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Understanding UNII balances
Undistributed net investment income (“UNII”) reflects how much, beyond current earnings, a closed-end fund has available to pay future distributions. Here we provide an overview of how UNII, and trends in UNII balances, may impact distributions, and where to learn more about UNII in Nuveen closed-end funds.
Why is a change in UNII balance important?
A closed-end fund’s UNII balance reflects the total amount the fund has available, beyond current earnings, from which to make future distributions to shareholders. This amount can change each month as the fund earns income and/or pays out distributions. While the absolute level of the UNII balance is important, the trend of the UNII balance over time may be of equal or greater importance as it can impact both future distributions and the fund’s net asset value (NAV) per share.
Finding UNII information
UNII appears in a downloadable file “Earnings and UNII Information” on nuveen.com/cef under the Distributions section of any closed-end fund’s page.
- The UNII balance shown on Nuveen's website reflects Generally Accepted Accounting Principles (GAAP) accounting.
- GAAP accounting requires booking of distributions on the ex-dividend date, vs. tax accounting, which is based on actual payment dates.
- This GAAP/tax accounting timing difference may result in a negative UNII balance for accounting purposes, while on a tax basis the actual balance may remain positive.
- For example: Nuveen’s municipal funds’ ex-dividend dates occur in the month preceding the actual cash payment date. Therefore, on nuveen.com, the fund(s) may show a negative UNII balance — although upon reconciliation for tax purposes the UNII balance may be positive.
Why invest with Nuveen?
1 Exceptions do apply, especially in cases with tax adjustments.
This report provides general tax information. Nuveen is not a tax professional. Individuals should consult their tax and financial professionals before making any tax or investment decisions.
This information should not replace a consultation with a tax professional regarding an individual’s tax situation. 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 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 financial professionals.
Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Closed-end funds frequently trade at a discount to their net asset value. Nuveen Securities, LLC, member FINRA and SIPC.