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Nuveen Multi-Strategy Income and Growth Fund 2 (NYSE: JQC)
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OBJECTIVE & INVESTMENT STRATEGY
The fund's primary investment objective is high current income; and its secondary objective is total return.
The fund invests in preferred securities (both tax-advantaged and taxable), convertible securities and related instruments, common stocks, and debt instruments, including high yield debt and senior loans. The fund uses leverage.
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) | $0.1750 |
| Monthly Equivalent Distribution | $0.0583 |
| Avg. Earnings/Share** ( As of 7/31/2010) | $0.0491 |
| Annualized 1 Year Total Return on NAV (As of 8/31/2010) | 25.73% |
| Annualized Distribution Rate on NAV †† | 7.30% |
| Annualized Since Inception Total Return on NAV (As of 8/31/2010) | 2.56% |
| Total % of Portfolio Leveraged (As of 7/30/2010) | 23.64% |
| Average Cost of Leverage(13 weeks) (As of 7/30/2010) | 1.48% |
HIGHLIGHTS
PRICING & DISTRIBUTION
as of
09/01/2010
| Closing Share Price (As of 9/1/2010) | $8.54 |
| Closing NAV per Share (As of 9/1/2010) | $9.59 |
| Premium / Discount | -10.94% |
| Current Distribution Rate (Market price)†† | 8.20% |
| Distribution Amount (Quarterly) | $0.1750 |
CAPITAL STRUCTURE
as of
07/30/2010
| Total Managed Assets | $1,692,010,179 |
| Common Shares | |
|---|---|
| Total Common Net Assets | $1,292,010,179 |
| Shares Outstanding | 137,476,325 |
| Avg Daily Volume (in shares) | 235,114 |
| Dollar | Percent | |
|---|---|---|
| Total Structural Leverage | $400,000,000 | 23.64% |
| Effective Leverage | $400,000,000 | 23.64% |
| Asset Coverage 1 | More Information |
FUND BASICS
| CUSIP | 67073D102 |
| NAV Ticker | XJQCX |
| Inception Date | 6/25/2003 |
| Inception NAV | $14.33 |
| Inception Share Price | $15.00 |
FUND CHARACTERISTICS
as of
06/30/2010
| # of Holdings | 906 |
| % Foreign Holdings ‡ | 31.40% |
| % Large, Mid, Small Cap † | 73.9%,13.1%,13.0% |
| Avg. Maturity (years) * | 27.43 |
| Avg. Leverage Adjusted Duration (years) * | 15.81 |
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 | 15.40% | 76.23% | -49.39% | -14.70% | 26.71% | -4.40% | 3.36% | 0.70% | -- | -- |
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NAV | 9.62% | 63.01% | -45.84% | -5.34% | 8.73% | 1.41% | 10.31% | 7.63% | -- | -- |
ANNUALIZED TOTAL RETURNS
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Share Price | 38.04% | -1.49% | 1.23% | -- | 1.42% |
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NAV | 25.73% | -2.57% | -0.12% | -- | 2.56% |
FUND MANAGER
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| An independently managed wholly owned subsidiary of Principal Global Investors, LLC, founded in 1987 is one of the country’s leading managers of preferred securities. Spectrum specializes in the management of diversified preferred security portfolios for institutional investors. Currently, Spectrum is sub-advisor to the preferred securities component of several Nuveen Closed-End Funds. Spectrum Asset Management is led by two principals with a combined 50 years of preferred securities experience. The investment team averages more than 15 years each in the preferred securities market. Spectrum used a value-oriented management style, which emphasized rigorous research to identify appropriate companies, sectors and market opportunities. |
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| Founded in 1994 by a team of industry veterans known for their pioneering work in quantitative analysis, Symphony Asset Management LLC is an institutional market leader in alternative and traditional investment strategies. Fundamental to Symphony’s investment philosophy is the concept that both quantitative and qualitative methods have value. The ability to blend these values into a unified, risk-controlled investment process is a skill that sets Symphony apart as an institutional money manager. Prior to implementation, each of our strategies has been thoroughly tested in one of the industry’s most sophisticated research environments. The resulting process is intellectually robust and independent of any one person’s influence or abilities. |
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| Value and Global/International Investment Expertise Tradewinds seeks to provide superior risk-adjusted returns through an analyst-driven, value-oriented process. Portfolio managers look for undervalued companies where catalysts exist to unlock value or improve profitability. Such catalysts can be new management, improving fundamentals,renewed management focus, industry consolidation or company restructuring. Adhere to value philosophy. Capitalize on short-term market inefficiencies - fear, greed and misperceptions. |
ANNUAL EXPENSE RATIOS
as of
07/30/2010
| Total Fund | Common Shares | |
|---|---|---|
| Management Fees | 0.70% | 0.92% |
| Interest Expenses | 0.31% | 0.40% |
| Other Expenses | 0.05% | 0.07% |
| Total | 1.06% | 1.39% |
See the fund's Annual Report for full information on expenses.
