Large Cap Equity Series Traditional

Transcription

1 COMMENTARY by Nuveen Asset Management Large Cap Equity Series Traditional 1Q 2016 The Federal Reserve held off on another interest rate hike in large part due to concerns over non-u.s. growth Oil prices hit a 12-year low before recovering somewhat as the quarter came to a close U.S. equities sold off sharply through mid-february and then subsequently rebounded, ending the period with modestly positive returns While we expect stock gains will continue over the long term, we would not be surprised to see near-term volatility as investors await signs of improving global economic growth Market Review Economic data were mixed in the first quarter, pointing to a stabilizing, but still sluggish, economy. On the positive side of the equation, U.S. consumer spending and job growth remained solid with the unemployment rate staying around 5%. Wage growth showed signs of modest strength with average hourly earnings figures rising slightly more than expected, while lower mortgage rates and falling energy prices were additional tailwinds for the consumer. On the other hand, global weakness, soft business spending, a wider trade deficit and the ongoing inventory correction remained headwinds for growth. More evidence of an oversupplied global market led oil prices to collapse again during the quarter, with West Texas Intermediate crude hitting a 12-year low of approximately $26-per-barrel in February (source: Bloomberg). However, later in the quarter, the possibility of a deal among major oil producers to freeze production, as well as a sense that economic prospects were not as dire as previously feared, helped prices climb back to around the $40-per-barrel mark. The manufacturing sector struggled due to weaker overseas growth, the long-term drop in oil prices and the rising value of the dollar. As the quarter drew to a close, however, some manufacturing indicators trended in a more positive direction. Outside the United States, the economic outlook was more uncertain. Angst surrounding growth in China remained front and center as policymakers struggled to promote growth in this weakening economy. Japan attempted to boost growth and stave off deflation with an unexpected rate cut at the end of January. The European Central Bank followed this lead in March, unleashing its own combination of measures. Meanwhile, the Federal Reserve (Fed) met in PORTFOLIO MANAGEMENT * Robert C. Doll, CFA Senior Portfolio Manager, Chief Equity Strategist 36 years investment experience Managed Funds since 2013 Scott M. Tonneson, CFA Portfolio Manager 22 years investment experience Managed Funds since 2015 *Effective December 31, 2015, Scott Tonneson, CFA, was added as portfolio manager to the Funds. Nuveen Large Cap Value Fund A NNGAX C NNGCX I NNGRX R3 NMMTX OVERALL MORNINGSTAR RATING CLASS A SHARES CLASS I SHARES Among 1,207 Large Value Funds; based on historical risk-adjusted return as of 3/31/16 Nuveen Large Cap Core Fund A NLACX C NLCDX I NLCIX Nuveen Large Cap Growth Fund A NLAGX C NLCGX I NLIGX For more information, please consult with your financial advisor and visit nuveen.com. NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE 1

2 mid-march and held off on another interest rate hike in large part due to concerns over global financial pressures and relatively weak growth, along with tepid inflation readings. U.S. policymakers also reduced forecasts for further rate hikes in 2016 to two increases by year-end. U.S. equity prices were extremely volatile in early 2016 due to the concerns surrounding global growth, commodity price gyrations and uncertain monetary policy. Markets suffered double-digit losses in the first few weeks of the year, bottoming in mid-february. As fears receded, however, markets saw another double-digit bounce in the opposite direction, ending the quarter with a 1.35% return as measured by the S&P 500 Index. Eight of the ten sectors within the index posted positive returns, led by telecommunication services and utilities, which both rose more than 15%. At the other end of the spectrum, stocks in health care and financials struggled, and both sectors (which represent the third and second largest components of the index, respectively) fell more than 5%. Health care stocks were weighed down by political comments regarding drug pricing controls, while financials were hindered by a number of factors, most notably the anticipated slowdown in the pace of Fed rate hikes. The Funds benchmarks, the Russell 1000 Value, the Russell 1000 and the Russell 1000 Growth, returned 1.64%, 1.17% and 0.74% for the quarter, respectively. In the face of elevated global uncertainty, investors continued to favor larger, more established companies. In the face of elevated global uncertainty, investors continued to favor larger, more established companies. This led the small-cap segment to again underperform its larger-cap brethren during the quarter, as measured by the