NUVEEN SECURITIES, LLC

Notes to Statement of financial Condition

December 31, 2016

(1) Summary of Significant Accounting Policies

General lnjinmalion and Basis of Prmnlalion

The accompanying Statement of Financial Condition reflects the accounts of Nu\•ecn Securities, LLC (the "Company''). The Company is a subsidiary of NU\·cen lnYestments, Inc. ('Parent"), which is a subsidfary of N uveen Holdings, Inc. (f/k/a Windy City Investments, Inc.; hereinafter, "Nuveen Holdings'). Nuveen Holdings is a wholly owned subsidiary of Nuvcen Finance, LLC (f/ k/ a TIA.A Asset tvfanagement Finance Company, u..q, which is an indirect subsidiary of Teachers Insurance and Annuiry Association of America ("TIAA''), a legal reser\•c life insurance company established under the insurance laws of the State of New York in 1918.

111e Company ts a Securities and Exchange Commission ("SEC'') registered broker/ dealer under the Secunaes Exchange Act of 1934, and provides im•estment product cliscnbution and related services for managed funds. In addition, the Company underwrites initial and secondary public offerings of closed-end funds and acts as placement agent for private offerings of other securities related thereto. In the ordmary course of business, the Company also serves :1s clearing agent with respect to murucipal bonds bought and sold by an affiliated investment adviser on behalf of tl1at am·iscr's separately managed accounts. TI1e Company is a clearing broker and clears trades through both the Depository Trust & Cleanng Corporation (tl1c "OTCC''), as well as the DTCCs subsidiary, the National Securities Clearing Corporation (the "NSCC'').

On January 4, 2016, the Company and Parent, entered into an agreement w1d1 Incapual LLC and certain of its affiliates ("Incapital'') to purchase certain assets, and assume certain liabilities, with respect to lncapital's Urut Investment Trust ("UIT') business (hereinafter, d1c "Incapital 1\cquisition''). TI1e Incapital Acquisition closed on Apnl 30, 2016. As a result, the Companr is a UlT sponsor, depositor and pnnapal underwriter.

1l1c Companr is subject to the regulatory rules of the SEC. the Financml Industry Regulatory Authority ("FINR.r\''), and the :Municipal Securities Rulemaking Board.

Use of &11nu11es

These finanoal statements have been prepared in conformicy with U.S. generally accepted accounting panciples ("GAAP''). 111e FUlancial Accounting Standards Board ("FASB'') Accounting Standards Coclification 1111 (the "Codtficaaon" or "r\SC" or "Topic'') is the source of authorit:Hfre U.S. GAAP recognized by the FASB to be applied by nongO\·crnmenral entities. The preparntion of financial statements m accordance with GAAP rcqwrcs management to mnke estimates and assumptions that affect the amounts reported in d1e finnnoal statements and related notes to the financial statements. Actual results could dtffor from these estimates.

Cash

l11c Companr m:untains cash at federally insured banking instirutions, which c.·m exceed the Federal Deposit Insurance Corporaaon's ("FDIC'') insurance co\•erage, and as a result, there 1s a concentration of credit nsk related to amounts m excess of FDIC insurance coverage.

3

NUVEEN SECURlTIES, LLC

Notes to Statement of Financial Condition

December 31, 2016

(1) Summary of Significant Accounting Policies (continued)

Ca1h Segregated rn Comp/Jame with Federal and Other &g11la11ons

Cash Segregared in Compliance with Federal and Other Regulations of $1.0 million at December 31, 2016 represents cash segregnted in a special reserve account for the benefit of customers under SEC Ruic 15c3-3.

Smmlies Tra11;ai-lions

Securities transactions arc reported on a settlement date basis, which ts generally three business days after d1e trade dace. Secunaes owned (trading accounts) :ue \•:.tlued at market.

At December 31, 2016, the Company's inventory of secuncies owned did not contain any sigruficant concentrations of credit nsk relating co eid1er mdtvidual issues or to issuers (or groups of issuers) locared in any state or region of the country.

