UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-10491
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Nuveen Real Estate Income Fund
--------------------------------------------------------------------------------
(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)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2007
-----------------------
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 SHAREHOLDERS
Annual Report
DECEMBER 31, 2007
Nuveen Investments
CLOSED-END FUNDS
NUVEEN
REAL ESTATE
INCOME FUND
JRS
High Current Income from a Portfolio of
Commercial Real Estate Investments
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Chairman's
LETTER TO SHAREHOLDERS
(TIMOTHY
SCHWERTFEGER
PHOTO) Timothy R. Schwertfeger Chairman of the Board
Dear Shareholder:
Once again, I am pleased to report that over the twelve-month period covered by
this report your Fund continued to provide you with attractive income. For more
details about the management strategy and performance of your Fund, please read
the Portfolio Managers' Comments, the Distribution and Share Price Information,
and the Performance Overview sections of this report.
With the recent volatility in the stock market, many have begun to wonder which
way the market is headed, and whether they need to adjust their holdings of
investments. No one knows what the future will bring, which is why we think a
well-balanced portfolio that is structured and carefully monitored with the help
of an investment professional is an important component in achieving your
long-term financial goals. A well-diversified portfolio may actually help to
reduce your overall investment risk, and we believe that investments like your
Nuveen Investments Fund can be important building blocks in a portfolio crafted
to perform well through a variety of market conditions.
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. 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.
Sincerely,
(TIMOTHY SCHWERTFEGER SIG)
Timothy R. Schwertfeger
Chairman of the Board
February 15, 2008
Portfolio Managers' COMMENTS
NUVEEN INVESTMENTS CLOSED-END FUNDS JRS
The Nuveen Real Estate Income Fund (JRS) is managed by a team of real estate
investment professionals at Security Capital Research & Management Incorporated
(SC-R&M), a wholly-owned subsidiary of J.P. Morgan Chase & Co. Anthony R. Manno
Jr. and Kenneth D. Statz, who each have more than 25 years of experience in
managing real estate investments, lead the team and have managed JRS since its
inception in 2001. Here they talk about the economic environment and performance
of the Fund over the twelve-month period.
WHAT WERE THE GENERAL ECONOMIC CONDITIONS AND MARKET TRENDS DURING THE ANNUAL
REPORTING PERIOD ENDED DECEMBER 31, 2007?
During the first part of the period, equities generally performed well as
favorable corporate earnings and export-driven economic growth were sufficient
to offset some growing anxiety over the deteriorating housing and mortgage
markets. The second half of the year was dominated by concerns about the impact
of possible sub-prime mortgage defaults and fears of a recession, especially as
the impact began to spread beyond mortgage lenders to international and domestic
money center banks and other financial institutions. When data began to show the
potential for a severely weakening economy, the Federal Reserve cut the widely
followed short-term fed funds rate by a half a percentage point in September, by
another quarter of a percentage point in October and yet another quarter point
in December. (On January 22 and 29, 2008 after the close of this reporting
period, the Federal Reserve cut the fed funds rate by a combined 1.25%, bringing
the rate to 3.00%.)
--------------------------------------------------------------------------------
Discussions of specific investments are for illustrative purposes only and are
not intended as recommendations of individual investments. The views expressed
in this commentary represent those of the portfolio managers as of the date of
this report and are subject to change at any time, based on market conditions
and other factors. The Fund disclaims any obligation to advise shareholders of
such changes.
--------------------------------------------------------------------------------
Amidst otherwise healthy operating conditions for commercial properties, Real
Estate Investment Trust (REIT) stock prices declined significantly, and
especially in the fourth quarter, as investors sold to escape turbulence in the
real estate lending markets and questioned the potential for a broader impact on
market liquidity and asset pricing. For the reporting period, health care,
industrial and mall companies were performance leaders, while the relative
underperformers in 2007 were the self-storage, multi-family and lodging
companies.
