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
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Date of fiscal year end: October 31, 2003
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Date of reporting period: October 31, 2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT October 31, 2003
Nuveen
Closed-End
Exchange-Traded
Funds
NUVEEN
REAL ESTATE
INCOME FUND
JRS
HIGH CURRENT INCOME
FROM A PORTFOLIO OF
COMMERCIAL REAL ESTATE
INVESTMENTS
Logo: NUVEEN Investments
FASTER INFORMATION
RECEIVE YOUR
NUVEEN FUND REPORT
ELECTRONICALLY
By registering for electronic delivery, you will receive an e-mail as soon as
your Nuveen Fund information is available. Click on the link and you will be
taken directly to the report. Your Fund report can be viewed and saved on your
computer. Your report will arrive faster via e-mail than by traditional mail.
Registering is easy and only takes a few minutes (see instructions at right).
--------------------------------------------------------------------------------
SOME COMMON CONCERNS:
WILL MY E-MAIL ADDRESS BE DISTRIBUTED TO OTHER COMPANIES?
No, your e-mail address is strictly confidential and will not be used for
anything other than notification of shareholder information.
WHAT IF I CHANGE MY MIND AND WANT TO RECEIVE INVESTOR MATERIALS THROUGH REGULAR
MAIL DELIVERY AGAIN?
If you decide you do not like receiving your reports electronically, it's a
simple process to go back to regular mail delivery.
--------------------------------------------------------------------------------
IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME FROM YOUR FINANCIAL ADVISOR OR BROKERAGE ACCOUNT,
FOLLOW THE STEPS OUTLINED BELOW:
1 Go to WWW.INVESTORDELIVERY.COM and follow the simple instructions, using
the address sheet that accompanied this report as a guide.
2 You'll be taken to a page with several options. Select the NEW
ENROLLMENT-CREATE screen and follow the simple instructions.
3 Click Submit. Confirm the information you just entered is correct, then
click Submit again.
4 You should get a confirmation e-mail within 24 hours. If you do not, go
back through these steps to make sure all the information is correct.
5 Use this same process if you need to change your registration information
or cancel internet viewing.
IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME DIRECTLY TO YOU FROM NUVEEN,
FOLLOW THE STEPS OUTLINED BELOW:
1 Go to WWW.NUVEEN.COM
2 Select ACCESS YOUR ACCOUNT. Select the E-REPORT ENROLLMENT section. Click
on Enrollment Today.
3 You'll be taken to a screen that asks for your Social Security number and
e-mail address. Fill in this information, then click Enroll.
4 You should get a confirmation e-mail within 24 hours. If you do not, go
back through these steps to make sure all the information is correct.
5 Use this same process if you need to change your registration information
or cancel internet viewing.
LOGO: NUVEEN Investments
PHOTO OF: Timothy R. Schwertfeger
Chairman of the Board
Sidebar text: WE THINK YOUR NUVEEN FUND CAN BE AN IMPORTANT BUILDING BLOCK IN A
PORTFOLIO DESIGNED TO PERFORM WELL THROUGH A VARIETY OF MARKET CONDITIONS.
Dear
SHAREHOLDER
I am very pleased to report that for the year ended October 31, 2003, your
Nuveen Fund continued to provide you with attractive monthly income. For more
specific information about the performance of your Fund, please see the
Portfolio Manager's Perspective and Performance Overview sections of this
report.
In this low interest rate environment, many have begun to wonder how real estate
investments will perform if interest rates begin to rise. Regardless of which
direction rates move, we believe that by constructing a carefully balanced
portfolio with the help of a trusted investment professional you may be able to
reduce your overall investment risk and give yourself a better chance to meet
your financial goals. We think that real estate investments, like your Nuveen
Fund, can be important building blocks in a portfolio designed to perform well
through a variety of market conditions.
Since 1898, Nuveen Investments has offered financial products and solutions that
incorporate careful research, diversification, and the application of
conservative risk-management principles. We are grateful that you have chosen us
as a partner as you pursue your financial goals. 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
December 15, 2003
1
Nuveen RealEstate Income Fund
(JRS)
Manager's
PERSPECTIVE
The Fund is managed by a team of real estate investment professionals at
Security Capital Research & Management Incorporated, a wholly-owned subsidiary
of Bank One Corporation. Tony Manno and Ken Statz, who each have more than 21
years' experience in managing real estate investments, lead the team. Here they
review the economic environment and performance of the Fund.
WHAT WERE THE MAJOR ECONOMIC DRIVERS OF THE U.S. REAL ESTATE MARKET DURING THIS
12-MONTH REPORTING PERIOD ENDED OCTOBER 31, 2003 AND HOW DID THOSE DRIVERS
AFFECT THE REIT MARKET?
During this reporting period, the major economic factors impacting the real
estate markets were low interest rates and a sluggish overall economy. Low
interest rates directly impacted the real estate market as a whole. In
particular, the commercial real estate market was affected in two principal
ways: first, the continued lure of would-be apartment renters into homeownership
further eroded the fundamentals of the apartment sector; and second, new
homeowners and re-financers of existing home mortgages found a greater need
and/or wherewithal to spend money on retail goods, helping to perpetuate a
strong operating environment for mall and smaller shopping center owners.
The sluggish economy, particularly the business sector, also impacted the real
estate market. During most of the reporting period, the U.S. economy appeared to
move from "stagnant" to "fragile growth." This trend was of particular
importance to the commercial real estate industry because of the crucial role
business investments play in creating and sustaining marginal demand for most
types of real estate. For example, the sluggish economy had a direct impact on
rising vacancy rates and reducing rental rate pricing power (for newly signed
leases only) for owners of office and apartment real estate.
