Nuveen's Buy/Write Funds Do Work

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 |  Includes: BXMX, QQQX, SPXX
by: Robert Lewis

Nuveen investments has four closed-end funds that engage in the sale of options for added income and stability. These funds are all traded on the New York Stock Exchange and seem to be doing their jobs. The funds are: Nuveen Equity premium Income Fund (JPZ); Nuveen Equity Premium Opportunity Fund (JSN); Nuveen Equity Premium Advantage Fund (JLA); and, Nuveen Equity Premium and Growth Fund (JPG).

Performance has been as follows:

1 year 5 year
JPZ 5.63% 2.20%
S&P 500 2.11% (0.25%)
JSN 5.78% 2.81%
50% S&P 500/50% NASDAQ 100 2.29% 1.19%
JLA 6.35% 3.28%
75% S&P 500/25% NASDAQ 100 2.45% 2.60%
JPZ 4.89% 1.57%
S&P 500 2.11% (0.25%)
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All the funds are selling at discounts from net asset value, as follows:

December 31, 2011 12 Month Average for calendar year
JPZ 13.27% 9.06%
JSN 11.61% 8.60%
JLA 13.31% 9.33%
JPG 13.54% 9.77%
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None of the funds uses leverage and net asset values as of December 31, 2011, were as follows:

FUND NET ASSETS
JPZ $496,085,000
JSN $859,329,000
JLA $340,529,000
JPG $225,664,000
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Portfolio composition, was similar for all the funds, as follows:

COMMON STOCK SHORT TERM INVESTMENTS CALL OPTIONS WRITTEN
JPZ 98.1% 6.5% 4.7%
JSN 97.8% 6.3% 4.2%
JLA 98.7% 4.9% 3.6%
JPG 99.0% 4.8% 3.8%
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Operating expenses, portfolio turnover and net investment income were as follows:

Operating Expenses Net Income Portfolio turnover
JPZ 0.97% 1.60% 04%
JSN 0.96% 1.23% 04%
JLA 0.98% 0.83% 14%
JPG 0.96% 1.66% 04%
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The funds have been successful and have substantial unrealized capital appreciation as well as net realized gains, as follows:

UNREALIZED APPRECIATION REALIZED GAINS
JPZ $72,021,749 $84,111
JSN $172,422,965 $107,222
JLA $97,789,120 $37,139
JPG $26,982,773 $45,486
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CONCLUSION

These are the best of the buy/write funds I have examined. I like them. They do what they are supposed to do and can be purchased at a discount. Each one has slightly different goals and objectives but they are basically the same. I would personally buy a basket of all four, depending on which were at greater discounts.

Disclosure: I am long JPZ, JSN, JLA, JPZ.