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
---------------------
Nuveen Real Estate Income Fund
------------------------------------------------------------------------------
(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
-------------------
Date of fiscal year end: December 31
------------------
Date of reporting period: December 31, 2005
------------------
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.
ANNUAL REPORT December 31, 2005
Nuveen Investments
Exchange-Traded
Closed-End
Funds
NUVEEN REAL ESTATE INCOME FUND
JRS
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HIGH CURRENT INCOME FROM A PORTFOLIO OF COMMERCIAL REAL ESTATE INVESTMENTS
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PHOTO OF: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Chairman's
LETTER TO SHAREHOLDERS
I am very pleased to report that for the year ended December 31, 2005, your Fund
continued to provide you with attractive monthly distributions and diversified
exposure to the real estate investment marketplace. For more information on the
Fund's performance, please read the Portfolio Managers' Comments, the
Distribution and Share Price Information, and the Performance Overview sections
of this report.
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 cash flow, 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.
"IN ADDITION TO PROVIDING REGULAR MONTHLY CASH FLOW, A REAL ESTATE ORIENTED
INVESTMENT LIKE YOUR FUND MAY HELP YOU ACHIEVE AND BENEFIT FROM GREATER
PORTFOLIO DIVERSIFICATION."
As you look through this report, be sure to review the inside front cover. This
contains information on how you can receive future Fund reports and other Fund
information faster by using e-mails and the Internet. Sign up is quick and easy
- just follow the step-by-step instructions.
As we noted in our last shareholder report, The St. Paul Travelers Companies,
Inc., which had owned 79% of Nuveen Investments, Inc. (the parent of your Fund's
investment adviser), had sold a substantial portion of its stake in Nuveen.
Since then, St. Paul has sold the balance of its shares to Nuveen Investments or
to others. Please be assured that these transactions only affected Nuveen's
corporate structure, and they do not have any impact on the investment
objectives or management of your Fund.
At Nuveen Investments, our mission continues to be to assist you and your
financial advisor by offering investment services and products that can help you
to secure your financial objectives. We are grateful that you have chosen us as
a partner as you pursue your financial goals, and we look forward to continuing
to earn your trust in the months and years ahead. Sincerely,
/s/Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
February 15, 2006
Nuveen Real Estate Income Fund
(JRS)
Portfolio Managers'
COMMENTS
The Nuveen Real Estate Income Fund is subadvised 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 the economic environment,
key investment strategies and performance of the Fund for the 12-month period
ended December 31, 2005.
WHAT WERE THE GENERAL ECONOMIC CONDITIONS AND TRENDS IN THE REAL ESTATE
SECURITIES MARKET OVER THE COURSE OF 2005?
During 2005, real estate stocks generated attractive returns driven by healthy
job growth, moderate levels of new construction, and broadly-based investment
demand for real estate assets. Unlike the uneven operating environment in 2004,
most property markets experienced solid increases in occupancy and improved
rental rates in 2005.
In contrast, 2005 proved to be a tough year in the fixed-income markets, with
yields rising (and prices falling) at most points on the yield curve. This
challenging environment was reflected in the lackluster performance of many REIT
preferred stocks over this period.
There was a wave of privatization in 2005, with announced or completed M&A
transactions involving public real estate companies totaling $35.0 billion.
While elevated from longer-term historical levels, these 2005 transaction totals
only moderately exceeded the $29.7 billion recorded in 2004. However, they were
uniquely characterized by the large number of platform privatization
announcements, including Arden Realty, one of the largest investments in the JRS
portfolio. Arden, AMLI Residential Properties (another large Fund holding) and
at least 12 other public companies drew the attention of institutional investors
in pursuit of attractive asset portfolios, development pipelines and management
capabilities.
With abundant and attractively priced private joint venture capital, real estate
companies evidenced discipline in 2005 in their use of public common equity
capital, particularly in light of attractive stock pricing. Issuance of new
common equity totaled $9.1 billion in 2005 including $2.2 billion during the
fourth quarter as compared to 2004 totals of $13.3 billion and $2.5 billion,
respectively.
4
WHAT STRATEGIES AND TACTICS DID YOU USE TO MANAGE THE FUNDS' ASSETS?
During the year, we continued to focus on those securities that we believed were
best positioned to generate sustainable income and potential price appreciation
over the long run. In managing the portfolio, 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 owns, its
management, and the relative price of the security.
The ability to shift allocations between preferred and common stocks of real
estate companies, based on the relative attractiveness of these two distinct
markets, remained an important tool in managing JRS for income and long-term
capital appreciation. Beginning in 2004, an environment characterized by rising
interest rates indicated a shift in the risk and reward characteristics of
common stocks versus preferred stocks. As a result, we significantly tilted the
portfolio toward common stocks, especially those of companies exhibiting the
greatest potential in an improving economy. We maintained the portfolio's tilt
toward common stocks in 2005. At year end, the portfolio continued to emphasize
companies and property types with a cyclical orientation associated with shorter
lease terms. In addition, we favored the strongest markets and locations where
we believed there was value enhancement potential, as well as the potential for
a real inflation hedge over the long term. In addition, last year's portfolio
trading activity included participation in seven initial public offerings. Among
these were three during the fourth quarter - Newkirk Realty Trust (an owner and
acquirer of net lease properties), Cogdell Spencer (an acquirer and developer of
medical office properties), and Republic Property Trust (an owner and developer
of office properties focused in the Washington D.C. metropolitan area).
As of December 31, 2005, the portfolio allocations were 70.6% to common stocks,
29.0% to preferred stocks, of which 2.8% was in convertible preferred
securities, and 0.4% was in short-term repurchase agreements.
5
HOW DID THE FUND PERFORM?
Fund performance results, as well as the performance of two real estate indexes,
are shown in the accompanying table.
TOTAL RETURNS ON NET ASSET VALUE
For the 12-month period ended December 31, 2005
JRS 7.42%
--------------------------------------------------------------------------------
Comparative benchmark1 7.50%
--------------------------------------------------------------------------------
Dow Jones Wilshire
Real Estate Securities Index2 13.85%
--------------------------------------------------------------------------------
Past performance does not guarantee future results. 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. Current performance may be higher or lower than
the data shown.
Since 2003, we have been gradually and selectively shifting the portfolio's
property type weightings from a largely defensive posture to one better
positioned with respect to a growing economy, while at all times remaining
highly focused on the current objectives of the Fund. During 2005 we pursued
this strategy by increasing the portfolio's allocation toward more cyclically
sensitive multifamily companies as well as mall companies. This research-based
theme performed relatively well, as our specific selections within these sectors
outperformed the respective sector components of the comparative benchmark.
Conversely, in seeking to maintain the income objective of the Fund, our
investments in the higher yielding, but historically defensive Health Care
sector underperformed the comparative benchmark as a whole.
In addition, it is important to note that investing in preferred stock remains
an important component of the income and appreciation strategy of JRS. Preferred
securities are included in the comparative benchmark, but not in broader real
estate securities indices, like the Dow Jones Wilshire Real Estate Securities
Index (WARESI). These securities remained a significant allocation in the Fund's
portfolio over the course of the year.