Fortunately, the real estate capital markets, eg REITS, seem to have evolved
substantially since the last such stagnant economy. Excessive over-building,
which had been a feature of previous downturns, has been largely absent from
this one.
As a result, real estate investments remained attractive during the 12-month
reporting period ending October 31, 2003. Investors looked to real estate
investments largely because of their core attributes--durable income and
tangible value. The REIT market reflected these concurrent themes by generating
significant returns in both the common equity and preferred equity markets.
Depending on property type, company, and security, either the common stock or
the more bond-like preferred stock of REITs presented the most appropriate
opportunity for JRS' objective.
WHAT WERE THE KEY STRATEGIES AND TACTICS USED TO MANAGE JRS OVER THIS PERIOD?
During the reporting period, we continued to focus on those preferred and common
securities that we believed were best positioned to generate sustainable income
and potential price appreciation. In managing the portfolio, we sought to
structure a diversified portfolio while taking into account company credit
quality issues, sector and geographic exposure and security-type allocations.
Each 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.
2
One important tool we employed in attempting to manage JRS for income and
long-term capital appreciation was the ability to shift the portfolio's
allocation between preferred and common stocks based upon the relative
attractiveness of these two distinct markets.
At the April 30, 2003 semiannual reporting date, the portfolio was split nearly
evenly between preferred and common stock (48% and 52%, respectively, excluding
cash equivalents). Such an allocation had been achieved to take advantage of the
relative value and inherent stability of preferreds during a deteriorating
market environment. Gradually, as markets began to stabilize and then show signs
of future improvement, the relative value of select common stocks became more
attractive. At the same time, a number of preferred securities in our portfolio
had reached or exceeded our target valuations. In response to these changes, we
shifted the portfolio substantially more toward common stocks during the second
half of the fiscal year. As of October 31, 2003, the portfolio allocations were
36% preferred and 64% common stock (excluding cash equivalents). This shift was
undertaken gradually, and it exemplifies the value of having such security-type
flexibility.
WERE THERE ANY SPECIFIC AREAS OR TYPES OF PROPERTIES YOU FOCUSED ON IN
PARTICULAR?
Throughout the reporting period, the portfolio was well diversified by property
type, geography and issuer. Again, JRS's ability to invest in preferred
securities allowed us to capture attractive cash flows by assuming a priority
position in the capital structure of cyclically depressed property types and
issuers. An example of how this flexibility benefited JRS was our investment in
apartment companies, many of which were under significant operating stress. By
adjusting the Fund's allocation to apartments mainly through preferred stock
holdings - which ranged between 51% and 79% of the allocation - we were able to
be much more selective in our common stock investments, and still participate
commensurately in the cash flows of this important component of the real estate
industry.
A similar strategy was employed for office companies, in which the percentage of
the allocation devoted to preferred stock ranged between 29% and 48%, and
hotels, in which 88% to 100% was in preferred stock. We believe this extra layer
of strategic flexibility enabled us to better diversify the portfolio by
property type and issuer, without adding undue risks.
HOW DID THE FUND PERFORM OVER THE TWELVE MONTHS ENDED OCTOBER 31, 2003?
For the 12 months ended October 31, 2003, the Fund produced a 39.8% total return
on net asset value. This compares with a 35.6% return over the same period for
the Wilshire Real Estate Securities Index, an unmanaged index comprised of
publicly traded REITs and REOCs. It is important to note that while the Fund has
an active program of investing in preferred stocks, these are not included in
the index. As of October 31, 2003, the Fund continued to trade at a premium to
its net asset value.
In our opinion, the Fund represents a quality component of a well-balanced core
investment portfolio that can continue to benefit shareholders over time.
3
Nuveen RealEstate Income Fund
Performance
OVERVIEW As of October 31, 2003
JRS
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $17.81
--------------------------------------------------
Common Share Net Asset Value $17.30
--------------------------------------------------
Net Assets Attributable to
Common Shares ($000) $486,814
--------------------------------------------------
TOP 5 COMMON % OF TOTAL
STOCK HOLDINGS INVESTMENTS
--------------------------------------------------
Mack-Cali Realty Corporation 7.6%
--------------------------------------------------
The Macerich Company 6.3%
--------------------------------------------------
Arden Realty, Inc. 5.8%
--------------------------------------------------
HRPT Properties Trust 5.1%
--------------------------------------------------
Nationwide Health Properties, Inc. 4.6%
--------------------------------------------------
TOP 5 PREFERRED % OF TOTAL
STOCK HOLDINGS INVESTMENTS
--------------------------------------------------
Crescent Real Estate Equities Company 6.2%
--------------------------------------------------
Home Properties, Inc. 4.2%
--------------------------------------------------
Apartment Investment & Management
Company 3.9%
--------------------------------------------------
Federal Realty Investment Trust 3.3%
--------------------------------------------------
LaSalle Hotel Properties 2.5%
--------------------------------------------------
% OF TOTAL
TOP FIVE SECTORS INVESTMENTS
--------------------------------------------------
Office 35.5%
--------------------------------------------------
Multifamily 16.3%
--------------------------------------------------
Malls 12.9%
--------------------------------------------------
Shopping Centers 12.4%
--------------------------------------------------
Healthcare 8.9%
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/01)
--------------------------------------------------
MARKET NAV
--------------------------------------------------
1-Year 35.40% 39.80%
--------------------------------------------------
Since Inception 18.72% 19.92%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY DIVIDENDS PER SHARE1
Nov 0.115
Dec 0.115
Jan 0.115
Feb 0.115
Mar 0.115
Apr 0.115
May 0.115
Jun 0.115
Jul 0.115
Aug 0.115
Sep 0.115
Oct 0.115
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
11/1/02 14.57
15.1
15.12
14.89
14.92
15.05
14.88
14.92
15.02
15.31
15.2
15.15
15.29
15.37
15.4
15.25
15.59
15.67
15.71
15.35
15.55
15.56
15.99
16
15.88
15.77
15.99
16.43
16.46
16.95
16.65
16.73
16.8
17.07
17.22
16.6
16.5
16.43
16.4
17
16.7
17.09
16.96
17.17
16.96
17.3
17.46
17.73
10/31/03 17.81
Pie Chart:
PORTFOLIO HOLDINGS BY TYPE OF INVESTMENT (AS A % OF TOTAL INVESTMENTS)
Common Stocks 62%
Preferred Stocks 35%
Short-Term Investments 3%
1 The Fund also paid shareholders a net ordinary income distribution in December
2002 of $0.038 per share.