Real estate debt markets took center stage in 2007 as growing credit problems in
residential real estate--single-family homes and condominiums--unleashed a
cascading series of market forces and events. While centered around sub-prime
and adjustable rate residential mortgages, debt markets reacted to the broader
issues of lax underwriting standards and complex bundled structures, withdrawing
liquidity and pushing up spreads across the entire spectrum of securitized real
estate debt instruments, including those backed by commercial real estate where
no adverse credit patterns have been evident. With securitized debt
4
markets stalled, lenders accumulated loans on their balance sheets and warehouse
lines, straining capacity and adding to a reluctance to lend.
These forces were much in evidence in the pricing movements of real estate
stocks during 2007, compounding a palpable tension that existed in the market
early in the year as valuations ran-up in the after-glow of the Equity Office
Properties--Blackstone transaction. Investors began to wonder whether tighter
debt markets would spell a repricing for commercial real estate after a lengthy
period of escalating values. Importantly, the second half of 2007 was the first
period since early 2005 where there was not an active pace of REIT privatization
and merger and acquisition announcements.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE FUND DURING THIS REPORTING PERIOD?
We continued to maintain significant property type and geographic
diversification while taking into account company credit quality, sector and
security-type allocations. As in past years, investment decisions were based on
a multi-layered analysis of the company, the real estate it owned, its
management, and the relative price of the security, with a focus on securities
that we believed would be best positioned to generate sustainable income and
price appreciation over the long-run.
Across all real estate sectors, we favored companies with properties located in
the strongest markets. Generally, these markets were defined by high barrier to
entry, which constrained new construction -- a condition that in the past often
has indicated the long-term potential to provide significant value enhancement
and a real inflation hedge.
The ability to shift allocations between preferred and common stock based on the
relative attractiveness of these two distinct security types continued to be an
important tool in managing JRS for income and long-term capital appreciation.
For 2007, we continued to tilt the portfolio toward common stocks, which at the
end of 2007 represented 71% of the portfolio. The remaining portfolio allocation
was to preferred stocks.
5
HOW DID THE FUND PERFORM OVER THIS TWELVE-MONTH PERIOD?
The performance of JRS, as well as that of a comparative index and benchmark, is
presented in the accompanying table.
Average Annual Total Returns on Net Asset Value
For the periods ended 12/31/07
1-YEAR 5-YEAR
----------------------------------------------------------------------------------
JRS(1 ) -29.30% 12.52%
Dow Jones Wilshire Real Estate Securities Index(2) -17.66% 18.63%
Comparative Benchmark(3) -14.25% 11.82%
--------------------------------------------------------------------------------
Past performance does not guarantee future results. Current performance may be
higher or lower than the data shown.
Returns do not reflect the deduction of taxes that shareholders may have to pay
on Fund distributions or upon the sale of Fund shares. For additional
information, see the Performance Overview for the Fund in this report.
--------------------------------------------------------------------------------
For the twelve months ended December 31, 2007, the total return on net asset
value for the Fund underperformed the Dow Jones Wilshire Real Estate Securities
Index and a comparative benchmark. The index and benchmark negative returns show
clearly that 2007 presented a very challenging and unforgiving market
environment. The Fund's relative underperformance was in large part due to its
use of financial leverage. Over this past year, leverage tended to exacerbate
the price declines suffered by the Fund's holdings. However, leverage is a
strategy that the Fund has used since its inception, and, as the five-year
returns of the Fund and comparative benchmark show, has made a positive
contribution to net performance over time. We believe this strategy will
continue to provide opportunities for enhanced distributions and total return in
the future.
--------------------------------------------------------------------------------
1 The Fund elected to retain a portion of its realized long-term capital gains
for the tax years ended December 31, 2007 and December 31, 2006, and pay
required federal corporate income taxes on these amounts. Common shareholders on
record date are entitled to take an offsetting tax credit for their pro-rata
share of the taxes paid by the Fund. The total return shown does not include the
economic benefit to Common shareholders of record of this tax credit/refund. The
Fund's corresponding total return on NAV for the 1-year and 5-year periods ended
December 31, 2007 when this benefit is included are -24.40% and 14.65%,
respectively.
