Advisors, LLC
Dear Ms. Miller:
This letter responds to comments provided by the staff of the Securities and Exchange Commission (the “SEC Staff”) via telephone, pursuant to Section 408 of the Sarbanes-Oxley Act of 2002, regarding the funds advised by Nuveen Fund Advisors, LLC (the “Adviser”) listed in Exhibit A attached hereto (each, a “Fund” and collectively, the “Funds”). Capitalized terms used herein, but not otherwise defined, have the meanings ascribed to them in the Funds’ Annual Reports for their respective fiscal years (each, an “Annual Report” and collectively, the “Annual Reports”) as filed on Form N-CSR with the Staff.
COMMENT 1
Please explain why the “Schedule of Investments” was not categorized by type of investment and related industry, country or geographic location (see Reg S-X.12-12, footnote 2).
Specifically, please explain how Nuveen Strategic Income Fund, which has approximately 49% of its net assets in asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”), meets the requirements in Reg S-X.12-12, footnote 2.
RESPONSE TO COMMENT 1
[Reg S-X.12-12 footnote 2 states that investments in securities of unaffiliated issuers should “categorize the schedule by (i) the type of investment (such as common stocks, preferred stocks, convertible securities, fixed income securities, government securities, options purchased, warrants, loan participations and assignments, commercial paper, bankers’ acceptances, certificates of deposit, short-term securities, repurchase agreements, other investment companies, and so forth); and (ii) the related industry, country, or geographic region of the investment.”]
The Adviser believes that the Funds’ Portfolios of Investments are currently in compliance with Reg S-X.12-12. Historically, the Adviser had determined ABS and MBS to be a singular investment type as ABS and MBS are not specifically listed as types of investments that are required to be categorized by Reg S-X.12-12. Considering additional feedback provided by the SEC Staff, the Adviser has determined that on a prospective basis the Funds’ Portfolios of Investments will disaggregate and present each ABS and MBS as individual types of investments. As the ABS and MBS held by the Nuveen Strategic Income Fund are U.S. securities, there is no further country or geographic location disclosure required. However, the Adviser is currently evaluating ways to enhance the related industry disclosure.
COMMENT 2
With regard to the Equity/Long Short Fund, please provide supplemental details about the nature of payments by affiliates disclosed in the “Statement of Changes in Net Assets” and the “Notes to the Financial Statements” and describe any associated internal control implications and mitigating actions.
RESPONSE TO COMMENT 2
The Adviser made a one-time payment on June 29, 2023 to the Nuveen Equity Long/Short Fund (the “Fund”) to offset excess interest charges the Fund paid to its prime broker in connection with the Fund’s short selling activities for the period from February 27, 2020 to June 28, 2023. As standard practice, short sale proceeds generated through the Fund’s prime brokerage account can be held at the prime broker and netted against its short-market value to which daily interest charges (or earnings) would be assessed by the prime broker. Over time, excess cash balances increased at the Fund’s custodian as opposed to being held at the prime broker to offset interest liabilities. The cash balances at the custodian were invested in short-term instruments, but the proceeds from those investments did not offset the interest charges paid to the prime broker, resulting in excess net interest charges to the Fund. In addition to the one-time payment to the Fund by the Adviser, Fund shareholders who redeemed shares during the period will receive direct payments with interest to offset the excess prime brokerage interest charges assessed for the period during which they held Fund shares. In addition to these reimbursements, the Adviser enhanced its cash management procedures and internal controls to include additional management oversight and monitoring of excess cash balances above defined thresholds; and personnel responsible for cash management activities received supplemental training.
COMMENT 3
Please add a footnote to the “Financial Highlights” stating that sales loads are not reflected in total return (see Form N-1A, Item 13, Instruction 3(b)).
RESPONSE TO COMMENT 3
On a prospective basis, the Funds will modify their total return footnote included in the Financial Highlights to read as follows:
Total returns are at NAV and do not include any sales charge. Total returns are not annualized.
