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A closed-end fund is a type of investment company that, like a mutual fund, uses
a professional manager to invest the fund's portfolio in a diversified
selection of securities. The Fund is closed-end, which means a limited number
of shares are issued during the IPO. Fund shares are bought and sold in the
open market and may be purchased in regular brokerage accounts, retirement plan
accounts, and trust or custodial accounts.
Nuveen Closed-End Funds are offered only through registered financial advisors,
professionals with the experience to understand your investment needs and
objectives, and the expertise to select the fund that best fits your return
objectives and expectations, investment time horizon and risk preferences.
Because Nuveen Closed-End Funds trade on the National Exchanges similar to
stocks, your financial advisor is likely to charge you commissions as he would
for any stock transactions.
Nuveen’s closed-end funds do not issue new certificates.
The Direct Registration System (DRS) enables shareholders to be directly
registered on the books of the Trustee without having to take possession of a
physical certificate. DRS provides faster, more convenient electronic share
movement. Shareholders can more easily sell shares through the transfer agent
or direct shares to their broker dealer. DRS eliminates the risk of lost,
stolen or damaged certificates.
If you have a pre-existing certificate(s), the certificate(s) is a negotiable
financial instrument and should be kept in a safe place such as a safe deposit
box. When sending them in the mail, we recommend that you use registered mail,
return receipt requested.
Dividends or Distributions are paid on a monthly or quarterly basis for all Nuveen Closed-End Funds.
Yes. Any shareholder in any Nuveen Closed-End Fund or Portfolio may enroll in
the Dividend Reinvestment Plan. If you own shares in your name, you may
participate directly. If you own shares that are held in the name of a
brokerage firm, bank or other nominee, you should instruct your nominee to
participate on your behalf. If your brokerage firm, bank or other nominee is
unable to do so, you should request to reregister your shares in your own name.
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Unlike the tax treatment of typical preferred securities, taxable preferred
securities do not qualify for the dividends-received deduction for
corporations. They are often issued by trusts established by operating
companies, and are not a direct obligation of the operating company. The trust
is generally treated as transparent for federal income tax purposes such that
the holders of the taxable preferred securities are treated as owning
beneficial interests in the underlying debt of the operating company.
Accordingly, payments of these securities are treated as interest rather than
as dividends for federal income tax purposes, and are not eligible for the
dividends received deduction. Because taxable preferred securities do not
quality for the tax-favorable dividends-received reduction, they generally
offer higher yields than regular preferred securities.
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Congress created REITs in 1960 to make investments in large-scale,
income-producing real estate accessible to smaller investors. In the same way
that shareholders benefit by owning stocks of other corporations, the
stockholders of a REIT earn a pro rata share of the economic benefits that are
derived from the production of income through commercial real estate ownership.
REITs offer distinct advantages for investors such as greater diversification through
investing in a portfolio of properties rather than a single building and expert
management by experienced real estate professionals.
In order for a company to qualify as a REIT, it must comply with certain
provisions within the Internal Revenue Code. As required by the Tax Code, a
REIT must:
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be an entity that is taxable as a corporation
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be managed by a board of directors or trustees
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have shares that are fully transferable
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have a minimum of 100 shareholders
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have no more than 50 percent of the shares held by five or fewer individuals
during the last half of each taxable year
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invest at least 75 percent of the total assets in real estate assets
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derive at least 75 percent of gross income from rents from real property, or
interest on mortgages on real property
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have no more than 20 percent of its assets consist of stocks in taxable REIT
subsidiaries
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pay dividends of at least 90 percent of its taxable income in the form of
shareholder dividends
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Individual investors directly own REIT shares purchased on the open market.
Other typical buyers of REITs are pension funds, endowment funds and
foundations, insurance companies, bank trust departments and mutual funds. REIT
shares typically may be purchased on the open market, with no minimum purchase
required. Many investors may also own REITs through mutual funds that
specialize in public real estate companies.
Investors may prefer to invest in REITs for their high levels of current
income. In addition, investors looking for ways to diversify their investment
portfolios beyond other common stocks as well as bonds are attracted to the
unique characteristics of REITs.
REITs are not partnerships, although REITs use partnerships to engage in joint
ventures. There are important organizational and operational differences
between REITs and limited partnerships, especially in tax reporting.
An investor in a REIT receives a traditional IRS Form 1099 from the REIT,
indicating the amount and type of income received during the year. An investor
in a partnership receives a more complicated IRS Schedule K-1.
REITs are required by law to distribute each year to their shareholders at least
90 percent of their taxable income. Thus, as investments, REITs tend to be
among those companies paying the highest dividends.
For REITs, dividend distributions for tax purposes are allocated as ordinary
income, capital gains and return of capital, each of which may be taxed at a
different rate. All public companies, including REITs, are required to provide
their shareholders early in the year with information clarifying how the prior
year's dividends should be allocated for tax purposes.
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