Closed-End Funds

Nuveen Investments

Closed-End Funds

Seeks High Current Income from a Portfolio
of Commercial Real Estate Investments

Annual Report

December 31, 2011

Nuveen Real Estate
Income Fund

JRS

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Table of Contents

Chairman's Letter to Shareholders					4
Portfolio Managers' Comments					5
Fund Leverage and Other Information					8
Common Share Distribution and Price Information					10
Performance Overview					12
Report of Independent Registered Public Accounting Firm					13
Portfolio of Investments					14
Statement of Assets & Liabilities					17
Statement of Operations					18
Statement of Changes in Net Assets					19
Statement of Cash Flows					20
Financial Highlights					22
Notes to Financial Statements					24
Board Members & Officers					33
Reinvest Automatically Easily and Conveniently					38
Glossary of Terms Used in this Report					40
Additional Fund Information					43

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Chairman's
Letter to Shareholders

Dear Shareholders,

These are perplexing times for investors. The global economy continues to struggle. The solutions being implemented in the eurozone to deal with the debt crises of many of its member countries are not yet seen as sufficient by the financial markets. The political paralysis in the U.S. has prevented the compromises necessary to deal with the fiscal imbalance and government spending priorities. The efforts by individual consumers, governments and financial institutions to reduce their debts are increasing savings but reducing demand for the goods and services that drive employment. These developments are undermining the rebuilding of confidence by consumers, corporations and investors that is so essential to a resumption of economic growth.

Although it is painfully slow, progress is being made. In Europe, the turnover of a number of national governments reflects the realization by politicians and voters alike that leaders who practiced business as usual had to be replaced by leaders willing to face problems and accept the hard choices needed to resolve them. The recent coordinated efforts by central banks in the U.S. and Europe to provide liquidity to the largest European banks indicates that these monetary authorities are committed to facilitating a recovery in the European banking sector.

In the U.S., the failure of the congressionally appointed Debt Reduction Committee was a blow to those who hoped for a bipartisan effort to finally begin addressing the looming fiscal crisis. Nevertheless, Congress and the administration cannot ignore the issue for long. The Bush era tax cuts are scheduled to expire on December 31, 2012, and six months later the $1.2 trillion of mandatory across-the-board spending cuts under the Budget Control Act of 2011 begin to go into effect. Any legislative modification would require bipartisan support and the prospects for a bipartisan solution are unclear. The impact of these two developments would be a mixed blessing: a meaningful reduction in the annual budget deficit at the cost of slowing the economic recovery.

It is in these particularly volatile markets that professional investment management is most important. Skillful investment teams who have experienced challenging markets and remain committed to their investment disciplines are critical to the success of an investor's long-term objectives. In fact, many long-term investment track records are built during challenging markets when managers are able to protect investors against these economic crosscurrents. Experienced investment teams know that volatile markets put a premium on companies and investment ideas that will weather the short-term volatility and that compelling values and opportunities are opened up when markets overreact to negative developments. By maintaining appropriate time horizons, diversification and relying on practiced investment teams, we believe that investors can achieve their long-term investment objectives.

As always, I encourage you to contact your financial consultant if you have any questions about your investment in a Nuveen Fund. On behalf of the other members of your Fund Board, we look forward to continuing to earn your trust in the months and years ahead.

Sincerely,

Robert P. Bremner
Chairman of the Board
February 22, 2012

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Portfolio Managers' Comments

Certain statements in this report are forward-looking statements. Discussions of specific investments are for illustration only and are not intended as recommendations of individual investments. The forward-looking statements and other views expressed herein are those of the portfolio managers as of the date of this report. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements and the views expressed herein are subject to change at any time, due to numerous market and other factors. The Fund disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein.

Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor's Group, Moody's Investors Service, Inc. or Fitch, Inc. Credit ratings are subject to change. AAA, AA, A, and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by a national rating agency.

Nuveen Real Estate Income Fund (JRS)

The Fund is managed by a team of real estate investment professionals at Security Capital Research & Management Incorporated, a wholly-owned subsidiary of JPMorgan Chase & Co. Anthony R. Manno Jr. , Kenneth D. Statz and Kevin W. Bedell, who together average 31 years of experience in managing real estate investments, lead the team and have managed JRS since its inception in 2001. Here they talk about general economic and market conditions, their management strategy and performance of the Fund over the twelve-month period ended December 31, 2011.

What were the general market conditions for the reporting period?

During this period, the U.S. economy continued to recover from the recent recession, but progress remained slow. The country's gross domestic product (GDP) grew in 2011, but at a slower rate than in 2010 (1.7% vs. 3.0%). The unemployment picture showed some improvement, with the national unemployment rate standing at 8.5% as of December 2011, compared with 9.4% one year earlier. However, the housing market continued to be a weak spot. For the twelve months ended November 2011 (the most recent data available at the time this report was prepared), the average home price in the Standard & Poor's (S&P)/Case-Shiller Index lost 1.3%, with 18 of the 20 major metropolitan areas reporting lower values. In addition, the U.S. economic picture continued to be clouded by concerns about the European debt crisis and efforts to reduce the federal deficit.

In an attempt to improve the overall economic environment, the Federal Reserve (Fed) continued to hold the benchmark fed funds rate at the record low level of zero to 0.25% that it had established in December 2008. In January 2012 (following the end of this reporting period), the central bank stated that economic conditions would likely warrant maintaining this low rate through 2014. The Fed also implemented a program to extend the average maturity of its U.S. Treasury holdings by purchasing $400 billion of these securities with maturities of six to thirty years and selling an equal amount of U.S. Treasury securities with maturities of three years or less. The goals of this program, which the Fed expects to complete by the end of June 2012, are to lower longer-term interest rates, support a stronger economic recovery and help ensure that inflation remains at levels consistent with the Fed's mandates of maximum employment and price stability.

The U.S. equity markets experienced periods of extreme volatility over the twelve-month reporting period, and posted mixed results for the full year. The Dow Jones Industrial Average gained 8.38% in 2011, and the broader S&P 500 Index ended the year up 2.11%. The NASDAQ Composite Index finished in the red, slipping 0.83%

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Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares.

For additional information, see the Performance Overview page in this report.

*  Refer to Glossary of Terms Used in this Report for definitions.

during 2011. The fixed-income markets generally did better, with the Barclays Capital U.S. Aggregate Bond Index producing a return of 7.84% for the year.

In general, Real Estate Investment Trust (REIT) common stocks rebounded strongly in the fourth quarter to end 2011 with attractive total returns amidst continued signs of stress in U.S. and global economies and the ongoing potential for contagion associated with a crisis in European financial markets. Returns for REIT senior fixed income securities were strong in 2011 aided, among other things, by a historic decline in U.S. Treasury yields.

What key strategies were used to manage the Fund during this reporting period?

The Fund is designed to invest at least 90% of its assets in income producing common stocks, preferred stocks, convertible preferred stocks and debt securities issued by real estate companies, with at least 80% of its total assets invested in income producing equity securities issued by REITs. In managing JRS, we seek to maintain significant property type and geographic diversification while taking into account company credit quality, sector, and security-type allocations. Investment decisions are based on a multi-layered analysis of the company, the real estate it owns, its management and the relative price of the security, with a focus on securities that we believe will be best positioned to generate sustainable income and potential price appreciation over the long run. In addition to fundamental security research, the proportion of the Fund invested in common equity versus preferred and fixed income investments is a key tactic we use to manage risk at a portfolio level. In general, in times of strong economic growth, we tilt the portfolio towards more ownership of equity. In highly uncertain times, we tend to favor more allocation toward bonds and preferred securities.

The allocation for the Fund between equity, preferred and debt investments as of December 31, 2011, was approximately 63% in REIT equity, 34% in preferred and 2% in bonds. This allocation is in-line with the long-term "normal" allocation for managing this portfolio and reflects our strategy of balancing growth and risk management in an economy experiencing a slow and uneven recovery.

How did the Fund perform over this twelve-month period?

The performance of the Fund, as well as for comparative indexes, and a benchmark, is presented in the accompanying table.

Average Annual Total Returns on Common Share Net Asset Value

For periods ended 12/31/11

				1-Year				5-Year				10-Year
JRS					8.18	%			-8.18	%			5.98	%
Wilshire U.S. Real Estate Securities Index*					8.87	%			-2.22	%			10.11	%
Specialized Real Estate Securities Benchmark*					7.50	%			2.67	%			9.62	%
S&P 500 Index*					2.11	%			-0.25	%			2.92	%

 

For the twelve-month period ended December 31, 2011, the total return on common share net asset value (NAV) for the Fund underperformed a real estate market index, but outperformed a specialized market benchmark and the S&P 500 Index.

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Over the course of the year, REIT common equity and fixed income securities generated attractive returns in a volatile market characterized by re-emerging concerns regarding the U.S. and global economies. Additionally, there was a continued boost from accommodative real estate financing markets and an elevated investor appetite for current yield.

While operating conditions in most property types continued to be challenging for owners and operators of real estate, there were clear signs of abundant market liquidity in real estate capital markets for high quality assets. This drove asset valuations, eased debt refundings and boosted confidence for owners. Public real estate markets continued to display a number of these trends evident through increasing stock prices, active equity issuance and narrow lending spreads.

The Fund's performance benefited from its allocation to common equity securities during a highly volatile period for the REIT common equity market. The Fund's underweight to preferred securities and equity investments in office companies constrained the Fund's performance relative to both the index and specialized benchmark during 2011.

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Fund Leverage
and Other Information

IMPACT OF THE FUND'S LEVERAGE STRATEGY ON PERFORMANCE

One important factor impacting the return of the Fund relative to its benchmarks was the Fund's use of financial leverage through the use of bank borrowings. The Fund uses leverage because its managers believe that, over time, leveraging provides opportunities for additional income and total return for common shareholders. However, use of leverage also can expose common shareholders to additional volatility. For example, as the prices of securities held by a Fund decline, the negative impact of these valuation changes on common share net asset value and common shareholder total return is magnified by the use of leverage. Conversely, leverage may enhance common share returns during periods when the prices of securities held by a Fund generally are rising. Leverage had a positive impact on the performance of the Fund over this reporting period. During the period, the Fund entered into interest rate swap contracts to partially fix the interest cost of the Fund's leverage. This activity detracted modestly from the overall positive impact of leverage, as rates declined slightly while the position was in place, meaning it would have been better had the interest rates of the leverage floated rather than being partially fixed in the period.

RECENT DEVELOPMENTS REGARDING THE FUND'S REDEMPTION OF AUCTION RATE PREFERRED SHARES

Shortly after its inception, the Fund issued auction rate preferred shares (ARPS) to create leverage. As noted in past shareholder reports, the weekly auctions for those ARPS shares began in February 2008 to consistently fail, causing the Fund to pay the so called "maximum rate" to ARPS shareholders under the terms of the ARPS in the Fund's charter documents. The Fund redeemed its ARPS at par in 2009 and since then has relied upon bank borrowings to create leverage.