As noted earlier, the rising interest rate environment experienced during 2005
constrained the performance of many real estate preferred stocks. While we
believe holding these securities helped the Fund's overall risk profile, it did
create a drag on performance when compared to an all common stock index like the
WARESI.
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.
6
Distribution and Share Price
INFORMATION
In addition to owning preferred stocks, the Fund has issued its own preferred
shares, called FundPreferredTM. 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 12-month period.
The Fund has a managed distribution policy designed to provide relatively stable
monthly cash flow to investors. The Fund declared a monthly distribution
increase in September to $0.1450 per share.
Under its managed distribution policy, the Fund pays monthly distributions that
are derived from a variety of sources for income tax reporting purposes. These
may include ordinary income, net realized capital gains, and, under certain
circumstances, a return of capital. Every month, the Fund prepares an estimate
of the sources for tax purposes of that month's distribution, and then posts
that estimate on the Nuveen Funds' website at www.nuveen.com/etf. The final
determination of the tax characteristics of all of a calendar year's
distributions are made after December 31 each year, and this information is then
reported on Form 1099-DIV early in the following year. The final tax
characterization of distributions may vary from the estimates provided monthly
throughout the course of the year. At the end of 2005, 18.22% of the Fund's
distributions to Common shareholders represented ordinary income and 81.78%
represented net realized long-term capital gains. In addition, these final tax
characteristics of distributions likely will vary from the sources identified in
the Fund's financial statements, because the rules governing determination of
tax characteristics of distributions differ in many respects from generally
accepted accounting principles.
As of December 31, 2005, the Fund was trading at a -10.68% discount to its net
asset value, compared with an average discount of -9.82% for the entire 12-month
period.
7
Nuveen Real Estate Income Fund
JRS
Performance
OVERVIEW As of December 31, 2005
Pie Chart:
PORTFOLIO ALLOCATION
(as a % of total investments)
Common Stocks 70.6%
Preferred Stocks 29.0%
Short-Term Investments 0.4%
Bar Chart:
2005 MONTHLY DISTRIBUTIONS PER SHARE
Jan 0.135
Feb 0.135
Mar 0.135
Apr 0.135
May 0.135
Jun 0.135
Jul 0.135
Aug 0.135
Sep 0.145
Oct 0.145
Nov 0.145
Dec 0.145
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
1/01/05 20.58
20.2
19.28
19.28
19.38
19.5
19.42
18.94
19.19
19.15
19.24
19.37
19.39
19.44
19.42
19.15
19.04
18.94
19
19.24
19.51
19.76
19.96
20.14
20.18
20.23
20.3
20.47
20.45
20.3
20.38
20.3
20.3
20
19.4
19.5
19.48
19.7
19.8
19.86
19.87
19.98
20.1
20.18
20.03
19.8
19.73
19.3
19.23
19.3
19.02
19.05
18.99
18.63
18.07
17.68
18.1
17.69
17.6
17.85
18.08
18.25
18.11
18.24
18.32
18.55
18.42
18.46
18.65
18.48
18.4
18.44
18.42
18.6
18.58
18.58
18.7
18.9
19.15
19.49
19.38
19.4
19.4
19.37
19.45
19.45
19.68
19.95
20.22
20.39
20.19
20.02
19.92
19.93
19.98
20.02
20.22
20.17
20.26
19.9
19.59
19.57
19.6
19.77
19.91
20.1
20.19
20.02
20.06
20.16
20.15
20.17
20.04
20.02
20.07
20.05
20.13
20.2
20.2
20.19
20.16
20.11
20.1
20
20.09
20.25
20.33
20.38
20.5
20.5
20.69
20.92
20.98
20.83
20.38
20.4
20.59
20.6
20.76
20.67
20.66
20.73
20.8
20.97
21.2
21.2
21.2
21.2
21.18
21.23
21
20.18
19.04
19.42
19.55
19.42
19.48
19.6
19.56
19.4
19.15
19.02
19.05
19.18
19.25
19.41
19.38
19.41
19.4
19.65
19.76
19.88
20.2
20.25
20.24
20.4
20.53
20.28
20.28
20.29
20.29
20.23
20.01
19.8
19.75
20
20
19.99
19.96
20.1
20.35
20.56
20.45
20.09
19.99
19.93
19.84
19.87
19.25
19.09
19.31
19.54
19.33
19.36
19.13
19.28
19.63
19.77
19.65
19.6
19.85
19.92
19.75
19.72
19.72
19.59
19.67
19.62
19.76
19.68
19.64
19.57
19.48
19.22
19.34
19.55
19.65
19.7
19.85
19.88
19.87
19.9
19.95
20.01
20.03
19.89
19.8
19.68
19.82
19.82
19.9
19.9
19.76
19.76
19.72
19.59
19.4
19.55
19.74
19.8
19.85
19.85
19.8
19.99
12/31/05 19.99
FUND SNAPSHOT
------------------------------------
Common Share Price $19.99
------------------------------------
Common Share Net Asset Value $22.38
------------------------------------
Premium/(Discount) to NAV -10.68%
------------------------------------
Market Yield1 8.70%
------------------------------------
Net Assets Attributable to
Common Shares ($000) $629,649
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Office Properties 32.7%
------------------------------------
Apartments 17.9%
------------------------------------
Regional Malls 12.5%
------------------------------------
Diversified 10.9%
------------------------------------
Health Care Property 8.5%
------------------------------------
Shopping Centers 7.1%
------------------------------------
Hotels 5.3%
------------------------------------
Short-Term Investments 0.4%
------------------------------------
Other 4.7%
------------------------------------
TOP FIVE COMMON STOCK ISSUERS
(as a % of total investments)
------------------------------------
The Macerich Company 8.2%
------------------------------------
Arden Realty, Inc. 7.2%
------------------------------------
Mack-Cali Realty Corporation 6.8%
------------------------------------
AvalonBay Communities, Inc. 5.8%
------------------------------------
Reckson Associates Realty
Corporation 5.1%
------------------------------------
TOP FIVE PREFERRED STOCK ISSUERS
(as a % of total investments)
------------------------------------
Crescent Real Estate
Equities Company 5.6%
------------------------------------
Apartment Investment &
Management Company 3.9%
------------------------------------
Home Properties Inc. 3.0%
------------------------------------
The Mills Corp. 2.6%
------------------------------------
LaSalle Hotel Properties 1.9%
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/15/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 4.75% 7.42%
------------------------------------
Since Inception 16.38% 20.61%
------------------------------------
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.
8
Shareholder
MEETING REPORT
Approval of the new investment management agreement and sub-advisory agreements
were the proposals voted upon at the July 26, 2005, shareholder meeting held at
The Northern Trust Bank.
Approval of the Board Members was the proposal voted upon at the November 15,
2005, shareholder meeting held at the offices of Nuveen Investments.