Depo11/s

Included on the Company's December 31, 2016 Statement of Financial Condition :lre \'an ous deposits wuh cleanng corpornuons and transfer agents .

."'Jd1t1na:d Con1mwio111

Adrnnced commissions consist of commissions ad,·:mced by the Company on s:lles of certain mutu:ll fund shares. Such commissions arc capimlized and amortized monthly into expense o\·er 12 months.

I nam1e Tuxes

Bcgmrung in 2014, after Tu\.A acquired Nu\'cen Holdings and its subsidiancs, tax.'\blc income of the Companr has been mcJuded in the TIAA U.S. federal consolidated tax return filing. Pnor to the Tl.A.r\ acquisinon of Nuvcen Holdings, the Company and Parent joined NU\•een Holdings in the filing of a U.S. federal consohd:ued tax rerum. The Company 1s :llso obligated to pay st.'\tC income taxes. Some state filtngs arc on :l separate return b:lSls, whtle m oilier smrcs, the Company is required to join inn consolid'\ted/combmed filing.

Tite Company recognizes current income taxes for t:lxablc income/loss reportable to taxing authorities, nnd deferred income raxes for the future amount of income taxes following the b:thnce sheet approach, in all income mx jurisdiccions. Under the bal:mce sheet approach, deferred tax assccs nnd hnbtltnes are dcrcrmincd b:lsed on differences between the fm:mcial reporting :lnd d1c tax b:lscs of assets :ind habiliucs, :lnd arc me:isured using the en:lcted tax rates :lncl laws that are applicable to periods in which the differences a.re expected to :lff cct taxable income.

For the federal tax 1unsdtction and separate filing states, the Company's current and deferred mcomc tax b:llances arc prepared on a separate return basis. For consolidated/ combined filing sratcs, the Company's current :lnd deferred income taxes reflect the impact of group apporcionmcnr factors.

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NUVEEN SECURITJES1 LLC

Notes to Statement of Financial Condition

December 31, 2016

(1) Summaty of Significant Accounting Policies (continued)

lnrome Taxis (conlin111d)

Valuanon allowances may be established, when necessary, co reduce the deferred cax assets to amounts detennined "more-likely-than-not" realizable. TI1e Company assesses the realizability of deferred tax assets based upon sources of furure t.'lxable income available to d1e Company. The Company assesses the need for a liability related to uncertain ta." positions following the two-step recognition and measurement approach.

&a11/ A rcormlmg and &porting &q11irrmtnls

ASU No. 2014-15 - Presentation of Financial Statements - Going Concern

ASU No. 201+15, "Present:ttion of Financial Statements - Going Concern" requires management of all entities to e\' aluate whether there arc conditions and events that r:use substantial doubt about the enttty's ability to continue as a going concern within one year after the financial statements arc issued (or available to be issued when applicable). ~fanagement will be required co make chis e\•nluation for both annual and interim reporting periods, if applicable. Man:tgement will have to make certain clisclosures if it concludes that substantial doubt exists or when ics plans alleviate substantial doubt about the entity's ability to continue as a going concern. The assessment will be similar co the one auditors perform under auditing standards. ASU No. 2014-15 is effecti,•e for annual reporting periods end.mg after December 15, 2016, and annual and interim periods thereafter. Management of the Company has made a dctennination dlat as of December 31, 2016, there arc no condittons or cYcnts that raise substantial doubt about the enaty's ability to continue as a going concern within one year after this December 31, 2016 Statement of Finanonl Condmon is first made a,·ailablc to be issued.