During 2010 and 2011, certain Nuveen leveraged closed-end funds (including this Fund) received a demand letter from a law firm on behalf of purported holders of common shares of each such fund, alleging that Nuveen and the funds' officers and Board of Directors/Trustees breached their fiduciary duties related to the redemption at par of the funds' ARPS. In response, the Board established an ad hoc Demand Committee consisting of certain of its disinterested and independent Board members to investigate the claims. The Demand Committee retained independent counsel to assist it in conducting an extensive investigation. Based upon its investigation, the Demand Committee found that it was not in the best interests of each fund or its shareholders to take the actions suggested in the demand letters, and recommended that the full Board reject the demands made in the demand letters. After reviewing the findings and

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recommendation of the Demand Committee, the full Board of each fund unanimously adopted the Demand Committee's recommendation.

Subsequently, the funds that received demand letters (including this Fund) were named in a consolidated complaint as nominal defendants in a putative shareholder derivative action captioned Martin Safier, et al. v. Nuveen Asset Management, et al. that was filed in the Circuit Court of Cook County, Illinois, Chancery Division (the "Cook County Chancery Court") on February 18, 2011 (the "Complaint"). The Complaint, filed on behalf of purported holders of each fund's common shares, also named Nuveen Fund Advisors, Inc. as a defendant, together with current and former Officers and interested Director/Trustees of each of the funds (together with the nominal defendants, collectively, the "Defendants"). The Complaint contained the same basic allegations contained in the demand letters. The Defendants filed a motion to dismiss the suit and on December 16, 2011, the court granted that motion dismissing the Complaint. The plaintiffs failed to file an appeal of the court's decision within the required time period, resulting in the final disposition of the suit.

RISK CONSIDERATIONS

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Past performance is no guarantee of future results. Fund common shares are subject to a variety of risks, including:

Investment Risk. The possible loss of the entire principal amount that you invest.

Price Risk. Shares of closed-end investment companies like the Fund frequently trade at a discount to their NAV. Your common shares at any point in time may be worth less than your original investment, even after taking into account the reinvestment of Fund dividends and distributions.

Tax Risk. The tax treatment of Fund distributions may be affected by new IRS interpretations of the Internal Revenue Code and future changes in tax laws and regulations. This is particularly true for funds employing a managed distribution program.

Real Estate Risk. Your investment in the Fund is linked to the performance of the commercial real estate markets, which may fall due to increasing vacancies, declining rents or the failure of borrowers to pay their loans.

Leverage Risk. The Fund's use of leverage creates the possibility of higher volatility for the Fund's per share NAV, market price, distributions and returns. There is no assurance that a Fund's leveraging strategy will be successful.

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Common Share Distribution
and Price Information

Distribution Information

The following information regarding the Fund's distributions is current as of December 31, 2011, and likely will vary over time based on the Fund's investment activities and portfolio investment value changes.

During the twelve-month reporting period, the Fund's quarterly distribution to common shareholders increased during June. Some of the important factors affecting the amount and composition of these distributions are summarized below.

The Fund employs financial leverage through the use of bank borrowings. Financial leverage provides the potential for higher earnings (net investment income), total returns and distributions over time, but-as noted earlier-also increases the variability of common shareholders' net asset value per share in response to changing market conditions.

The Fund has a managed distribution program. The goal of this program is to provide common shareholders with relatively consistent and predictable cash flow by systematically converting the Fund's expected long-term return potential into regular distributions. As a result, regular common share distributions throughout the year are likely to include a portion of expected long-term gains (both realized and unrealized), along with net investment income.

Important points to understand about the managed distribution program are:

•  The Fund seeks to establish a relatively stable common share distribution rate that roughly corresponds to the projected total return from its investment strategy over an extended period of time. However, you should not draw any conclusions about the Fund's past or future investment performance from its current distribution rate.

•  Actual common share returns will differ from projected long-term returns (and therefore the Fund's distribution rate), at least over shorter time periods. Over a specific timeframe, the difference between actual returns and total distributions will be reflected in an increasing (returns exceed distributions) or a decreasing (distributions exceed returns) Fund net asset value.

•  Each distribution is expected to be paid from some or all of the following sources:

•  net investment income (regular interest and dividends),

•  realized capital gains, and

•  unrealized gains, or, in certain cases, a return of principal (non-taxable distributions).

•  A non-taxable distribution is a payment of a portion of the Fund's capital. When the Fund's returns exceed distributions, it may represent portfolio gains generated, but

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**  The Fund elected to retain a portion of its realized long-term capital gains for the tax years ended December 31, 2007 and December 31, 2006, and pay required federal corporate income taxes on these amounts. As reported on Form 2439, Common shareholders on record date must include their pro-rata share of these gains on their applicable federal tax returns, and are entitled to take offsetting tax credits, for their pro-rata share of the taxes paid by the Fund. The total returns "Including retained gain tax credit/ refund" include the economic benefit to Common shareholders on record date of these tax credits/refunds. The Fund had no retained capital gains for the tax years ended December 31, 2011 through December 31, 2008 or for the tax years ended prior to December 31, 2006.

not realized as a taxable capital gain. In periods when the Fund's returns fall short of distributions, the shortfall will represent a portion of your original principal, unless the shortfall is offset during other time periods over the life of your investment (previous or subsequent) when the Fund's total return exceeds distributions.

•  Because distribution source estimates are updated during the year based on the Fund's performance and forecast for its current fiscal year (which is the calendar year for the Fund), estimates on the nature of your distributions provided at the time the distributions are paid may differ from both the tax information reported to you in your Fund's IRS Form 1099 statement provided at year end, as well as the ultimate economic sources of distributions over the life of your investment.

The following table provides information regarding the Fund's common share distributions and total return performance for the fiscal year ended December 31, 2011. This information is intended to help you better understand whether the Fund's returns for the specified time period were sufficient to meet the Fund's distributions.

As of 12/31/11 (Common Shares)				JRS
Inception date				11/15/01
Fiscal year (calendar year) ended December 31, 2011:
Per share distribution:
From net investment income				$	0.91
From long-term capital gains					0.00
From short-term capital gains					0.00
Return of capital					0.00
Total per share distribution				$	0.91
Distribution rate on NAV					9.43	%
Average annual total returns:
Excluding retained gain tax credit/refund**:
1-Year on NAV					8.18	%
5-Year on NAV					-7.97	%
10-Year on NAV					5.98	%
Including retained gain tax credit/refund**:
1-Year on NAV					8.18	%
5-Year on NAV					-5.68	%
10-Year on NAV					7.08	%

 

Common Share Repurchases and Price Information

As of December 31, 2011, and since the inception of the Fund's repurchase program, the Fund has not repurchased any of its outstanding common shares.

As of December 31, 2011, the Fund was trading at a +8.30% premium to its common share NAV, compared with an average premium of +5.48% for the entire twelve-month period.

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Fund Snapshot

Common Share Price				$	10.44
Common Share Net Asset Value (NAV)				$	9.64
Premium/(Discount) to NAV					8.30	%
Current Distribution Rate1					8.81	%
Net Assets Applicable to Common Shares ($000)				$	275,750

 

Leverage

(as a % of managed assets)⁵

Regulatory Leverage					28.70	%
Effective Leverage					28.70	%

 

Portfolio Composition

(as a % of total investments)^2,3

Office					30.5	%
Specialized					26.6	%
Residential					18.3	%
Retail					16.3	%
Industrial					4.8	%
Diversified					2.1	%
Hotels, Restaurants & Leisure					1.0	%
Short-Term Investments					0.4	%

 

Top Five Common Stock Issuers

(as a % of total investments)^2,3

Health Care Property Investors Inc.					5.4	%
Prologis Inc.					4.8	%
Equity Residential					4.7	%
Simon Property Group, Inc.					4.4	%
AvalonBay Communities, Inc.					4.0	%

 

Top Five Preferred Stock Issuers

(as a % of total investments)^2,3

Hospitality Properties Trust					4.2	%
SL Green Realty Corporation					3.5	%
Highwoods Properties, Inc.					3.5	%
Apartment Investment & Management Company					3.3	%
Lexington Realty Trust					2.1	%

 

Average Annual Total Returns

(Inception 11/15/01)

				On Share Price				On NAV
1-Year					13.11	%			8.18	%
5-Year					-7.28	%			-7.97	%
10-Year					7.05	%			5.98	%

 

Average Annual Total Returns⁴

(Including retained gain tax credit/refund)

				On Share Price				On NAV
1-Year					13.11	%			8.18	%
5-Year					-4.82	%			-5.68	%
10-Year					8.06	%			7.08	%

JRS

Performance

OVERVIEW

(Unaudited)

Nuveen Real Estate Income Fund

  as of December 31, 2011

Portfolio Allocation (as a % of total investments)^2,3

2010-2011 Distributions Per Common Share

Common Share Price Performance — Weekly Closing Price

  Refer to the Glossary of Terms used in this Report for further definition of the terms used within this Fund's Performance Overview Page.

1  Current Distribution Rate is based on the Fund's current annualized quarterly distribution divided by the Fund's current market price. REIT distributions received by the Fund are generally comprised of investment income, long-term and short-term capital gains and a REIT return of capital. The Fund's quarterly distributions to its shareholders may be comprised of ordinary income, net realized capital gains and, if at the end of the calendar year the Fund's cumulative net ordinary income and net realized gains are less than the amount of the Fund's distributions, a return of capital for tax purposes.

2  Excluding investments in derivatives.

3  Holdings are subject to change.

4  As previously explained in the Common Share Distribution and Price Information section of this report, the Fund elected to retain a portion of its realized long-term capital gains for the tax years ended December 31, 2007 and December 31, 2006, and pay required federal corporate income taxes on these amounts. These standardized total returns include the economic benefit to Common shareholders of record of this tax credit/refund. The Fund had no retained capital gains for the tax years ended December 31, 2011 through December 31, 2008 or for the tax years ended prior to December 31, 2006.

5  As defined in Footnote 7—Management Fees and Other Transactions with Affiliates.

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Report of INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders
Nuveen Real Estate Income Fund

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Nuveen Real Estate Income Fund (the "Fund") as of December 31, 2011, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian, counterparty and brokers. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Nuveen Real Estate Income Fund at December 31, 2011, and the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended in conformity with U.S. generally accepted accounting principles.

