UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-10491
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Nuveen Real Estate Income Fund
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(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Jessica R. Droeger
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: December 31
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Date of reporting period: September 30, 2005
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
QUARTERLY REPORT September 30, 2005
Nuveen Investments
Exchange-Traded
Closed-End Funds
NUVEEN
REAL ESTATE
INCOME FUND
JRS
HIGH CURRENT INCOME FROM A PORTFOLIO OF COMMERCIAL REAL ESTATE INVESTMENTS
Chairman's Letter
Dear Shareholder
I am very pleased to report that for the nine-month period ended September 30,
2005, your Fund continued to provide you with attractive monthly distributions
and diversified exposure to the real estate investment marketplace.
Portfolio diversification is a recognized way to try to reduce some of the risk
that comes with investing. Since one part of your portfolio may be going up when
another is going down, portfolio diversification may help smooth your investment
returns over time. In addition to providing regular monthly income, a real
estate oriented investment like your Fund may help you achieve and benefit from
greater portfolio diversification. Your financial advisor can explain these
potential advantages in more detail. I urge you to contact him or her soon for
more information on this important investment strategy.
For more than 100 years, Nuveen has specialized in offering quality investments
such as your Fund to those seeking to accumulate and preserve wealth. Our
mission continues to be to assist you and your financial advisor by offering the
investment solutions and services that can help you secure your long-term
financial goals. We thank you for choosing us as a partner as you work toward
that objective.
Sincerely,
Timothy R. Schwertfeger
Chairman of the Board
November 15, 2005
Nuveen Real Estate Income Fund
(JRS)
Portfolio Managers' Comments
The Nuveen Real Estate Income Fund (JRS) is managed by a team of real estate
investment professionals at Security Capital Research & Management Incorporated,
a wholly-owned subsidiary of J. P. Morgan Chase & Co. Anthony R. Manno Jr. and
Kenneth D. Statz, who each have more than 22 years' experience in managing real
estate investments, lead the team. Here they review their management strategy
and the performance of the Fund for the nine-month period ended September 30,
2005.
WHAT WAS YOUR OVERALL MANAGEMENT STRATEGY AND WHAT WERE SOME OF THE PRIMARY
TACTICS YOU EMPLOYED DURING THIS NINE-MONTH REPORTING PERIOD?
During the nine-month period ended September 30, 2005, we continued to focus on
finding securities that we believed were best positioned to generate sustainable
income and potential price appreciation over the long-run. In particular, we
sought to maintain significant diversification while taking into account company
credit quality, sector and geographic exposure, and security-type allocations.
Every investment decision was based on a multi-layered analysis of the company,
the real estate it owned, its management and the relative price of the security.
The ability to shift allocations between preferred and common stocks based on
the relative attractiveness of these two distinct markets continued to be an
important tool in managing JRS for income and long-term capital appreciation. As
we have since 2004, we maintained the portfolio's tilt toward common stocks in
the first nine months of 2005, and continued to emphasize companies and property
types with a cyclical orientation associated with shorter lease terms. Further,
we favored what we thought were the strongest markets and locations where we saw
value enhancement potential and a real inflation hedge over the long-term.
HOW DID THE FUND PERFORM?
Fund performance results, as well as the performance of comparative benchmarks,
are shown in the accompanying table.
Total returns on net asset value*
For periods ended September 30, 2005
9-months 1-year
--------------------------------------------------------------------------------
JRS 6.74% 22.10%
--------------------------------------------------------------------------------
Comparative benchmark(1) 7.51% 17.93%
--------------------------------------------------------------------------------
Dow Jones Wilshire
Real Estate Securities
Index(2) 10.80% 29.04%
--------------------------------------------------------------------------------
* Nine-month returns are cumulative; one-year returns are annualized.
Past performance does not guarantee future results. Current performance may be
higher or lower than the data shown. Returns do not reflect the deduction of
taxes that a shareholder may have to pay on Fund distributions or upon the sale
of Fund shares.
For the nine months ended September 30, 2005, the Fund provided an attractive
cumulative total return on net asset value, although its performance trailed a
comparative benchmark and the Dow Jones Wilshire Real Estate Securities Index.
(1) The comparative benchmark return is calculated using the preferred stock
and highest 50% yielding (based on market capitalization) common stock
securities in the SNL Financial L C real estate database.
(2) The Dow Jones Wilshire Real Estate Securities Index is an unmanaged index
comprised of common shares of publicly-traded REITs and other real estate
operating companies.
Since 2003, we have been gradually and selectively shifting the portfolio's
property type weightings from a largely defensive posture to one that we believe
is better positioned to perform well in a growing economy. At the same time,
we've remained highly focused on the current income objectives of the Fund. Over
this nine-month reporting period, we pursued this strategy by increasing the
portfolio's allocation, relative to its comparative benchmark, toward more
cyclically sensitive multifamily apartment companies and mall companies. In
addition, the portfolio maintained a higher allocation to office companies than
its comparison benchmark. Both multifamily and office companies outperformed the
broader real estate securities universe during this reporting period.
On the other hand, our strategy to shift from defensive positions in light of
improving economic conditions led to a lower allocation, relative to the
comparative benchmark, to the more defensive shopping center sector. In the
first nine months of 2005 this tactic hurt the Fund's performance relative to
both the comparative benchmark and the Wilshire index.