JRS
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT WAS
REACHED AS FOLLOWS:
Common and
Taxable Auctioned Preferred
shares voting
together as a class
====================================================================================================================================
For 26,912,907
Against 162,629
Abstain 273,326
------------------------------------------------------------------------------------------------------------------------------------
Total 27,348,862
====================================================================================================================================
APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT BETWEEN NUVEEN ASSET
MANAGEMENT AND SECURITY CAPITAL RESEARCH & MANAGEMENT INCORPORATED
WAS REACHED AS FOLLOWS:
Common and
Taxable Auctioned Preferred
shares voting
together as a class
====================================================================================================================================
For 26,916,872
Against 166,293
Abstain 265,697
------------------------------------------------------------------------------------------------------------------------------------
Total 27,348,862
====================================================================================================================================
9
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 as of December
31, 2005, and the related statement of operations 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 periods indicated therein.
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 audits 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 audits 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, 2005, by correspondence with the custodian
and brokers. We believe that our audits provide 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, 2005, and the results of its operations
for the year then ended, changes in its net assets for each of the two years in
the period then ended, and its financial highlights for the periods indicated
therein in conformity with U.S. generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
February 14, 2006
10
Nuveen Real Estate Income Fund (JRS)
Portfolio of
INVESTMENTS December 31, 2005
SHARES DESCRIPTION(1) VALUE
------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST COMMON STOCKS - 89.6% (70.6% OF TOTAL INVESTMENTS)
APARTMENTS - 13.9%
215,300 Apartment Investment & Management Company, Class A $ 8,153,411
795,000 Archstone-Smith Trust 33,302,550
516,400 AvalonBay Communities, Inc. 46,088,700
------------------------------------------------------------------------------------------------------------------------------------
Total Apartments 87,544,661
------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED - 4.1%
1,500,000 Newkirk Realty Trust Inc. 23,250,000
222,900 Spirit Finance Corporation 2,529,915
------------------------------------------------------------------------------------------------------------------------------------
Total Diversified 25,779,915
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROPERTY - 10.8%
270,000 Cogdell Spencer Inc. 4,560,300
1,587,300 Nationwide Health Properties, Inc. 33,968,220
1,740,300 Senior Housing Properties Trust 29,428,473
------------------------------------------------------------------------------------------------------------------------------------
Total Health Care Property 67,956,993
------------------------------------------------------------------------------------------------------------------------------------
HOTELS - 0.7%
492,564 Hersha Hospitality Trust 4,438,002
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL PROPERTIES - 2.8%
459,600 First Industrial Realty Trust, Inc. 17,694,600
------------------------------------------------------------------------------------------------------------------------------------
OFFICE PROPERTIES - 35.8%
1,286,200 Arden Realty, Inc. 57,660,346
477,300 Equity Office Properties Trust 14,476,509
3,059,400 HRPT Properties Trust 31,664,790
1,265,500 Mack-Cali Realty Corporation 54,669,600
264,600 Maguire Properties, Inc. 8,176,140
1,120,600 Reckson Associates Realty Corporation 40,319,188
1,579,000 Republic Property Trust 18,948,000
------------------------------------------------------------------------------------------------------------------------------------
Total Office Properties 225,914,573
------------------------------------------------------------------------------------------------------------------------------------
REGIONAL MALLS - 10.4%
971,000 The Macerich Company 65,192,940
------------------------------------------------------------------------------------------------------------------------------------
SELF STORAGE CENTERS - 3.3%
984,200 U-Store-It Trust 20,717,410
------------------------------------------------------------------------------------------------------------------------------------
SHOPPING CENTERS - 7.8%
239,600 Cedar Shopping Centers Inc. 3,371,172
413,800 Federal Realty Investment Trust 25,096,970
880,300 New Plan Excel Realty Trust 20,405,354
------------------------------------------------------------------------------------------------------------------------------------
Total Shopping Centers 48,873,496
------------------------------------------------------------------------------------------------------------------------------------
Total Real Estate Investment Trust Common Stocks (cost $346,527,690) 564,112,590
------------------------------------------------------------------------------------------------------------------------------------
11
Nuveen Real Estate Income Fund (JRS) (continued)
Portfolio of INVESTMENTS December 31, 2005
SHARES DESCRIPTION(1) COUPON VALUE
------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST PREFERRED STOCKS - 36.7% (29.0% OF TOTAL INVESTMENTS)
APARTMENTS - 8.7%
603,500 Apartment Investment & Management Company, Series R 10.000% $ 15,401,320
461,100 Apartment Investment & Management Company, Series U 7.750% 11,453,724
158,000 Apartment Investment & Management Company, Series Y 7.875% 3,965,800
945,000 Home Properties Inc., Series F 9.000% 24,258,150
------------------------------------------------------------------------------------------------------------------------------------
Total Apartments 55,078,994
--------------------------------------------------------------------------------------------------------------------
DIVERSIFIED - 9.7%
1,031,300 Crescent Real Estate Equities Company, Series A (Convertible) 6.750% 22,059,507
850,000 Crescent Real Estate Equities Company, Series B 9.500% 22,355,000
150,000 Lexington Corporate Properties Trust, Series B 8.050% 3,805,500
497,623 PS Business Parks, Inc., Series F 8.750% 12,654,553
------------------------------------------------------------------------------------------------------------------------------------
Total Diversified 60,874,560
--------------------------------------------------------------------------------------------------------------------
HOTELS - 6.0%
130,000 Ashford Hospitality Trust, Series A 8.550% 3,328,000
339,000 Boykin Lodging Company, Series A 10.500% 8,864,850
310,000 FelCor Lodging Trust Inc., Series C, (2) 8.000% 7,446,200
120,000 Hersha Hospitality Trust, Series A 8.000% 2,962,800
592,000 LaSalle Hotel Properties, Series A 10.250% 15,392,000
------------------------------------------------------------------------------------------------------------------------------------
Total Hotels 37,993,850
--------------------------------------------------------------------------------------------------------------------
OFFICE PROPERTIES - 5.6%
95,400 Alexandria Real Estate Equities Inc., Series B 9.100% 2,422,206
160,000 Alexandria Real Estate Equities Inc., Series C 8.375% 4,120,800
200,000 Corporate Office Properties Trust, Series G 8.000% 5,069,000
12,141 Highwoods Properties, Inc., Series A 8.625% 13,415,805
406,000 Maguire Properties, Inc., Series A 7.625% 9,947,000
------------------------------------------------------------------------------------------------------------------------------------
Total Office Properties 34,974,811
--------------------------------------------------------------------------------------------------------------------
REGIONAL MALLS - 5.5%
113,000 Glimcher Realty Trust, Series F 8.750% 2,895,625
50,000 Glimcher Realty Trust, Series G 8.125% 1,252,250
400,000 Taubman Centers, Inc., Series H 7.625% 10,100,000
115,200 The Mills Corp., Series C 9.000% 2,975,616
213,000 The Mills Corp., Series E 8.750% 5,452,800
480,000 The Mills Corp., Series G 7.875% 12,090,000
------------------------------------------------------------------------------------------------------------------------------------
Total Regional Malls 34,766,291
--------------------------------------------------------------------------------------------------------------------
SHOPPING CENTERS - 1.2%
160,000 Cedar Shopping Centers Inc., Series A 8.875% 4,285,008
125,000 Saul Centers, Inc., Series A 8.000% 3,200,000
------------------------------------------------------------------------------------------------------------------------------------
Total Shopping Centers 7,485,008
--------------------------------------------------------------------------------------------------------------------
Total Real Estate Investment Trust Preferred Stocks (cost $222,982,647) 231,173,514
--------------------------------------------------------------------------------------------------------------------
12
PRINCIPAL
AMOUNT (000) DESCRIPTION(1) COUPON MATURITY VALUE
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.5% (0.4% OF TOTAL INVESTMENTS)
Repurchase Agreement with State Street Bank, dated 12/30/05,
repurchase price $2,851,228 collateralized by $2,950,000 U.S. Treasury
$ 2,850 Notes, 4.000% due 11/15/12, value $2,909,438 3.250% 1/03/06 $ 2,850,199
=============-----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $2,850,199) 2,850,199
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $572,360,536) - 126.8% 798,136,303
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.5% 3,512,621
-------------------------------------------------------------------------------------------------------------------
Taxable Auctioned Preferred Shares, at Liquidation Value - (27.3)% (172,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $629,648,924
===================================================================================================================
INTEREST RATE SWAPS OUTSTANDING AT DECEMBER 31, 2005:
FIXED RATE
PAID FIXED RATE FLOATING RATE FLOATING RATE UNREALIZED
NOTIONAL BY THE FUND PAYMENT RECEIVED PAYMENT TERMINATION APPRECIATION
COUNTERPARTY AMOUNT (ANNUALIZED) FREQUENCY BY THE FUND(3) FREQUENCY DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Citigroup Inc. $43,000,000 4.800% Monthly 4.320% Monthly 2/06/2007 $ (48,259)
Citigroup Inc. 43,000,000 5.190% Monthly 4.320% Monthly 2/06/2009 (603,998)
------------------------------------------------------------------------------------------------------------------------------------
$(652,257)
====================================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Security is eligible for the Dividends Received Deduction.