COMMENT 4
The “Notes to Financial Statements” state that, “fee income and amendment fees, if any, are recognized as ‘Fees’ on the Statement of Operations.” Please explain what “Other income” represents on the “Statement of Operations.”
Additionally, please explain in correspondence if this income should be denoted as affiliated income on the Statement of Operations since it is included in the affiliates section to the Financial Statements.
RESPONSE TO COMMENT 4
The Funds recognize “Other income” when they receive voluntary compensation from the Adviser, which historically has been immaterial to the Funds. The Adviser respectfully requests that the SEC Staff direct their attention to the following underlined sentences of the “Other Transactions with Affiliates” disclosure in “8. Management Fees and Other Transactions with Affiliates” within the Notes to Financial Statements of Nuveen Dividend Value Fund’s October 31, 2023 Annual Report:
The Funds receive voluntary compensation from the Adviser in amounts that approximate the cost of research services obtained from broker-dealers and research providers if the Adviser had purchased the research services directly. This income received by the Funds is recognized in “Other income” on the Statement of Operations and any amounts due to the Funds at the end of the reporting period is recognized in “Reimbursement from Adviser” on the Statement of Assets and Liabilities. During the current fiscal period, the values of voluntary compensation were as follows: [Disclosure followed by tabular quantitative information].
On a prospective basis, the Adviser is changing the reference to “Other income” on the Statement of Operations and in the disclosure noted above to “Affiliated income.”
COMMENT
Please include in the “Notes to Financial Statements” the accounting treatment for premiums paid or received in connection with swap contracts.
Additionally, please consider including in the “Notes to Financial Statements” if the premiums are amortized over the term of the contract or if they are realized at termination of the contract.
RESPONSE TO COMMENT 5
The Adviser respectfully requests that the SEC Staff direct their attention to the following paragraph of the “Credit Default Swaps Contracts” disclosure in “5. Derivative Instruments” within the Notes to Financial Statements of Nuveen Credit Income Fund’s August 31, 2023 Annual Report:
When a Fund has bought (sold) protection in a credit default swap upon occurrence of a specific credit event with respect to the underlying referenced entity, the Fund will either (i) receive (deliver) that security, or an equivalent amount of cash, from the counterparty in exchange for receipt (payment) of the notional amount to the counterparty, or (ii) receive (pay) a net settlement amount of the credit default swap contract less the recovery value of the referenced obligation or underlying securities comprising the referenced index. Payments paid (received) at the beginning of the measurement period are reflected as swap premiums paid (received) on the Statement of Assets and Liabilities, when applicable. Credit default swaps are “marked-to-market” on a daily basis to reflect the value of the swap agreement at the end of each trading day and are recognized as unrealized appreciation (depreciation) on the Statement of Operations.
On a prospective basis, the Adviser has added the underline sentence to above disclosure:
Payments paid (received) at the beginning of the measurement period are reflected as swap premiums paid (received) on the Statement of Assets and Liabilities, when applicable. These upfront premiums are amortized over the life of the credit default swap contract and reflected as realized gain (loss) on the Statement of Operations upon termination.
COMMENT 6
The Staff noted that the Funds have denoted when issued/delayed draw as underlying bonds associated with the Recourse Trust. Please explain if there is additional risk with using bonds that have not settled as of the balance sheet date to establish the TOB Trust. Please confirm that these risks, if any, are appropriately disclosed in the prospectus and financial statements.
RESPONSE TO COMMENT 6
There is no risk additional risk using bonds that have not settled as of the balance sheet date to establish a TOB trust. If the sale of the unsettled bond does not come to market, the establishment of the TOB Trust will immediately be canceled.
COMMENT 7
The Staff noted that there is unrealized depreciation on the Recourse Trust. Please explain if the recourse arrangement is accounted for as a derivative under U.S. GAAP and explain the accounting policy for the disclosure of such arrangement. Going forward please separately denote the underlying bonds associated with Recourse Trust and non-Recourse Trust on the schedule of investments, if applicable.