TOP ISSUERS
as of
06/30/2010
| Issuer | Dollar Value | % of Total Portfolio |
|---|---|---|
| Wells Fargo and Com: Debt | $36,882,609 | 2.28% |
| Comcast Corporation: Equity | $26,292,202 | 1.63% |
| Deutsche Bank AG: Debt | $26,006,536 | 1.61% |
| HSBC Holdings Publi: Debt | $24,637,639 | 1.53% |
| Banco Santander SA: Debt | $24,556,667 | 1.52% |
| Aegon NV: Debt | $20,095,171 | 1.25% |
| Vodafone Group Publ: Debt | $19,890,900 | 1.23% |
| PartnerRe Limited: Debt | $19,560,201 | 1.21% |
| Old Mutual PLC: Debt | $18,812,500 | 1.17% |
| Credit Suisse Group: Debt | $18,469,116 | 1.14% |
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.
Common Stock RiskAlthough common stocks historically have generated higher average returns than other types of investments, common stocks also have experienced significantly more volatility in those returns. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common stock held by the fund. Also, prices of common stocks are sensitive to general movements in the stock market and a drop in the stock market may depress the price of common stocks held by the fund or to which it has exposure.
Convertible Securities RiskConvertible securities generally offer lower interest or dividend yields than non-convertible fixed-income securities of similar credit quality because of the potential for capital appreciation. The market values of convertible securities tend to decline as interest rates increase and, conversely, to increase as interest rates decline. However, a convertible security's market value also tends to reflect the market price of the common stock of the issuing company, particularly when that stock price is greater than the convertible security's "conversion price." The conversion price is defined as the predetermined price or exchange ratio at which the convertible security can be converted or exchanged for the underlying common stock.
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.
Preferred Stock RiskPreferred stocks are subordinated to bonds and other debt instruments in a company's capital structure in terms of priority to corporate income and liquidation payments, and therefore will be subject to greater credit risk than those debt instruments. Certain preferred stocks contain provisions that allow an issuer under certain circumstances to skip distributions (in the case of "non-cumulative" preferred stocks) or defer distributions (in the case of "cumulative" preferred stocks). If the fund owns a preferred stock that is deferring its distributions, the fund may be required to report income for tax purposes while it is not receiving income from that stock. Preferred stocks typically do not provide any voting rights, except in cases when dividends are in arrears for a specified number of periods.
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.
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).
¶ Holdings and their ratings may change over time. Ratings shown are generally the highest rating given by one or more national rating agencies. AAA, AA, A, and BBB are investment grade ratings; BB, B, CCC/CC/C and D are below-investment grade ratings. Holdings designated “NR” are not rated by a national rating agency, and may be assigned an internal rating by the fund’s investment adviser.
* For the 73.27% 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.
† Percentage are relative to the 27.13% of the portfolio invested in equity securities.
†† 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.