(3) Based on LIBOR (London Inter-Bank Offered Rates).
See accompanying notes to financial statements.
13
Statement of
ASSETS AND LIABILITIES December 31, 2005
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $572,360,536) $798,136,303
Dividends and interest receivable 4,816,151
Other assets 29,532
------------------------------------------------------------------------------------------------------------------------------------
Total assets 802,981,986
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Unrealized depreciation on interest rate swaps 652,257
Accrued expenses:
Management fees 399,406
Other 192,671
Taxable Auctioned Preferred share dividends payable 88,728
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,333,062
------------------------------------------------------------------------------------------------------------------------------------
Taxable Auctioned Preferred shares, at liquidation value 172,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $629,648,924
====================================================================================================================================
Common shares outstanding 28,136,413
====================================================================================================================================
Net asset value per Common share outstanding (net assets applicable to
Common shares, divided by Common shares outstanding) $ 22.38
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 281,364
Paid-in surplus 391,118,113
Undistributed (Over-distribution of) net investment income 13,125,937
Accumulated net realized gain (loss) from investments and derivative transactions --
Net unrealized appreciation (depreciation) of investments and derivative transactions 225,123,510
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $629,648,924
====================================================================================================================================
Authorized shares:
Common Unlimited
Taxable Auctioned Preferred Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
14
Statement of
OPERATIONS Year Ended December 31, 2005
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 29,011,102
Interest 219,822
------------------------------------------------------------------------------------------------------------------------------------
Total investment income 29,230,924
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 6,943,225
Taxable Auctioned Preferred shares - auction fees 430,916
Taxable Auctioned Preferred shares - dividend disbursing agent fees 25,171
Shareholders' servicing agent fees and expenses 6,010
Custodian's fees and expenses 162,120
Trustees' fees and expenses 22,556
Professional fees 56,211
Shareholders' reports - printing and mailing expenses 98,959
Stock exchange listing fees 2,372
Investor relations expense 129,056
Other expenses 32,176
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 7,908,772
Custodian fee credit (44)
Expense reimbursement (2,362,641)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 5,546,087
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 23,684,837
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from:
Investments 43,150,661
Interest rate swaps (1,739,276)
Change in net unrealized appreciation (depreciation) of:
Investments (18,591,745)
Interest rate swaps 3,221,965
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 26,041,605
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO TAXABLE AUCTIONED PREFERRED SHAREHOLDERS
From net investment income (976,242)
From accumulated net realized gains (4,466,723)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions to Taxable Auctioned Preferred shareholders (5,442,965)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from operations $ 44,283,477
====================================================================================================================================
See accompanying notes to financial statements.
15
Statement of
CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
12/31/05 12/31/04
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 23,684,837 $ 24,895,312
Net realized gain (loss) from:
Investments 43,150,661 18,980,955
Interest rate swaps (1,739,276) (4,017,763)
Change in net unrealized appreciation (depreciation) of:
Investments (18,591,745) 109,849,162
Interest rate swaps 3,221,965 3,346,462
Distributions to Taxable Auctioned Preferred shareholders:
From net investment income (976,242) (1,353,325)
From accumulated net realized gains (4,466,723) (1,218,577)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from operations 44,283,477 150,482,226
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (8,022,508) (19,333,368)
From accumulated net realized gains (38,683,938) (17,762,374)
Tax return of capital -- (3,983,421)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions to
Common shareholders (46,706,446) (41,079,163)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares offering costs adjustments 67,319 --
Taxable Auctioned Preferred shares offering costs adjustments 25,537 --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from capital share transactions 92,856 --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares (2,330,113) 109,403,063
Net assets applicable to Common shares at the beginning of year 631,979,037 522,575,974
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of year $629,648,924 $631,979,037
====================================================================================================================================
Undistributed (Over-distribution of) net investment income at the end of year $ 13,125,937 $ 179,126
====================================================================================================================================
See accompanying notes to financial statements.
16
Notes to
FINANCIAL STATEMENTS
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 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 fair value in accordance with procedures established in
good faith by the Board of Trustees. In establishing 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 investments 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
December 31, 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.
Federal 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.
17
Notes to
FINANCIAL STATEMENTS (continued)
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 makes monthly cash distributions to Common Shareholders of a stated
dollar amount based on the Fund's net investment income, 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 distribution 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. The final determination of
the source of all distributions for the year are made after the end of the year
and reflected in the accompanying financial statements.
Real Estate Investment Trust ("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, 2005, the character of distributions to the Fund from the
REITs was 55.38% ordinary income, 32.12% long-term and short-term capital gains,
and 12.50% return of REIT capital. For the fiscal year 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 fiscal years ended December 31, 2005 and 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.
For the fiscal years ended December 31, 2005 and 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.
18
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 fiscal year
ended December 31, 2005, nor during the fiscal year ended December 31, 2004.
3. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term investments and
derivative transactions) during the fiscal year ended December 31, 2005,
aggregated $101,860,076 and $107,524,096, respectively.
19
Notes to
FINANCIAL STATEMENTS (continued)
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 timing differences
in recognizing certain gains and losses on investment transactions.
At December 31, 2005, the cost of investments owned was $572,360,536.
The net unrealized appreciation of investments at December 31, 2005, aggregated
$225,775,767, of which $228,404,453 related to appreciated securities and
$2,628,686 related to depreciated securities.