2 The Dow Jones Wilshire Real Estate Securities Index is a broad, unmanaged,
capitalization-weighted measure of the performance of publicly-traded REITs and
other real estate operating companies.
3 The comparative benchmark is based on the preferred stock and highest 50%
yielding (based on market capitalization) common stock securities in the SNL
financial LC real estate database through 6/30/07. Beginning in July 2007, the
benchmark is based on the preferred and all common stocks in the database.
Returns are computed from this database by a third party provider.
--------------------------------------------------------------------------------
In addition to leverage, the Fund's tilt toward common stocks throughout 2007
also hurt its overall performance versus the Dow Jones Wilshire Real Estate
Securities Index, as the more defensive position of preferred securities in an
issuer's capital structure and their generally higher dividend yields resulted
in better relative performance in a turbulent pricing environment. Finally, the
Fund increased its exposure to high quality regional mall and office holdings
(Simon Property Group, Boston Properties and SL Green Realty) as it reinvested
proceeds from positions that were taken private earlier in 2007. The initial
returns of these positions also served to constrain returns in 2007, but we
believe they have the potential to enhance the performance of the Fund over a
complete investment cycle.
Not all the news was negative. The Fund's ownership of securities of several
other companies that were subject to merger and acquisition activities during
the first half of 2007 had a positive impact on performance. Specifically four
companies (Equity Office Properties, Archstone Smith Trust, Republic Property
Trust and Crescent Real Estate) were acquired during the period by third parties
at significant premiums to trading values prior to the announced deals. Another
area of positive performance for the Fund was its significant overweight in
health care oriented companies, which were relatively strong performers in 2007
due to the defensive nature of their long leases and steady demand.
6
RECENT DEVELOPMENTS IN THE AUCTION RATE PREFERRED MARKETS
During February 2008, after the close of this reporting period, regularly
scheduled auctions for the Taxable Auctioned Preferred shares issued by your
Fund began attracting more shares for sale than offers to buy. This meant that
these auctions "failed to clear," and that many Taxable Auctioned Preferred
shareholders who wanted to sell their shares in these auctions were unable to do
so. It is important to note this decline in liquidity did not lower the credit
quality of these shares, and that Taxable Auctioned Preferred shareholders
unable to sell their shares received distributions at the "maximum rate"
calculated in accordance with the pre-established terms of the Taxable Auctioned
Preferred stock. At the time this report was prepared, the Fund's managers could
not predict when future auctions might succeed in attracting sufficient buyers
for the shares offered. The Fund's managers are working diligently to develop
mechanisms designed to improve the liquidity of the Taxable Auctioned Preferred
shares, but at present there is no assurance that these efforts will succeed.
These developments do not affect the management or investment policies of the
Fund. However, one implication of these auction failures for common shareholders
is that the Fund's cost of leverage will be higher than it otherwise would have
been had the auctions been successful. As a result, the Fund's future common
share earnings may be marginally lower than they otherwise might have been.
7
Common Share
Distribution and Share Price
INFORMATION
On March 1, 2007, Nuveen Investments announced that the Fund would move from a
monthly to a quarterly common share distribution schedule. The last monthly
distribution was paid on April 2, 2007, and first quarterly distribution was
paid on July 2, 2007.
The Fund employs financial leverage through the issuance of Taxable Auctioned
Preferred shares, as well as through bank borrowings. Financial leverage
provides the potential for higher earnings, (net investment income), total
returns and distributions over time, but--as noted earlier--also increases the
variability of common shareholders' net asset value per share in response to
changing market conditions. Financial leverage contributed positively to the
Fund's common share net earnings over the reporting period, but detracted from
the Fund's overall common share total return.