It is important to note that investing in preferred stock remains an important
component of the income and appreciation strategy of JRS. While preferred
securities are included in the comparative benchmark, they are not included in
broader real estate securities indices, like the Wilshire index. Though we have
reduced JRS's allocation to preferred stocks relative to the comparative
benchmark, they remained a significant allocation in the Fund's portfolio over
this nine-month reporting period. While we believe it helped the Fund's overall
risk profile, it did create a drag on performance when compared to an
all-common-stock index like the Wilshire index.
DISTRIBUTION AND SHARE PRICE INFORMATION
In addition to owning preferred stocks, the Fund has issued its own preferred
shares, called Taxable Auctioned Preferred(TM). This provides a degree of
financial leverage that can increase share price volatility, but also can
enhance Fund returns and supplement the income available to pay common
shareholder distributions. This leveraging strategy provided incremental income
and helped enhance shareholder distributions over the nine-month period.
The Fund has a managed distribution policy designed to provide relatively stable
monthly cash flow to investors. Under this policy, the Fund's monthly
distributions will be paid from net investment income generated by its
underlying securities as well as from net realized capital gains and/or returns
of capital, generally representing unrealized capital gains. Over this
nine-month reporting period, the Fund has maintained a stable monthly
distribution of $0.1350 per share - however, the Fund declared a monthly
distribution increase to $0.1450 per share in September 2005.
As of September 30, 2005, the Fund was trading at a -10.23% discount to its net
asset value. This was greater than the average -9.19% discount the Fund
exhibited over the course of the entire nine-month reporting period.
Nuveen Real Estate Income Fund
JRS
Performance
OVERVIEW As of September 30, 2005
PORTFOLIO ALLOCATION
(as a % of total investments)
Common Stocks 69.7%
Preferred Stocks 29.2%
Repurchase Agreements 1.1%
Bar Chart:
2004-2005 MONTHLY DISTRIBUTIONS PER SHARE
Oct .1350
Nov .1350
Dec .1350
Jan .1350
Feb .1350
Mar .1350
Apr .1350
May .1350
Jun .1350
Jul .1350
Aug .1350
Sep .1450
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
10/1/2004 19.24
10/4/2004 19.37
10/5/2004 19.27
10/6/2004 19.38
10/7/2004 19.38
10/8/2004 19.42
10/11/2004 19.59
10/12/2004 19.63
10/13/2004 19.45
10/14/2004 19.53
10/15/2004 19.68
10/18/2004 19.82
10/19/2004 19.89
10/20/2004 19.75
10/21/2004 19.92
10/22/2004 20.00
10/25/2004 19.91
10/26/2004 20.00
10/27/2004 19.99
10/28/2004 20.05
10/29/2004 20.02
11/1/2004 20.25
11/2/2004 20.24
11/3/2004 20.45
11/4/2004 20.61
11/5/2004 19.40
11/8/2004 18.96
11/9/2004 19.18
11/10/2004 19.40
11/11/2004 19.68
11/12/2004 19.89
11/15/2004 19.91
11/16/2004 19.90
11/17/2004 19.71
11/18/2004 19.65
11/19/2004 19.68
11/22/2004 19.74
11/23/2004 19.99
11/24/2004 20.14
11/26/2004 20.18
11/29/2004 20.20
11/30/2004 20.24
12/1/2004 20.49
12/2/2004 20.62
12/3/2004 20.78
12/6/2004 20.90
12/7/2004 20.66
12/8/2004 20.70
12/9/2004 20.85
12/10/2004 20.99
12/13/2004 20.75
12/14/2004 20.88
12/15/2004 20.75
12/16/2004 20.76
12/17/2004 20.62
12/20/2004 20.40
12/21/2004 20.41
12/22/2004 20.45
12/23/2004 20.64
12/27/2004 20.65
12/28/2004 20.62
12/29/2004 20.46
12/30/2004 20.64
12/31/2004 20.75
1/3/2005 20.58
1/4/2005 20.20
1/5/2005 19.28
1/6/2005 19.28
1/7/2005 19.38
1/10/2005 19.50
1/11/2005 19.42
1/12/2005 18.94
1/13/2005 19.19
1/14/2005 19.15
1/18/2005 19.24
1/19/2005 19.37
1/20/2005 19.39
1/21/2005 19.44
1/24/2005 19.42
1/25/2005 19.15
1/26/2005 19.04
1/27/2005 18.94
1/28/2005 19.00
1/31/2005 19.24
2/1/2005 19.51
2/2/2005 19.76
2/3/2005 19.96
2/4/2005 20.14
2/7/2005 20.18
2/8/2005 20.23
2/9/2005 20.30
2/10/2005 20.47
2/11/2005 20.45
2/14/2005 20.30
2/15/2005 20.38
2/16/2005 20.30
2/17/2005 20.30
2/18/2005 20.00
2/22/2005 19.40
2/23/2005 19.50
2/24/2005 19.48
2/25/2005 19.70
2/28/2005 19.80
3/1/2005 19.86
3/2/2005 19.87
3/3/2005 19.98
3/4/2005 20.10
3/7/2005 20.18
3/8/2005 20.03
3/9/2005 19.80
3/10/2005 19.73
3/11/2005 19.30
3/14/2005 19.23
3/15/2005 19.30
3/16/2005 19.02
3/17/2005 19.05
3/18/2005 18.99
3/21/2005 18.63
3/22/2005 18.07
3/23/2005 17.68
3/24/2005 18.10
3/28/2005 17.69