Chicago, Illinois
February 27, 2012

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JRS

Nuveen Real Estate Income Fund

Portfolio of Investments

  December 31, 2011

Shares				Description (1)				Value
				Real Estate Investment Trust Common Stocks – 87.6% (62.5% of Total Investments)
				Hotels, Restaurants & Leisure – 1.4%
	104,750			Hyatt Hotels Corporation, Class A, (2)				$	3,942,790
				Industrial – 6.7%
	646,907			Prologis Inc.					18,495,071
				Office – 16.1%
	99,910			Boston Properties, Inc.					9,951,036
	347,150			Brandywine Realty Trust					3,297,925
	212,100			CommonWealth REIT					3,529,344
	294,150			Corporate Office Properties					6,253,629
	301,360			Mack-Cali Realty Corporation					8,043,298
	225,170			Piedmont Office Realty Trust					3,836,897
	142,840			SL Green Realty Corporation					9,518,858
				Total Office					44,430,987
				Residential – 19.4%
	275,350			Apartment Investment & Management Company, Class A,					6,308,269
	117,398			AvalonBay Communities, Inc.					15,332,179
	106,450			BRE Properties, Inc.					5,373,596
	394,800			Colonial Properties Trust					8,235,528
	318,060			Equity Residential					18,138,962
				Total Residential					53,388,534
				Retail – 17.1%
	73,670			Federal Realty Investment Trust					6,685,553
	488,779			General Growth Properties Inc.					7,341,461
	152,357			Macerich Company					7,709,264
	219,320			Regency Centers Corporation					8,250,818
	133,309			Simon Property Group, Inc.					17,188,862
				Total Retail					47,175,958
				Specialized – 26.9%
	267,210			Extra Space Storage Inc.					6,474,498
	503,270			HCP, Inc.					20,850,476
	218,270			Health Care REIT, Inc.					11,902,263
	955,375			Host Hotels & Resorts Inc.					14,110,889
	80,757			Public Storage, Inc., (3)					10,858,586
	181,660			Ventas Inc.					10,014,916
				Total Specialized					74,211,628
				Total Real Estate Investment Trust Common Stocks (cost $185,973,946)					241,644,968

 

 

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Shares				Description (1)				Coupon								Ratings (4)				Value
				Convertible Preferred Securities – 3.9% (2.8% of Total Investments)
				Office – 3.9%
	525,756			CommonWealth REIT					6.500	%						Baa3				$	10,667,589
				Total Convertible Preferred Securities (cost $10,684,923)																	10,667,589
Shares				Description (1)				Coupon												Value
				Real Estate Investment Trust Preferred Stocks – 45.5% (32.4% of Total Investments)
				Diversified – 2.9%
	33,000			PS Business Parks, Inc., Series M					7.200	%										$	829,950
	261,400			PS Business Parks, Inc., Series O, (3)					7.375	%											6,582,052
	27,700			PS Business Parks, Inc., Series I					6.875	%											696,378
				Total Diversified																	8,108,380
				Office – 20.0%
	181,000			CommomWealth REIT					7.125	%											4,425,450
	33,000			Duke-Weeks Realty Corporation					6.950	%											828,300
	12,141			Highwoods Properties, Inc., Series A					8.625	%											13,393,041
	293,000			Hudson Pacific Properties Inc.					8.375	%											7,600,420
	335,978			Lexington Realty Trust					7.550	%											8,033,234
	314,000			Parkway Properties, Inc.					8.000	%											7,272,240
	550,000			SL Green Realty Corporation, (3)					7.625	%											13,700,500
				Total Office																	55,253,185
				Residential – 6.3%
	511,100			Apartment Investment & Management Company, Series U					7.750	%											12,808,166
	179,300			Apartment Investment & Management Company, Series Y					7.875	%											4,514,774
				Total Residential																	17,322,940
				Retail – 5.8%
	37,842			CBL & Associates Properties Inc., Series C					7.750	%											941,887
	102,000			CBL & Associates Properties Inc., Series D					7.375	%											2,415,360
	70,550			Glimcher Realty Trust, Series G					8.125	%											1,681,912
	265,000			Regency Centers Corporation, Series C					7.450	%											6,723,050
	13,000			Regency Centers Corporation, Series D					7.250	%											325,390
	152,800			Saul Centers, Inc.					8.000	%											3,949,880
				Total Retail																	16,037,479
				Specialized – 10.5%
	114,174			HCP, Inc., Series F					7.100	%											2,914,862
	38,000			Health Care REIT, Inc., Series D					7.875	%											966,340
	103,300			Hersha Hospitality Trust, Series A					8.000	%											2,474,035
	652,421			Hospitality Properties Trust, Series C					7.000	%											16,134,371
	271,452			Sunstone Hotel Investors Inc., Series A					8.000	%											6,387,266
				Total Specialized																	28,876,874
				Total Real Estate Investment Trust Preferred Securities (cost $122,979,144)																	125,598,858

 

 

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JRS

Nuveen Real Estate Income Fund (continued)

Portfolio of Investments December 31, 2011

Principal Amount (000)				Description (1)				Coupon				Maturity				Ratings (4)				Value
				Convertible Bonds – 2.7% (1.9% of Total Investments)
				Office – 2.7%
$	8,000			Corporate Office Properties LP, Convertible Bond, 144A					4.250	%		4/15/30				N/R				$	7,360,000
				Total Convertible Bonds (cost $7,450,883)																	7,360,000
Principal Amount (000)				Description (1)				Coupon				Maturity								Value
				Short-Term Investments – 0.6% (0.4% of Total Investments)
$	1,580			Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/30/11, repurchase price $1,579,920, collateralized by $1,550,000 U.S. Treasury Notes, 1.500%, due 6/30/16, value $1,612,000					0.010	%		1/03/12								$	1,579,918
				Total Short-Term Investments (cost $1,579,918)																	1,579,918
				Total Investments (cost $328,668,814) – 140.3%																	386,851,333
				Borrowings – (40.3)% (5), (6)																	(111,000,000	)
				Other Assets Less Liabilities – (0.0)% (7)																	(101,219	)
				Net Assets Applicable to Common Shares – 100%																$	275,750,114

 

Investments in Derivatives at December 31, 2011

Interest rate swaps outstanding:

Counterparty				Notional Amount				Fund Pay/Receive Floating Rate				Floating Rate Index				Fixed Rate*				Fixed Rate Payment Frequency				Termination Date				Unrealized Appreciation (Depreciation)
JPMorgan				$	20,727,500			Receive				1-Month USD-LIBOR					1.412	%		Monthly				3/29/14				$	(402,594	)
Morgan Stanley					20,727,500			Receive				1-Month USD-LIBOR					0.409			Monthly				3/29/12					3,399
Morgan Stanley					20,727,500			Receive				1-Month USD-LIBOR					2.323			Monthly				3/29/16					(1,222,622	)
																												$	(1,621,817	)

 

*  Annualized.

 

    For Fund portfolio compliance purposes, the Fund's industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications into sectors for reporting ease.

  (1)  All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted.

  (2)  Non-income producing; issuer has not declared a dividend within the last twelve months.

  (3)  Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in derivatives.

  (4)  Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor's Group ("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's") or Fitch, Inc. ("Fitch") rating. Ratings below BBB by Standard & Poor's, Baa by Moody's or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies.

  (5)  Borrowings as a percentage of Total Investments is 28.7%.

  (6)  The Fund may pledge up to 100% of its eligible investments in the Portfolio of Investments as collateral for Borrowings. As of December 31, 2011, investments with a value of $352,289,346 have been pledged as collateral for Borrowings.

  (7)  Other Assets Less Liabilities includes the net Unrealized Appreciation (Depreciation) of derivative instruments as noted within Investments in Derivatives at December 31, 2011.

  N/R  Not rated.

  144A  Investment is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These investments may only be resold in transactions exempt from registration, which are normally those transactions with qualified institutional buyers.

  USD-LIBOR  United States Dollar-London Inter-Bank Offered Rate.

    See accompanying notes to financial statements.

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Statement of

ASSETS & LIABILITIES

December 31, 2011

Assets
Investments, at value (cost $328,668,814)				$	386,851,333
Cash					26,662
Receivables:
Dividends					1,814,475
Interest					71,712
Other assets					54,685
Total assets					388,818,867
Liabilities
Borrowings					111,000,000
Unrealized depreciation on interest rate swaps, net					1,621,817
Accrued expenses:
Interest on borrowings					9,430
Management fees					273,288
Other					164,218
Total liabilities					113,068,753
Net assets applicable to Common shares				$	275,750,114
Common shares outstanding					28,615,375
Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding)				$	9.64
Net assets applicable to Common shares consist of:
Common shares, $.01 par value per share				$	286,154
Paid-in surplus					405,052,796
Undistributed (Over-distribution of) net investment income					(107,177	)
Accumulated net realized gain (loss)					(186,042,361	)
Net unrealized appreciation (depreciation)					56,560,702
Net assets applicable to Common shares				$	275,750,114
Authorized shares:
Common					Unlimited
Taxable Auctioned Preferred					Unlimited

 

See accompanying notes to financial statements.

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Statement of

OPERATIONS

Year Ended December 31, 2011

Investment Income
Dividends				$	12,896,352
Interest					249,940
Total investment income					13,146,292
Expenses
Management fees					3,201,777
Interest expense on borrowings					1,181,217
Shareholders' servicing agent fees and expenses					3,039
Custodian's fees and expenses					56,187
Trustees' fees and expenses					10,286
Professional fees					1,797
Shareholders' reports — printing and mailing expenses					110,381
Stock exchange listing fees					3,757
Investor relations expense					92,646
Other expenses					217,225
Total expenses before custodian fee credit and expense reimbursement					4,878,312
Custodian fee credit					(11	)
Expense reimbursement					(256,638	)
Net expenses					4,621,663
Net investment income (loss)					8,524,629
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments and foreign currency					21,043,521
Interest rate swaps					(544,021	)
Change in net unrealized appreciation (depreciation) of:
Investments and foreign currency					(5,727,533	)
Interest rate swaps					(1,621,817	)
Net realized and unrealized gain (loss)					13,150,150
Net increase (decrease) in net assets applicable to Common shares from operations				$	21,674,779

 

See accompanying notes to financial statements.

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Statement of

CHANGES in NET ASSETS

				Year Ended 12/31/11				Year Ended 12/31/10
Operations
Net investment income (loss)				$	8,524,629			$	7,919,497
Net realized gain (loss) from:
Investments and foreign currency					21,043,521				25,574,697
Interest rate swaps					(544,021	)			—
Change in net unrealized appreciation (depreciation) of:
Investments and foreign currency					(5,727,533	)			39,548,791
Interest rate swaps					(1,621,817	)			—
Net increase (decrease) in net assets applicable to Common shares from operations					21,674,779				73,042,985
Distributions to Common Shareholders
From net investment income					(26,002,387	)			(25,053,892	)
Decrease in net assets applicable to Common shares from distributions to Common shareholders					(26,002,387	)			(25,053,892	)
Capital Share Transactions
Net proceeds from Common shares issued to shareholders due to reinvestment of distributions					1,006,303				757,423
Net increase (decrease) in net assets applicable to Common shares from capital share transactions					1,006,303				757,423
Net increase (decrease) in net assets applicable to Common shares					(3,321,305	)			48,746,516
Net assets applicable to Common shares at the beginning of period					279,071,419				230,324,903
Net assets applicable to Common shares at the end of period				$	275,750,114			$	279,071,419
Undistributed (Over-distribution of) net investment income at the end of period				$	(107,177	)		$	(160,670	)

 

See accompanying notes to financial statements.

