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Nuveen Multi-Currency Short-Term Government Income Fund (NYSE: JGT)
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OBJECTIVE & INVESTMENT STRATEGY
The investment objective of the fund is to provide an attractive level of current income and total return.
The fund will invest directly and indirectly in a portfolio of short-term international government securities. The fund will invest approximately 50% of its assets directly in international short-term government securities that are denominated in non-U.S. currencies and will not be currency hedged. Indirect investments in international non-U.S. government securities are made by purchasing forward currency contracts and other derivative instruments that offer exposure to the returns of short-term international (non-U.S.) government securities. These contracts are collateralized by direct investments in U.S. cash equivalents, including U.S. government debt and agency paper. This strategy may create the economic effect of financial leverage. The portfolio team will monitor and adjust investments using a propriety risk reduction methodology.
DISTRIBUTION HISTORY
MANAGED DISTRIBUTION POLICYManaged Distribution Policy: This fund has adopted a Managed Distribution
Policy, designed to provide attractive, quarterly distributions throughout the course of the year. Under this policy, the fund seeks to maintain a stable quarterly distribution amount (in cents per common share), comprised of payments received from portfolio companies, as well as net realized fund portfolio capital gains and, if necessary, a return of capital (representing in some cases
net unrealized capital gains). The fund will determine the tax characteristics of all fund distributions after the end of the calendar year and will provide shareholders such information at that time.
KEY INFORMATION REGARDING DISTRIBUTIONS
| Current Distribution (Quarterly) (As of 10/1/2010) | $0.3470 |
| Monthly Equivalent Distribution | $0.1157 |
| Avg. Earnings/Share** ( As of 7/31/2010) | $0.0331 |
| Annualized 1 Year Total Return on NAV (As of 8/31/2010) | -3.22% |
| Annualized Distribution Rate on NAV †† | 8.91% |
| Annualized Since Inception Total Return on NAV (As of 8/31/2010) | 2.91% |
| Average Cost of Leverage(13 weeks) (As of 7/30/2010) | 0.00% |
HIGHLIGHTS
- attractive distributions from current income and potential total return
- low average portfolio duration (less than 2 years, including effective leverage)
- potential for additional total return when the U.S. dollar is weakening relative to the currencies associated with the fund’s international debt investments
- portfolio diversification potential / low historical correlation with U.S. stocks and bonds
- potential for some tax-advantaged returns, as forward currency contracts currently receive 60% long-term capital gains / 40% short-term capital gains tax treatment
PRICING & DISTRIBUTION
as of
09/01/2010
| Closing Share Price (As of 9/1/2010) | $14.35 |
| Closing NAV per Share (As of 9/1/2010) | $15.58 |
| Premium / Discount | -7.89% |
| Current Distribution Rate (Market price)†† | 9.67% |
| Distribution Amount (Quarterly) | $0.3470 |
CAPITAL STRUCTURE
as of
07/30/2010
| Total Managed Assets | $683,417,128 |
| Common Shares | |
|---|---|
| Total Common Net Assets | $683,417,128 |
| Shares Outstanding | 43,741,293 |
| Avg Daily Volume (in shares) | 113,419 |
| Dollar | Percent | |
|---|---|---|
| Asset Coverage 1 | More Information |
FUND BASICS
| CUSIP | 67090N109 |
| NAV Ticker | XJGTX |
| Inception Date | 4/25/2007 |
| Inception NAV | $19.10 |
| Inception Share Price | $20.00 |
FUND CHARACTERISTICS
as of
06/30/2010
| # of Holdings | 64 |
| % Foreign Holdings ‡ | 51.48% |
| Avg. Maturity (years) * | 0.96 |
| Avg. Leverage Adjusted Duration (years) * | 1.64 |
SHARE PRICE AND NAV HISTORY
Data reflects performance over the previous 12 months
As of
09/01/2010
ASSET ALLOCATION
As of 06/30/2010
CALENDAR YEAR TOTAL RETURNS
As of 08/31/2010
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Share Price | -2.65% | 22.55% | -8.32% | -- | -- | -- | -- | -- | -- | -- |
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NAV | -5.60% | 13.35% | -6.01% | -- | -- | -- | -- | -- | -- | -- |
ANNUALIZED TOTAL RETURNS
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Share Price | -3.44% | 3.28% | -- | -- | 0.27% |
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NAV | -3.22% | 2.55% | -- | -- | 2.91% |
FUND MANAGER
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| Taxable Fixed Income Investment Expertise The NAM Taxable Fixed Income Team, with over 17 years of experience, is led by five investment professionals with extensive investment research and portfolio management experience. The team selects fixed-income securities based upon an assessment of a security's relative value and potential total return; taking into account past and expected future performance, structural characteristics such as coupon, call features and expected timing of cash flows, as well as fundamental and qualitative credit analysis. The management team is supported by a research team that utilizes proprietary research as well as third-party investment analysis to evaluate potential portfolio investments. |
ANNUAL EXPENSE RATIOS
as of
07/30/2010
| Total Fund | Common Shares | |
|---|---|---|
| Management Fees | 0.88% | 0.88% |
| Other Expenses | 0.22% | 0.22% |
| Total | 1.10% | 1.10% |
See the fund's Annual Report for full information on expenses.