RESPONSE TO COMMENT 7
All inverse floating rate securities, including those with recourse arrangements, are considered portfolio securities for financial reporting purposes and reflected at fair value in the Funds’ financial statements. As such, the accounting treatment for Recourse Trusts are as described in “Inverse Floating Rate Securities” disclosure within “4. Portfolio Securities and Investments in Derivatives” of the Notes to Financial Statements of Nuveen High Yield Municipal Bond Fund’s March 31, 2023 Annual Report.
On a prospective basis, the Funds will distinguish underlying bonds with Recourse Trust from non-Recourse Trust within their Portfolios of Investments.
COMMENT 8
The Staff noted that the Fund recorded unrealized gain (loss) and realized gain (loss) for shortfall amounts on certain Recourse Trust per review of the “Statement of Operations.” Please explain if there was interest associated with those shortfall payments to the liquidity provider and where they are reflected on the “Statement of Operations.” With regard to the Recourse Trust, there is disclosure of maximum exposure to the Recourse Trust. Please explain if this amount includes interest.
RESPONSE TO COMMENT 8
To date, the Funds have not had any interest associated with shortfall amounts on Recourse Trusts. Should the Funds incur such interest, the “Inverse Floating Rate Securities” disclosure within “4. Portfolio Securities and Investments in Derivatives” of the Notes to Financial Statements will be updated accordingly.
For the tabular disclosures describing the maximum exposure to recourse trusts, the amount disclosed is the par value of the inverse floaters and does not include interest.
* * * * * * * *
Please call me at (312) 845-3484 if you have any questions or issues you would like to discuss regarding these matters.
Sincerely yours,
CHAPMAN AND CUTLER LLP
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CORRESP 1 filename1.htm CORRESP [CHAPMAN AND CUTLER LLP LETTERHEAD] July 19, 2024 VIA EDGAR CORRESPONDENCE Megan F. Miller United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: SOX Review for Nuveen Fund Advisors, LLC (File numbers listed in Exhibit A) Dear Ms. Miller: This letter responds to comments provided by the staff of the Securities and Exchange Commission (the “SEC Staff”) via telephone, pursuant to Section 408 of the Sarbanes-Oxley Act of 2002, regarding the funds advised by Nuveen Fund Advisors, LLC (the “Adviser”) listed in Exhibit A attached hereto (each, a “Fund” and collectively, the “Funds”). Capitalized terms used herein, but not otherwise defined, have the meanings ascribed to them in the Funds’ Annual Reports for their respective fiscal years (each, an “Annual Report” and collectively, the “Annual Reports”) as filed on Form N-CSR with the Staff. COMMENT 1 Please explain why the “Schedule of Investments” was not categorized by type of investment and related industry, country or geographic location (see Reg S-X.12-12, footnote 2). Specifically, please explain how Nuveen Strategic Income Fund, which has approximately 49% of its net assets in asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”), meets the requirements in Reg S-X.12-12, footnote 2. RESPONSE TO COMMENT 1 [Reg S-X.12-12 footnote 2 states that investments in securities of unaffiliated issuers should “categorize the schedule by (i) the type of investment (such as common stocks, preferred stocks, convertible securities, fixed income securities, government securities, options purchased, warrants, loan participations and assignments, commercial paper, bankers’ acceptances, certificates of deposit, short-term securities, repurchase agreements, other investment companies, and so forth); and (ii) the related industry, country, or geographic region of the investment.”] The Adviser believes that the Funds’ Portfolios of Investments are currently in compliance with Reg S-X.12-12. Historically, the Adviser had determined ABS and MBS to be a singular investment type as ABS and MBS are not specifically listed as types of investments that are required to be categorized by Reg S-X.12-12. Considering additional feedback provided by the SEC Staff, the Adviser has determined that on a prospective basis the Funds’ Portfolios of Investments will disaggregate and present each ABS and