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Statement of

CASH FLOWS

Year Ended December 31, 2011

Cash Flows from Operating Activities:
Net Increase (Decrease) In Net Assets Applicable to Common Shares from Operations				$	21,674,779
Adjustments to reconcile the net increase (decrease) in net assets applicable to Common shares from operations to net cash provided by (used in) operating activities:
Purchases of investments					(215,400,389	)
Proceeds from sales and maturities of investments					174,201,455
Proceeds from (Purchases of) short-term investments, net					5,716,414
Proceeds from (Payments for) interest rate swap contracts, net					(544,021	)
Amortization (Accretion) of premiums and discounts, net					(81,194	)
(Increase) Decrease in:
Receivable for dividends					(134,983	)
Receivable for interest					169,288
Receivable for investments sold					984,131
Other assets					178,333
Increase (Decrease) in:
Accrued interest on borrowings					4,640
Accrued management fees					33,268
Accrued other expenses					(17,814	)
Net realized (gain) loss from:
Investments and foreign currency					(21,043,521	)
Interest rate swaps					544,021
Change in net unrealized (appreciation) depreciation of:
Investments and foreign currency					5,727,533
Interest rate swaps					1,621,817
Capital gain and return of capital distributions from investments					5,098,989
Net cash provided by (used in) operating activities					(21,267,254	)
Cash Flows from Financing Activities:
Increase (Decrease) in borrowings					46,290,000
Cash distributions paid to Common shareholders					(24,996,084	)
Net cash provided by (used in) financing activities					21,293,916
Net Increase (Decrease) in Cash					26,662
Cash at the beginning of period					—
Cash at the End of Period				$	26,662

 

Supplemental Disclosure of Cash Flow Information

Cash paid for interest on borrowings (excluding borrowing costs) was $1,111,577.

Non-cash financing activities not included herein consists of reinvestments of Common share distributions of $1,006,303.

 

See accompanying notes to financial statements.

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20

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Intentionally Left Blank

Nuveen Investments
21

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Financial

HIGHLIGHTS

Selected data for a Common share outstanding throughout each period:

								Investment Operations																				Less Distributions
				Beginning Common Share Net Asset Value				Net Investment Income (Loss)(a)				Net Realized/ Unrealized Gain (Loss)(b)				Distributions from Net Investment Income to Taxable Auctioned Preferred Share- holders(c)				Distributions from Capital Gains to Taxable Auctioned Preferred Share- holders(c)				Total				Net Investment Income to Common Share- holders				Capital Gains to Common Share- holders				Return of Capital to Common Share- holders				Total
Year Ended 12/31:
	2011			$	9.79			$	.30			$	.46			$	—			$	—			$	.76			$	(.91	)		$	—			$	—			$	(.91	)
	2010				8.10				.28				2.29				—				—				2.57				(.88	)			—				—				(.88	)
	2009				6.46				.42				2.15				—	*			—				2.57				(.41	)			—				(.52	)			(.93	)
	2008				16.84				.75				(9.18	)			(.16	)			—				(8.59	)			(.55	)			—				(1.24	)			(1.79	)
	2007				26.44				.73				(7.64	)			(.05	)			(.36	)			(7.32	)			(.69	)			(1.59	)			—				(2.28	)

				Taxable Auctioned Preferred Shares at End of Period												Borrowings at End of Period
				Aggregate Amount Outstanding (000)				Liquidation Value Per Share				Asset Coverage Per Share				Aggregate Amount Outstanding (000)				Asset Coverage Per $1,000
Year Ended 12/31:
	2011			$	—			$	—			$	—			$	111,000			$	3,484
	2010				—				—				—				64,710				5,313
	2009				—				—				—				64,710				4,559
	2008				37,000				25,000				148,762				25,000				9,807
	2007				222,000				25,000				78,660				70,000				10,979

 

(a)  Per share Net Investment Income (Loss) is calculated using the average daily shares method.

(b)  Net of federal corporate income taxes on long-term capital gains retained by the Fund per share as follows:

				Long-Term Capital Gains Retained
Year Ended 12/31:
	2011				N/A
	2010				N/A
	2009				N/A
	2008				N/A
	2007			$	1.21

 

(c)  The amounts shown are based on Common Share equivalents.

(d)  • Total Return Based on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized.

  Total Return Based on Common Share Net Asset Value is the combination of changes in Common share net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending net asset value. The actual reinvest price for the last dividend declared in the period may often be based on the Fund's market price (and not its net asset value), and therefore may be different from the price used in the calculation. Total returns are not annualized.

 

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																								Ratios/Supplemental Data
																Total Returns												Ratios to Average Net Assets Applicable to Common Shares Before Reimbursement(e)								Ratios to Average Net Assets Applicable to Common Shares After Reimbursement(e)(f)
				Borrowing Costs and Taxable Auctioned Preferred Share Underwriting Discounts				Ending Common Share Net Asset Value				Ending Market Value				Based on Market Value(d)				Based on Common Share Net Asset Value(d)				Ending Net Assets Applicable to Common Shares (000)				Expenses				Net Investment Income (Loss)				Expenses				Net Investment Income (Loss)				Portfolio Turnover Rate
Year Ended 12/31:
	2011			$	—			$	9.64			$	10.44				13.11	%			8.18	%		$	275,750				1.74	%			2.95	%			1.65	%			3.04	%			49	%
	2010				—				9.79				10.11				37.51				32.98				279,071				1.60				2.95				1.48				3.07				58
	2009				—				8.10				8.08				87.05				46.80				230,325				1.66				6.61				1.47				6.79				74
	2008				—	*			6.46				5.08				(62.13	)			(55.79	)			183,168				2.55				5.03				2.24				5.33				20
	2007				—				16.84				15.88				(38.06	)			(29.30	)			476,504				2.03				2.71				1.68				3.06				44

 

  • The Fund elected to retain a portion of its realized long-term capital gains for the following tax years ended December 31, (which is the fiscal year end for the Fund) and pay required federal corporate income taxes on these amounts. As reported on Form 2439, Common shareholders on record date must include their pro-rata share of these gains on their applicable federal tax returns, and are entitled to take offsetting tax credits, for their pro-rata share of the taxes paid by the Fund. The standardized total returns shown above do not include the economic benefit to Common shareholders on record date of these tax credits/refunds. The Fund's corresponding Total Returns Based on Market Value and Common Share Net Asset Value when these benefits are included are as follows:

								Total Returns
				Common Shareholders of Record on				Based on Market Value				Based on Common Share Net Asset Value
Year Ended 12/31:
	2011				N/A				13.11	%			8.18	%
	2010				N/A				37.51				32.98
	2009				N/A				87.05				46.80
	2008				N/A				(62.13	)			(55.79	)
	2007				December 31				(33.51	)			(24.40	)

 

(e)  • Ratios do not reflect the effect of dividend payments to Taxable Auctioned Preferred shareholders, when applicable.

  • Net Investment Income ratios reflect income earned and expenses incurred on assets attributable to Taxable Auctioned Preferred shares and/or borrowings, where applicable.

  • Each ratio includes the effect of all interest expense paid and other costs related to borrowings as follows:

				Ratios of Borrowings Interest Expense to Average Net Assets Applicable to Common Shares
Year Ended 12/31:
	2011				.42	%
	2010				.35
	2009				.41
	2008				.91
	2007				.57

 

(f)  After expense reimbursement from the Adviser, where applicable. Ratios do not reflect the effect of custodian fee credits earned on the Fund's net cash on deposit with the custodian bank, where applicable. As of November 30, 2011, the Adviser is no longer reimbursing the Fund for any fees or expenses.

*  Rounds to less than $.01 per share.

N/A  The Fund had no retained capital gains for the tax years ended December 31, 2011, December 31, 2010, December 31, 2009 and December 31, 2008.

 

See accompanying notes to financial statements.

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23

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Notes to

FINANCIAL STATEMENTS

1. General Information and Significant Accounting Policies

General Information

Nuveen Real Estate Income Fund (the "Fund") is a closed-end registered investment company registered under the Investment Company Act of 1940, as amended. The Fund's Common shares are listed on the NYSE Amex and trade under the ticker symbol "JRS." The Fund was organized as a Massachusetts business trust on August 27, 2001.

The Fund seeks to provide high current income and capital appreciation by investing at least 90% of its total assets in income producing common stocks, preferred stocks, convertible preferred stocks and debt securities issued by real estate companies; at least 80% of its total assets in income producing equity securities issued by Real Estate Investment Trusts ("REITs"); and will not invest more than 25% of its total assets in non-investment grade preferred stocks, convertible preferred stocks and debt securities.

Effective January 1, 2011, the Fund's adviser, Nuveen Asset Management, a wholly-owned subsidiary of Nuveen Investments, Inc. ("Nuveen"), changed its name to Nuveen Fund Advisors, Inc. (the "Adviser").

Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").

Investment Valuation

Common stocks and other equity-type securities are valued at the last sales price on the securities exchange on which such securities are primarily traded and are generally classified as Level 1 for fair value measurement purposes. Securities primarily traded on the NASDAQ National Market ("NASDAQ") are valued, except as indicated below, at the NASDAQ Official Closing Price and are generally classified as Level 1. However, securities traded on a securities exchange or NASDAQ for which there were no transactions on a given day or securities not listed on a securities exchange or NASDAQ are valued at the last quoted bid price.

Prices of fixed-income securities and interest rate swap contracts are provided by a pricing service approved by the Fund's Board of Trustees. These securities are generally classified as Level 2. When price quotes are not readily available, the pricing service establishes a security's fair value using methods that may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor's credit characteristics considered relevant. In pricing certain securities, particularly less liquid and lower quality securities, the pricing service may consider information about a security, its issuer, or market activity provided by the Adviser. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs.

Repurchase agreements are valued at contract amount plus accrued interest, which approximates market value. These securities are generally classified as Level 2.

Certain securities may not be able to be priced by the pre-established pricing methods as described above. Such securities may be valued by the Fund's Board of Trustees or its designee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; debt securities that have gone into default and for which there is no current market quotation; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of a Fund's net asset value (as may be the case in non-U.S. markets on which the security is primarily traded) or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, is not deemed to reflect the security's fair value. As a general principle, the fair value of a security would appear to be the amount that the owner might reasonably expect to receive for it in a current sale. A variety of factors may be considered in determining the fair value of such securities, which may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including

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24

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the obligor's credit characteristics considered relevant. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs. Regardless of the method employed to value a particular security, all valuations are subject to review by the Fund's Board of Trustees or its designee.