TOP ISSUERS
as of
06/30/2010
| Issuer | Dollar Value | % of Total Portfolio |
|---|---|---|
| Federal Home Loan B: Debt | $201,101,021 | 30.95% |
| Brazil Federative R: Debt | $123,504,642 | 19.00% |
| Israel: Debt | $36,079,589 | 5.55% |
| Freddie Mac: Corporate Debt | $34,004,054 | 5.22% |
| United States of Am: Treasury Obligatio | $29,101,825 | 4.48% |
| Canada: Treasury Debt | $23,570,053 | 3.63% |
| Turkey Republic: Debt | $21,348,318 | 3.28% |
| Indonesia Republic: Debt | $20,877,504 | 3.21% |
| Chile Republic: Debt | $18,589,873 | 2.86% |
| Inter-American Deve: Debt | $17,866,479 | 2.75% |
Data shown represents past performance and is no guarantee of future results. Market price and net asset value (NAV) of a Fund's shares will fluctuate with market conditions. Current performance may be higher or lower than the performance shown.
RISKS
Interest Rate RiskInterest rate risk is the risk that fixed-income securities such as bonds, preferred, convertible and other debt securities will decline in value because of changes in market interest rates. When market interest rates rise, the market value of such securities generally will fall. Consequently, the net asset value and market price of common shares will tend to decline if market interest rates rise.
Call Risk or Prepayment RiskDuring periods of declining interest rates or for other purposes, issuers may exercise their option to prepay principal earlier than scheduled, forcing the fund to reinvest in lower-yielding securities. This is known as call or prepayment risk.
Reinvestment RiskReinvestment risk is the risk that if market rates decline, income earned from the fund's portfolio must be reinvested at market interest rates that are below the fund portfolio's current earnings rate or that of the original bond that generated the income.
Credit riskThe risk that a security in the fund's portfolio will decline in price, or fail to make dividend or interest payments when due, because the security's issuer defaults or experiences a decline in its financial status. Securities falling lower in a company's capital structure and/or unrated securities and securities with lower credit ratings are expected to have higher credit risk. See subordination.
Non-Investment Grade or Below-Investment Grade Securities RiskInvestments in, or related to, obligors of below investment grade quality, are commonly referred to as "junk bonds". These investments are predominantly speculative with respect to the issuer's capacity to pay interest and repay principal when due and therefore involve a greater risk of default or decline in market value due to adverse economic and issuer-specific developments. Such investments may be less liquid than investment grade securities.
Non-U.S. Securities RiskInvestments in securities of non-U.S. issuers involve special risks not typically associated with domestic investments including:
(i) less publicly available information about non-U.S. issuers or markets due to less rigorous disclosure or accounting standards or regulatory practices;
(ii) smaller, less liquid and more volatile markets, meaning that an adviser may not be able to sell the fund's portfolio securities at times, in amounts and at prices it considers reasonable;
(iii) potential adverse effects of fluctuations in currency exchange rates or controls on the value of the fund's investments;
(iv) the economies of non-U.S. countries may grow at slower rates than expected or may experience a downturn or recession;
(v) the security issuer's willingness or ability to repay principal and interest due in a timely manner;
(vi) the impact of adverse economic, political, social or diplomatic events;
(vii) possible seizure, expropriation or nationalization of the company or its assets;
(viii) certain non-U.S. countries may impose restrictions on the ability of non-U.S. issuers to make payments of principal and/or interest to investors located outside the U.S., due to blockage of foreign currency exchanges or otherwise; and
(ix) withholding and other non-U.S. taxes may not be available for pass-through to the fund's shareholders as a deduction from taxable income or as a credit against their U.S. federal income tax liability.