3/29/2005 17.60
3/30/2005 17.85
3/31/2005 18.08
4/1/2005 18.25
4/4/2005 18.11
4/5/2005 18.24
4/6/2005 18.32
4/7/2005 18.55
4/8/2005 18.42
4/11/2005 18.46
4/12/2005 18.65
4/13/2005 18.48
4/14/2005 18.40
4/15/2005 18.44
4/18/2005 18.42
4/19/2005 18.60
4/20/2005 18.58
4/21/2005 18.58
4/22/2005 18.70
4/25/2005 18.90
4/26/2005 19.15
4/27/2005 19.49
4/28/2005 19.38
4/29/2005 19.40
4/30/2005 19.40
5/2/2005 19.37
5/3/2005 19.45
5/4/2005 19.45
5/5/2005 19.68
5/6/2005 19.95
5/9/2005 20.22
5/10/2005 20.39
5/11/2005 20.19
5/12/2005 20.02
5/13/2005 19.92
5/16/2005 19.93
5/17/2005 19.98
5/18/2005 20.02
5/19/2005 20.22
5/20/2005 20.17
5/23/2005 20.26
5/24/2005 19.90
5/25/2005 19.59
5/26/2005 19.57
5/27/2005 19.60
5/31/2005 19.77
6/1/2005 19.91
6/2/2005 20.10
6/3/2005 20.19
6/6/2005 20.02
6/7/2005 20.06
6/8/2005 20.16
6/9/2005 20.15
6/10/2005 20.17
6/13/2005 20.04
6/14/2005 20.02
6/15/2005 20.07
6/16/2005 20.05
6/17/2005 20.13
6/20/2005 20.20
6/21/2005 20.20
6/22/2005 20.19
6/23/2005 20.16
6/24/2005 20.11
6/27/2005 20.10
6/28/2005 20.00
6/29/2005 20.09
6/30/2005 20.25
7/1/2005 20.33
7/5/2005 20.38
7/6/2005 20.50
7/7/2005 20.50
7/8/2005 20.69
7/11/2005 20.92
7/12/2005 20.98
7/13/2005 20.83
7/14/2005 20.38
7/15/2005 20.40
7/18/2005 20.59
7/19/2005 20.60
7/20/2005 20.76
7/21/2005 20.67
7/22/2005 20.66
7/25/2005 20.73
7/26/2005 20.80
7/27/2005 20.97
7/28/2005 21.20
7/29/2005 21.20
7/31/2005 21.20
8/1/2005 21.20
8/2/2005 21.18
8/3/2005 21.23
8/4/2005 21.00
8/5/2005 20.18
8/8/2005 19.04
8/9/2005 19.42
8/10/2005 19.55
8/11/2005 19.42
8/12/2005 19.48
8/15/2005 19.60
8/16/2005 19.56
8/17/2005 19.40
8/18/2005 19.15
8/19/2005 19.02
8/22/2005 19.05
8/23/2005 19.18
8/24/2005 19.25
8/25/2005 19.41
8/26/2005 19.38
8/29/2005 19.41
8/30/2005 19.40
8/31/2005 19.65
9/1/2005 19.76
9/2/2005 19.88
9/6/2005 20.20
9/7/2005 20.25
9/8/2005 20.24
9/9/2005 20.40
9/12/2005 20.53
9/13/2005 20.28
9/14/2005 20.28
9/15/2005 20.29
9/16/2005 20.29
9/19/2005 20.23
9/20/2005 20.01
9/21/2005 19.80
9/22/2005 19.75
9/23/2005 20.00
9/26/2005 20.00
9/27/2005 19.99
9/28/2005 19.96
9/29/2005 20.10
9/30/2005 20.35
FUND SNAPSHOT
------------------------------------
Common Share Price $20.35
------------------------------------
Common Share Net Asset Value $22.67
------------------------------------
Premium / (Discount) to NAV -10.23%
------------------------------------
Market Yield(1) 8.55%
------------------------------------
Net Assets Attributable to
Common Shares ($000) $637,852
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/15/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
9-Month
(Cumulative) 4.33% 6.74%
------------------------------------
1-Year 15.79% 22.10%
------------------------------------
Since Inception 17.41% 21.89%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Office Property 32.0%
------------------------------------
Apartments 19.8%
------------------------------------
Regional Malls 12.2%
------------------------------------
Healthcare 9.6%
------------------------------------
Diversified 8.0%
------------------------------------
Shopping Center 7.1%
------------------------------------
Hotels 5.4%
------------------------------------
Repurchase Agreements 1.1%
------------------------------------
Other 4.8%
------------------------------------
TOP FIVE COMMON STOCK ISSUERS
(as a % of total investments)
------------------------------------
The Macerich Company 7.8%
------------------------------------
Mack-Cali Realty Corporation 7.5%
------------------------------------
Arden Realty, Inc. 7.1%
------------------------------------
Nationwide Health
Properties, Inc. 5.5%
------------------------------------
AvalonBay Communities, Inc. 5.5%
------------------------------------
TOP FIVE PREFERRED STOCK ISSUERS
(as a % of total investments)
------------------------------------
Crescent Real Estate
Equities Company 5.7%
------------------------------------
Apartment Investment &
Management Company 3.9%
------------------------------------
Home Properties Inc. 3.1%
------------------------------------
The Mills Corp. 2.6%
------------------------------------
LaSalle Hotel Properties 2.0%
------------------------------------
1 Market yield is based on the Fund's current annualized monthly 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 monthly 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.