4
Shareholder
MEETING REPORT
The annual shareholder meeting was held on March 5, 2003, at the Northern Trust
Bank, Chicago, Illinois.
JRS
--------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Common and
FundPreferred FundPreferred
shares voting shares voting
together as together as
a class a class
================================================================================
James E. Bacon*
For 27,779,260 --
Withhold 169,373 --
--------------------------------------------------------------------------------
Total 27,948,633 --
================================================================================
William E. Bennett
For 27,780,679 --
Withhold 167,954 --
--------------------------------------------------------------------------------
Total 27,948,633 --
================================================================================
Jack B. Evans
For 27,782,675 --
Withhold 165,958 --
--------------------------------------------------------------------------------
Total 27,948,633 --
================================================================================
William L. Kissick
For -- 6,545
Withhold -- 40
--------------------------------------------------------------------------------
Total -- 6,585
================================================================================
Thomas E. Leafstrand
For 27,788,415 --
Withhold 160,218 --
--------------------------------------------------------------------------------
Total 27,948,633 --
================================================================================
Timothy R. Schwertfeger
For -- 6,545
Withhold -- 40
--------------------------------------------------------------------------------
Total -- 6,585
================================================================================
Sheila W. Wellington
For 27,767,505 --
Withhold 181,128 --
--------------------------------------------------------------------------------
Total 27,948,633 --
================================================================================
* James Bacon retired as a trustee of the Fund, effective July 1, 2003.
5
Report of
INDEPENDENT AUDITORS
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 October
31, 2003, and the related statement of operations for the year then ended and
the statement of changes in net assets and the financial highlights for the year
then ended and for the period November 15, 2001 (commencement of operations)
through October 31, 2002. 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of investments owned as of October 31, 2003, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. 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 October 31, 2003, and the results of its operations
for the year then ended and the statement of changes in its net assets and
financial highlights for the year then ended and for the period November 15,
2001 (commencement of operations) through October 31, 2002 in conformity with
accounting principles generally accepted in the United States.
Ernst & Young LLP
Chicago, Illinois
December 12, 2003
6
Nuveen Real Estate Income Fund (JRS)
Portfolio of
INVESTMENTS October 31, 2003
MARKET
SHARES DESCRIPTION(1) VALUE
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 85.0% (62.1% OF TOTAL INVESTMENTS)
HEALTHCARE - 11.6%
1,672,300 Nationwide Health Properties, Inc. $ 30,603,090
1,740,300 Senior Housing Properties Trust 25,913,067
------------------------------------------------------------------------------------------------------------------------------------
HOTEL - 0.7%
400,400 Hersha Hospitality Trust 3,483,480
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 5.9%
890,400 First Industrial Realty Trust, Inc. 28,759,920
------------------------------------------------------------------------------------------------------------------------------------
MALLS - 12.1%
807,600 Glimcher Realty Trust 17,104,968
1,044,100 The Macerich Company 41,972,820
------------------------------------------------------------------------------------------------------------------------------------
MULTIFAMILY - 11.0%
276,300 Amli Residential Properties Trust 7,029,072
309,000 Apartment Investment & Management Company - Series A 12,638,100
385,000 Archstone-Smith Trust 10,279,500
516,400 Avalonbay Communities, Inc. 23,583,988
------------------------------------------------------------------------------------------------------------------------------------
OFFICE - 34.6%
1,388,800 Arden Realty, Inc. 38,844,736
114,900 Highwoods Properties, Inc. 2,849,520
3,642,100 HRPT Properties Trust 34,090,056
1,351,500 Mack-Cali Realty Corporation 50,938,035
580,500 Maguire Properties, Inc. 12,654,900
1,305,600 Reckson Associates Realty Corporation 29,010,431
------------------------------------------------------------------------------------------------------------------------------------
SHOPPING CENTERS - 8.6%
413,800 Federal Realty Investment Trust 15,703,710
1,159,400 New Plan Excel Realty Trust 26,318,380
------------------------------------------------------------------------------------------------------------------------------------
STORAGE - 0.5%
76,900 Public Storage, Inc. 2,207,030
------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (cost $338,147,476) 413,984,803
--------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 48.3% (35.2% OF TOTAL INVESTMENTS)
HEALTHCARE - 0.5%
32,558 Nationwide Health Properties, Inc. - Series A, 7.677% 2,575,136
------------------------------------------------------------------------------------------------------------------------------------
HOTEL - 5.4%
360,000 Boykin Lodging Company - Series A, 10.500% 9,918,000
600,000 LaSalle Hotel Properties - Series A, 10.250% 16,500,000
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 2.7%
497,623 PS Business Parks, Inc. - Series F, 8.750% 13,361,178
7
Nuveen Real Estate Income Fund (JRS) (continued)
Portfolio of INVESTMENTS October 31, 2003
MARKET
SHARES DESCRIPTION(1) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MALLS - 5.5%
140,000 CBL & Associates Properties, Inc. - Series B, 8.750% $ 7,665,000
Glimcher Realty Trust:
237,300 Series B, 9.250% 6,017,928
125,000 Series F, 9.250% 3,237,500
The Mills Corp.:
123,200 Series C, 9.000% 3,279,584
225,000 Series E, 8.750% 5,962,500
24,500 Taubman Centers, Inc. - Series A, 8.300% 620,095
------------------------------------------------------------------------------------------------------------------------------------
MULTIFAMILY - 11.4%
Apartment Investment & Management Company:
91,600 Series G, 9.375% 2,518,084
51,050 Series Q, 10.100% 1,387,539
803,500 Series R, 10.000% 22,015,900
970,000 Home Properties, Inc. - Series F, 9.000% 27,761,400
51,300 United Dominion Realty Trust, Inc. - Series B, 8.600% 1,390,230
------------------------------------------------------------------------------------------------------------------------------------
OFFICE - 14.2%
203,500 Alexandria Real Estate Equities, Inc. - Series B, 9.100% 5,596,250
200,000 Corporate Office Properties Trust - Series G, 8.000% 5,264,000
Crescent Real Estate Equities Company:
835,100 Series A (Convertible), 6.750% 18,789,750
850,000 Series B, 9.500% 22,839,500
Highwoods Properties, Inc.:
12,141 Series A, 8.625% 11,473,245
33,600 Series B, 8.000% 845,712
150,000 Lexington Corporate Properties Trust - Series 8.050% 3,915,000
------------------------------------------------------------------------------------------------------------------------------------
SHOPPING CENTERS - 8.3%
Developers Diversified Realty Corporation:
96,200 Series F, 8.600% 2,607,020
480,000 Series G, 8.000% 12,897,600
816,000 Federal Realty Investment Trust - Series B, 8.500% 21,974,880
125,000 Saul Centers, Inc. - Series A, 8.000% 3,125,000
------------------------------------------------------------------------------------------------------------------------------------
STORAGE - 0.3%
Shurgard Storage Centers, Inc.:
30,000 Series C, 8.700% 763,950
24,600 Series D, 8.750% 672,810
------------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stocks (cost $212,702,604) 234,974,791
--------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT (000) DESCRIPTION(1) VALUE
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (COST $18,270,000) - 3.8% (2.7% OF TOTAL INVESTMENTS)
$ 18,270 State Street Bank Repurchase Agreement, dated 10/31/03, due 11/03/03, 18,270,000
============= repurchase price $18,271,416, collateralized by U.S. Treasury Bonds
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $569,120,080) - 137.1% 667,229,594
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (1.8)% (8,415,239)
--------------------------------------------------------------------------------------------------------------------
Taxable Auctioned Preferred Shares, at Liquidation Value - (35.3)% (172,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $486,814,355
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
See accompanying notes to financial statements.
8
Statement of
ASSETS AND LIABILITIES October 31, 2003
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at market value (cost $569,120,080) $667,229,594
Cash 607
Receivables:
Dividends 2,730,222
Interest 472
Other assets 23,721
------------------------------------------------------------------------------------------------------------------------------------
Total assets 669,984,616
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 3,125,000
Interest rate swaps, at value 7,521,042
Accrued expenses:
Management fees 333,229
Other 172,367
Taxable Auctioned Preferred share dividends payable 18,623
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 11,170,261
------------------------------------------------------------------------------------------------------------------------------------
Taxable Auctioned Preferred shares, at liquidation value 172,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $486,814,355
====================================================================================================================================
Common shares outstanding 28,133,755
====================================================================================================================================
Net asset value per Common share outstanding (net assets applicable to
Common shares, divided by Common shares outstanding) $ 17.30
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 281,338
Paid-in surplus 399,808,810
Undistributed (Over-distribution of) net investment income (14,990,672)
Accumulated net realized gain from investment transactions 10,795,588
Net unrealized appreciation of investments and interest rate swap transactions 90,919,291
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $486,814,355
====================================================================================================================================
Authorized shares:
Common Unlimited
Taxable Auctioned Preferred Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
9
Statement of
OPERATIONS Year Ended October 31, 2003
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 32,908,378
Interest 94,049
------------------------------------------------------------------------------------------------------------------------------------
Total investment income 33,002,427
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 5,379,926
Net interest expense on interest rate swap transactions 4,404,017
Taxable Auctioned Preferred shares - auction fees 425,416
Taxable Auctioned Preferred shares - dividend disbursing agent fees 22,500
Shareholders' servicing agent fees and expenses 11,241
Custodian's fees and expenses 125,759
Trustees' fees and expenses 53,314
Professional fees 92,487
Shareholders' reports - printing and mailing expenses 145,061
Stock exchange listing fees 2,828
Investor relations expense 85,955
Other expenses 25,830
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 10,774,334
Custodian fee credit (910)
Expense reimbursement (1,801,689)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 8,971,735
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 24,030,692
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain from investments 14,955,847
Change in net unrealized appreciation (depreciation) of investments 106,540,733
Change in net unrealized appreciation (depreciation) of interest rate swap transactions 1,684,638
------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 123,181,218
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO TAXABLE AUCTIONED PREFERRED SHAREHOLDERS
From net investment income (2,107,289)
From accumulated net realized gains from investments (93,304)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions to Taxable Auctioned Preferred shareholders (2,200,593)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares from operations $145,011,317
====================================================================================================================================
See accompanying notes to financial statements.