Russell 2000 Index return of -1.52%. Reversing last year s trend, however, value-oriented stocks gained ground as markets began to rally in February and outperformed growth and momentum stocks across the capitalization spectrum for the quarter, but particularly in the small-cap universe. International developed markets fell short of the United States with Japan and most European countries posting negative returns. In addition to the abovementioned growth concerns, European stocks were weighed down by the U.K. s possible exit from the European Union. As a result, the broad-based MSCI EAFE Index (gross) returned -2.88% for the quarter. Meanwhile, emerging market stocks snapped back from their 2015 underperformance, particularly Brazil and Eastern Europe, largely due to stabilizing oil prices. The segment posted a 5.75% return as measured by the MSCI Emerging Markets Index (gross). After falling sharply earlier in the year, China s Shanghai Index rebounded as the quarter ended, but still ended significantly in the red. Market Outlook While markets have rallied strongly over the past couple of months, investor skepticism remains high. The current equity rally seems tentative, and we remain cautious about the near-term market outlook. For one, much of the recent rally can be attributed to the rebound in oil prices. It appears that the oil price advance was largely due to expectations of falling supply, which has not yet materialized. By their nature, oil prices are volatile, and it seems inevitable that we will see another correction at some point. If and when that happens, that could cause 2

3 another sell-off in risk assets. Additionally, corporate earnings may struggle for some time. It is tough to argue for stronger equity markets without seeing earnings improvements. Over time, we think improving economic growth, still-low interest rates, low inflation and a more stable dollar should be positives for corporate earnings and ultimately for equity prices. Earnings results will likely improve in the second half of 2016 as earlier headwinds from the oil/dollar dynamic begin to fade. As such, we think stock prices will more likely than not advance over the coming year. We believe equities will outperform bonds and cash again in The short-term outlook is cloudier. Pockets of weakness continue in the global economy, China is not out of the woods, the global political backdrop remains a wildcard and investors are rightfully wary of renewed oil price volatility. Stock prices have come a long way in a short time. While we expect gains will continue over the long term, we would not be surprised to see ongoing volatility as investors await signs of improving global economic growth. Such a backdrop suggests that equity gains will be limited, meaning finding the right opportunities is critical. We believe certain areas of the market are better positioned than others. For some time, we have advocated that investors focus on companies that can generate free cash flow and have the ability to expand via unit growth rather than pricing power. These themes remain relevant in today s slowgrowth environment. Additionally, as we mentioned earlier, we have recently seen a shift in leadership from momentum investing to value styles. We think this trend will continue as long as economic growth improves modestly. We think stock prices will more likely than not advance over the coming year. We believe equities will outperform bonds and cash in

4 Nuveen Large Cap Value Fund A NNGAX C NNGCX I NNGRX R3 NMMTX The Fund (Class A Shares at NAV and Class I Shares) outperformed the Russell 1000 Value Index, returning 2.48% and 2.56% vs. 1.64% for the quarter, respectively 1 Contributors during the quarter included a preference for smaller-sized names, an underweight to higher momentum stocks and stock selection in materials and consumer staples Detractors during the quarter included emphases on stocks with more volatility and more variation in earnings, as well as underweights in utilities and energy The Nuveen Large Cap Value Fund (Class A shares at NAV and Class I shares) outperformed the Russell 1000 Value Index for the quarter. On the positive side, the Fund benefited from a preference for smaller-sized names within the index as well as an underweight to higher momentum stocks (those that have recently performed well). Also, stock selection was particularly strong in the materials and consumer staples sectors. In addition, underweight positions in financials and health care plus overweights in industrials and telecommunication services boosted the Fund s results. The Fund s solid stock selection helped it outperform during the reporting period, including a position in Joy Global, a manufacturer and servicer of heavy equipment used in the mining industry. Although the mining sector previously showed a steady decline for services and products provided by Joy Global, more recent signs developed that the decline could be bottoming with