The tax components of undistributed net ordinary income and net realized gains
at December 31, 2005, were as follows:
--------------------------------------------------------------------------------
Undistributed net ordinary income * $13,172,759
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 years ended December
31, 2005 and December 31, 2004, was designated for purposes of the dividends
paid deduction as follows:
2005
--------------------------------------------------------------------------------
Distributions from net ordinary income * $ 9,490,892
Distributions from net long-term capital gains ** 42,608,613
================================================================================
* Net ordinary income consists of net taxable income derived from dividends,
interest, and net short-term capital gains, if any.
** The Fund designated as a long-term capital gain dividend, pursuant to
Internal Revenue Code Section 852(b)(3), the amount necessary to reduce the
earnings and profits of the Fund related to net capital gain to zero for
the tax period ended December 31, 2005.
2004
--------------------------------------------------------------------------------
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.
20
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 December 31, 2005, the complex-level fee rate was .1895%.
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.
21
Notes to
FINANCIAL STATEMENTS (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
February 1, 2006, to shareholders of record on January 15, 2006.
22
Financial
HIGHLIGHTS
23
Financial
HIGHLIGHTS
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 $22.46 $ .84 $ .93 $(.03) $(.16) $1.58 $(.29) $(1.37) $ -- $(1.66)
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 $ -- $22.38 $19.99 4.75% 7.42%
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 $629,649 1.28% 3.46% .90% 3.85% 13%
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 $172,000 $25,000 $116,519
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.
* Annualized.
** Total 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.
24-25 SPREAD
Board Members
AND OFFICERS
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 nine. None of the board members who are not "interested" persons of the Funds
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.
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER
------------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Timothy R. Schwertfeger(1) Chairman of 1994 Chairman (since 1996) and Director of Nuveen Investments, 156
3/28/49 the Board Inc., Nuveen Investments, LLC, Nuveen Advisory Corp. and
333 W. Wacker Drive and Trustee Nuveen Institutional Advisory Corp.(3); Director (since 1996)
Chicago, IL 60606 of Institutional Capital Corporation; Chairman and Director
(since 1997) of Nuveen Asset Management; Chairman and
Director of Rittenhouse Asset Management, Inc. (since 1999);
Chairman of Nuveen Investments Advisers Inc. (since 2002).
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Robert P. Bremner Board member 1997 Private Investor and Management Consultant. 156
8/22/40
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown Board member 1993 Retired (since 1989) as Senior Vice President of The 156
7/29/34 Northern Trust Company; Director (since 2002) Community
333 W. Wacker Drive Advisory Board for Highland Park and Highwood, United
Chicago, IL 60606 Way of the North Shore.
------------------------------------------------------------------------------------------------------------------------------------
Jack B. Evans Board member 1999 President, The Hall-Perrine Foundation, a private philanthropic 156
10/22/48 corporation (since 1996); Director and Vice Chairman, United
333 W. Wacker Drive Fire Group, a publicly held company; Adjunct Faculty Member,
Chicago, IL 60606 University of Iowa; Director, Gazette Companies; Life Trustee
of Coe College and 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.
------------------------------------------------------------------------------------------------------------------------------------
William C. Hunter Board member 2004 Dean and Distinguished Professor of Finance, School of 156
3/6/48 Business at the University of Connecticut (since 2002);
333 W. Wacker Drive previously, Senior Vice President and Director of Research
Chicago, IL 60606 at the Federal Reserve Bank of Chicago (1995-2003); Director
(since 1997), Credit Research Center at Georgetown University;
Director (since 2004) of Xerox Corporation; Director
SS&C Technologies, Inc. (May 2005 - October 2005).
------------------------------------------------------------------------------------------------------------------------------------
David J. Kundert Board member 2005 Retired (since 2004) as Chairman, JPMorgan Fleming Asset 154
10/28/42 Management, President and CEO, Banc One Investment
333 W. Wacker Drive Advisors Corporation, and President, One Group Mutual
Chicago, IL 60606 Funds; prior thereto, Executive Vice President, Banc One
Corporation and Chairman and CEO, Banc One Investment
Management Group; Board of Regents, Luther College;
member of the Wisconsin Bar Association; member of Board
of Directors, Friends of Boerner Botanical Gardens.
26
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER
------------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
William J. Schneider Board member 1997 Chairman of Miller-Valentine Partners Ltd., a real estate 156
9/24/44 investment company; formerly, Senior Partner and Chief
333 W. Wacker Drive Operating Officer (retired, December 2004), of Miller-Valentine
Chicago, IL 60606 Group; formerly, Vice President, Miller-Valentine Realty;
Board Member, Chair of the Finance Committee and member
of the Audit Committee of Premier Health Partners, the
not-for-profit company of Miami Valley Hospital; Vice
President, Dayton Philharmonic Orchestra Association; Board
Member, Regional Leaders Forum, which promotes cooperation on
economic development issues; Director, Dayton Development
Coalition; formerly, Member, Community Advisory Board,
National City Bank, Dayton, Ohio and Business Advisory
Council, Cleveland Federal Reserve Bank.
------------------------------------------------------------------------------------------------------------------------------------
Judith M. Stockdale Board member 1997 Executive Director, Gaylord and Dorothy Donnelley 156
12/29/47 Foundation (since 1994); prior thereto, Executive Director,
333 W. Wacker Drive Great Lakes Protection Fund (from 1990 to 1994).
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Eugene S. Sunshine Board member 2005 Senior Vice President for Business and Finance, 156
1/22/50 Northwestern University (since 1997); Director (since 2003),
333 W. Wacker Drive Chicago Board Options Exchange; Director (since 2003),
Chicago, IL 60606 National Mentor Holdings, a privately-held, national provider
of home and community-based services; Chairman (since
1997), Board of Directors, Rubicon, a pure captive insurance
company owned by Northwestern University; Director (since
1997), Evanston Chamber of Commerce and Evanston
Inventure, a business development organization.
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUND:
------------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary and 156
9/9/56 Administrative Associate General Counsel, formerly, Vice President and
333 W. Wacker Drive Officer Assistant General Counsel, of Nuveen Investments, LLC;
Chicago, IL 60606 Managing Director (2002-2004), General Counsel (1998-2004)
and Assistant Secretary, formerly, Vice President of Nuveen
Advisory Corp. and Nuveen Institutional Advisory Corp.(3);
Managing Director (since 2002) and Assistant Secretary and
Associate General Counsel, formerly, Vice President (since
1997), of Nuveen Asset Management; Managing Director
(since 2004) and Assistant Secretary (since 1994) of Nuveen
Investments, Inc.; Assistant Secretary of NWQ Investment
Management Company, LLC. (since 2002); Vice President and
Assistant Secretary of Nuveen Investments Advisers Inc.
(since 2002); Managing Director, Associate General Counsel
and Assistant Secretary of Rittenhouse Asset Management,
Inc. (since 2003); Chartered Financial Analyst.
27
Board Members
AND OFFICERS (CONTINUED)
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Julia L. Antonatos Vice President 2004 Managing Director (since 2005), formerly Vice President 156
9/22/63 (since 2002); formerly, Assistant Vice President (since 2000)
333 W. Wacker Drive of Nuveen Investments, LLC; Chartered Financial Analyst.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant Vice 156
2/3/66 and Assistant President (since 2000) of Nuveen Investments, LLC.