(2) Fair Value Measurements

FASB ASC 820-10 establishes a fa.tr value hier:arch) that pnoonzes information used to develop those assumpnons. TI1e f:ur ,·aluc luerarchy gives ilie h1ghcsr pnomy to quoted prices to acO\'C markets and d1c lowest priority to unobservable data (for example, d1e rcporung entity's O\\.TI data). FASB ASC 820-10 rcqwrcs d1at fair value measurements be separately chsdosed by b ·cl within the fair ''alue hierarchy in order to chsnngwsh between ma.rker partiapant -assumptions based on market data obtained from source.s independent of the reporting entity (obscr\·ablc inputs d1ar arc classified wulun Le,·els 1 and 2 of the hierarchy) and the reporting entity's own :tssumpcions about market paracipant assumptions {unobservable inputs classified within Level 3 of the lucrarchr). Specifically:

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NUVEEN SECURITIES, LLC

Notes to Statemenc of Financial Condition

December 31, 2016

(2) Fair V:.lue Measurements (continued)

• Level 1 • inputs to the \ aluation methodology arc quoted prices {unad1usted) in ncnve markets for 1dcnncal assets or liabilities that the reporting entity has the ability to access nt the measurement date.

• Level 2 - inputs to the valuation methodology other than quoted pnces included within Level 1 that are observable for the asset or liabilicy, either directly or indirectly, through corroboration with observable m:lrket data (market·corroboratcd inputs).

• Level 3 - inputs to the valuation methodology that are unobservable inputs for tl1e asset or liability - that 1s, inputs that reflect tl1e reporting ennty's own assumpnons about the assumptions market paniopants would use in pricing tl1e asset or lrnbwty (including assumpnons about nsk) developed based on the best mfonnation a\•:ulablc in the circumstances.

In instances where tl1e deternunanon of the fair value measurement 1s based on inputs from different levels of the fair value hier:1Cchy, tl1c level in the fair value hierarchy within wluch the entire fotr value measurement faUs is based on the lowest level input that is stgrufic;mt to me frur value measurement tn ltS entirety. The Company's assessment of the stgnific:mcc of a parocular input to the fiur Yalue measurement in Its ennrety requires iudgmcnt, and considers factors specific to the asset or liabthty.

The following table presents information about the Companr's frur value measurements at December 31, 2016 (in OOOs):

Description December 31, 2016 Assets

Securi1ies O\\ned $ 390

Liabilities Contingent consideration 1,268

Quoted Prices in Aclive Markets

for Identical Assets (Level I)

Fair Value Measurements Using

Significant Other Observable Inputs

(Level 2)

Significant Unobservable Inputs

(Level 3)

390

1,268

The following table presents a rollforward for the ye:ir ended December 31, 2016 of f:ur value measurements that use s1gruficant unobscn·able mputs (Level 3) (in OOOs):

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NUVEEN SECURJTIES, LLC

Notes to S1atcmco c of Financial Condition

Dec.ember 31, 2016

(2) F~irV~lue Measurements (contin ued)

Assets

Bcgtnrung bafance (as of Januarr 1, 2016) .. ·-···· ... -····-······ $331 To1al g.uns or losses (rcalued/ unre:ilacd}..................... 57

Included in earnings ··-·····-·····...................................... 57 Purchases ...... _ ... _ ..................................................... -···-···• 2

Sales .......... -·········-·····-············ ...................... ····-······-········· Transfers inro wd 3 ..................................... _. ............... . l 'r:insfers out o f we! 3 .. - .............................................. .. ----

Endmg balance (as of December 31, 2016) ....................... $390

Liabilities Beginning balance (as of Janu:uy 1, 2016) .......................... S -

Tomi gains or losses (realized/unrealized) .................... . Included in earnings ...................................................... .

Purchases ...................................................... ........................ I ,268 Sales ....................................................................................... . Transfers into Le,•el 3 ........................................................ . T rnnsfers out of Level 3 .................................................... . ----

Ending balance (as of December 31 , 2016) ...................... . $1.268

Smm/1e1 Owned

"Securities owned" by the Company at December 31, 2016 represents a required investment tn the DTCC and ts considered to be a Le' cl 3 in\'cstrncnt, as there arc no quoted market prices for DTCC s tock; the fair \'alue of the DTCC stock ts based upon valuation information obtained clircctlr from DTCC.