PORTFOLIO OF INVESTMENTS (UNAUDITED)
NUVEEN REAL ESTATE INCOME FUND (JRS)
September 30, 2005
SHARES DESCRIPTION(1) VALUE
---------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 88.3% (69.7% OF TOTAL INVESTMENTS)
APARTMENTS - 16.3%
526,300 AMLI Residential Properties Trust $ 16,878,441
215,300 Apartment Investment & Management Company 8,349,334
870,000 Archstone-Smith Trust 34,686,900
516,400 AvalonBay Communities, Inc. 44,255,480
---------------------------------------------------------------------------------------------------------------
DIVERSIFIED - 0.6%
312,800 Spirit Finance Corporation 3,519,000
---------------------------------------------------------------------------------------------------------------
HEALTHCARE - 12.2%
1,912,300 Nationwide Health Properties, Inc. 44,556,590
1,740,300 Senior Housing Properties Trust 33,065,700
---------------------------------------------------------------------------------------------------------------
HOTELS - 0.8%
492,564 Hersha Hospitality Trust 4,891,161
---------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 2.9%
459,600 First Industrial Realty Trust, Inc. 18,406,980
---------------------------------------------------------------------------------------------------------------
OFFICE PROPERTY - 34.8%
1,388,800 Arden Realty, Inc. 57,176,896
477,300 Equity Office Properties Trust 15,612,483
3,092,100 HRPT Properties Trust 38,372,961
1,351,500 Mack-Cali Realty Corporation 60,736,410
298,100 Maguire Properties, Inc. 8,957,905
1,205,600 Reckson Associates Realty Corporation 41,653,480
---------------------------------------------------------------------------------------------------------------
REGIONAL MALLS - 9.9%
971,000 The Macerich Company 63,056,740
---------------------------------------------------------------------------------------------------------------
SHOPPING CENTER - 7.7%
239,600 Cedar Shopping Centers Inc. 3,467,012
413,800 Federal Realty Investment Trust 25,212,834
880,300 New Plan Excel Realty Trust 20,202,885
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STORAGE - 3.1%
984,200 U-Store-It Trust 19,949,733
---------------------------------------------------------------------------------------------------------------
Total Common Stocks - (cost $331,916,458) 563,008,925
-------------------------------------------------------------------------------------------------
SHARES DESCRIPTION(1) VALUE
---------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 36.9% (29.2% OF TOTAL INVESTMENTS)
APARTMENTS - 8.7%
Apartment Investment & Management Company:
603,500 Series R, 10.000% 15,606,510
461,100 Series U, 7.750% 11,541,333
158,000 Series Y, 7.875% 3,965,800
945,000 Home Properties Inc., Series F, 9.000% 24,626,700
---------------------------------------------------------------------------------------------------------------
DIVERSIFIED - 9.7%
Crescent Real Estate Equities Company:
1,031,300 Series A (Convertible), 6.750% 22,843,295
850,000 Series B, 9.500% 22,873,500
150,000 Lexington Corporate Properties Trust, Series B, 8.050% 3,937,500
497,623 PS Business Parks Inc., Series F, 8.750% 12,893,412
---------------------------------------------------------------------------------------------------------------
HOTELS - 6.1%
130,000 Ashford Hospitality Trust, Series A, 8.550% 3,381,300
339,000 Boykin Lodging Company, Series A, 10.500% 9,017,400
310,000 FelCor Lodging Trust Inc., Series C, 8.000% 7,719,000
120,000 Hersha Hospitality Trust, Series A, 8.000% 3,012,000
592,000 LaSalle Hotel Properties, Series A, 10.250% 15,747,200
---------------------------------------------------------------------------------------------------------------
OFFICE PROPERTY - 5.6%
Alexandria Real Estate Equities Inc.:
95,400 Series B, 9.100% 2,486,124
160,000 Series C, 8.375% 4,211,200
200,000 Corporate Office Properties Trust, Series G, 8.000% 5,200,000
12,141 Highwoods Properties, Inc., Series A, 8.625% 13,408,217
406,000 Maguire Properties, Inc., Series A, 7.625% 10,292,100
---------------------------------------------------------------------------------------------------------------
REGIONAL MALLS - 5.6%
Glimcher Realty Trust:
113,000 Series F, 8.750% 2,916,530
50,000 Series G, 8.125% 1,269,500
400,000 Taubman Centers, Inc., Series H, 7.625% 10,230,000
The Mills Corp:
115,200 Series C, 9.000% 3,007,872
213,000 Series E, 8.750% 5,644,500
480,000 Series G, 7.875% 12,435,024
---------------------------------------------------------------------------------------------------------------
SHOPPING CENTER - 1.2%
160,000 Cedar Shopping Centers Inc., Series A, 8.875% 4,115,008
125,000 Saul Centers, Inc., Series A, 8.000% 3,268,750
---------------------------------------------------------------------------------------------------------------
Total Preferred Stocks - (cost $220,466,625) 235,649,775
-------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT (000) DESCRIPTION(1) VALUE
---------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 1.4% (1.1% OF TOTAL INVESTMENTS)
$ 8,635 State Street Bank, 3.150%, dated 9/30/05, due 10/03/05, repurchase
price $8,637,715, collateralized by $6,790,000 U.S. Treasury Bonds,
7.500%, due 11/15/16, value $8,813,210 8,635,448
==============-------------------------------------------------------------------------------------------------
Total Repurchase Agreements (cost $8,635,448) 8,635,448
-------------------------------------------------------------------------------------------------
Total Investments (cost $561,018,531) - 126.6% 807,294,148
-------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.4% 2,557,657
-------------------------------------------------------------------------------------------------
Taxable Auctioned Preferred Shares, at Liquidation Value - (27.0)% (172,000,000)
-------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $637,851,805
=================================================================================================
INTEREST RATE SWAP CONTRACTS OUTSTANDING AT SEPTEMBER 30, 2005:
UNREALIZED
NOTIONAL TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FIXED RATE FLOATING RATE* DATE (DEPRECIATION)
-------------------------------------------------------------------------------------------------------------
CITIGROUP N.A. $43,000,000 4.8000% 3.6800% 2/06/07 $ (257,898)
CITIGROUP N.A. 43,000,000 5.1900% 3.6800% 2/06/09 (976,741)
-------------------------------------------------------------------------------------------------------------
$ (1,234,639)
=============================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net
assets applicable to common shares unless otherwise noted.
