- Additional Proxy Soliciting Materials (definitive) (DEFA14A)
July 29 2011 - 6:02AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Preliminary Proxy Statement.
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-
6(e)(2)
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Definitive Proxy Statement.
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Definitive Additional Materials.
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Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12
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Nuveen Municipal High Income Opportunity Fund 2 (NMD)
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
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1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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4)
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Date Filed:
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New Fundamental Policy Proposals Regarding the Making of Loans for
Nuveen Municipal Bond Closed-End Funds
Additional Q&A
July 27, 2011
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Q:
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Why are the funds proposing a change to their fundamental investment policies that would permit the funds to make loans?
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A:
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This proposal is part of a multi-year effort to ensure that all of Nuveens municipal bond closed-end funds have a
uniform and updated set of investment policies that reflect the evolution and changes in the municipal bond market that
have emerged over the past 20 years. This particular proposal is part of a more comprehensive best practices
initiative on behalf of the funds that began more than three years ago.
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Nuveens municipal bond closed-end funds have been brought to market at different intervals over the course of more
than 20 years, and reflect various policies and investment capabilities appropriate to the market environment at the
time of their creation, which reflect new developments over that period in the municipal market, including new types of
securities and investment strategies. Consequently, many of Nuveens more recently offered municipal bond closed-end
funds feature investment capabilities not uniformly enjoyed by older municipal bond closed-end funds. The proposals
set forth in the Proxy Statement for the Affected Municipal Funds are designed to provide those funds with the same
portfolio management tools currently available to Nuveens more recently offered funds.
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Q:
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Was there a particular catalyst or portfolio concern prompting this proposal?
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A:
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This proposal is part of a broader policy initiative undertaken by Nuveen for the past several years. There are
currently no identified credit situations within the complex where this option is intended or targeted. As stated in
the Proxy Statement, this policy change proposal reflects the broader intent to provide the Affected Municipal Funds
the same portfolio management flexibility already available to other funds with similar investment objectives within
the Nuveen complex.
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Q:
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Does this proposal reflect a growing concern on Nuveens part over the state of municipal issuers?
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A:
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Nuveens portfolio management and research team is actively engaged in monitoring both macro issues impacting the
municipal bond market as well as individual credit holdings held by the various funds. The team regularly comments on
the strength of the municipal bond market as well as provides in-depth research articles, and such commentary is
available on our website.
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Providing a fund with the option of making loans to help facilitate a timely workout of a
distressed issuers situation merely provides the fund with an additional tool to help
preserve shareholder value, and, importantly, should not be viewed as a commentary on the
state of the municipal bond market.
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Q:
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Have the funds participated in loans to municipal issuers in the past?
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A:
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Though such a loan situation in the municipal market is rare, it
represents a more common workout practice in the corporate bond
market. The most recent situation where a Nuveen fund
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with the flexibility to do so made a loan to an issuer facing a credit workout situation
occurred approximately eight years ago. Since that time, a limited number of funds having a
policy permitting the making of loans have considered doing so in particular workout
situations, but have taken other actions in pursuit of maximizing shareholder value.
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Is this proposal in response to any past or current municipal credit litigation?
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A:
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This proposal is not related to any past or pending litigation.
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Q:
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Have voters approved this proposal?
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A:
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The vote by shareholders of Affected Municipal Funds to approve the new policy proposal remains open, as a quorum has yet
to be obtained. The funds holding the shareholder meeting at which this issue has been presented have adjourned the
meeting until August 31, 2011.
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If approved, do you know when/if you plan to employ this option?
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A:
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As stated in the Proxy Statement, this policy is designed to provide each fund the flexibility to make loans in
circumstances where a municipal issuer is in distress if the adviser believes that doing so would both:
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facilitate a timely workout of the issuers situation in a manner that
benefits the fund; and,
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is the best choice for reducing the likelihood or severity of loss on the
funds investment.
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Again, there are currently no identified credit situations within the complex where this
option is intended or targeted.
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Will this option impact how the underlying bonds should be valued?
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A:
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The funds will value a loan based on several factors that draw upon
policies and procedures adopted and approved by the funds Board of
Trustees/Directors that are able to value instruments issued in these
types of situations. As with any investment, risks exist, and if the
adviser is wrong, the valuation of a particular loan could be impacted
and effect the value of the underlying bond held in the fund.
However, we would not expect that any loans would constitute a
meaningful portion of a funds total assets.
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