Contingent Considuvlion

Ar December 31, 2016, the Company has approxim:Hely $1.3 mill.ton of conangcnc consideration recorded as a liability on its December 31, 2016 Statement of Fm:maal Condinon. Tlus amount represents future payments that may be parable to the seller in the Incapital Acquisition (refer to Note 1, "Summary of S1gn1ficant Accounting Policies - General Information and Basis of Presentaaon" for add.monal infonnaaon). Due to rhc use of significant unobservable inputs, the Company considers the csamated fate vnlue of the contingent consideration to be a Le\•cl 3 financial instmment. The Company engaged an internal \•aluaaon consulrnnt to assist with the determination of the csamated fair value for the contingent constderacion.

l\lcthods for Detemuning F:ur Value

In determining the f:ur "alue of its financial ins truments, the Company uses a nacty of methods and assumptions that are based on market conditions and risk exjsting at each balance sheet date. For the

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NUVEEN SECURITIES, LLC

Notes to Statement of Financial Condition

December 31, 2016

(2) Fair Value Measurements (continued)

majority of financi.'tl instruments, standard market conventions and techniques are used to detenninc fotr value.

Cash and cash equivalents, d.Jscnbution fees and undcrwrinng rc\•cnue recei\rable, receivables due from bcokers and dealers, deposits with and receivables due from clearing organizations, and other assets and receivables are financial assets with carrying values that approximate fair value because they are generally short-term in nature. Investment valuation 1s described in preceding paragraphs. Due to affiliates, due to customers, and other papbles a.re financial liabilities with carrymg values that also approximate fair value because they are generallr short-term in nature .

.A comp:uison of the December 31, 2016 f;ur values and carrying amounts of these financial instruments 1s as follows:

~ Cash :ind cash equi\':tlcnts Cash segregated in compliance with federal

:md other regulations Deposits \vtth and recct\·ablcs due from

cle:mng organizauons Secunaes owned Receivables due from affiliates Distnbuuon fees and unden\ nang rc\·cnue

receivable .Advanced commissions Deposits wuh ocher orgamzaaons Urut mvcstmcnt trust revenue rcccwablc Other

Ljabihnes. Sales comrruss1ons, disuibuuon fees, and

other accounts payable Due to brokers Contingent constdernuon Due to affiliaces Accrued e..xpenses and other lubiliues Deferred tax ltabwC\'

8

(in OOOs) Carrying Amount Fair Value

$22,651 S22,651

1,000 1,000 20,475 20,475

390 390 19,423 19,423 14,01-t 14,01..J

6,137 6,137 1,500 1,500

449 449 ... 4

14,790 14,790

10.J 104 1,268 1,268 2,224 2.,22.J

58.J 58-t 2,216 2,216

NUVEEN SECURITIES, LLC

Notes to Statement of Financial Condition

December 31, 2016

(3) Intangible Assets and Contingent Consideration

For the April 30, 2016 Incapital Acquisition, a reconciliation of the purchase pace (in OOOs) is as follows:

Cash paid at closing $12,775 Estimated contingent consideration 2,630 Post-closing adjustments ~30)

Total Sl 5 375

With the assistance of an internal valuation expert, the Company has determined that the entire purchase price for the Jncapical Acquisition should be allocated to intangtble assets for intellectual property acqmred. As a result, the Companr recorded a gross intangible asset of approximately S15.4 rrullion on its statement of financial condition. The estimated useful life of the intangible asset is fo•e years. At December 31, 2016, the Compan}' has approximatel}' S13.3 million for this intangible asset on its statement of financial condition, which is net of accumulated amortization.

Contingent consideration represents potcntinl additional payments associated with an acquisition, ba:;t:d on the outcome of future events. In accordance with F ASB ASC 850, ''Business Combinations," the Company recognizes the fair value of :my contingent consideration at the date of acquisition. Contingent consideration is required to be classified as a liability when the acquircr is obligated to par cash or transfer other assets to the seller. Contingent considcracion is to be classificJ as equity when the acqwrer 1s obligated to issue shares, or the seller has the option to elect setdement in equity shares. Contingent cons1deraaon classified as a l.Jability is required to be remeasured to fair \'alue at each bal:mce sheet date unnl the conungcncy is resoh·ed, wnh changes recognized in earnings. TI1e changes in fair nlue include both the ume value of moner, wluch \vtll accrctc with the passage o f time, and revisions to esamates of the amount and/ or aming of the contmgent constdcrauon payment.