10
Statement of
CHANGES IN NET ASSETS
FOR THE
PERIOD 11/15/01
(COMMENCEMENT
YEAR ENDED OF OPERATIONS)
10/31/03 THROUGH 10/31/02
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 24,030,692 $ 28,380,355
Net realized gain from investments 14,955,847 4,692,936
Change in net unrealized appreciation (depreciation) of investments 106,540,733 (8,431,219)
Change in net unrealized appreciation (depreciation) of interest rate swap transactions 1,684,638 (8,874,861)
Distributions to Taxable Auctioned Preferred shareholders:
From net investment income (2,107,289) (1,906,748)
From accumulated net realized gains from investments (93,304) (620,986)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares from operations 145,011,317 13,239,477
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (38,804,610) (24,691,256)
From accumulated net realized gains from investments (1,068,203) (7,070,702)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions to
Common shareholders (39,872,813) (31,761,958)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- 401,689,500
Net proceeds from shares issued to shareholders due to reinvestment of distributions 382,555 39,666
Taxable Auctioned Preferred shares offering costs 3,544 (2,017,208)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares from capital share transactions 386,099 399,711,958
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares 105,524,603 381,189,477
Net assets applicable to Common shares at the beginning of period 381,289,752 100,275
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of period $486,814,355 $381,289,752
====================================================================================================================================
Undistributed (Over-distribution of) net investment income at the end of period $(14,990,672) $ 1,890,535
====================================================================================================================================
See accompanying notes to financial statements.
11
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.
Prior to the commencement of operations, the Fund had no operations other than
those related to organizational matters, the initial capital contribution of
$100,275 by Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned
subsidiary of Nuveen Investments, Inc. (formerly, The John Nuveen Company), and
the recording of the organization expenses ($15,000) and their reimbursement by
Nuveen Investments, LLC (formerly, Nuveen Investments), also a wholly owned
subsidiary of Nuveen Investments, Inc.
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").
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with
accounting principles generally accepted in the United States.
Securities 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 price. Securities traded on Nasdaq are valued at the
Nasdaq Official Closing Price. If it is determined that market prices for a
security are unavailable or inappropriate, the Board of Trustees of the Fund, or
its designee, may establish a fair value for the security. Short-term securities
are valued at amortized cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on an accrual basis (see Dividends and Distributions to Common
Shareholders for REIT income recognition policy).
Income Taxes
The Fund intends to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all
of its net investment income to its shareholders. Therefore, no federal income
tax provision is required.
Dividends and Distributions to Common Shareholders
Dividends to Common shareholders are declared monthly. The Fund's policy is to
pass through to its shareholders, each month, substantially all REIT
distributions it receives, together with other operating income less operating
expenses. REIT distributions received by the Fund are generally comprised of
investment income, long-term and short-term capital gains, and a return of REIT
capital. The actual character of amounts received during the period is not known
until after both the fiscal and calendar year ends. For the twelve months ended
December 31, 2002, the character of distributions to the Fund from REITs was
71.47% ordinary income, 12.21% long-term and short-term capital gains, and
16.32% return of REIT capital.
12
The Fund applies a percentage estimate, such as those shown above, or uses a
similar estimation of the breakdown of income type, to its receipts from REITs
and treats as income in the Statement of Operations only the amount of ordinary
income so calculated. The Fund adjusts that estimated breakdown of income type
(and consequently its net investment income) as necessary early in the following
calendar year when REITs inform their shareholders of the actual breakdown of
income type.
During the period, the Fund treats each distribution to its shareholders from
the portfolio REITs as being entirely from net investment income. The Fund
recharacterizes those distributions as being from ordinary income, long-term and
short-term capital gains, and return of capital, if necessary, at the beginning
of the subsequent calendar year, based upon the income type breakdown
information conveyed at that time by the REITs whose securities are held in the
Fund's portfolio. Recharacterizations are reflected in the accompanying
financial statements. Consequently, the financial statements may reflect an
over-distribution of net investment income that is at least partly attributable
to the fact that, as of the date of the financial statements, some of the
amounts received by the Fund from portfolio REITs, but none of the dividends
paid by the Fund to shareholders from the portfolio REITs, during the current
fiscal year, will have been treated as something other than ordinary income.
The Fund may also generate capital gains from trading investments in its
portfolio which are distributed to shareholders not less frequently than
annually. Such capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
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 accounting principles generally
accepted in the United States.
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, $25,000 stated value Taxable Auctioned Preferred shares.
The dividend rate on each series may change every seven days, as set pursuant to
a dutch auction process by the auction agent, and is payable at or near the end
of each rate period.
Interest Rate Swap Transactions
The Fund is authorized to enter into hedging transactions, including interest
rate swap transactions. The Fund uses interest rate swaps with the intent to
reduce or eliminate the risk that an increase in short-term interest rates could
have on Common share net earnings as a result of leverage. Interest rate swaps
involve the Fund's agreement with the swap 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 swap. Interest rate swaps do
not involve the delivery of securities or other underlying assets or principal.