Refer to Footnote 2—Fair Value Measurements for further details on the leveling of securities held by the Fund as of the end of the reporting period.

Investment Transactions

Investment transactions are recorded on a trade date basis. Realized gains and losses from transactions are determined on the specific identification method, which is the same basis used for federal income tax purposes. Investments purchased on a when-issued/delayed delivery basis may have extended settlement periods. Any investments so purchased are subject to market fluctuation during this period. The Fund has instructed the custodian to segregate assets with a current value at least equal to the amount of the when-issued/delayed delivery purchase commitments. At December 31, 2011, the Fund had no such outstanding purchase commitments.

Investment Income

Dividend income is recorded on the ex-dividend date or, for foreign securities, when information is available. Interest income, which reflects the amortization of premiums and includes accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Interest income also reflects paydown gains and losses, if any.

Income Taxes

The Fund intends to distribute substantially all of its investment company taxable income to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies ("RICs"). In any year when the Fund realizes net capital gains, the Fund may choose to distribute all or a portion of its net capital gains to shareholders, or alternatively, to retain all or a portion of its net capital gains and pay federal corporate income taxes on such retained gains.

For all open tax years and all major taxing jurisdictions, management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). Furthermore, management of the Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Dividends and Distributions to Common Shareholders

Distributions to Common shareholders are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.

The Fund makes quarterly cash distributions to Common shareholders of a stated dollar amount per share. Subject to approval and oversight by the Fund's Board of Trustees, the Fund seeks to maintain a stable distribution level designed to deliver the long-term return potential of the Fund's investment strategy through regular quarterly distributions (a "Managed Distribution Program"). Total distributions during a calendar year generally will be made from the Fund's net investment income, net realized capital gains and net unrealized capital gains in the Fund's portfolio, if any. The portion of distributions paid attributed to net unrealized gains, if any, is distributed from the Fund's assets and is treated by shareholders as a non-taxable distribution ("Return of Capital") for tax purposes. In the event that total distributions during a calendar year exceed the Fund's total return on net asset value, the difference will reduce net asset value per share. If the Fund's total return on net asset value exceeds total distributions during a calendar year, the excess will be reflected as an increase in net asset value per share. The final determination of the source and character of all distributions for the fiscal year are made after the end of the fiscal year and are reflected in the financial statements contained in the annual report as of December 31 each year.

REIT distributions received by the Fund are generally comprised of ordinary income, long-term and short-term capital gains, and a return of REIT capital. The actual character of amounts received during the period are not known until after the fiscal year-end. For the fiscal year ended December 31, 2011, the character of distributions to the Fund from the REITs was 71.66% ordinary income, 16.37% long-term and short-term capital gains, and 11.97% return of REIT capital. For the fiscal year ended December 31, 2010, the character of distributions to the Fund from the REITs was 70.45% ordinary income, 18.75% long-term and short-term capital gains, and 10.80% return of REIT capital.

For the fiscal years ended December 31, 2011 and December 31, 2010, the Fund applied the actual character of distributions reported by the REITs in which the Fund invests to its receipts from the REITs. If a REIT held in the portfolio of investments did not report the actual character of its distributions during the period, the Fund treated the distributions as ordinary income.

The actual character of distributions made by the Fund during the fiscal years ended December 31, 2011 and December 31, 2010, are reflected in the accompanying financial statements.

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25

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Notes to

FINANCIAL STATEMENTS (continued)

Taxable Auctioned Preferred Shares

The Fund is authorized to issue auction rate preferred ("Taxable Auctioned Preferred") shares. As of December 31, 2009, the Fund redeemed all $222,000,000 of its outstanding Taxable Auctioned Preferred shares, at liquidation value.

During the fiscal year ended December 31, 2010, lawsuits pursuing claims made in a demand letter alleging that the Fund's Board of Trustees breached their fiduciary duties related to the redemption at par of the Fund's Taxable Auction Preferred shares had been filed on behalf of shareholders of the Fund and against the Adviser, the Nuveen holding company, the majority owner of the holding company, the lone interested trustee, and current and former officers of the Fund. Nuveen and the other defendants have filed a motion to dismiss the lawsuits and on December 16, 2011, the court granted that motion dismissing the lawsuits. The plaintiffs failed to file an appeal on the court's decision within the required time period, resulting in the final disposition of the lawsuit.

Foreign Currency Transactions

The Fund is authorized to engage in foreign currency transactions, including foreign currency forwards, futures, options and swap contracts. To the extent that the Fund invests in securities and/or contracts that are denominated in a currency other than U.S. dollars, the Fund will be subject to currency risk, which is the risk that an increase in the U.S. dollar relative to the foreign currency will reduce returns or portfolio value. Generally, when the U.S. dollar rises in value against a foreign currency, the Fund's investments denominated in that currency will lose value because its currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative value. Investments and other assets and liabilities denominated in foreign currencies are converted into U.S. dollars on a spot (i.e. cash) basis at the spot rate prevailing in the foreign currency exchange market at the time of valuation. Purchases and sales of investments and income denominated in foreign currencies are translated into U.S. dollars on the respective dates of such transactions.

The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at 4:00 p.m. Eastern time. Investments, income and expenses are translated on the respective dates of such transactions. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date of the transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received.

The realized gains and losses resulting from changes in foreign currency exchange rates and changes in foreign exchange rates associated with other assets and liabilities on investments are recognized as a component of "Net realized gain (loss) from investments and foreign currency," on the Statement of Operations, when applicable.

The unrealized gains and losses resulting from changes in foreign currency exchange rates and changes in foreign exchange rates associated with other assets and liabilities on investments are recognized as a component of "Change in net unrealized appreciation (depreciation) of investments and foreign currency," on the Statement of Operations, when applicable.

Interest Rate Swap Contracts

The Fund is subject to interest rate risk in the normal course of pursuing its investment objectives and is authorized to invest in interest rate swap transactions in an attempt to manage such risk. The Fund's use of interest rate swap contracts is intended to mitigate the negative impact that an increase in short-term interest rates could have on Common share net earnings as a result of leverage. Interest rate swap contracts involve the Fund's agreement with the counterparty to pay or receive a fixed rate payment in exchange for the counterparty receiving or paying a variable rate payment that is intended to approximate the Fund's variable rate payment obligation on Taxable Auctioned Preferred shares or any variable rate borrowing. The payment obligation is based on the notional amount of the interest rate swap contract. Interest rate swap contracts do not involve the delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to the swap counterparty on such transactions is limited to the net amount of interest payments that the Fund is to receive. Interest rate swap positions are valued daily. The Fund accrues the fixed rate payment expected to be paid or received and the variable rate payment expected to be received or paid on interest rate swap contracts on a daily basis, and recognizes the daily change in the fair value of the Fund's contractual rights and obligations under the contracts. The net amount recorded for these transactions for each counterparty is recognized on the Statement of Assets and Liabilities as a component of "Unrealized appreciation or depreciation on interest rate swaps, net" with the change during the

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26

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fiscal period recognized on the Statement of Operations as a component of "Change in net unrealized appreciation (depreciation) of interest rate swaps." Income received or paid by the Fund is recognized as a component of "Net realized gain (loss) from interest rate swaps" on the Statement of Operations, in addition to the net realized gains or losses recognized upon the termination of an interest rate swap contract and are equal to the difference between the Fund's basis in the interest rate swap and the proceeds from (or cost of) the closing transaction. Payments received or made at the beginning of the measurement period are recognized as a component of "Interest rate swap premiums paid and/or received" on the Statement of Assets and Liabilities. For tax purposes, periodic payments are treated as ordinary income or expense.

During the fiscal year ended December 31, 2011, the Fund entered into interest rate swap contracts to partially fix the interest cost of leverage, which the Fund uses through the use of bank borrowings.

The average notional amount of interest rate swaps contracts outstanding during the fiscal year ended December 31, 2011, was as follows:

Average notional amount of interest rate swap contracts outstanding*

$

49,746,000

 

*  The average notional amount is calculated based on the outstanding notional at the beginning of the fiscal year and at the end of each fiscal quarter within the current fiscal year.

Refer to Footnote 3—Derivative Instruments and Hedging Activities for further details on interest rate swap contract activity.

Market and Counterparty Credit Risk

In the normal course of business the Fund may invest in financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to the transaction to perform (counterparty credit risk). The potential loss could exceed the value of the financial assets recorded on the financial statements. Financial assets, which potentially expose the Fund to counterparty credit risk, consist principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of the Fund's exposure to counterparty credit risk in respect to these financial assets approximates its carrying value as recorded on the Statement of Assets and Liabilities. Futures contracts, when applicable, expose the Fund to minimal counterparty credit risk as they are exchange traded and the exchange's clearing-house, which is counterparty to all exchange traded futures, guarantees the futures contracts against default.

The Fund helps manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations and by having the Adviser monitor the financial stability of the counterparties. Additionally, counterparties may be required to pledge collateral daily (based on the daily valuation of the financial asset) on behalf of the Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when the Fund has an unrealized loss, the Fund has instructed the custodian to pledge assets of the Fund as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the valuations fluctuate, either up or down, by at least the pre-determined threshold amount.

Repurchase Agreements

In connection with transactions in repurchase agreements, it is the Fund's policy that its custodian take possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest, at all times. If the counterparty defaults, and the fair value of the collateral declines, realization of the collateral may be delayed or limited.

Custodian Fee Credit

The Fund has an arrangement with the custodian bank whereby certain custodian fees and expenses are reduced by net credits earned on the Fund's cash on deposit with the bank. Such deposit arrangements are an alternative to overnight investments. Credits for cash balances may be offset by charges for any days on which the Fund overdraws its account at the custodian bank.

Indemnifications

Under the Fund's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts that provide general indemnifications to other parties. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to Common shares from operations during the reporting period. Actual results may differ from those estimates.

2. Fair Value Measurements

Fair value is defined as the price that the Fund would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. A three-tier hierarchy is used

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27

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Notes to

FINANCIAL STATEMENTS (continued)

to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below:

Level 1 —  Quoted prices in active markets for identical securities.

Level 2 —  Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3 —  Significant unobservable inputs (including management's assumptions in determining the fair value of investments).

The inputs or methodologies used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the Fund's fair value measurements as of December 31, 2011:

				Level 1				Level 2				Level 3				Total
Investments:
Real Estate Investment Trust Common Stocks				$	241,644,968			$	—			$	—			$	241,644,968
Convertible Preferred Securities					10,667,589				—				—				10,667,589
Real Estate Investment Trust Preferred Stocks					112,205,817				13,393,041				—				125,598,858
Convertible Bonds					—				7,360,000				—				7,360,000
Short-Term Investments					—				1,579,918				—				1,579,918
Derivatives:
Interest Rate Swaps*					—				(1,621,817	)			—				(1,621,817	)
Total				$	364,518,374			$	20,711,142			$	—			$	385,229,516

 

*  Represents net unrealized appreciation (depreciation) as reported in the Fund's Portfolio of Investments.