The Fund has a managed distribution program. The goal of a managed distribution
program is to provide common shareholders with relatively consistent and
predictable cash flow by systematically converting its expected long-term return
potential into regular distributions. As a result, regular common share
distributions throughout the year are likely to include a portion of expected
long-term gains (both realized and unrealized), along with net investment
income.
Important points to understand about the managed distribution program are:
- The Fund seeks to establish a relatively stable common share distribution rate
that roughly corresponds to the projected total return from its investment
strategy over an extended period of time. However, you should not draw any
conclusions about the Fund's past or future investment performance from its
current distribution rate.
- Actual common share returns will differ from projected long-term returns (and
therefore the Fund's distribution rate), at least over shorter time periods.
Over a specific timeframe, the difference between actual returns and total
distributions will be reflected in an increasing (returns exceed
distributions) or a decreasing (distributions exceed returns) Fund net asset
value.
- Each distribution is expected to be paid from some or all of the following
sources:
- net investment income (regular interest and dividends),
- realized capital gains, and
- unrealized gains, or, in certain cases, a return of principal (non-taxable
distributions).
- A non-taxable distribution is a payment of a portion of the Fund's capital.
When the Fund's returns exceed distributions, it may represent portfolio gains
generated, but not realized as
8
a taxable capital gain. In periods when the Fund's returns fall short of
distributions, it will represent a portion of your original principal unless
the shortfall is offset during other time periods over the life of your
investment (previous or subsequent) when the Fund's total return exceeds
distributions.
- Because distribution source estimates are updated during the year based on the
Fund's performance and forecast for its current fiscal year (which is the
calendar year for the Fund), estimates on the nature of your distributions
provided at the time the distributions are paid may differ from both the tax
information reported to you in your Fund's IRS Form 1099 statement provided at
year end, as well as the ultimate economic sources of distributions over the
life of your investment.
The following table provides information regarding the Fund's common share
distributions and total return performance for the fiscal year ended December
31, 2007. The distribution information is presented on a tax basis rather than
on a generally accepted accounting principles (GAAP) basis. This information is
intended to help you better understand whether the Fund's returns for the
specified time period was sufficient to meet the Fund's distributions.
-----------------------------------------------------------------------------
AS OF 12/31/07 (COMMON SHARES) JRS
-----------------------------------------------------------------------------
Inception date 11/15/01
Calendar year:
Per share distribution:
From net investment income $0.69
From short-term capital gains --
From long-term capital gains 1.59
From return of capital --
--------
Total per share distribution $2.28
========
Distribution rate on NAV 13.54%
Annualized total returns:
Excluding retained gain tax credit/refund(4):
1-year on NAV (29.30)%
5-year on NAV 12.52%
Since inception on NAV 11.61%
Including retained gain tax credit/refund(4):
1-year on NAV (24.40)%
5-year on NAV 14.65%
Since inception on NAV 13.34%
-----------------------------------------------------------------------------
As of December 31, 2007, the Fund was trading at a -5.70% discount to its NAV,
compared with an average discount of -0.56% for the entire twelve-month period.
--------------------------------------------------------------------------------
4 The Fund elected to retain a portion of its realized long-term capital gains
for the tax years ended December 31, 2007 and December 31, 2006, and pay
required federal corporate income taxes on these amounts. As reported on Form
2439, Common shareholders on record date must include their pro-rata share of
these gains on their applicable federal tax returns, and are entitled to take
offsetting tax credits, for their pro-rata share of the taxes paid by the Fund.
The total returns "Including retained gain tax credit/refund" include the
economic benefit to Common shareholders on record date of these tax
credits/refunds.
--------------------------------------------------------------------------------
9
Retention of Realized Long-Term
CAPITAL GAINS
On December 14, 2007, the Fund announced it would retain a portion of its
realized long-term capital gains for the tax year ended December 31, 2007, and
would pay any required federal corporate income taxes on these gains.