a few pockets of stabilization. This was enough news for investors to reward the company s shares from the extremely depressed levels hit in January. Another top performer was CenturyLink, the third largest telecommunications company in the United States, which saw its shares rebound after underperforming during the previous reporting period. CenturyLink s announcement regarding a strategic review of its datacenter business caught the attention of investors in late When the company reported fourth-quarter results, investors were pleasantly surprised by revenues and earnings that were much better than some expected. In addition, the Fund benefited from a position in Exelon, a holding company that engages in energy generation and delivery in the United States. In its most recent quarterly results, Exelon again showed consistent earnings growth, but also made a new commitment to 2.5% dividend growth. Along with this positive dividend news, investors cheered the closing of Exelon s contentious merger with Pepco Holdings on March 24, which helped propel this stock. On the other hand, we emphasized stocks that showed more volatility and more variation in earnings, two strategies that hampered returns as investors favored more stable and defensive names. Also, our significant underweight in utilities proved detrimental since the sector was the best-performing area within the 1 Please see page 5 for complete performance. FUND DESCRIPTION The Fund invests primarily in large-capitalization value stocks of U.S. companies. The strategy seeks long-term capital appreciation through balancing quantitative analysis with fundamental research in constructing a portfolio of securities of companies that we believe to have compelling business fundamentals. OVERALL MORNINGSTAR RATING CLASS A SHARES CLASS I SHARES Among 1207 Large Value Funds; based on historical risk-adjusted return as of 3/31/16 TOP 10 POSITIONS * Fund Weight JPMorgan Chase & Co. 2.7% Cisco Systems Inc. 2.5% Intel Corp. 2.5% Wal-Mart Stores Inc. 2.1% Microsoft Corp. 2.1% Exxon Mobil Corp. 1.6% Ford Motor Co. 1.6% American International Group Inc. 1.6% General Motors Co. 1.5% Target Corp. 1.5% SECTOR OVER & UNDERWEIGHTS * Fund vs. Russell 1000 Value Index Information Technology Discretionary Industrials Telecom Services Materials Staples Health Care Utilities Energy Financials -9.0% -7.5% -5.5% -3.9% 2.1% 1.7% 0.8% 6.3% 7.5% 7.5% *As a percentage of the Fund s total net assets as of 3/31/16. Sector over & underweights are compared to the benchmark Russell 1000 Value Index. Totals may not add up to 100% due to rounding. Positions are subject to change. The positions listed are not recommendations to buy or sell. 4

5 Russell 1000 Value Index during the quarter. An underweight to the rebounding energy sector also detracted. The Fund s top detractor was U.K.-based Ensco, the world s second-largest offshore oil and gas well drilling company. The company s performance is closely correlated to the price of crude oil since it derives virtually all of its revenues from oil sales. Ensco saw its shares drop sharply in January and February as oil prices fell, with investors anticipating the resulting slowdown in the company s production, revenue and therefore earnings. Also, shares of industrial company Trinity Industries fell significantly in mid-february after reporting fourth fiscal quarter results. The company specializes in making railcars, inland barges and a variety of other products and services for the energy, transportation and construction sectors. Although the company s earnings were strong in the fourth quarter, management guided toward a more difficult environment in 2016 due in large part to the weakness in commodity prices. Finally, the Fund s underweight position in telecommunications provider AT&T detracted during the quarter. The company, which is a large weight in the Russell benchmark, continued to show the benefits from its merger with DirecTV in its most recent quarterly results. AT&T was also boosted by the market s preference for higher dividend yielding stocks during the first quarter. Portfolio Positioning We are positioning the Fund with a cyclical tilt via overweights to the information technology, consumer discretionary and industrials sectors. We are emphasizing stocks in the portfolio with relatively smaller market caps within the large-cap universe, a higher degree of volatility and more leverage (as measured by a higher debt/equity ratio). Nuveen Large Cap Value Fund A NNGAX I NNGRX Average Annualized Total Returns as of 3/31/16 Class A (Without sales charge) Class A (With sales charge) Class I Russell 1000 Value Index QTD Year 3 Years 5 Years 10 Years Since Inception (8/7/96) Returns quoted represent past performance which is no guarantee of future results. Investment returns and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than their original cost. Current performance may be higher or lower than the performance shown. Returns without sales charges would be lower if the sales charge were included. For the most recent month-end performance visit nuveen.com or call (800) Class A shares have a 5.75% maximum sales charge. Returns assume reinvestment of all dividends and capital gains. Class I shares have no sales charge and may be purchased by specified classes of investors. 1 Expense ratios are based on the Fund s most recent fiscal year end. Expense Ratios 1 Gross Net A NNGAX I NNGRX