* Based on LIBOR (London Inter-Bank Offered Rates).
See accompanying notes to financial statements.
Statement of
ASSETS AND LIABILITIES September 30, 2005 (Unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $561,018,531) $ 807,294,148
Receivables:
Dividends and interest 3,952,767
Investments sold 509,179
Other assets 34,022
--------------------------------------------------------------------------------
Total assets 811,790,116
--------------------------------------------------------------------------------
LIABILITIES
Interest rate swaps, at value 1,234,639
Accrued expenses:
Management fees 385,110
Other 256,494
Taxable Auctioned Preferred share dividends payable 62,068
--------------------------------------------------------------------------------
Total liabilities 1,938,311
--------------------------------------------------------------------------------
Taxable Auctioned Preferred shares, at liquidation value 172,000,000
--------------------------------------------------------------------------------
Net assets applicable to Common shares $ 637,851,805
================================================================================
Common shares outstanding 28,136,413
================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 22.67
================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
--------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 281,364
Paid-in surplus 391,050,795
Undistributed (Over-distribution of) net investment income (19,449,307)
Accumulated net realized gain from investments and interest
rate swaps 20,927,975
Net unrealized appreciation (depreciation) of investments
and interest rate swaps 245,040,978
--------------------------------------------------------------------------------
Net assets applicable to Common shares $ 637,851,805
================================================================================
Authorized shares:
Common Unlimited
Taxable Auctioned Preferred Unlimited
================================================================================
See accompanying notes to financial statements.
Statement of
OPERATIONS Nine Months Ended September 30, 2005 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 22,624,829
Interest 150,400
--------------------------------------------------------------------------------
Total investment income 22,775,229
--------------------------------------------------------------------------------
EXPENSES
Management fees 5,165,389
Taxable Auctioned Preferred shares - auction fees 321,616
Taxable Auctioned Preferred shares -
dividend disbursing agent fees 19,247
Shareholders' servicing agent fees and expenses 4,995
Custodian's fees and expenses 122,808
Trustees' fees and expenses 20,436
Professional fees 47,556
Shareholders' reports - printing and mailing expenses 78,443
Stock exchange listing fees 1,768
Investor relations expense 98,752
Other expenses 25,103
--------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 5,906,113
Custodian fee credit (44)
Expense reimbursement (1,757,064)
--------------------------------------------------------------------------------
Net expenses 4,149,005
--------------------------------------------------------------------------------
Net investment income 18,626,224
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain from investments 22,425,841
Net realized gain (loss) from interest rate swaps (1,497,866)
Change in net unrealized appreciation (depreciation)
of investments 1,908,105
Change in net unrealized appreciation (depreciation)
of interest rate swaps 2,639,583
--------------------------------------------------------------------------------
Net realized and unrealized gain 25,475,663
--------------------------------------------------------------------------------
DISTRIBUTIONS TO TAXABLE AUCTIONED PREFERRED SHAREHOLDERS
From net investment income (3,787,551)
From accumulated net realized gains from investments --
--------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Taxable Auctioned Preferred shareholders (3,787,551)
--------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from operations $ 40,314,336
================================================================================
See accompanying notes to financial statements.
Statement of
CHANGES IN NET ASSETS (Unaudited)
NINE MONTHS ENDED YEAR ENDED
9/30/05 12/31/04
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 18,626,224 $ 24,895,312
Net realized gain from investments 22,425,841 18,980,955
Net realized gain (loss) from interest rate swaps (1,497,866) (4,017,763)
Change in net unrealized appreciation (depreciation) of investments 1,908,105 109,849,162
Change in net unrealized appreciation (depreciation) of interest rate swaps 2,639,583 3,346,462
Distributions to Taxable Auctioned Preferred shareholders:
From net investment income (3,787,551) (1,353,325)
From accumulated net realized gains from investments -- (1,218,577)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares from operations 40,314,336 150,482,226
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (34,467,106) (19,333,368)
From accumulated net realized gains from investments -- (17,762,374)
Tax return of capital -- (3,983,421)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions to
Common shareholders (34,467,106) (41,079,163)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Taxable Auctioned Preferred shares offering costs 25,538 --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares 5,872,768 109,403,063
Net assets applicable to Common shares at the beginning of period 631,979,037 522,575,974
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of period 637,851,805 $631,979,037
====================================================================================================================================
Undistributed (Over-distribution of) net investment income at the end of period $ (19,449,307) $ 179,126
====================================================================================================================================
See accompanying notes to financial statements.