The purchase agreement with Incapital states that the maximum paymenc for the acqu1smon of the mtcllccrual property acquired will be $25.0 million. \'\1ith approximately $12.8 million paid at closing, the implied maximum contingent consider:uion is S12.2 mill.ton. As p:i.rc of purchase accounting, the Company mmally recorded conungcnt consideration of $2.6 million, which represents the fatr value of what is expected to potenti:illy be payable to the sellers in the future. As required under FA.SB :\SC 850, the Company remeasured dus contingent consideration liability to fair value at December 31, 2016. At December 31, 2016, the Company had approximately Sl.3 million recorded as "Contingent constderauon" in the l.Jabilities section of tts Statement of Financial Condition. Under terms of the purchase agreement, the final contingent consideration will be measured as of December 31, 2017, and 1s payable within 60 da} s.

9

NUVEEN SECURITIES, LLC

Notes to Statement of Financial Condition

December 31, 2016

The follo\"ing table presents a reconciliation of acuvtty tn intangible assets from January 1, 2016 to December 31, 2016, as presented on the Company's s tatement of financial condttton (in OOOs):

Balance at January 1, 2016..................................................................................................................... S

Gross intangible asset - Intellectual property. . .. . ..... . ..................... . .................... 15,375

Amortization of intangible asset: Intellectual property................................................................................................................. (2,050)

Balance at December 31, 2016............................................................................................................ $13,325

(4) Income Taxes

TI1e ta .. 'i: effect of significant items which give ose to deferred tax assets and liabtltttes recorded on the Company's Statement of Financial Conc:hoon at December 31, 2016 are shown in the followmg table (m OOOs):

Gross deferred tax assets: State net opernung loss carryforwards Contingent constderauon

Gross deferred tax assets

State , ·aluation allo\vance

Deferred tax assets, net of ,·aJuation allowance

Gross deferred tax liabilities: Deferred commissions and offering costs Intangible assets

Gross deferred tax liabilities

Net def erred tax liability, net of valu.'ltion a.llow:mce

$ 181 474 655

(141} 508

2,295 429

2.724

s 2.216

.At December 31, 2016, the Companr had a state net operanng loss carry forward of $3A nullion, recogmzed as a def erred t.'lx asset of $0.2 million on the Company's Statement of Fmancial Conc:bnon that will exptre between 2017 and 2025. For financial reporting purposes, a valu:iuon allowance of S0.1 nuJlton has been established against the deferred tax assets related to certain state tax loss carryfonvnrds due to the uncertainty th:it the assets will be realized. l11c Company increased this valuntton allowance br SO. I rrullion during the yenr ended December 31, 2016.

TI1e Compnny's mcomc tax returns are subject to ex:urunatton br federal, sL1rc, and local taxing authonucs. TI1e federal and certain sr:ite income tax rerums for years after 2009 remain open to exnnunauon. Dunng 2015, the Internal Revenue Scr\'ice began nn examination of the consolid.1ted income ta..~ filing of Nun:en Holdmgs, wluch includes the Companr, for the year 2013. No ad1ustments ha,·e been proposed.

10

NUVEEN SECURITIES, LLC

Notes to Statement of Financial Condition

December 31, 2016

(4) Income Taxes (continued)

The Company has not recogruzed a liability for an)' unrecogruzed ta..x benefits as of Decembcc 31, 2016. In addition, the Company does not belie,•e that 1t is rcnsonably possible that there will be a s1gnific.'lnt adjustment to the total amount of unrecogruzed ta....: benefits wtthm the ne.xt tweh•e months.

No federal or state income taxes were paid directly by the Company ducmg 2016. The Company recorded $4.0 million and $0.2 million for federal and state ta..xes, respcctivdy, dtrough "Due to affiliates" (Parent) for its share of the consolidated group's ta..xes.