Accordingly, the risk of credit loss with respect to the swap counterparty on
interest rate swaps is limited to the net amount of interest payments that the
Fund is to receive. The Fund has instructed the custodian to segregate assets
with a current value at least equal to the amount of the net payment obligations
under any interest rate swap transactions. Interest rate swap positions are
marked to market 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, by having the Adviser
continually monitor the financial stability of the swap counterparties.
At October 31, 2003, the Fund had open interest rate swap agreements with
Citibank NA as follows:
UNREALIZED
NOTIONAL TERMINATION APPRECIATION
AMOUNT FIXED RATE FLOATING RATE* DATE (DEPRECIATION)
----------------------------------------------------------------------------------------------------------
$43,000,000 4.0225% 1.1200% 2/06/05 $(1,295,068)
43,000,000 4.8000 1.1200 2/06/07 (2,651,119)
43,000,000 5.1900 1.1200 2/06/09 (3,244,036)
----------------------------------------------------------------------------------------------------------
$(7,190,223)
==========================================================================================================
*Based on LIBOR (London Interbank Offered Rate)
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.
13
Notes to
FINANCIAL STATEMENTS (continued)
Offering Costs
Nuveen Investments, LLC has agreed to pay all Common share offering costs (other
than the sales load) that exceed $.03 per Common share. The Fund's share of
Common share offering costs ($843,000) were recorded as a reduction of the
proceeds from the sale of the Common shares.
Costs incurred by the Fund in connection with its offering of Taxable Auctioned
Preferred shares ($2,013,664) were recorded as a reduction to paid-in surplus.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 asset applicable to Common shares from operations during the
reporting period. Significant estimates used in the preparation of the
accompanying financial statements includes estimating the composition of REIT
distributions received by the Fund during the reporting period. Actual amounts
may differ from those estimates.
2. FUND SHARES
During the fiscal year ended October 31, 2003, 24,199 Common shares were issued
to shareholders due to reinvestment of distributions.
During the period November 15, 2001 (commencement of operations) through October
31, 2002, 28,100,000 Common shares and 6,880 Taxable Auctioned Preferred shares
were sold. In addition, 2,556 Common shares were issued to shareholders due to
reinvestment of distributions during the period November 15, 2001 (commencement
of operations) through October 31, 2002.
3. SECURITIES TRANSACTIONS
Purchases and sales of investments (excluding short-term investments) during the
fiscal year ended October 31, 2003, aggregated $158,554,111 and $168,127,987,
respectively.
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recording income and in recognizing
certain gains and losses on security transactions.
At October 31, 2003, the cost of investments was as follows:
--------------------------------------------------------------------------------
Cost of investments $568,778,898
================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
and interest rate swap transactions at October 31, 2003, were as follows:
-------------------------------------------------------------------------------
Gross unrealized:
Appreciation $98,534,021
Depreciation (7,273,548)
-------------------------------------------------------------------------------
Net unrealized appreciation of investments and interest
rate swap transactions $91,260,473
===============================================================================
14
The tax components of undistributed net ordinary income and net realized gains
at October 31, 2003, were as follows:
--------------------------------------------------------------------------------
Undistributed net ordinary income * $--
Undistributed net long-term capital gains --
================================================================================
*Net ordinary income consists of net taxable income derived from dividends,
interest and net short-term capital gains, if any.
The tax character of distributions paid during the fiscal years ended October
31, 2003 and October 31, 2002, were as follows:
2003
--------------------------------------------------------------------------------
Distributions from net ordinary income * $42,073,264
Distributions from net long-term capital gains --
================================================================================
2002
--------------------------------------------------------------------------------
Distributions from net ordinary income * $25,313,542
Distributions from net long-term capital gains 5,722,287
================================================================================
*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 years ended
October 31, 2003 and October 31, 2002, respectively.
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Fund's investment management agreement with the Adviser, the Fund pays
an annual management fee, payable monthly, at the rates set forth below, which
are based upon the Fund's average daily managed assets. "Managed assets" means
the average daily net assets of the Fund including assets attributable to
Taxable Auctioned Preferred shares and the principal amount of borrowings, if
any.
AVERAGE DAILY MANAGED ASSETS MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $500 million .9000%
For the next $500 million .8750
For the next $500 million .8500
For the next $500 million .8250
For Managed Assets over $2 billion .8000
================================================================================
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.
15
Notes to
FINANCIAL STATEMENTS (continued)
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.
Subadvisor Acquisition
On November 24, 2003, Banc One Investment Advisors Corporation, an indirect,
wholly-owned subsidiary of Bank One Corporation acquired Security Capital.
Pursuant to the Investment Company Act of 1940, the change in ownership of
Security Capital caused the existing sub-advisory agreement to terminate, and
shareholders of the Fund are required to approve a new subadvisory agreement
with Security Capital. At the Fund's annual shareholder meeting on January 20,
2004, shareholders will consider approval of the new sub-advisory agreement. If
shareholders approve the new sub-advisory agreement, it will become effective on
or about the date of the annual meeting.
Currently, Security Capital is acting as sub-adviser to the Fund under an
Interim Sub-Advisory Agreement approved by the Fund's Board of Trustees. In the
event that shareholders do not approve the new sub-advisory agreement, the
Interim Sub-Advisory Agreement will remain in effect until expiration or
termination and the Board will take such action as it deems to be in the best
interests of the Fund and its shareholders.
6. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Fund declared a dividend distribution of $.1150 per Common share which was
paid on December 1, 2003, to shareholders of record on November 15, 2003.