During the fiscal year ended December 31, 2011, the Fund recognized no significant transfers to or from Level 1, Level 2 or Level 3.

3. Derivative Instruments and Hedging Activities

The Fund records derivative instruments at fair value, with changes in fair value recognized on the Statement of Operations, when applicable. Even though the Fund's investments in derivatives may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes. For additional information on the derivative instruments in which the Fund was invested during and at the end of the reporting period, refer to the Portfolio of Investments, Financial Statements and Footnote 1—General Information and Significant Accounting Policies.

The following table presents the fair value of all derivative instruments held by the Fund as of December 31, 2011, the location of these instruments on the Statement of Assets and Liablilities, and the primary underlying risk exposure.

Location on the Statements of Assets Liabilities

Underlying

Derivative

Asset Derivatives

Liability Derivatives

Risk Exposure

Instrument

Location

Value

Location

Value

Interest Rate

Swaps

Unrealized depreciation on interest rate swaps, net*

$

3,399

Unrealized depreciation on interest rate swaps, net*

$

1,625,216

 

*  Value represents cumulative gross unrealized appreciation (depreciation) of interest rate swap contracts as reported in the Portfolio of Investments. The Statement of Assets and Liabilities presents the net unrealized appreciation (depreciation) of all interest rate swap contracts as "Unrealized depreciation on interest rate swaps, net."

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28

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The following tables present the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized for the fiscal year ended December 31, 2011, on derivative instruments, as well as the primary risk exposure associated with each.

Net Realized Gain (Loss) from Interest Rate Swaps
Risk Exposure Interest Rate				$	(544,021	)
Change in Net Unrealized Appreciation (Depreciation) of Interest Rate Swaps
Risk Exposure Interest Rate				$	(1,621,817	)

 

4. Fund Shares

Common Shares

Since the inception of the Fund's repurchase program, the Fund has not repurchased any of its outstanding Common shares.

Transactions in Common shares were as follows:

				Year Ended 12/31/11				Year Ended 12/31/10
Common shares issued to shareholders due to reinvestment of distributions					103,593				84,768

 

5. Investment Transactions

Purchases and sales (including maturities but excluding short-term investments and derivative transactions, where applicable) during the fiscal year ended December 31, 2011, aggregated $215,400,389 and $174,201,455, respectively.

6. Income Tax Information

The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to timing differences in recognizing certain gains and losses on investment transactions. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts as detailed below. Temporary differences do not require reclassification. Temporary and permanent differences do not impact the net asset value of the Fund.

At December 31, 2011, the cost and unrealized appreciation (depreciation) of investments (excluding investments in derivatives), as determined on a federal income tax basis, were as follows:

Cost of investments				$	332,109,269
Gross unrealized:
Appreciation				$	62,321,833
Depreciation					(7,579,769	)
Net unrealized appreciation (depreciation) of investments				$	54,742,064

 

Permanent differences, primarily due to tax basis earnings and profits adjustments, resulted in reclassifications among the Fund's components of common share net assets at December 31, 2011, the Fund's tax year end, as follows:

Paid-in surplus				$	(18,074,971	)
Undistributed (Over-distribution of) net investment income					17,531,251
Accumulated net realized gain (loss)					543,720

 

The tax components of undistributed net ordinary income and net long-term capital gains at December 31, 2011, the Fund's tax year end, were as follows:

Undistributed net ordinary income				$	—
Undistributed net long-term capital gains					—

 

The tax character of distributions paid during the Fund's tax years ended December 31, 2011 and December 31, 2010, was designated for purposes of the dividends paid deduction as follows:

2011
Distributions from net ordinary income *				$	26,002,387
Distributions from net long-term capital gains					—

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29

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Notes to

FINANCIAL STATEMENTS (continued)

2010
Distributions from net ordinary income *				$	25,053,892
Distributions from net long-term capital gains					—

 

*  Net ordinary income consists of net taxable income derived from dividends and interest, and current year earnings and profits attributable to realized gains.

At December 31, 2011, the Fund's tax year end, the Fund had unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as follows:

Expiration: December 31, 2016

$

182,350,623

 

During the Fund's tax year ended December 31, 2011, the Fund utilized $21,754,169 of its capital loss carryforwards.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the "Act") was enacted, which changed various technical rules governing the tax treatment of RICs. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the Act, the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

The Act also contains several provisions aimed at preserving the character of distributions made by fiscal year RICs during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which RICs might be required to file amended Forms 1099 to restate previously reported distributions.

During the Fund's tax year ended December 31, 2011, there were no post-enactment capital losses generated.

The Fund has elected to defer losses incurred from November 1, 2011 through December 31, 2011, the Fund's tax year end, in accordance with federal income tax rules. These losses are treated as having arisen on the first day of the following fiscal year. The Fund has elected to defer losses as follows:

Post-October capital losses				$	251,283
Late-year ordinary losses					—

 

7. Management Fees and Other Transactions with Affiliates

The Fund's management fee consists of two components—a fund-level fee, based only on the amount of assets within the Fund, and a complex-level fee, based on the aggregate amount of all eligible fund assets managed by the Adviser. This pricing structure enables Fund shareholders to benefit from growth in the assets within the Fund as well as from growth in the amount of complex-wide assets managed by the Adviser.

The annual fund-level fee, payable monthly, is calculated according to the following schedule:

Average Daily Managed Assets*				Fund-Level Fee Rate
For the first $500 million					.7000	%
For the next $500 million					.6750
For the next $500 million					.6500
For the next $500 million					.6250
For managed assets over $2 billion					.6000

 

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30

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The annual complex-level fee, payable monthly, is calculated according to the following schedule:

Complex-Level Managed Asset Breakpoint Level*				Effective Rate at Breakpoint Level
$55 billion					.2000	%
$56 billion					.1996
$57 billion					.1989
$60 billion					.1961
$63 billion					.1931
$66 billion					.1900
$71 billion					.1851
$76 billion					.1806
$80 billion					.1773
$91 billion					.1691
$125 billion					.1599
$200 billion					.1505
$250 billion					.1469
$300 billion					.1445

 

*  For the fund-level and complex-level fees, managed assets include closed-end fund assets managed by the Adviser that are attributable to financial leverage. For these purposes, financial leverage includes the funds' use of preferred stock and borrowings and certain investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by a TOB trust that has been effectively financed by the trust's issuance of floating rate securities, subject to an agreement by the Adviser as to certain funds to limit the amount of such assets for determining managed assets in certain circumstances. The complex-level fee is calculated based upon the aggregate daily managed assets of all Nuveen Funds that constitute "eligible assets." Eligible assets do not include assets attributable to investments in other Nuveen Funds and assets in excess of $2 billion added to the Nuveen Fund complex in connection with the Adviser's assumption of the management of the former First American Funds effective January 1, 2011. As of December 31, 2011, the complex-level fee rate for the Fund was .1767%.

The management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Adviser has entered into a sub-advisory agreement with Security Capital Research & Management Incorporated ("Security Capital"), under which Security Capital manages the investment portfolio of the Fund. Security Capital is compensated for its services to the Fund from the management fees paid to the Adviser. The Adviser is responsible for overseeing the Fund's investments in interest rate swap contracts.

The Fund pays no compensation directly to those of its trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Fund from the Adviser or its affiliates. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen-advised funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen-advised funds.

For the first ten years of the Fund's operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily managed assets, for fees and expenses in the amounts and for the time periods set forth below:

Year Ending November 30,								Year Ending November 30,
	2001	*			.30	%			2007				.25	%
	2002				.30				2008				.20
	2003				.30				2009				.15
	2004				.30				2010				.10
	2005				.30				2011				.05
	2006				.30

 

*  From the commencement of operations.

The Adviser has not agreed to reimburse the Fund for any portion of its fees and expenses beyond November 30, 2011.

During the fiscal year ended December 31, 2011, the Fund was reimbursed $70,053 by Nuveen to offset a portion of expenses incurred as a result of the Fund's anticipated Common share shelf offering filing with the Securities and Exchange Commission which ultimately did not occur.

8. Borrowing Arrangements

The Fund has entered into an $111 million (maximum commitment amount), prime brokerage facility with BNP Paribas Prime Brokerage, Inc. ("BNP") as a means of financial leverage. On January 19, 2011, the Fund amended its prime brokerage facility with BNP and increased its maximum commitment amount from $75 million to $85 million and on November 9, 2011, increased its maximum commitment amount from $85 million to $111 million. As of December 31, 2011, the outstanding balance on these

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31

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Notes to

FINANCIAL STATEMENTS (continued)

borrowings was $111 million. During the fiscal year ended December 31, 2011, the average daily balance outstanding and interest rate on these borrowings were $83.9 million and 1.29%, respectively.

In order to maintain this borrowing facility, the Fund must meet certain collateral, asset coverage and other requirements. Borrowings outstanding are fully secured by securities held in the Fund's portfolio of investments. Interest is charged on these borrowings at 3-Month LIBOR (London Inter-bank Offered Rate) plus .95% on the amount borrowed and .50% on the undrawn balance. The Fund also incurred a one-time .25% amendment fee on each increase to the maximum commitment amount, which was fully expensed during the current reporting period.

Effective January 9, 2012, interest charged on the amount borrowed changed from 3-Month LIBOR plus .95% to 3-Month LIBOR plus .85%. All other terms remain unchanged.

Borrowings outstanding are recognized as "Borrowings" on the Statement of Assets and Liabilities. Interest expense incurred on the borrowed amount and undrawn balance and the one-time amendment fee are recognized as a component of "Interest expense on borrowings" on the Statement of Operations.

9. New Accounting Pronouncements

Financial Accounting Standards Board ("FASB") Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements.

On April 15, 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011-03, ("ASU No. 2011-03"). The guidance in ASU No. 2011-03 is intended to improve the accounting for repurchase agreements and other similar agreements. Specifically, ASU No. 2011-03 modifies the criteria for determining when these transactions would be accounted for as financings (secured borrowings/lending agreements) as opposed to sale (purchase) with commitments to repurchase (resell). The effective date of ASU No. 2011-03 is for the interim and annual periods beginning on or after December 15, 2011. At this time, management is evaluating the implications of this guidance and the impact it will have to the financial statement amounts and footnote disclosures, if any.

Fair Value Measurements and Disclosures

On May 12, 2011, the FASB issued ASU No. 2011-04 modifying Topic 820, Fair Value Measurements and Disclosures. At the same time, the International Accounting Standards Board ("IASB") issued International Financial Reporting Standard ("IFRS") 13, Fair Value Measurement. The objective of the FASB and IASB is convergence of their guidance on fair value measurements and disclosures. Specifically, ASU No. 2011-04 requires reporting entities to disclose i) the amounts of any transfers between Level 1 and Level 2 and the reasons for the transfers and ii) for Level 3 fair value measurements, a) quantitative information about significant unobservable inputs used, b) a description of the valuation processes used by the reporting entity and c) a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs if a change in those inputs might result in a significantly higher or lower fair value measurement. The effective date of ASU No. 2011-04 is for interim and annual periods beginning after December 15, 2011. At this time, management is evaluating the implications of this guidance and the impact it will have to the financial statement amounts and footnote disclosures, if any.