These risks are more pronounced to the extent that the fund invests a significant amount of its assets in companies located in one region. Unanticipated economic, political and social developments may also affect the values of the fund's investments and the fund's availability to make additional investments in such countries.
All of these risks are usually much greater in emerging markets countries. Investments in emerging markets may be considered speculative, due to the higher possibility of hyperinflation, currency devaluations, lower trading volumes, and less liquidity.
Currency RiskChanges in exchange rates will affect the value of the fund's investments and the loss implied by an adverse movement in exchange rates may exceed the local currency return of an investment. There can be no assurance that the currencies in selected positions will appreciate or depreciate in the manner anticipated. The value of any currency relative to the U.S. dollar may be affected by complex political and economic factors. The exchange rate of each non-U.S. currency in terms of the U.S. dollar is a result of the supply and demand for the two currencies. Currency exchange rates may be particularly affected by payments and the extent of governmental surpluses or deficits in both non-U.S. countries and in the U.S., all of which are in turn sensitive to the monetary, fiscal and trade policies pursued by the relevant governments.
Derivatives Strategy RiskDerivatives are financial instruments whose value changes in response to the changes in underlying investment variables. Derivative securities include, but are not limited to, calls, puts, warrants, swaps, and forwards. The fund's use of derivatives involves risks different from, and possibly greater than, the risks associated with the underlying investments. The derivatives market is largely unregulated. It is possible that developments in the derivatives market, including potential government regulation, could adversely affect the fund's ability to terminate existing contracts or to realize amounts to be received under such contracts.
Interest Rate Swaps RiskIn interest rate swap transactions, there is a risk that yields will move in the direction opposite to the direction anticipated by the fund, which would cause the fund to make payments to its counterparty in the transaction that could adversely affect the fund's performance.
Forward Currency Contracts RiskForward currency contracts are not standardized; rather, banks and dealers act as principals in these markets, negotiating each transaction on an individual basis. Forward and "cash" trading is substantially unregulated; there is no limitation on daily price movements and speculative position limits are not applicable. The principals who deal in the forward currency markets are not required to continue to make markets in the securities or currencies they trade and these markets can experience periods of illiquidity, sometimes of significant duration. In addition, trading forward currency contracts can have the effect of financial leverage by creating additional investment exposure.
Counterparty RiskTo the extent that a fund's derivative investments are purchased or sold in OTC transactions, the fund will be exposed to the risk that counterparties to these transactions, for whatever reason, will be unable to meet their obligations under the arrangements, which generally will be equal to the amount, if any, by which the fund's positions are "in-the-money." The fund may have contractual remedies pursuant to a derivative contract, but there is no guarantee that the fund would be successful in pursuing them. The fund thus assumes the risk that it will be delayed or prevented from obtaining payments that it is owed by a defaulting counterparty.
Additional Investment Exposure (Effective Leverage) RiskThe fund's derivative Investments have an economic effect similar to financial leverage by creating investment exposure in addition to the exposure to its direct holdings. This leverage is not reflected in leverage levels as defined by securities laws, but has a similar magnifying effect.
NOTES
1 The ratio of a fund's total managed assets to the sum of (the fund's outstanding preferred shares, at par, plus its outstanding borrowings).
* For the 99.39% of the portfolio invested in debt securities.
**The average earnings per share and UNII figures are monthly amounts based on three month averages for the municipal funds and senior loan funds and six month averages for all other taxable funds. For JRS and 25% of JDD, the average earnings per share represents net REIT cash flow which may consist of income, capital gains and/or a return of capital.
†† Distribution rates represent the latest declared regular distribution, annualized, relative to the most recent daily market price and NAV.
‡ Relative to the fund's total managed assets.
Total return is determined by subtracting the initial investment from the redeemable value of the investment at the end of the investment period, dividing the remainder by the initial investment and expressing the result as a percentage. The calculation assumes that all fund distributions have been reinvested.