Change in Fiscal Year End
The Board of Trustees of the Fund approved a change in the Fund's fiscal year
end from October 31 to December 31 upon completion of the Fund's October 31,
2003 fiscal year.
16
Financial
HIGHLIGHTS
17
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 Net Taxable Taxable Investment Capital
Common Realized/ Auctioned Auctioned Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
==================================================================================================================================
Year Ended 10/31:
2003 $13.56 $ .85 $4.38 $ (.07) $ -- $5.16 $(1.38) $(.04) $(1.42)
2002(a) 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 10/31:
2003 $ -- $17.30 $17.81 35.40% 39.80%
2002(a) (.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 10/31:
2003 $486,814 2.51% 5.17% 2.09% 5.59% 26%
2002(a) 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 10/31:
2003 $172,000 $25,000 $95,758
2002(a) 172,000 25,000 80,420
==========================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income at net asset value,
reinvested capital gains distributions at net asset value, if any, and
changes in Common share net asset value per share. Total returns are not
annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Taxable Auctioned
Preferred shareholders; income ratios reflect income earned on assets
attributable to Taxable Auctioned Preferred shares. 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
includes the effect of the net interest expense paid on interest rate swap
transactions as follows:
2003 1.03
2002(a) .68*
(a) For the period November 15, 2001 (commencement of operations) through
October 31, 2002.
See accompanying notes to financial statements.
18-19 spread
Trustees
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 of
Trustees of the Funds. The number of trustees of the Funds is currently set at
six. None of the trustees 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 trustees 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 TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
TRUSTEE WHO IS AN INTERESTED PERSON OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Timothy R. Schwertfeger (1) Chairman of the 1994 Chairman and Director (since 1996) of Nuveen 142
3/28/49 Board and Investments, Inc. and Nuveen Investments, LLC;
333 W. Wacker Drive Trustee Director (since 1992) and Chairman (since 1996) of
Chicago, IL 60606 Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp.; Chairman and Director (since 1997)
of Nuveen Asset Management, Inc.; Director (since 1996)
of Institutional Capital Corporation; Chairman and Director
(since 1999) of Rittenhouse Asset Management, Inc.;
Chairman of Nuveen Investments Advisers Inc. (since 2002).
TRUSTEES WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
William E. Bennett Trustee 2001 Private Investor; previously, President and Chief Executive 142
10/16/46 Officer, Draper & Kramer, Inc., a private company that
333 W. Wacker Drive handles mortgage banking, real estate development, pension
Chicago, IL 60606 advisory and real estate management (1995-1998). Prior
thereto, Executive Vice President and Chief Credit Officer of
First Chicago Corporation and its principal subsidiary, The
First National Bank of Chicago.
------------------------------------------------------------------------------------------------------------------------------------
Jack B. Evans Trustee 1999 President, The Hall-Perrine Foundation, a private philanthropic 131
10/22/48 corporation (since 1996); Director, Alliant Energy; Director and
333 W. Wacker Drive Vice Chairman, United Fire & Casualty Company; Director,
Chicago, IL 60606 Federal Reserve Bank of Chicago; formerly, President and Chief
Operating Officer, SCI Financial Group, Inc., a regional financial
services firm.
------------------------------------------------------------------------------------------------------------------------------------
William L. Kissick Trustee 1992 Professor Emeritus, School of Medicine and the Wharton 131
7/29/32 School of Management and former Chairman, Leonard Davis
333 W. Wacker Drive Institute of Health Economics, University of Pennsylvania;
Chicago, IL 60606 Adjunct Professor, Health Policy and Management, Yale University.
------------------------------------------------------------------------------------------------------------------------------------
Thomas E. Leafstrand Trustee 1992 Retired; previously, Vice President in charge of Municipal 131
11/11/31 Underwriting and Dealer Sales at The Northern Trust
333 W. Wacker Drive Company.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Sheila W. Wellington Trustee 1994 President (since 1993) of Catalyst (a not-for-profit organization 131
2/24/32 focusing on women's leadership development in business
333 W. Wacker Drive and the professions).
Chicago, IL 60606
20
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(3) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary 142
9/9/56 Administrative and Associate General Counsel, formerly, Vice President
333 W. Wacker Drive Officer and Assistant General Counsel of Nuveen Investments, LLC;
Chicago, IL 60606 Managing Director (since 2002), General Counsel and
Assistant Secretary, formerly, Vice President of Nuveen
Advisory Corp. and Nuveen Institutional Advisory Corp.;
Managing Director (since 2002), Assistant Secretary and
Associate General Counsel, formerly, Vice President (since
2000), of Nuveen Asset Management, Inc.; Assistant
Secretary of Nuveen Investments, Inc. (since 1994);
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 May 2003); Chartered
Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant 142
2/3/66 and Assistant Vice President (since 2000), previously, Associate of
333 W. Wacker Drive Secretary Nuveen Investments, LLC.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Peter H. D'Arrigo Vice President 1999 Vice President of Nuveen Investments, LLC (since 1999), 142
11/28/67 and Treasurer prior thereto, Assistant Vice President (since 1997); Vice
333 W. Wacker Drive President and Treasurer of Nuveen Investments, Inc. (since
Chicago, IL 60606 1999); Vice President and Treasurer of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp. (since 1999); Vice
President and Treasurer of Nuveen Asset Management,
Inc. (since 2002) and of Nuveen Investments Advisers
Inc. (since 2002); Assistant Treasurer of NWQ Investment
Management Company, LLC (since 2002); Chartered
Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President 2000 Vice President (since 2002) and Assistant General Counsel 142
9/24/64 and Secretary (since 1998); formerly, Assistant Vice President (since 1998)
333 W. Wacker Drive of Nuveen Investments, LLC; Vice President (since 2002)
Chicago, IL 60606 and Assistant Secretary (since 1998), formerly Assistant
Vice President of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.