MBS as individual types of investments. As the ABS and MBS held by the Nuveen Strategic Income Fund are U.S. securities, there is no further country or geographic location disclosure required. However, the Adviser is currently evaluating ways to enhance the related industry disclosure. COMMENT 2 With regard to the Equity/Long Short Fund, please provide supplemental details about the nature of payments by affiliates disclosed in the “Statement of Changes in Net Assets” and the “Notes to the Financial Statements” and describe any associated internal control implications and mitigating actions. RESPONSE TO COMMENT 2 The Adviser made a one-time payment on June 29, 2023 to the Nuveen Equity Long/Short Fund (the “Fund”) to offset excess interest charges the Fund paid to its prime broker in connection with the Fund’s short selling activities for the period from February 27, 2020 to June 28, 2023. As standard practice, short sale proceeds generated through the Fund’s prime brokerage account can be held at the prime broker and netted against its short-market value to which daily interest charges (or earnings) would be assessed by the prime broker. Over time, excess cash balances increased at the Fund’s custodian as opposed to being held at the prime broker to offset interest liabilities. The cash balances at the custodian were invested in short-term instruments, but the proceeds from those investments did not offset the interest charges paid to the prime broker, resulting in excess net interest charges to the Fund. In addition to the one-time payment to the Fund by the Adviser, Fund shareholders who redeemed shares during the period will receive direct payments with interest to offset the excess prime brokerage interest charges assessed for the period during which they held Fund shares. In addition to these reimbursements, the Adviser enhanced its cash management procedures and internal controls to include additional management oversight and monitoring of excess cash balances above defined thresholds; and personnel responsible for cash management activities received supplemental training. COMMENT 3 Please add a footnote to the “Financial Highlights” stating that sales loads are not reflected in total return (see Form N-1A, Item 13, Instruction 3(b)). RESPONSE TO COMMENT 3 On a prospective basis, the Funds will modify their total return footnote included in the Financial Highlights to read as follows: 2 Total returns are at NAV and do not include any sales charge. Total returns are not annualized. COMMENT 4 The “Notes to Financial Statements” state that, “fee income and amendment fees, if any, are recognized as ‘Fees’ on the Statement of Operations.” Please explain what “Other income” represents on the “Statement of Operations.” Additionally, please explain in correspondence if this income should be denoted as affiliated income on the Statement of Operations since it is included in the affiliates section to the Financial Statements. RESPONSE TO COMMENT 4 The Funds recognize “Other income” when they receive voluntary compensation from the Adviser, which historically has been immaterial to the Funds. The Adviser respectfully requests that the SEC Staff direct their attention to the following underlined sentences of the “Other Transactions with Affiliates” disclosure in “8. Management Fees and Other Transactions with Affiliates” within the Notes to Financial Statements of Nuveen Dividend Value Fund’s October 31, 2023 Annual Report: The Funds receive voluntary compensation from the Adviser in amounts that approximate the cost of research services obtained from broker-dealers and research providers if the Adviser had purchased the research services directly. This income received by the Funds is recognized in “Other income” on the Statement of Operations and any amounts due to the Funds at the end of the reporting period is recognized in “Reimbursement from Adviser” on the Statement of Assets and Liabilities. During the current fiscal period, the values of voluntary compensation were as follows: [Disclosure followed by tabular quantitative information]. On a prospective basis, the Adviser is changing the reference to “Other income” on the Statement of Operations and in the disclosure noted above to “Affiliated income.” COMMENT 5 Please include in the “Notes to Financial Statements” the accounting treatment for premiums paid or received in connection with swap contracts. Additionally, please consider including in the “Notes to Financial Statements” if the premiums are amortized over the term of the contract or if they are realized at termination of the contract. 