Notes to
FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
Nuveen Real Estate Income Fund (the "Fund") is a non-diversified, closed-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund's Common shares are listed on the American Stock
Exchange 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 by investing primarily in a
portfolio of income-producing common stocks, preferred stocks, convertible
preferred stocks and debt securities issued by real estate companies, such as
Real Estate Investment Trusts ("REITs").
Effective January 1, 2005, Nuveen Institutional Advisory Corp. ("NIAC"), the
Fund's previous Adviser, and its affiliate, Nuveen Advisory Corp. ("NAC"), were
merged into Nuveen Asset Management ("NAM"), each wholly owned subsidiaries of
Nuveen Investments, Inc. ("Nuveen"). As a result of the merger, NAM is now the
Adviser to all funds previously advised by either NIAC or NAC.
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.
Investment Valuation
Exchange-listed securities are generally valued at the last sales price on the
securities exchange on which such securities are primarily traded. Securities
traded on a securities exchange for which there are no transactions on a given
day or securities not listed on a securities exchange are valued at the mean of
the closing bid and asked prices. Securities traded on Nasdaq are valued at the
Nasdaq Official Closing Price. Prices of derivative instruments are also
provided by an independent pricing service approved by the Fund's Board of
Trustees. If the pricing service is unable to supply a price for a derivative
instrument, the Fund may use a market price or fair market value quote provided
by a major broker/dealer in such investments. If it is determined that market
prices for an investment are unavailable or inappropriate, the Board of Trustees
of the Fund, or its designee, may establish a fair value for the investment. In
establishing a fair value, the Board of Trustees, or its designee, will use a
wide variety of market data including yields or prices of comparable securities,
indications of value from security dealers, general market conditions and other
information and analysis. Short-term securities are valued at amortized cost,
which approximates market value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from investment transactions are determined on the specific
identification method. Investments purchased on a when-issued or 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 and delayed delivery purchase commitments. At
September 30, 2005, the Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on an accrual basis.
Income Taxes
The Fund intends to distribute substantially all net investment income and net
capital gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required.
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. generally accepted accounting
principles.
The Fund intends to make monthly cash distributions to Common Shareholders of a
stated dollar amount based primarily on the Fund's net investment income but
also secondarily on net realized capital gains and/or on net unrealized capital
gains in the Fund's portfolio (stated in terms of a fixed cents per Common Share
dividend rate) ("Managed Distribution Policy"). The Fund seeks to maintain a
stable dividend level, subject to approval and oversight by the Fund's Board of
Trustees. Distributions will be made only after paying any accrued dividends or
making any redemption or liquidation payments to Taxable Auctioned Preferred
shares, if any, and interest and required principal payments on borrowings, if
any. Under the Managed Distribution Policy, if, for any monthly distribution,
net investment income and net realized capital gain were less than the amount of
the distribution, the difference would be distributed from the Fund's assets and
would be treated by shareholders as a return of capital for tax purposes.
Distributions during the first nine months of the fiscal year are classified as
having been paid from net investment income; consequently, this will negatively
impact the amount of undistributed net investment income shown in the financial
statements in this interim report. The final determination of the source of all
distributions for the year are made after the end of the year and reflected in
the financial statements contained in the annual report.
REIT distributions received by the Fund are generally comprised of investment
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 of the Fund. For the twelve months ended December 31,
2004, the character of distributions to the Fund from the REITs was 58.07%
ordinary income, 25.75% long-term and short-term capital gains, and 16.18%
return of REIT capital.
For the nine months ended September 30, 2005, the Fund applied the actual
percentages for the twelve months ended December 31, 2004, described above, to
its receipts from the REITs and treated as income in the Statement of Operations
only the amount of ordinary income so calculated. The Fund adjusts that
estimated breakdown of income type (and consequently its net investment income)
as necessary early in the following calendar year when the REITs inform their
shareholders of the actual breakdown of income type. For the fiscal year ended
December 31, 2004, 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.
During the nine months ended September 30, 2005, the Fund treated each
distribution to its shareholders from the portfolio REITs as being entirely from
net investment income. The Fund will recharacterize those distributions as being
from ordinary income, long-term and short-term capital gains, and return of
capital, if necessary, at the beginning of the subsequent year, based upon the
income type breakdown information conveyed at the time by the REITs whose
securities are held in the Fund's portfolio. Consequently, the financial
statements at September 30, 2005, reflect an over-distribution of net investment
income that is at least partly attributable to the fact that some of the amounts
received by the Fund from the portfolio REITS, but none of the dividends paid by
the Fund to shareholders, were treated as something other than ordinary income.
For the fiscal year ended December 31, 2004, the Fund applied the actual
character of distributions reported by the REITs in which the Fund invests to
the distributions paid to the Fund shareholders.
Taxable Auctioned Preferred Shares
The Fund has issued and outstanding 1,720 Series M, 1,720 Series T, 1,720 Series
W and 1,720 Series F, Taxable Auctioned Preferred shares, $25,000 stated value
per share, as a means of effecting financial leverage. The dividend rate paid by
the Fund on each Series is determined every seven days, pursuant to a dutch
auction process overseen by the auction agent, and is payable at the end of each
rate period.