We believe retaining realized long-term capital gains enables the Fund to better
preserve and grow its capital base for long-term investors. This increases
earnings potential over time, providing the opportunity for more stable growth
of distributions and high share prices.
Common shareholders of record on December 31, 2007, holding the Fund in a
taxable account must include their pro-rata share of the Fund's retained gains
as reported on IRS Form 2439 on their 2007 federal income tax returns. They will
be entitled to take an offsetting federal income tax credit equal to their
pro-rata share of taxes the Fund paid on its retained gains. Common shareholders
also will be entitled to increase their Fund investments' cost basis by the net
amount of gains retained by the Fund. The Fund's net asset value on December 27,
2007, was reduced to reflect the accrual of the Fund's estimated tax liability.
The Fund's final per share retained long-term capital gains and corresponding
federal corporate income taxes paid are as follows:
PER SHARE JRS
----------------------------------------------------------------------
Long-Term Capital Gain Retained $ 3.4576
Less Federal Income Taxes Paid by Fund (1.2102)
NET LONG-TERM CAPITAL GAIN RETAINED $ 2.2474
----------------------------------------------------------------------
Final amounts for retained gains and taxes paid will be reported to shareholders
of record on IRS Form 2439. Investors who hold shares in "street name" should
receive Form 2439 from their brokerage firm by March 31, 2008. Investors who own
shares directly through the Funds' transfer agent will receive Form 2439 in
mid-February 2008. These gains will not be reported on Form 1099-DIV, which only
reflects realized capital gains actually distributed to shareholders and taxable
in 2007. Shareholders who held Funds in a taxable account should wait to file
their tax returns until both Form 2439 and 1099-DIV are received. More details
about these Funds, as well as additional information on retained capital gains
and related tax information are available on www.nuveen.com/taxinfo.
10
JRS Nuveen Real Estate
PERFORMANCE Income Fund
OVERVIEW
as of December 31, 2007
PORTFOLIO ALLOCATION (AS A % OF TOTAL INVESTMENTS)(3)
(PIE CHART)
Real Estate Investment Trust Common Stocks 71.3
Short-Term Investments 0.6
Real Estate Investment Trust Preferred Stocks 28.1
2007 DISTRIBUTIONS PER SHARE(5)
(BAR CHART)
Jan 0.19
Feb 0.19
Mar 0.19
Jun 0.57
Sep 0.57
Dec 0.57
-
SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
(LINE GRAPH)
1/01/07 28.3800
27.3101
28.1900
28.6200
28.9700
29.9800
29.0200
28.3800
28.1100
26.4500
27.4000
26.7000
27.8000
26.8700
26.9200
26.6800
27.2500
26.9500
26.3000
25.7500
24.0000
25.0000
25.9000
25.6800
24.5000
23.3500
24.0500
24.3500
23.5500
22.7500
20.0000
20.2700
20.9300
20.3500
22.0000
22.0000
22.0000
21.1600
22.4000
22.6000
23.3500
23.1000
21.8500
22.2500
21.2500
19.1000
19.1500
18.5800
19.2500
19.8000
17.6100
16.2500
15.7000
12/31/07 15.8800
FUND SNAPSHOT
-------------------------------------------------------------------------------------
Common Share Price(1) $15.88
-------------------------------------------------------------------------------------
Common Share Net Asset Value(1) $16.84
-------------------------------------------------------------------------------------
Premium/(Discount) to NAV -5.70%
-------------------------------------------------------------------------------------
Current Distribution Rate(2) 14.36%
-------------------------------------------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $476,504
-------------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)(3)
-------------------------------------------------------------------------------------
Specialized 35.4%
-------------------------------------------------------------------------------------
Retail 23.4%
-------------------------------------------------------------------------------------
Office 17.0%
-------------------------------------------------------------------------------------
Residential 15.4%
-------------------------------------------------------------------------------------
Diversified 4.8%
-------------------------------------------------------------------------------------
Short-Term Investments 0.6%
-------------------------------------------------------------------------------------
Other 3.4%
-------------------------------------------------------------------------------------
TOP FIVE COMMON STOCK ISSUERS
(as a % of total investments)(3)
------------------------------------------------------------------------------------
Macerich Company 6.2%