3 RESPONSE TO COMMENT 5 The Adviser respectfully requests that the SEC Staff direct their attention to the following paragraph of the “Credit Default Swaps Contracts” disclosure in “5. Derivative Instruments” within the Notes to Financial Statements of Nuveen Credit Income Fund’s August 31, 2023 Annual Report: When a Fund has bought (sold) protection in a credit default swap upon occurrence of a specific credit event with respect to the underlying referenced entity, the Fund will either (i) receive (deliver) that security, or an equivalent amount of cash, from the counterparty in exchange for receipt (payment) of the notional amount to the counterparty, or (ii) receive (pay) a net settlement amount of the credit default swap contract less the recovery value of the referenced obligation or underlying securities comprising the referenced index. Payments paid (received) at the beginning of the measurement period are reflected as swap premiums paid (received) on the Statement of Assets and Liabilities, when applicable. Credit default swaps are “marked-to-market” on a daily basis to reflect the value of the swap agreement at the end of each trading day and are recognized as unrealized appreciation (depreciation) on the Statement of Operations. On a prospective basis, the Adviser has added the underline sentence to above disclosure: Payments paid (received) at the beginning of the measurement period are reflected as swap premiums paid (received) on the Statement of Assets and Liabilities, when applicable. These upfront premiums are amortized over the life of the credit default swap contract and reflected as realized gain (loss) on the Statement of Operations upon termination. COMMENT 6 The Staff noted that the Funds have denoted when issued/delayed draw as underlying bonds associated with the Recourse Trust. Please explain if there is additional risk with using bonds that have not settled as of the balance sheet date to establish the TOB Trust. Please confirm that these risks, if any, are appropriately disclosed in the prospectus and financial statements. RESPONSE TO COMMENT 6 There is no risk additional risk using bonds that have not settled as of the balance sheet date to establish a TOB trust. If the sale of the unsettled bond does not come to market, the establishment of the TOB Trust will immediately be canceled. COMMENT 7 The Staff noted that there is unrealized depreciation on the Recourse Trust. Please explain if the recourse arrangement is accounted for as a derivative under U.S. GAAP and explain the accounting policy for the disclosure of such arrangement. Going forward please separately denote the underlying bonds associated with Recourse Trust and non-Recourse Trust on the schedule of investments, if applicable. 4 RESPONSE TO COMMENT 7 All inverse floating rate securities, including those with recourse arrangements, are considered portfolio securities for financial reporting purposes and reflected at fair value in the Funds’ financial statements. As such, the accounting treatment for Recourse Trusts are as described in “Inverse Floating Rate Securities” disclosure within “4. Portfolio Securities and Investments in Derivatives” of the Notes to Financial Statements of Nuveen High Yield Municipal Bond Fund’s March 31, 2023 Annual Report. On a prospective basis, the Funds will distinguish underlying bonds with Recourse Trust from non-Recourse Trust within their Portfolios of Investments. COMMENT 8 The Staff noted that the Fund recorded unrealized gain (loss) and realized gain (loss) for shortfall amounts on certain Recourse Trust per review of the “Statement of Operations.” Please explain if there was interest associated with those shortfall payments to the liquidity provider and where they are reflected on the “Statement of Operations.” With regard to the Recourse Trust, there is disclosure of maximum exposure to the Recourse Trust. Please explain if this amount includes interest. RESPONSE TO COMMENT 8 To date, the Funds have not had any interest