6 Nuveen Large Cap Core Fund A NLACX C NLCDX I NLCIX The Fund (Class A Shares at NAV and Class I Shares) outperformed the Russell 1000 Index, returning 1.81% and 1.85% vs. 1.17% for the quarter, respectively 1 Contributors during the quarter included a preference for smaller-sized names, an underweight to higher momentum stocks, as well as stock selection in consumer discretionary, industrials, consumer staples and materials Detractors during the quarter included emphases on stocks with more volatility and more variation in earnings, as well as an underweight position in consumer staples The Nuveen Large Cap Core Fund (Class A shares at NAV and Class I shares) outperformed the Russell 1000 Index for the quarter. On the positive side, the Fund benefited from a preference for smaller-sized names within the index as well as an underweight to higher momentum stocks (those that have recently performed well). Also, stock selection was particularly strong in the consumer discretionary, industrials, consumer staples and materials sectors. An overweight position in industrials and an underweight in financials also boosted the Fund s results. The Fund s solid stock selection helped it outperform during the reporting period, including shares of global e-commerce marketplace provider Groupon, which advanced strongly after struggling for a number of quarters. Groupon, which connects millions of subscribers with area merchants offering deals for activities, travel, goods and services, benefited from two catalysts during the period. Initially investors took notice after Groupon s fourth-quarter earnings release, which showed the company beginning to successfully execute on its strategy to improve overall operating results and profits. In mid-february, China s e-commerce giant Alibaba Group disclosed that it had taken a small minority stake in the company, which provided investors with more reason to be hopeful for its future growth prospects. Also, a position in Joy Global, a manufacturer and servicer of heavy equipment used in the mining industry, aided the Fund s results. Although the mining sector previously showed a steady decline for services and products provided by Joy Global, more recent signs developed that the decline could be bottoming with a few pockets of stabilization. This was enough news for investors to reward the company s shares from extremely depressed levels. In addition, the Fund saw strong results from CenturyLink, the third largest telecommunications company in the United States. The company s shares rebounded after underperforming during the previous reporting period. CenturyLink s announcement regarding a strategic review of its datacenter business caught the attention of investors in late When the company reported fourth-quarter results in February, investors were pleasantly surprised by revenues and earnings that were much better than some expected. FUND DESCRIPTION The Fund invests primarily in large-capitalization stocks of U.S. companies. The strategy seeks long-term capital appreciation through balancing quantitative analysis with fundamental research in constructing a portfolio of securities of companies that we believe to have above-average growth potential at attractive prices. TOP 10 POSITIONS * Fund Weight Apple Inc. 4.2% Home Depot Inc. 1.9% Intel Corp. 1.7% Cisco Systems Inc. 1.7% Gilead Sciences Inc. 1.7% McDonald s Corp. 1.6% Microsoft Corp. 1.6% Visa Inc. Class A 1.6% Amgen Inc. 1.6% MasterCard Inc. Class A 1.5% SECTOR OVER & UNDERWEIGHTS * Fund vs. Russell 1000 Index Discretionary 9.0% Industrials Information Technology Telecom Services Health Care Materials Utilities Energy Staples Financials -9.9% -1.0% -1.5% -5.1% -5.6% 0.1% 5.1% 1.3% 7.6% *As a percentage of the Fund s total net assets as of 3/31/16. Sector over & underweights are compared to the benchmark Russell 1000 Index. Totals may not add up to 100% due to rounding. Positions are subject to change. The positions listed are not recommendations to buy or sell. 1 Please see page 7 for complete performance. On the negative side, we emphasized stocks that showed more volatility and more variation in earnings, two strategies that hampered returns as investors favored more stable and defensive names. Also, although our stock selection was favorable in consumer staples, the positive impact was offset by an underweight position in this strongly performing sector. 6