333 W. Wacker Drive Secretary
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Peter H. D'Arrigo Vice President 1999 Vice President of Nuveen Investments, LLC (since 1999); Vice 156
11/28/67 and Treasurer President and Treasurer (since 1999) of Nuveen Investments,
333 W. Wacker Drive Inc.; Vice President and Treasurer (1999-2004) of Nuveen
Chicago, IL 60606 Advisory Corp. and Nuveen Institutional Advisory Corp.(3);
Vice President and Treasurer of Nuveen Asset Management
(since 2002) and of Nuveen Investments Advisers Inc. (since
2002); Assistant Treasurer of NWQ Investment Management
Company, LLC. (since 2002); Vice President and Treasurer of
Nuveen Rittenhouse Asset Management, Inc. (since 2003);
Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
John N. Desmond Vice President 2005 Vice President, Director of Investment Operations, Nuveen 156
8/24/61 Investments, LLC (since January 2005); formerly, Director,
333 W. Wacker Drive Business Manager, Deutsche Asset Management (2003-2004),
Chicago, IL 60606 Director, Business Development and Transformation, Deutsche
Trust Bank Japan (2002-2003); previously, Senior Vice
President, Head of Investment Operations and Systems,
Scudder Investments Japan, (2000-2002), Senior Vice
President, Head of Plan Administration and Participant
Services, Scudder Investments (1995-2002).
------------------------------------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President 1998 Vice President (since 2002), Assistant Secretary and 156
9/24/64 and Secretary Assistant General Counsel (since 1998) formerly, Assistant
333 W. Wacker Drive Vice President (since 1998) of Nuveen Investments, LLC;
Chicago, IL 60606 Vice President (2002-2004) and Assistant Secretary (1998-2004)
formerly, Assistant Vice President of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp.(3); Vice President and
Assistant Secretary (since 2005) of Nuveen Asset Management.
------------------------------------------------------------------------------------------------------------------------------------
Lorna C. Ferguson Vice President 1998 Managing Director (since 2004), formerly, Vice President of 156
10/24/45 Nuveen Investments, LLC, Managing Director (2004) formerly,
333 W. Wacker Drive Vice President (1998-2004) of Nuveen Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional Advisory Corp.(3); Managing Director
(since 2005) of Nuveen Asset Management.
------------------------------------------------------------------------------------------------------------------------------------
William M. Fitzgerald Vice President 1995 Managing Director (since 2002), formerly, Vice President of 156
3/2/64 Nuveen Investments; Managing Director (1997-2004) of
333 W. Wacker Drive Nuveen Advisory Corp. and Nuveen Institutional Advisory
Chicago, IL 60606 Corp.(3); Managing Director of Nuveen Asset Management
(since 2001); Vice President of Nuveen Investments Advisers
Inc. (since 2002); Chartered Financial Analyst.
28
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller (since 1998) 156
5/31/54 and Controller of Nuveen Investments, LLC; formerly, Vice President and
333 W. Wacker Drive Funds Controller (1998-2004) of Nuveen Investments, Inc.;
Chicago, IL 60606 Certified Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
James D. Grassi Vice President 2004 Vice President and Deputy Director of Compliance (since 2004) 156
4/13/56 and Chief of Nuveen Investments, LLC, Nuveen Investments Advisers Inc.,
333 W. Wacker Drive Compliance Nuveen Asset Management and Rittenhouse Asset Management,
Chicago, IL 60606 Officer Inc.; previously, Vice President and Deputy Director of Compliance
(2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory
Corp.(3); formerly, Senior Attorney (1994-2004), The Northern
Trust Company.
------------------------------------------------------------------------------------------------------------------------------------
David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, 156
3/22/63 LLC; Certified Public Accountant.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Tina M. Lazar Vice President 2002 Vice President of Nuveen Investments, LLC (since 1999). 156
8/27/61
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant General 156
7/27/51 and Assistant Counsel of Nuveen Investments, LLC; Vice President and
333 W. Wacker Drive Secretary Assistant Secretary of Nuveen Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory Corp.(3); Vice President (since 2005)
and Assistant Secretary of Nuveen Investments, Inc.; Vice
President (since 2005) and Assistant Secretary (since 1997)
of Nuveen Asset Management; Vice President (since 2000),
Assistant Secretary and Assistant General Counsel (since
1998) of Rittenhouse Asset Management, Inc.; Vice President
and Assistant Secretary of Nuveen Investments Advisers Inc.
(since 2002); Assistant Secretary of NWQ Investment
Management Company, LLC (since 2002).
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and board member
of the Adviser.
(2) Board members serve an indefinite term until his/her successor is elected.
The year first elected or appointed represents the year in which the board
member was first elected or appointed to any fund in the Nuveen Complex.
(3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
(4) Officers serve one year terms through July 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.
29
Reinvest Automatically
EASILY AND CONVENIENTLY
Sidebar text: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN EXCHANGE-TRADED CLOSED-END FUNDS
DIVIDEND REINVESTMENT PLAN
Your Nuveen Exchange-Traded Closed-End Fund allows you to conveniently reinvest
dividends and/or capital gains 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.
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 month you'll receive a statement
showing your total dividends and 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. Dividends and distributions received to purchase
shares in the open market will normally be invested shortly after the dividend
payment date. No interest will be paid on dividends and 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 dividend or 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 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. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
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 investment 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 DIVIDENDS AND/OR 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.
30
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
Each Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
12-month period ended June 30, 2005, and (iii) a description of the policies and
procedures that the Funds 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 References Section at 450 Fifth Street NW, Washington, D.C.
20549.
CEO CERTIFICATION DISCLOSURE
Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange
the annual CEO certification as required by Section 303A.12(a) of the NYSE
Listed Company Manual.
Each Fund has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
DISTRIBUTION INFORMATION
The Fund designates 0% of dividends declared from net investment income as
dividends qualifying for the 70% dividends received deduction for corporations
and 7.80% as qualified dividend income for individuals under the Jobs and Growth
Tax Relief Reconciliation Act of 2003.
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 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
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.
31
Nuveen Investments:
SERVING Investors
For GENERATIONS
Photo of: 2 women looking at a photo album.
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS.
Managing more than $135 billion in assets, Nuveen Investments offers access to a
number of different asset classes and investing solutions through a variety of
products. Nuveen Investments markets its capabilities under four distinct
brands: Nuveen, a leader in fixed-income investments; NWQ, a leader in
value-style equities; Rittenhouse, a leader in growth-style equities; and
Symphony, a leading institutional manager of market-neutral alternative
investment portfolios.
FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest.
Be sure to obtain a prospectus, where applicable. Investors should consider the
investment objective and policies, risk considerations, charges and expenses of
the Fund carefully before investing. The prospectus contains this and other
information relevant to an investment in the Fund. For 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.
o Share prices
o Fund details
Learn more o Daily financial news
about Nuveen Funds at o Investor education
WWW.NUVEEN.COM/ETF o Interactive planning tools
Logo: NUVEEN Investments
EAN-A-1205D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. There were no amendments to or waivers
from the Code during the period covered by this report. The registrant has
posted the code of ethics on its website at www.nuveen.com/etf. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees determined that the registrant
has at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its Audit Committee. The registrant's audit committee
financial expert is Jack B. Evans, Chairman of the Audit Committee, who is
"independent" for purposes of Item 3 of Form N-CSR.