Nuveen Investments
32

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Board Members & Officers (Unaudited)

The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board Members of the Funds. The number of board members of the Fund is currently set at ten. None of the board members who are not "interested" persons of the Funds (referred to herein as "independent board members") has ever been a director or employee of, or consultant to, Nuveen or its affiliates. The names and business addresses of the board members and officers of the Funds, their principal occupations and other affiliations during the past five years, the number of portfolios each oversees and other directorships they hold are set forth below.

Name, Birthdate and Address

Position(s) Held with the Funds

Year First Elected or Appointed and Term(1)

Principal Occupation(s) Including other Directorships During Past 5 Years

Number of Portfolios in Fund Complex Overseen by Board Member

Independent Board Members:

g ROBERT P. BREMNER(2)

8/22/40 333 W. Wacker Drive Chicago, IL 60606

Chairman of the Board and Board Member

1996 Class III

Private Investor and Management Consultant; Treasurer and Director, Humanities Council of Washington, D.C.; Board Member, Independent Directors Council (affiliated with the Investment Company Institute.)

238

g JACK B. EVANS

10/22/48 333 W. Wacker Drive Chicago, IL 60606

Board Member

1999 Class III

President, The Hall-Perrine Foundation, a private philanthropic corporation (since 1996); Director and Chairman, United Fire Group, a publicly held company; member of the Board of Regents for the State of Iowa University System; Director, Source Media Group; Life Trustee of Coe College and the Iowa College Foundation; formerly, Director, Alliant Energy; formerly, Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm.

238

g WILLIAM C. HUNTER

3/6/48 333 W. Wacker Drive Chicago, IL 60606

Board Member

2004 Class I

Dean, Tippie College of Business, University of Iowa (since 2006); Director (since 2004) of Xerox Corporation; Director (since 2005), Beta Gamma Sigma International Honor Society; Director of Wellmark, Inc. (since 2009); formerly, Dean and Distinguished Professor of Finance, School of Business at the University of Connecticut (2003-2006); previously, Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago (1995-2003); formerly, Director (1997-2007), Credit Research Center at Georgetown University.

238

Nuveen Investments
33

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Board Members & Officers (Unaudited) (continued)

Name, Birthdate and Address

Position(s) Held with the Funds

Year First Elected or Appointed and Term(1)

Principal Occupation(s) Including other Directorships During Past 5 Years

Number of Portfolios in Fund Complex Overseen by Board Member

Independent Board Members (continued):

g DAVID J. KUNDERT(2)

10/28/42 333 W. Wacker Drive Chicago, IL 60606

Board Member

2005 Class II

Director, Northwestern Mutual Wealth Management Company; retired (since 2004) as Chairman, JPMorgan Fleming Asset Management, President and CEO, Banc One Investment Advisors Corporation, and President, One Group Mutual Funds; prior thereto, Executive Vice President, Banc One Corporation and Chairman and CEO, Banc One Investment Management Group; Member, Board of Regents, Luther College; member of the Wisconsin Bar Association; member of Board of Directors, Friends of Boerner Botanical Gardens; member of Board of Directors and Chair of Investment Committee, Greater Milwaukee Foundation.

238

g WILLIAM J. SCHNEIDER(2)

9/24/44 333 W. Wacker Drive Chicago, IL 60606

Board Member

1997 Class III

Chairman of Miller-Valentine Partners Ltd., a real estate investment company; formerly, Senior Partner and Chief Operating Officer (retired 2004) of Miller- Valentine Group; member, University of Dayton Business School Advisory Council; member, Mid-America Health System Board; formerly, member and chair, Dayton Philharmonic Orchestra Association; formerly, member, Business Advisory Council, Cleveland Federal Reserve Bank.

238

g JUDITH M. STOCKDALE

12/29/47 333 W. Wacker Drive Chicago, IL 60606

Board Member

1997 Class I

Executive Director, Gaylord and Dorothy Donnelley Foundation (since 1994); prior thereto, Executive Director, Great Lakes Protection Fund (1990-1994).

238

g CAROLE E. STONE(2)

6/28/47 333 W. Wacker Drive Chicago, IL 60606

Board Member

2007 Class I

Director, Chicago Board Options Exchange (since 2006); Director, C2 Options Exchange, Incorporated (since 2009); formerly, Commissioner, New York State Commission on Public Authority Reform (2005-2010); formerly, Chair, New York Racing Association Oversight Board (2005-2007).

238

g VIRGINIA L. STRINGER

8/16/44 333 W. Wacker Drive Chicago, IL 60606

Board Member

2011

Board Member, Mutual Fund Directors Forum; Member, Governing Board, Investment Company Institute's Independent Directors Council; governance consultant and non-profit board member; former Owner and President, Strategic Management Resources, Inc. a management consulting firm; previously, held several executive positions in general management, marketing and human resources at IBM and The Pillsbury Company; Independent Director, First American Fund Complex (1987-2010) and Chair (1997-2010).

238

 

Nuveen Investments
34

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Name, Birthdate and Address

Position(s) Held with the Funds

Year First Elected or Appointed and Term(1)

Principal Occupation(s) Including other Directorships During Past 5 Years

Number of Portfolios in Fund Complex Overseen by Board Member

Independent Board Members (continued):

g TERENCE J. TOTH(2)

9/29/59 333 W. Wacker Drive Chicago, IL 60606

Board Member

2008 Class II

Director, Legal & General Investment Management America, Inc. (since 2008); Managing Partner, Promus Capital (since 2008); formerly, CEO and President, Northern Trust Global Investments (2004-2007); Executive Vice President, Quantitative Management & Securities Lending (2000-2004); prior thereto, various positions with Northern Trust Company (since 1994); member: Goodman Theatre Board (since 2004), Chicago Fellowship Board (since 2005) and Catalyst Schools of Chicago Board (since 2008); formerly, member: Northern Trust Mutual Funds Board (2005-2007), Northern Trust Global Investments Board (2004-2007), Northern Trust Japan Board (2004-2007), Northern Trust Securities Inc. Board (2003-2007) and Northern Trust Hong Kong Board (1997-2004).

238

Interested Board Member:

g JOHN P. AMBOIAN(3)

6/14/61 333 W. Wacker Drive Chicago, IL 60606

Board Member

2008 Class II

Chief Executive Officer and Chairman (since 2007) and Director (since 1999) of Nuveen Investments, Inc., formerly, President (1999-2007); Chief Executive Officer (since 2007) of Nuveen Investments Advisers, Inc.; Director (since 1998) formerly, Chief Executive Officer (2007-2010) of Nuveen Fund Advisors, Inc.

238

Name, Birthdate and Address

Position(s) Held with the Funds

Year First Elected or Appointed(4)

Principal Occupation(s) During Past 5 Years

Number of Portfolios in Fund Complex Overseen by Officer

Officers of the Funds:

g GIFFORD R. ZIMMERMAN

9/9/56 333 W. Wacker Drive Chicago, IL 60606

Chief Administrative Officer

1988

Managing Director (since 2002), Assistant Secretary and Associate General Counsel of Nuveen Securities, LLC; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Managing Director (since 2002), Assistant Secretary (since 1997) and Co-General Counsel (since 2011) of Nuveen Fund Advisors, Inc.; Managing Director, Assistant Secretary and Associate General Counsel of Nuveen Asset Management, LLC (since 2011); Managing Director, Associate General Counsel and Assistant Secretary, of Symphony Asset Management LLC (since 2003); Vice President and Assistant Secretary of NWQ Investment Management Company, LLC (since 2002), Nuveen Investments Advisers Inc. (since 2002), Tradewinds Global Investors LLC, and Santa Barbara Asset Management, LLC (since 2006), Nuveen HydePark Group LLC and Nuveen Investment Solutions, Inc. (since 2007) and of Winslow Capital Management Inc. (since 2010); Chief Administrative Officer and Chief Compliance Officer (since 2006) of Nuveen Commodities Asset Management, LLC; Chartered Financial Analyst.

238

 

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Board Members & Officers (Unaudited) (continued)

Name, Birthdate and Address

Position(s) Held with the Funds

Year First Elected or Appointed(4)

Principal Occupation(s) During Past 5 Years

Number of Portfolios in Fund Complex Overseen by Officer

Officers of the Funds (continued):

g WILLIAM ADAMS IV

6/9/55 333 W. Wacker Drive Chicago, IL 60606

Vice President

2007

Senior Executive Vice President, Global Structured Products (since 2010), formerly, Executive Vice President (1999-2010) of Nuveen Securities, LLC; Co-President of Nuveen Fund Advisors, Inc. (since 2011); President (since August 2011), formerly, Managing Director (2010-2011) of Nuveen Commodities Asset Management, LLC.

133

g CEDRIC H. ANTOSIEWICZ

1/11/62 333 W. Wacker Drive Chicago, IL 60606

Vice President

2007

Managing Director of Nuveen Securities, LLC.

133

g MARGO L. COOK

4/11/64 333 W. Wacker Drive Chicago, IL 60606

Vice President

2009

Executive Vice President (since 2008) of Nuveen Investments, Inc. and of Nuveen Fund Advisors, Inc. (since 2011); Managing Director-Investment Services of Nuveen Commodities Asset Management, LLC (since August 2011), previously, Head of Institutional Asset Management (2007-2008) of Bear Stearns Asset Management; Head of Institutional Asset Management (1986-2007) of Bank of NY Mellon; Chartered Financial Analyst.

238

g LORNA C. FERGUSON

10/24/45 333 W. Wacker Drive Chicago, IL 60606

Vice President

1998

Managing Director (since 2005) of Nuveen Fund Advisors, Inc. and Nuveen Securities, LLC (since 2004).

238

g STEPHEN D. FOY

5/31/54 333 W. Wacker Drive Chicago, IL 60606

Vice President and Controller

1998

Senior Vice President (since 2010), formerly, Vice President (2005-2010) and Funds Controller of Nuveen Securities, LLC; Vice President of Nuveen Fund Advisors, Inc.; Chief Financial Officer of Nuveen Commodities Asset Management, LLC; (since 2010) Certified Public Accountant.