7 In addition, stock selection was weak in health care during the quarter with the Fund s top three detractors found in that sector: United Therapeutics, McKesson and AmerisourceBergen. Shares of biotechnology firm United Therapeutics, which had been under downward pressure since the start of the year fell further in late March. The company has been working for some time with partner firm Medtronic to get its lead product that treats pulmonary arterial hypertension, an injectable drug called Remodulin, approved in implantable pump form. United Therapeutics announced that Medtronic s application for approval of the Remodulin Implantable System was rejected by the U.S. Food and Drug Administration, sending shares sharply lower. The company is currently evaluating this regulatory setback as it had hoped to expand the patient base for the drug and extend its patent life. Also, health care services company McKesson detracted during the period after its shares had reached all-time highs in The company, which distributes pharmaceuticals and technology solutions to retail pharmacies, hospitals and other health care providers, saw its stock price plunge in January. At that time, McKesson lowered guidance for its fiscal 2016 earnings based on weaker pricing trends for generic pharmaceuticals and recent customer consolidation. In addition, shares of pharmaceutical sourcing and distribution company AmerisourceBergen fell during the quarter after the company lowered its 2016 earnings guidance. Broad industry concerns surrounding drug distributors came into focus during the first part of the year as Wall Street analysts cited the slowdown in new generics coming to the market. AmerisourceBergen shares were also weighed down by the generally weak flu season and growing concern that competition among major players could also erode the company s future earnings growth. Portfolio Positioning We are positioning the Fund with a cyclical tilt via overweights to the consumer discretionary, industrials and information technology sectors. In addition, we are emphasizing stocks in the portfolio with relatively smaller market caps within the large-cap universe, a higher degree of volatility and more leverage (as measured by a higher debt/equity ratio). Nuveen Large Cap Core Fund A NLACX I NLCIX Average Annualized Total Returns as of 3/31/16 Class A (Without sales charge) Class A (With sales charge) QTD Class I Russell 1000 Index Year Since Inception (6/17/13) Expense Ratios 1 Gross Net A NLACX I NLCIX Returns quoted represent past performance which is no guarantee of future results. Investment returns and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than their original cost. Current performance may be higher or lower than the performance shown. Returns without sales charges would be lower if the sales charge were included. For the most recent month-end performance visit nuveen.com or call (800) Class A shares have a 5.75% maximum sales charge. Returns assume reinvestment of all dividends and capital gains. Class I shares have no sales charge and may be purchased by specified classes of investors. 1 Expense ratios are based on the Fund s most recent fiscal year end. 7

8 Nuveen Large Cap Growth Fund A NLAGX C NLCGX I NLIGX The Fund (Class A Shares at NAV and Class I Shares) underperformed the Russell 1000 Growth Index, returning 0.37% and 0.45% vs. 0.74% for the quarter, respectively 1 Contributors during the quarter included stock selection in the consumer discretionary sector, an underweight to higher momentum stocks and a preference for smaller-sized names Detractors during the quarter included emphases on stocks that showed more volatility and more variation in earnings, and stock selection in industrials and information technology The Nuveen Large Cap Growth Fund (Class A shares at NAV and Class I shares) underperformed the Russell 1000 Growth Index for the quarter. On the positive side, stock selection was particularly strong in the consumer discretionary sector. Also, the Fund benefited from an underweight to higher momentum stocks (those that have recently performed well) and a preference for smaller-sized names within the index. In terms of individual contributors, two of the Fund s top contributors were found in the consumer discretionary sector. Shares of global e-commerce marketplace provider Groupon advanced strongly after struggling for a number of quarters. Groupon, which connects millions of subscribers with area merchants offering deals for activities, travel, goods and services, benefited from two catalysts during the period. Initially investors took notice after Groupon s fourth-quarter earnings release, which showed the company beginning to successfully execute on its strategy to improve overall operating results and profits. In mid-february, China s e-commerce giant Alibaba Group disclosed that it had taken a small minority stake in the company, which provided investors with more reason to be hopeful for its future growth prospects. Also, in a thematic turnaround from the fourth quarter, the