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
Interest Rate Swap Transactions
The Fund may invest in certain derivative financial instruments. The Fund's use
of interest rate swap transactions 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 transactions involve the
Fund's agreement with the counterparty to pay a fixed rate payment in exchange
for the counterparty paying the Fund 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 swaps
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. Although
there are economic advantages of entering into interest rate swap transactions,
there are also additional risks. The Fund helps manage the credit risks
associated with interest rate swap transactions by entering into agreements only
with counterparties the Adviser believes have the financial resources to honor
their obligations and by having the Adviser continually monitor the financial
stability of the swap counterparties.
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 seller
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 credits earned on the Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
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. generally
accepted accounting principles 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. FUND SHARES
The Fund did not engage in transactions in its own shares during the nine months
ended September 30, 2005, nor during the fiscal year ended December 31, 2004.
3. SECURITIES TRANSACTIONS
Purchases and sales of investments (excluding short-term investments) during the
nine months ended September 30, 2005, aggregated $54,319,970 and $63,392,536,
respectively.
4. 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 recording income and in recognizing
certain gains and losses on investment transactions.
At September 30, 2005, the cost of investments owned was $561,018,531.
The net unrealized appreciation of investments at September 30, 2005, aggregated
$246,275,617, of which $246,507,783 related to appreciated securities and
$232,166 related to depreciated securities.
The tax components of undistributed net ordinary income and net realized gains
at December 31, 2004, the Fund's last fiscal year end, were as follows:
--------------------------------------------------------------------------------
Undistributed net ordinary income * $--
Undistributed net long-term capital gains --
================================================================================
* Net ordinary income consists of net taxable income derived from dividends,
interest and net short-term capital gains, if any.
The tax character of distributions paid during the fiscal year ended December
31, 2004, the Fund's last fiscal year end, was designated for purposes of the
dividends paid deduction as follows:
--------------------------------------------------------------------------------
Distributions from net ordinary income * $20,708,231
Distributions from net long-term capital gains 18,932,319
Tax return of capital 3,983,421
================================================================================
* Net ordinary income consists of net taxable income derived from dividends,
interest and net short-term capital gains, if any.
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by the
Adviser, and a specific fund-level component, based only on the amount of assets
within the Fund. This pricing structure enables Nuveen fund shareholders to
benefit from growth in the assets within each individual fund as well as from
growth in the amount of complex-wide assets managed by the Adviser.
The annual fund-level fee, payable monthly, for the Fund is based upon the
average daily Managed Assets of the Fund as follows:
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
================================================================================
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the table below. As
of September 30, 2005, the complex-level fee rate was .1898%.
COMPLEX-LEVEL ASSETS(1) COMPLEX-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion (2) .1400
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds in
the U.S.
(2) With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level fee
rate for such complex-wide Managed Assets shall be .1400% until such time as
a different rate or rates is determined.
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 fee paid to the Adviser.
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 YEAR ENDING
NOVEMBER 30, 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.
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
6. ANNOUNCEMENT REGARDING PARENT COMPANY OF ADVISER
In early April, 2005, The St. Paul Travelers Companies, Inc. ("St. Paul
Travelers"), which owned 79% of Nuveen, (A) completed a public offering of a
substantial portion of its equity stake in Nuveen, (B) sold Nuveen $200 million
of its Nuveen shares, (C) entered into an agreement with Nuveen to sell an
additional $400 million of its Nuveen shares on a "forward" basis with payment
for and settlement of these shares delayed for several months, and (D) entered
into agreements with two unaffiliated investment banking firms to sell an amount
equal to most or all of its remaining Nuveen shares for current payment but for
future settlement. Transactions (C) and (D) above were settled in late July,
which effectively reduced St. Paul Travelers' controlling stake in Nuveen and
was deemed an "assignment" (as defined in the 1940 Act) of the investment
management agreement between the Fund and the Adviser, which resulted in the
automatic termination of the agreement under the 1940 Act. In anticipation of
such deemed assignment, the Board of Trustees had approved a new ongoing
investment management agreement for the Fund and the submission of the agreement
for approval by the Fund's shareholders, which shareholder approval was received
prior to the settlement of transactions (C) and (D). The new ongoing management
agreement took effect upon such settlement.
7. SUBSEQUENT EVENT -- DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Fund declared a distribution of $.1450 per Common share which was paid on
November 1, 2005, to shareholders of record on October 15, 2005.