Mr. Evans was formerly President and Chief Operating Officer of SCI Financial
Group, Inc., a full service registered broker-dealer and registered investment
adviser ("SCI"). As part of his role as President and Chief Operating Officer,
Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and
actively supervised the CFO's preparation of financial statements and other
filings with various regulatory authorities. In such capacity, Mr. Evans was
actively involved in the preparation of SCI's financial statements and the
resolution of issues raised in connection therewith. Mr. Evans has also served
on the audit committee of various reporting companies. At such companies, Mr.
Evans was involved in the oversight of audits, audit plans, and the preparation
of financial statements. Mr. Evans also formerly chaired the audit committee of
the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Nuveen Real Estate Income Fund
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP the Audit Committee approved in advance all
audit services and non-audit services that Ernst & Young LLP provided to the
Fund, except for those non-audit services that were subject to the pre-approval
exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The
pre-approval exception for services provided directly to the Fund waives the
pre-approval requirement for services other than audit, review or attest
services if: (A) the aggregate amount of all such services provided constitutes
no more than 5% of the total amount of revenues paid by the Fund to its
accountant during the fiscal year in which the services are provided; (B) the
Fund did not recognize the services as non-audit services at the time of the
engagement; and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before the
audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND BILLED TO FUND BILLED TO FUND BILLED TO FUND
------------------------------------------------------------------------------------------------------------------------------------
December 31, 2005 $ 19,000 $ 0 $ 1,014 $ 3,750
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
December 31, 2004 $ 18,000 $ 0 $ 3,800 $ 3,550
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
The above "All Other Fees" are fees paid to audit firms to perform agreed upon
procedures required by the rating agencies to rate fund preferred shares. The
above "Tax Fees" were billed for professional services for tax advice, tax
compliance, and tax planning.
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE
ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by Ernst & Young LLP to
Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling,
controlled by or under common control with NAM ("Control Affiliate") that
provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for
engagements directly related to the Fund's operations and financial reporting,
during the Fund's last two full fiscal years.
The tables also show the percentage of fees subject to the pre-approval
exception. The pre-approval exception for services provided to the Adviser and
any Affiliated Fund Service Provider (other than audit, review or attest
services) waives the pre-approval requirement if: (A) the aggregate amount of
all such services provided constitutes no more than 5% of the total amount of
revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund
Service Providers during the fiscal year in which the services are provided that
would have to be pre-approved by the Audit Committee; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement; and
(C) the services are promptly brought to the Audit Committee's attention, and
the Committee (or its delegate) approves the services before the Fund's audit is
completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES
BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER
AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
SERVICE PROVIDERS SERVICE PROVIDERS SERVICE PROVIDERS
---------------------------------------------------------------------------------------------------------------------
December 31, 2005 $ 0 $ 282,575 $ 0
---------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
---------------------------------------------------------------------------------------------------------------------
December 31, 2004 $ 0 $ 0 $ 0
---------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
---------------------------------------------------------------------------------------------------------------------
The above "Tax Fees" are primarily fees billed to the Adviser for Fund tax
return preparation.
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. For
engagements entered into on or after May 6, 2003, the Audit Committee is
required to pre-approve non-audit services that Ernst & Young LLP provides to
the Adviser and any Affiliated Fund Services Provider, if the engagement related
directly to the Fund's operations and financial reporting (except for those
subject to the de minimis exception described above). The Audit Committee
requested and received information from Ernst & Young LLP about any non-audit
services that Ernst & Young LLP rendered during the Fund's last fiscal year to
the Adviser and any Affiliated Fund Service Provider. The Committee considered
this information in evaluating Ernst & Young LLP's independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES
PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND
RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE
TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
------------------------------------------------------------------------------------------------------------------------------------
December 31, 2005 $ 4,764 $ 282,575 $ 0 $ 287,339
December 31, 2004 $ 7,350 $ 0 $ 0 $ 7,350
The above "Non-Audit Fees billed to Adviser" for 2005 include "Tax-Fees" billed
to Adviser in the amount of $282,575 from previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the Audit Committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the Audit Committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the Audit Committee at
the next Audit Committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant's Board of Directors or Trustees has a separately designated
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The
members of the audit committee are Robert P. Bremner, Lawrence H. Brown, Jack B.
Evans, William J. Schneider and Eugene S. Sunshine.
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.
The Adviser has engaged Security Capital Research & Management Incorporated
("Security Capital" or "Sub-Adviser") as Sub-Adviser to provide discretionary
investment advisory services. As part of these services, the Adviser has also
delegated to the Sub-Adviser the full responsibility for proxy voting and
related duties in accordance with the Sub-Adviser's policy and procedures. The
Adviser periodically will monitor the Sub-Adviser's voting to ensure that they
are carrying out their duties. The Sub-Adviser's proxy voting policies and
procedures are summarized as follows:
Security Capital may be granted by its clients the authority to vote the proxies
of the securities held in client portfolios. To ensure that the proxies are
voted in the best interests of its clients, Security Capital has adopted
detailed proxy voting procedures ("Procedures") that incorporate detailed proxy
guidelines ("Guidelines") for voting proxies on specific types of issues.
Pursuant to the Procedures, most routine proxy matters will be voted in
accordance with the Guidelines, which have been developed with the objective of
encouraging corporate action that enhances shareholder value. For proxy matters
that are not covered by the Guidelines (including matters that require a
case-by-case determination) or where a vote contrary to the Guidelines is
considered appropriate, the Procedures require a certification and review
process to be completed before the vote is cast. That process is designed to
identify actual or potential material conflicts of interest and ensure that the
proxy is cast in the best interest of clients.
To oversee and monitor the proxy-voting process, Security Capital will establish
a proxy committee and appoint a proxy administrator. The proxy committee will
meet periodically to review general proxy-voting matters, review and approve the
Guidelines annually, and provide advice and recommendations on general
proxy-voting matters as well as on specific voting issues.
A copy of the Security Capital's proxy voting procedures and guidelines are
available upon request by contacting your client service representative.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
SECURITY CAPITAL
A. PORTFOLIO MANAGER BIOGRAPHIES
ANTHONY R. MANNO JR. is CEO, President and Chief Investment Officer of Security
Capital Research & Management Incorporated. He is Chairman, President and
Managing Director of SC-Preferred Growth Incorporated. Prior to joining Security
Capital in 1994, Mr. Manno spent 14 years with LaSalle Partners Limited as a
Managing Director, responsible for real estate investment banking activities.
KENNETH D. STATZ is a Managing Director and Senior Market Strategist of Security
Capital Research & Management Incorporated where he is responsible for the
development and implementation of portfolio investment strategy. Prior to
joining Security Capital in 1995, Mr. Statz was a Vice President in the
Investment Research Department of Goldman, Sachs & Co., concentrating on
research and underwriting for the REIT industry.