------------------------------------------------------------------------------------------------------------------------------------
Lorna C. Ferguson Vice President 1998 Vice President of Nuveen Investments, LLC; Vice 142
10/24/45 President (since 1998) of Nuveen Advisory Corp. and
333 W. Wacker Drive Nuveen Institutional Advisory Corp.
Chicago, IL 60606
21
Trustees
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(3) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
William M. Fitzgerald Vice President 1995 Managing Director (since 2002) of Nuveen Investments, 142
3/2/64 LLC; Managing Director (since 2001), formerly Vice
333 W. Wacker Drive President of Nuveen Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory Corp. (since 1995); Managing
Director of Nuveen Asset Management, Inc. (since 2001);
Vice President of Nuveen Investment Advisers Inc.
(since 2002); Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller (since 142
5/31/54 and Controller 1998) of Nuveen Investments, LLC and Vice President and
333 W. Wacker Drive Funds Controller (since 1998) of Nuveen Investments, Inc.;
Chicago, IL 60606 Certified Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, LLC, 142
3/22/63 previously Assistant Vice President (since 1999); prior
333 W. Wacker Drive thereto, Associate of Nuveen Investments, LLC; Certified
Chicago, IL 60606 Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
Tina M. Lazar Vice President 2002 Vice President (since 1999), previously, Assistant Vice 142
8/27/61 President (since 1993) of Nuveen Investments, LLC.
333 W. Wacker Drive
Chicago, IL 60606
22
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(3) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant General 142
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.; Assistant Secretary of Nuveen
Investments, Inc. and (since 1997) Nuveen Asset Management,
Inc.; 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).
------------------------------------------------------------------------------------------------------------------------------------
Edward F. Neild, IV Vice President 1996 Managing Director (since 2002) of Nuveen Investments, 142
7/7/65 LLC; Managing Director (since 1997), formerly Vice
333 W. Wacker Drive President (since 1996) of Nuveen Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional Advisory Corp.; Managing Director
of Nuveen Asset Management, Inc. (since 1999).
Chartered Financial Analyst.
(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 trustee of the
Adviser.
(2) Trustees serve a one-year term until his/her successor is elected. The year
first elected or appointed represents the year in which the Trustee was
first elected or appointed to any fund in the Nuveen Complex.
(3) Officers serve a one-year term 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.
23
Build Your Wealth
AUTOMATICALLY
Sidebar text: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded 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 tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each 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
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
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.
FLEXIBILITY
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.
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.
24
Fund
INFORMATION
BOARD OF TRUSTEES
William E. Bennett
JackB. Evans
William L. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
FUND MANAGER
Nuveen Institutional
Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (i) without
charge, upon request, by calling Nuveen Investments at (800) 257-8787; and (ii)
on the Commission's website at http://www.sec.gov.
25
Serving Investors
FOR GENERATIONS
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.
Managing $90 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 tax-free 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.
To learn more about the products and services Nuveen Investments offers and for
a prospectus, where applicable, talk to your financial advisor, or call us at
(800) 257-8787. Please read the information carefully before you invest.
Distributed by
NUVEEN INVESTMENTS, LLC | 333 West Wacker Drive | Chicago, Illinois 60606
| www.nuveen.com
EAN-F-1003D
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. The registrant has posted such code of
ethics on its website at www.nuveen.com/etf.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of directors has 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 William E. Bennett, who is "independent" for purposes of
Item 3 of Form N-CSR.
Mr. Bennett was formerly Executive Vice President and Chief Credit Officer of
First Chicago Corporation and its principal subsidary, The First National Bank
of Chicago. As part of his role as Chief Credit Officer, Mr. Bennett set policy
as to accrual of assets/loans; designated performing/non-performing assets; set
the level of reserves against the credit portfolio; and determined the carrying
value of credit related assets and exposure. Among other things, Mr. Bennett was
also responsible for the oversight of the internal analysis function including
setting ground rules for the review and preparation of financial analysis and
financial statements for use in making credit and risk decisions for clients.
Mr. Bennett has significant experience reviewing, analyzing and evaluating
financial statements of domestic and international companies in a variety of
industries with complex accounting issues.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
In the rare event that a municipal issuer held by the Fund were to issue a proxy
or that the Fund were to receive a proxy issued by a cash management security,
Nuveen Advisory Corp. (the "Adviser") would either engage an independent third
party to determine how the proxy should be voted or vote the proxy with the
consent, or based on the instructions, of the Fund's Board of Directors or
Trustees or its representative. In the case of a conflict of interest, the proxy
would be submitted to the applicable Fund's Board to determine how the proxy
should be voted. A member of the Adviser's legal department would oversee the
administration of the voting, and ensure that records were maintained in
accordance with Rule 204-2(c)(2) under the Investment Advisers Act of 1940 (17
CFR 275.204-2(c)(2)), reports were filed with the SEC on Form N-PX, and the
results were provided to the Board of Directors or Trustees and made available
to shareholders as required by applicable rules.
ITEM 8. [RESERVED]
ITEM 9. 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 registrant's last
fiscal half-year (the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 10. 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 posted on registrant's website at www.nuveen.com/etf.
(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 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(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 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Real Estate Income Fund
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By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: January 8, 2004
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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: January 8, 2004
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(Principal Financial Officer)
Date: January 8, 2004
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.