Fund was rewarded during this period for its underweight position in online retail giant Amazon.com, a fairly large benchmark constituent. Following the company s meteoric stock price increase throughout 2015, Amazon.com shares subsequently dropped sharply through mid-february. The company s fourth-quarter holiday results were not as impressive as investors hoped for as fulfillment costs came in higher than expected. In addition, the Fund saw strong results from CenturyLink, the third largest telecommunications company in the United States. The company s shares rebounded after underperforming during the previous reporting period. CenturyLink s announcement regarding a strategic review of its datacenter business caught the attention of investors in late When the company reported fourth-quarter results in February, investors were pleasantly surprised by revenues and earnings that were much better than some expected. FUND DESCRIPTION The Fund invests primarily in large-capitalization growth stocks of U.S. companies. The strategy seeks long-term capital appreciation through balancing quantitative analysis with fundamental research in constructing a portfolio of securities of companies that we believe to have above-average growth potential at attractive prices. TOP 10 POSITIONS* Fund Weight Apple Inc. 7.0% Microsoft Corp. 3.5% Home Depot Inc. 2.7% Gilead Sciences Inc. 2.3% Alphabet Inc. Class A 2.2% Amgen Inc. 2.1% UnitedHealth Group Inc. 2.1% MasterCard Inc. Class A 2.0% Starbucks Corp. 1.8% Boeing Co. 1.8% SECTOR OVER & UNDERWEIGHTS* Fund vs. Russell 1000 Growth Index Information Technology 4.7% Discretionary 4.6% Health Care Industrials Utilities Telecom Services Energy Materials Financials Staples -7.6% -5.6% -0.2% -2.0% 0.8% 0.4% 0.1% 4.5% *As a percentage of the Fund s total net assets as of 3/31/16. Sector over & underweights are compared to the benchmark Russell 1000 Growth Index. Totals may not add up to 100% due to rounding. Positions are subject to change. The positions listed are not recommendations to buy or sell. 1 Please see page 9 for complete performance. Offsetting the above-mentioned strength, we emphasized stocks that showed more volatility and more variation in earnings, two strategies that hampered returns as investors favored more stable and defensive names. Also, stock selection was relatively weak in the industrials and information technology sectors. In addition, our significant underweight in consumer staples proved detrimental since the sector was one of the strongest-performing areas within the Russell 1000 Growth Index during the quarter. 8

9 Stock selection also detracted within health care during the quarter with two of the Fund s top detractors found in that sector: United Therapeutics and McKesson. Shares of biotechnology firm United Therapeutics, which had been under downward pressure since the start of the year fell further in late March. The company has been working for some time with partner firm Medtronic to get its lead product that treats pulmonary arterial hypertension, an injectable drug called Remodulin, approved in implantable pump form. United Therapeutics announced that Medtronic s application for approval of the Remodulin Implantable System was rejected by the U.S. Food and Drug Administration, sending shares sharply lower. The company is currently evaluating this regulatory setback as it had hoped to expand the patient base for the drug and extend its patent life. Also, health care services company McKesson detracted during the period after its shares had reached all-time highs in The company, which distributes pharmaceuticals and technology solutions to retail pharmacies, hospitals and other health care providers, saw its stock price plunge in January. At that time, McKesson lowered guidance for its fiscal 2016 earnings based on weaker pricing trends for generic pharmaceuticals and recent customer consolidation. In the information technology space, the Fund was hindered by its underweight exposure to Facebook, which represents a large weight in the Russell 1000 Growth Index. Investors expectations for earnings improved due to evidence of the company s success in growing its mobile business, where users are spending more time and money, which is leading to increased overall advertising revenues. Facebook is particularly well positioned as video viewing accelerates and advertisers are increasing the portion of their budgets allocated to highly-targeted online video campaigns. Portfolio Positioning We are positioning the Fund with a cyclical tilt via overweights to the information technology and consumer discretionary sectors, while also overweighting the more defensive health care sector. We are emphasizing stocks in the portfolio with relatively smaller market caps within the large-cap universe, more leverage (as measured by a higher debt/equity ratio) and lower P/E ratios. Nuveen Large Cap Growth Fund A NLAGX I NLIGX Average Annualized Total Returns