associated with shortfall amounts on Recourse Trusts. Should the Funds incur such interest, the “Inverse Floating Rate Securities” disclosure within “4. Portfolio Securities and Investments in Derivatives” of the Notes to Financial Statements will be updated accordingly. For the tabular disclosures describing the maximum exposure to recourse trusts, the amount disclosed is the par value of the inverse floaters and does not include interest. * * * * * * * * 5 Please call me at (312) 845-3484 if you have any questions or issues you would like to discuss regarding these matters. Sincerely yours, CHAPMAN AND CUTLER LLP By: /s/ Morrison C. Warren Morrison C. Warren cc: E. Scott Wickerham, Vice President and Funds’ Controller (Principal Financial Officer) John McCann, Vice President and Assistant Secretary of the Funds; Managing Director and Associate General Counsel Brett E. Black, Chief Compliance Officer and Managing Director of the Funds Eric Fess, Chapman & Cutler, LLP, Counsel to the Independent members of the Board of Directors/Trustees of the Funds Robert Zutz, K&L Gates LLP, Counsel to the Independent members of the Board of Directors/Trustees of the Funds 6 EXHIBIT A CIK File# Fund Name Registrant Name FYE Reviewed 1 0001020660 811-07873 Nuveen All-American Municipal Bond Fund Nuveen Municipal Trust 3/31/2023 2 0001020660 811-07873 Nuveen High Yield Municipal Bond Fund Nuveen Municipal Trust 3/31/2023 3 0001020660 811-07873 Nuveen Intermediate Duration Municipal Bond Fund Nuveen Municipal Trust 3/31/2023 4 0001020660 811-07873 Nuveen Limited Term Municipal Bond Fund Nuveen Municipal Trust 3/31/2023 5 0001020660 811-07873 Nuveen Short Duration High Yield Municipal Bond Fund Nuveen Municipal Trust 3/31/2023 6 0001020660 811-07873 Nuveen Strategic Municipal Opportunities Fund Nuveen Municipal Trust 3/31/2023 7 0000820892 811-05309 Nuveen Short Term Municipal Bond Fund Nuveen Investment Funds, Inc. 3/31/2023 8 0001013881 811-07619 Nuveen Global Equity Income Fund Nuveen Investment Trust 6/30/2023 9 0001013881 811-07619 Nuveen Multi Cap Value Fund Nuveen Investment Trust 6/30/2023 10 0001013881 811-07619 Nuveen Large Cap Value Opportunities Fund Nuveen Investment Trust 6/30/2023 11 0001013881 811-07619 Nuveen Small/Mid Cap Value Fund Nuveen Investment Trust 6/30/2023 12 0001013881 811-07619 Nuveen Small Cap Value Opportunities Fund Nuveen Investment Trust 6/30/2023 13 0001041673 811-08333 Nuveen International Value Fund Nuveen Investment Trust II 6/30/2023 14 0001041673 811-08333 Nuveen Dividend Growth Fund Nuveen Investment Trust II 7/31/2023 15 0001041673 811-08333 Nuveen Global Dividend Growth Fund Nuveen Investment Trust II 7/31/2023 16 0001041673 811-08333 Nuveen International Dividend Growth Fund Nuveen Investment Trust II 7/31/2023 17 0001041673 811-08333 Nuveen International Small Cap Fund Nuveen Investment Trust II 7/31/2023 18 0001041673 811-08333 Nuveen Winslow Large-Cap Growth ESG Fund Nuveen Investment Trust II 7/31/2023 19 0000820892 811-05309 Nuveen Credit Income Fund Nuveen Investment Funds, Inc. 8/31/2023 20 0000820892 811-05309 Nuveen Strategic Income Fund Nuveen Investment Funds, Inc. 8/31/2023 21 0001041673 811-08333 Nuveen Equity Long/Short Fund Nuveen Investment Trust II 8/31/2023 22 0001071336 811-09037 Nuveen High Yield Income Fund Nuveen Investment Trust III 8/31/2023 23 0001071336 811-09037 Nuveen Floating Rate Income Fund Nuveen Investment Trust III 8/31/2023 24 0001380786 811-21979 Nuveen Flexible Income Fund Nuveen Investment Trust V 8/31/2023 25 0001380786 811-21979 Nuveen Preferred Securities and Income Fund Nuveen Investment Trust V 8/31/2023 26 0000820892 811-05309 Nuveen Dividend Value Fund Nuveen Investment Funds, Inc. 10/31/2023 27 0000820892 811-05309 Nuveen Large Cap Select Fund Nuveen Investment Funds, Inc. 10/31/2023 28 0000820892 811-05309 Nuveen Mid Cap Growth Opportunities Fund Nuveen Investment Funds, Inc. 10/31/2023 29 0000820892 811-05309 Nuveen Mid Cap Value 1 Fund Nuveen Investment Funds, Inc. 10/31/2023 30 0000820892 811-05309 Nuveen Small Cap Growth Opportunities Fund Nuveen Investment Funds, Inc. 10/31/2023 31 0000820892 811-05309 Nuveen Small Cap Select Fund Nuveen Investment Funds, Inc. 10/31/2023 32 0000820892 811-05309 Nuveen Small Cap Value Fund Nuveen Investment Funds, Inc. 10/31/2023 7