KEVIN W. BEDELL is a Managing Director of Security Capital Research & Management
Incorporated where he directs the Investment Analysis Team, which provides
in-depth proprietary research on publicly listed companies. Prior to joining
Security Capital in 1996, Mr. Bedell spent nine years with LaSalle Partners
Limited where he was Equity Vice President and Portfolio Manager, with
responsibility for strategic, operational and financial management of a private
real estate investment trust with commercial real estate investments in excess
of $1 billion.
DAVID E. ROSENBAUM is a Managing Director of Security Capital Research &
Management Incorporated where he leads the Investment Structuring Team. He is
also Managing Director of SC-Preferred Growth Incorporated. Prior to joining
Security Capital in 1997, Mr. Rosenbaum was a Vice President at Lazard Freres &
Co., LLC, where he structured investments in real estate operating companies.
B. OTHER ACCOUNTS MANAGED BY SECURITY CAPITAL
------------------------------------------------------------------------------------------------------------------------------------
Nuveen Real Estate Income Fund
Security Capital Research & Management Incorporated
------------------------------------------------------------------------------------------------------------------------------------
---------- ---------------------- ---------------------- --------------------- --------------- ---------------- --------------------
Registered Investment Other Pooled Other Accounts Registered Other Pooled Other Accounts
Companies Investment Investment Investment
Vehicles Companies Vehicles
---------- --------- ------------ --------- ------------ --------- ----------- ------- ------- -------- ------- -------- -----------
Number Total Number Total Number Total Number Total Number Total Number Total
of Assets of Assets of Assets of Assets of Assets of Assets
Accounts ($billions) Accounts ($billions) Accounts ($billions) Accounts Accounts Accounts ($billions)
---------- --------- ------------ --------- ------------ --------- ----------- --------------- -------- ------- -------- -----------
Anthony R.
Manno Jr. 4 $0.8 1 $1.9 526 $2.1 - - - - 5 $0.5
---------- --------- ------------ --------- ------------ --------- ----------- ------- ------- -------- ------- -------- -----------
Kenneth D.
Statz 4 $0.8 1 $1.9 518 $2.1 - - - - 5 $0.5
---------- --------- ------------ --------- ------------ --------- ----------- ------- ------- -------- ------- -------- -----------
Kevin W.
Bedell 4 $0.8 1 $1.9 524 $2.1 - - - - 5 $0.5
---------- --------- ------------ --------- ------------ --------- ----------- ------- ------- -------- ------- -------- -----------
David E.
Rosenbaum 4 $0.8 1 $1.9 525 $2.1 - - - - 5 $0.5
---------- --------- ------------ --------- ------------ --------- ----------- ------- ------- -------- ------- -------- -----------
C. POTENTIAL MATERIAL CONFLICTS OF INTEREST
As shown in the above tables, the portfolio managers may manage
accounts in addition to the registrant. The potential for conflicts of
interest exists when portfolio managers manage other accounts with
similar investment objectives and strategies to the registrant
("Similar Accounts"). Potential conflicts may include, for example,
conflicts between investment strategies and conflicts in the allocation
of investment opportunities.
Responsibility for managing Security Capital's clients' portfolios is
organized according to investment strategies within asset classes.
Generally, client portfolios with similar strategies are managed using
the same objectives, approach and philosophy. Therefore, portfolio
holdings, relative position sizes and sector exposures tend to be
similar across similar portfolios which minimizes the potential for
conflicts of interest.
Security Capital may receive more compensation with respect to certain
Similar Accounts than that received with respect to the registrant or
may receive compensation based in part on the performance of certain
Similar Accounts. This may create a potential conflict of interest for
Security Capital or its portfolio managers by providing an incentive to
favor these Similar Accounts when, for example, placing securities
transactions. Potential conflicts of interest may arise with both the
aggregation and allocation of securities transactions and allocation of
limited investment opportunities. Allocations of aggregated trades,
particularly trade orders that were only partially completed due to
limited availability, and allocation of investment opportunities
generally, could raise a potential conflict of interest, as Security
Capital may have an incentive to allocate securities that are expected
to increase in value to favored accounts. Initial public offerings, in
particular, are frequently of very limited availability. Security
Capital may be perceived as causing accounts it manages to participate
in an offering to increase Security Capital's overall allocation of
securities in that offering. A potential conflict of interest also may
be perceived to arise if transactions in one account closely follow
related transactions in a different account, such as when a purchase
increases the value of securities previously purchased by another
account, or when a sale in one account lowers the sale price received
in a sale by a second account. If Security Capital manages accounts
that engage in short sales of securities of the type in which the Funds
invests, Security Capital could be seen as harming the performance of
the Funds for the benefit of the accounts engaging in short sales if
the short sales cause the market value of the securities to fall.
Security Capital has policies and procedures designed to manage these
conflicts described above such as allocation of investment
opportunities to achieve fair and equitable allocation of investment
opportunities among its clients over time. For example:
Orders for the same equity security are aggregated on a continual basis
throughout each trading day consistent with Security Capital's duty of
best execution for its clients. If aggregated trades are fully
executed, accounts participating in the trade will be allocated their
pro rata share on an average price basis. Partially completed orders
will be allocated among the participating accounts on a pro-rata
average price basis as well.
D. FUND MANAGER COMPENSATION
The Portfolio Managers participate in a highly competitive compensation
program that is designed to attract and retain outstanding people. The
total compensation program includes base salary and cash incentives.
These elements reflect individual performance and the performance of
the business as a whole. Base salaries are fixed for each Portfolio
Manager. Cash bonuses are variable and are focused extensively on the
profitability of the business as a whole as well as portfolio
investment performance. Base salaries are not based on the performance
of any account. Cash bonuses are based on the profitability of the
business as a whole as well as the investment performance of all
accounts managed by the Portfolio Manager. Portfolio Manager
compensation is not based on the value of assets held in the Funds
portfolio.
E. OWNERSHIP OF JRS SECURITIES AS DECEMBER 31, 2005.
---------------------- ---------- ------------ ----------------- ------------------ ------------------ ------------- ------------
Portfolio Manager None $1-$10,000 $10,001-$50,000 $50,001-$100,000 $100,001-$500,000 $500,001 - over
$1,000,000 $1,000,000
---------------------- ---------- ------------ ----------------- ------------------ ------------------ ------------- ------------
Anthony R. Manno Jr. X
---------------------- ---------- ------------ ----------------- ------------------ ------------------ ------------- ------------
Kenneth D. Statz X
---------------------- ---------- ------------ ----------------- ------------------ ------------------ ------------- ------------
Kevin W. Bedell X
---------------------- ---------- ------------ ----------------- ------------------ ------------------ ------------- ------------
David E. Rosenbaum X
---------------------- ---------- ------------ ----------------- ------------------ ------------------ ------------- ------------
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 were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board during the reporting period and
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. Letter or number the
exhibits in the sequence indicated.
(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
because the code is posted on registrant's website at www.nuveen.com/etf and
there were no amendments during the period covered by this report. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then Code of Conduct.)
(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
-----------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: March 8, 2006
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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: March 8, 2006
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By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: March 8, 2006
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.