as of 3/31/ Class A (Without sales charge) Class A (With sales charge) Class I Russell 1000 Growth Index Gross Net A NLAGX I NLIGX QTD 1 Year Since Inception (6/17/13) Returns quoted represent past performance which is no guarantee of future results. Investment returns and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than their original cost. Current performance may be higher or lower than the performance shown. Returns without sales charges would be lower if the sales charge were included. For the most recent month-end performance visit nuveen.com or call (800) Class A shares have a 5.75% maximum sales charge. Returns assume reinvestment of all dividends and capital gains. Class I shares have no sales charge and may be purchased by specified classes of investors. 1 Expense ratios are based on the Fund s most recent fiscal year end. The net expense ratio reflects a contractual commitment by the Fund s investment adviser to waive fees and/or reimburse expenses through December 31, Absent the waiver and/or reimbursement, expenses would be higher and total returns would be less. 9

10 For the period ended March 31, 2016, Morningstar rated the Nuveen Large Cap Value Fund s I and A shares, for the overall, 3-, 5-, and 10-year periods. The Class I shares received 4, 3, 3 and 4 stars and the Class A shares received 3, 2, 2 and 3 stars among 1207, 1207, 1051 and 764 Large Value Funds, respectively (derived from a weighted average of the fund s three-, five-, and 10-year [if applicable] risk-adjusted return measures and Morningstar Ratings metrics). These ratings are for Class I and A shares only; other classes may have different performance characteristics. Investment performance reflects applicable fee waivers. Without such waivers, total returns would be reduced and ratings could be lower. For funds with at least a three-year history, a Morningstar Rating is based on a risk-adjusted return measure (including the effects of sales charges, loads, and redemption fees) with emphasis on downward variations and consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% 4 stars, the next 35% 3 stars, the next 22.5% 2 stars, and the bottom 10% 1 star. Each share class is counted as a fraction of one fund within this scale and rated separately Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. The views and opinions expressed are for informational and educational purposes only as of the date of writing and may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. CFA and Chartered Financial Analyst are registered trademarks owned by CFA Institute. A WORD ON RISK Mutual fund investing involves risk; principal loss is possible. There is no guarantee the Funds investment objectives will be achieved. Prices of equity securities may decline significantly over short or extended periods of time. These and other risk considerations, such as futures contract, growth stock, and large cap stock risks, are described in detail in the Fund s prospectus. Nuveen Investments 333 West Wacker Drive Chicago, IL nuveen.com 10 GLOSSARY The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The returns assume reinvestment of dividends and do not reflect any applicable sales charges. You cannot invest directly in an index. The Russell 1000 Index measures the performance of the large cap segment of the U.S. equity universe which includes approximately 1000 of the largest securities based on a contribution of their market cap and current index measurement. The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The S&P 500 Index measures the performance of large-capitalization U.S stocks. The S&P 500 is a market weighted index of 500 stocks that are traded on the NYSE, AMEX, and NASDAQ. The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The MSCI EAFE Index consists of the following 22 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. Price/earnings ratio (P/E ratio) is the ratio of a stock s current price to its per-share earnings over the past year. For a fund, the ratio is the weighted average P/E of the stocks in the fund s portfolio. A forward P/E uses estimated earnings for the next four quarters in the denominator. P/E is often an indicator of market expectations about corporate prospects; usually, the higher the P/E, the greater the expectations for a company s future growth in earnings. Net asset value (NAV) is the net market value of all securities held in a portfolio. Before investing, carefully consider fund investment objectives, risks, charges and expenses. For this and other information that should be read carefully, please request a prospectus or summary prospectus from your financial advisor or Nuveen Investments at or visit nuveen.com. The Fund features portfolio management by Nuveen Asset Management, LLC, an affiliate of Nuveen Securities, LLC. Funds distributed by Nuveen Securities, LLC, a subsidiary of Nuveen Investments, Inc Nuveen Investments, Inc. All rights reserved. MQU-NLCET-0316P INV-Q-07/16