238

g SCOTT S. GRACE

8/20/70 333 W. Wacker Drive Chicago, IL 60606

Vice President and Treasurer

2009

Managing Director, Corporate Finance & Development, Treasurer (since 2009) of Nuveen Securities, LLC; Managing Director and Treasurer (since 2009) of Nuveen Fund Advisors, Inc., Nuveen Investment Solutions, Inc., Nuveen Investments Advisers, Inc., Nuveen Investments Holdings Inc. and (since 2011) Nuveen Asset Management, LLC; Vice President and Treasurer of NWQ Investment Management Company, LLC, Tradewinds Global Investors, LLC, Symphony Asset Management LLC and Winslow Capital Management, Inc.; Vice President of Santa Barbara Asset Management, LLC; formerly, Treasurer (2006-2009), Senior Vice President (2008-2009), previously, Vice President (2006-2008) of Janus Capital Group, Inc.; formerly, Senior Associate in Morgan Stanley's Global Financial Services Group (2000-2003); Chartered Accountant Designation.

238

 

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Name, Birthdate and Address

Position(s) Held with the Funds

Year First Elected or Appointed(4)

Principal Occupation(s) During Past 5 Years

Number of Portfolios in Fund Complex Overseen by Officer

Officers of the Funds (continued):

g WALTER M. KELLY

2/24/70 333 W. Wacker Drive Chicago, IL 60606

Chief Compliance Officer and Vice President

2003

Senior Vice President (since 2008) and Assistant Secretary (since 2003) of Nuveen Fund Advisors, Inc.

238

g TINA M. LAZAR

8/27/61 333 W. Wacker Drive Chicago, IL 60606

Vice President

2002

Senior Vice President (since 2010), formerly, Vice President (2005-2010) of Nuveen Fund Advisors, Inc.

238

g KEVIN J. MCCARTHY

3/26/66 333 W. Wacker Drive Chicago, IL 60606

Vice President and Secretary

2007

Managing Director (since 2008), formerly, Vice President (2007-2008), Nuveen Securities, LLC; Managing Director (since 2008), Assistant Secretary (since 2007) and Co-General Counsel (since 2011) of Nuveen Fund Advisors, Inc.; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Managing Director (since 2008), and Assistant Secretary, Nuveen Investment Holdings, Inc.; Vice President (since 2007) and Assistant Secretary of Nuveen Investments Advisers Inc., NWQ Investment Management Company, LLC, Tradewinds Global Investors LLC, NWQ Holdings, LLC, Symphony Asset Management LLC, Santa Barbara Asset Management, LLC, Nuveen HydePark Group, LLC, Nuveen Investment Solutions, Inc. (since 2007) and of Winslow Capital Management, Inc. (since 2010); Vice President and Secretary (since 2010) of Nuveen Commodities Asset Management, LLC; prior thereto, Partner, Bell, Boyd & Lloyd LLP (1997-2007).

238

g KATHLEEN L. PRUDHOMME

3/30/53 901 Marquette Avenue Minneapolis, MN 55402

Vice President and Assistant Secretary

2011

Managing Director, Assistant Secretary and Co-General Counsel (since 2011) of Nuveen Fund Advisors, Inc.; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Managing Director and Assistant Secretary (since 2011) of Nuveen Securities, LLC; formerly, Deputy General Counsel, FAF Advisors, Inc. (2004-2010).

238

 

(1)  The Board Members serve three year terms. The Board of Trustees is divided into three classes. Class I, Class II, and Class III, with each being elected to serve until the third succeeding annual shareholders' meeting subsequent to its election or thereafter in each case when its respective successors are duly elected or appointed. The first year elected or appointed represents the year in which the board member was first elected or appointed to any fund in the Nuveen Complex.

(2)  Also serves as a trustee of the Nuveen Diversified Commodity Fund, an exchange-traded commodity pool managed by Nuveen Commodities Asset Management, LLC, an affiliate of the Adviser.

(3)  Mr. Amboian is an interested Trustee because of his position with Nuveen Investments, Inc. and certain of its subsidiaries, which are affiliates of the Nuveen Funds.

(4)  Officers serve one year terms through August of each year. The year first elected or appointed represents the year in which the Officer was first elected or appointed to any fund in the Nuveen Complex.

 

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Reinvest Automatically
Easily and Conveniently

Nuveen makes reinvesting easy. A phone call is all it takes to set up your reinvestment account.

Nuveen Closed-End Funds Automatic Reinvestment Plan

Your Nuveen Closed-End Fund allows you to conveniently reinvest distributions in additional Fund shares.

By choosing to reinvest, you'll be able to invest money regularly and automatically, and watch your investment grow through the power of compounding. Just like distributions in cash, there may be times when income or capital gains taxes may be payable on distributions that are reinvested.

It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market.

Easy and convenient

To make recordkeeping easy and convenient, each quarter you'll receive a statement showing your total distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own.

How shares are purchased

The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the greater of the net asset value or 95% of the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. If the Plan Agent begins purchasing Fund shares on the open market while shares are trading below net asset value, but the Fund's shares subsequently trade at or above their net asset value before the Plan Agent is able to complete its purchases, the Plan Agent may cease open-market purchases and may invest the uninvested portion of the distribution in newly-issued Fund shares at a price equal to the greater of the shares' net asset value or 95% of the shares' market value on the last business day immediately prior to the purchase date. Distributions received to purchase shares in the open market will normally be invested shortly after the distribution payment date. No interest will be paid on distributions awaiting reinvestment. Because the market price of the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid

Nuveen Investments
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by Plan participants. These commissions usually will be lower than those charged on individual transactions.

Flexible

You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change.

You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your financial advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan.

The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time.

Call today to start reinvesting distributions

For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787.

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Glossary of Terms
Used in this Report

•  Average Annual Total Return: This is a commonly used method to express an investment's performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment's actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered.

•  Current Distribution Rate: Current distribution rate is based on the Fund's current annualized quarterly distribution divided by the Fund's current market price. The Fund's quarterly distributions to its shareholders may be comprised of ordinary income, net realized capital gains and, if at the end of the calendar year the Fund's cumulative net ordinary income and net realized gains are less than the amount of the Fund's distributions, a tax return of capital.

•  Effective Leverage: Effective leverage is a Fund's effective economic leverage, and includes both regulatory leverage and the leverage effects of certain derivative investments in the Fund's portfolio.

•  Leverage: Using borrowed money to invest in securities or other assets.

•  Net Asset Value (NAV): The net market value of all securities held in a portfolio.

•  Net Asset Value (NAV) Per Share: The market value of one share of a mutual fund or closed-end fund. For a Fund, the NAV is calculated daily by taking the Fund's total assets (securities, cash, and accrued earnings), subtracting the Fund's liabilities, and dividing by the number of shares outstanding.

•  Regulatory Leverage: Regulatory Leverage consists of preferred shares or debt issued by the Fund. Both of these are part of the Fund's capital structure. Regulatory leverage is sometimes referred to as "'40 Act Leverage" and is subject to asset coverage limits set in the Investment Company Act of 1940.

•  S&P 500 Index: An unmanaged index generally considered representative of the U.S. stock market. Index returns assume reinvestment of distributions, but do not include the effects of any applicable sales charges or management fees. It is not possible to invest directly in an index.

•  Specialized Real Estate Securities Benchmark: A measure based on the return of the preferred stock and highest 50% yielding (based on market capitalization) common stock securities in the SNL Financial LC real estate database through 6/30/2007. Beginning in July 2007, the benchmark is based on preferred and all common stocks in the database. Returns are computed from this database by a third party provider.

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Returns do not include the effects of any sales charges or management fees. It is not possible to invest directly in this benchmark.

•  Wilshire U.S. Real Estate Securities Index: An unmanaged index comprised of common shares of publicly-traded Real Estate Investment Trusts (REITS) and other real estate operating companies. Index returns assume reinvestment of distributions, but do not include the effects of any applicable sales charges or management fees. It is not possible to invest directly in an index.

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Notes

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Additional Fund Information

Board of Trustees

John P. Amboian
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Judith M. Stockdale
Carole E. Stone
Virginia L. Stringer
Terence J. Toth

Fund Manager

Nuveen Fund Advisors, Inc.
333 West Wacker Drive
Chicago, IL 60606

Custodian

State Street Bank & Trust Company
Boston, MA

Transfer Agent and
Shareholder Services

State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787

Legal Counsel

Chapman and Cutler LLP
Chicago, IL

Independent Registered
Public Accounting Firm

Ernst & Young LLP
Chicago, IL

Quarterly Portfolio of Investments and Proxy Voting Information

You may obtain (i) the Fund's quarterly portfolio of investments, (ii) information regarding how the Fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30, and (iii) a description of the policies and procedures that the Fund used to determine how to vote proxies relating to portfolio securities without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at www.nuveen.com.

You may also obtain this and other Fund information directly from the Securities and Exchange Commission (SEC). The SEC may charge a copying fee for this information. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington, D.C. Call the SEC at (202) 942-8090 for room hours and operation. You may also request Fund information by sending an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public Reference Section at 100 F Street NE, Washington, D.C. 20549.

CEO Certification Disclosure

The Fund has filed with the SEC the certification of its Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act.

Distribution Information

The Fund hereby designates its percentages of dividends paid from net ordinary income as dividends qualifying for the 70% dividends received deduction (DRD) for corporations and its percentages as qualified dividend income (QDI) for individuals under Section 1(h)(11) of the Internal Revenue Code as shown in the accompanying table. The actual qualified dividend income distributions will be reported to shareholders on Form 1099-DIV which will be sent to shareholders shortly after calendar year end.

				% of DRD				% of QDI
JRS					0.00	%			0.00	%

 

Common Share Information

The Fund intends to repurchase shares of its own common stock in the future at such times and in such amounts as is deemed advisable. During the period covered by this report, the Fund repurchased shares of its common stock as shown in the accompanying table.

				Common Shares Repurchased
JRS					—

 

Any future repurchases will be reported to shareholders in the next annual or semi-annual report.

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Nuveen Investments:
Serving Investors for Generations

Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions through continued adherence to proven, long-term investing principles. Today, we offer a range of high quality equity and fixed-income solutions designed to be integral components of a well-diversified core portfolio.

Focused on meeting investor needs.

Nuveen Investments provides high-quality investment services designed to help secure the long-term goals of institutional and individual investors as well as the consultants and financial advisors who serve them. Nuveen Investments markets a wide range of specialized investment solutions which provide investors access to capabilities of its high-quality boutique investment affiliates—Nuveen Asset Management, Symphony Asset Management, NWQ Investment Management Company, Santa Barbara Asset Management, Tradewinds Global Investors, Winslow Capital Management and Gresham Investment Management. In total, Nuveen Investments managed $220 billion as of December 31, 2011.

Find out how we can help you.

To learn more about how the products and services of Nuveen Investments may be able to help you meet your financial goals, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Investors should consider the investment objective and policies, risk considerations, charges and expenses of any investment carefully. Where applicable, be sure to obtain a prospectus, which contains this and other relevant information. To obtain a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money.

Learn more about Nuveen Funds at: www.nuveen.com/cef

Distributed by
Nuveen Securities, LLC
333 West Wacker Drive
Chicago, IL 60606
www.nuveen.com/cef

_EAN-A-1211D

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