Financial
HIGHLIGHTS (Unaudited)
Financial
HIGHLIGHTS (Unaudited)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
--------------------------------------------------------------- -----------------------------------------
Distributions Distributions
from Net from
Investment Capital
Income to Gains to Net
Beginning Taxable Taxable Investment Capital
Common Net Auctioned Auctioned Income to Gains to Tax
Share Net Realized/ Preferred Preferred Common Common Return
Net Asset Investment Unrealized Share- Share- Share- Share- of
Value Income(a) Gain (Loss) holders+ holders+ Total holders holders Capital Total
====================================================================================================================================
Year Ended 12/31:
2005(e) $22.46 $ .66 $ .91 $(.13) $ -- $1.44 $(1.23) $ -- $ -- $(1.23)
2004(b) 18.57 .88 4.56 (.05) (.04) 5.35 (.69) (.63) (.14) (1.46)
2003(c) 17.30 .12 1.38 (.01) -- 1.49 (.01) (.08) (.13) (.22)
Year Ended 10/31:
2003 13.56 .85 4.38 (.05) (.02) 5.16 (.97) (.41) (.04) (1.42)
2002(d) 14.33 1.02 (.46) (.07) (.02) .47 (.89) (.25) -- (1.14)
====================================================================================================================================
Total Returns
----------------------
Offering
Costs and
Taxable Based
Auctioned Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
========================================================================================
Year Ended 12/31:
2005(e) $ -- $22.67 $20.35 4.33% 6.74%
2004(b) -- 22.46 20.75 19.80 30.12
2003(c) -- 18.57 18.73 6.49 8.69
Year Ended 10/31:
2003 -- 17.30 17.81 35.40 39.80
2002(d) (.10) 13.56 14.40 3.30 2.09
========================================================================================
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
---------------------------- ------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
===================================================================================================================
Year Ended 12/31:
2005(e) $ 637,852 1.29%* 3.69%* .91%* 4.07%* 7%
2004(b) 631,979 1.34 4.13 .94 4.52 14
2003(c) 522,576 2.31* 4.07* 1.91* 4.47* 2
Year Ended 10/31:
2003 486,814 2.51 5.17 2.09 5.59 26
2002(d) 381,290 2.12* 6.71* 1.72* 7.11* 37
===================================================================================================================
Cumulative Taxable Auctioned
Preferred at End of Period
---------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
================================================================
Year Ended 12/31:
2005(e) $172,000 $25,000 $117,711
2004(b) 172,000 25,000 116,857
2003(c) 172,000 25,000 100,956
Year Ended 10/31:
2003 172,000 25,000 95,758
2002(d) 172,000 25,000 80,420
================================================================
(a) Per share Net Investment Income is calculated using the average daily
shares method.
(b) For the fiscal year ended December 31, 2004, the Fund changed its method of
presentation for net interest expense on interest rate swap transactions.
The effect of this reclassification was to increase Net Investment Income
by $0.15 per share with a corresponding decrease in Net Realized/Unrealized
Investment Gain (Loss), a decrease in each of the Ratios of Expenses to
Average Net Assets Applicable to Common Shares by 0.77% with a
corresponding increase in each of the Ratios of Net Investment Income to
Average Net Assets Applicable to Common Shares.
(c) For the period November 1, 2003 through December 31, 2003.
(d) For the period November 15, 2001 (commencement of operations) through
October 31, 2002.
(e) For the nine months ended September 30, 2005.
* Annualized.
** Total Investment Return 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. Total Return 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. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ o Ratios do not reflect the effect of dividend payments to Taxable
Auctioned Preferred shareholders.
o Income ratios reflect income earned on assets attributable to Taxable
Auctioned Preferred shares.
o For periods ended prior to December 31, 2004, each Ratio of Expenses
to Average Net Assets Applicable to Common Shares and each Ratio of
Net Investment Income to Average Net Assets Applicable to Common
Shares included the effect of the net interest expense incurred on
interest rate swap transactions as follows:
Year Ended 12/31:
2003(c) .91*
Year Ended 10/31:
2003 1.03
2002(d) .68*
See accompanying notes to financial statements.
Other Useful
INFORMATION
In April, 2005, The St. Paul Travelers Companies, Inc. ("St. Paul Travelers")
sold the majority of its controlling equity interest in Nuveen Investments, Inc.
("Nuveen") to the general public. Nuveen is the parent of Nuveen Asset
Management ("NAM"), which is each Fund's investment manager. This sale was
deemed to be an "assignment" of the investment management agreement between each
Fund and NAM and, if applicable, of the sub-advisory agreement between NAM and
the Fund's sub-adviser. As required by law, the shareholders of each Fund were
asked to approve a new investment management agreement and, if applicable, a new
subadvisory agreement that reflected this change in ownership. The shareholders
of each Fund voted this approval at a Shareholders' Meeting on July 26, 2005.
There were no changes to the investment objectives or management of any Fund as
a result of these actions.
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
The Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
most recent 12-month period ended June 30, 2005, and (iii) a description of the
policies and procedures that the Fund used to determine how to vote proxies
relating to portfolio securities are available 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 1-202-942-8090
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 450 Fifth Street NW, Washington, D.C. 20549.
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.
MARKET YIELD (ALSO KNOWN AS DISTRIBUTION YIELD OR CURRENT YIELD): Market yield
is based on the Fund's current annualized monthly 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 monthly 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.
NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any MuniPreferred shares
issued in order to leverage the Fund) from its total assets and then dividing
the remainder by the number of shares outstanding. Fund NAVs are calculated at
the end of each business day.
BOARD OF TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Jack B. Evans
William C. Hunter
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Eugene S. Sunshine
FUND MANAGER
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
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
The Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the period covered by this report. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
ITEM 2. CODE OF ETHICS.
Not applicable to this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to this filing.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this filing.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable at this time.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board implemented after the registrant
last provided disclosure in response to this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")(17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable to
this filing.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons: Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Real Estate Income Fund
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By (Signature and Title)* /s/ Jessica R. Droeger
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Jessica R. Droeger
Vice President and Secretary
Date: December 8, 2005
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Gifford R. Zimmerman
----------------------------------------------
Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: December 8, 2005
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By (Signature and Title)* /s/ Stephen D. Foy
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Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: December 8, 2005
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* Print the name and title of each signing officer under his or her signature.