(5) Commitments and Contingencies

As discussed in Note 3, "Intangible Assets and Contingent Consideration," the Compan)' has approximately $1.3 million recorded as a !Jab1bty on its December 31, 2016 Statement of Financial Condmon for payments that may become payable to the seller of mccUectual property the Company acqulred during the second quarter of 2016. Refer to Note 3, " Intangible I\ssets and Contingent Consideration," for addtuonal mformauon.

From ume to time, the Company is named as a defendant in ccrtam legal actions havmg ansen in the orcltnary course of busmess. T11crc is presenclr no !Jugauon that we belie\•c would have an ad\•ersc m:uenal effo<:t on the Comp:my's financial condlbon, results of opcrntion or liquidity.

I ndrm11!fia1lio111

In the nonna.1 course of its business, cl~e Company ma)' indemnify certain serYice pro\•1dccs against spcofied pocentt:tl losses in connecuon \\11th their actmg as an agent of, or providing services to, c11c Company. T11c rmxirrmm potcnaaJ amounts of future payments d1at the Comp:mr could be required to make under these tndemnificauons cannot be estimated. Howe,·er, the Company bcltc,•es that it is unlikely it will have to make mateml payments under d1csc arr.mgements and, as of December 31, 2016, dtc Company has not recorded any contingent !Jability on its Statement of Financial Condition for these mdcmnifications.

Addmonally, the Company enters mto agreements that contain a vanety of rcpresentaoons and warrnnoes and which may prov1de for mdemnificauon against potential losses caused by the breach of those representations and warranties. 1l1e Company's maximum exposure under d1esc arrangements is unknown.

(6) Net Capital Requirement

TI1e Company 1s subject to the Secunties and Exchange Commission Ruic 15c3·1, the "Uniform Net Capital Ruic," wluch requires the mamcenancc of minimum ncr capiL11 and requires chat the raoo of aggregate indebtedness co net capital, as these terms arc defined, shall not exceed 15 to 1. At December 31, 2016, the Company's net capiL1.l catlo was 0.83 to 1 and its net capital w;-is approximatclr $22.9 million, which is S21.7 mtllion in excess of the reqwred net capual of Sl .3 million.

l I

NUVEEN SECURITIES, LLC

Notes to Statement of Financial Condition

December 31, 2016

(7) Related Party Transactions

The Company considers transactions to be related party when, at any time during the financial reporting penod: (a) one party has direct or indirect control of the other party, (b) the parries arc subject co common control from the same source, and/ or (c) one party has significant influence over the financial reporting and opernung policies of the other party, to an e.xtenc that the other party nught be inhibited from pursuing its own separate interests. Related parties may include: (1) Parent and us related affiltate/subsidiary companies; (2) any investment fund controlled by or under common control with Parent and its related affiliate/subsidiary comparues; (3) any officer, director or person performing an equivalent function, or any entity controlled by any of the foregoing persons, including any spouse or I.meal descendant (including by adoption as well as stepchildren) of the officers and directors; and (4) im•estors wtth sigruficant influence, including their close families.

Dunng the year ended December 31, 2016, the Company had the following rel:ited party transactions: (1) an expense sharing agreement '"ith Parent and an affiliate of Parenr, (2) a tax sharing arrangement; (3) a service fee revenue arrangement for services pro\•ided to us affiliates; and (4) the Company en.med revenue in connection with the sale, or distribution of, mutual funds m the Nuveen fund family.

In adduion, during the year ended December 31, 20Hi, the Parent made a cash contribution of $13.0 million to the Company in anticipation of the Incapital Acquis1aon and the related purchase accounting required under G .\.AP that was expected to result in die Company rccordmg a $13.3 million intangible asset on its Statement of Fmanoa1 Condmon, a non-allowable asset for regulntory net C1pital purposes.

(8) Subsequent Events

TI1e Company has c\•aluated subsequent C\·encs under the pro\•tsions of FASB Topic 855-10 and hns detennined that. through f-.farch 1, 2017, the date that d1is Statement of Finanoal Condition has first been made avatlable, there were no e\·ents occurring subsequent to December 31, 2016 fitting the cateria of FASB Topic 855-10 that needed to be reflected on the Company's Statement of Financial Concltaon as of December 31. 2016.

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