------------------------------------------------------------------------------------
Ventas Inc. 6.1%
------------------------------------------------------------------------------------
AvalonBay Communities, Inc. 5.5%
------------------------------------------------------------------------------------
Simon Property Group, Inc. 4.9%
------------------------------------------------------------------------------------
Senior Housing Properties Trust 4.9%
------------------------------------------------------------------------------------
TOP FIVE PREFERRED STOCK ISSUERS
(as a % of total investments)(3)
------------------------------------------------------------------------------------
Public Storage, Inc. 3.0%
------------------------------------------------------------------------------------
Lexington Realty Trust 2.4%
------------------------------------------------------------------------------------
Highwoods Properties, Inc. 1.9%
------------------------------------------------------------------------------------
Maguire Properties, Inc. 1.9%
------------------------------------------------------------------------------------
Ashford Hospitality Trust, Inc. 1.8%
------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(4)
(Inception 11/15/01)
-------------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
-------------------------------------------------------------------------------------
1-Year -38.06% -29.30%
-------------------------------------------------------------------------------------
5-Year 10.08% 12.52%
-------------------------------------------------------------------------------------
Since Inception 9.97% 11.61%
-------------------------------------------------------------------------------------
1 Common Share Net Asset Value (NAV) reflects an adjustment, made subsequent to
December 31, 2007, for the amount of the tax liability associated with the
Fund's retention of a portion of its long-term capital gains and the Fund's
payment of federal corporate income tax thereon, and therefore differs from
the NAV published shortly after that date. The Common Share Price is actual as
of December 31, 2007, and did not reflect the knowledge of the subsequent
adjustment to NAV.
2 Current Distribution Rate is based on the Fund's current annualized quarterly
distribution divided by the Fund's current market price. REIT distributions
received by the Fund are generally comprised of investment income, long-term
and short-term capital gains and a REIT return of capital. The Fund's
quarterly distributions to its shareholders may be comprised of ordinary
income, net realized capital gains and, if at the end of the calendar year the
Fund's cumulative net ordinary income and net realized gains are less than the
amount of the Fund's distributions, a return of capital for tax purposes.
3 Excluding derivative transactions.
4 The Fund elected to retain a portion of its realized long-term capital gains
for the tax years ended December 31, 2007 and December 31, 2006, and pay
required federal corporate income taxes on these amounts. As reported on Form
2439, Common shareholders on record date must include their pro-rata share of
these gains on their applicable federal tax returns, and are entitled to take
an offsetting tax credit, for their pro-rata share of the taxes paid by the
Fund. The standardized total returns shown above do not include the economic
benefit to Common shareholders of record of this tax credit/refund. The Fund's
corresponding average annual total returns on share price when this benefit is
included are -33.51%, 12.29% and 11.78% for the 1-year, 5-year and since
inception periods, respectively. The Fund's corresponding average annual total
returns on NAV when this benefit is included are -24.40%, 14.65% and 13.34%,
for the 1-year, 5-year and since inception periods, respectively.
5 Effective March 1, 2007, the Fund changed from a monthly distribution to a
quarterly distribution schedule. The Fund's last monthly distribution was
declared March 1, 2007, and paid on April 2, 2007. The Fund's first quarterly
distribution was declared June 1, 2007, and paid on July 2, 2007.
11
SHAREHOLDER MEETING REPORT
The special meeting of shareholders was held in the offices of Nuveen
Investments on October 12, 2007.
JRS
-------------------------------------------------------------------------------------
Common and
Preferred
shares voting
together
as a class
-------------------------------------------------------------------------------------
TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT:
For 12,745,252
Against 482,045
Abstain 412,599
Broker Non-Votes 4,341,363
-------------------------------------------------------------------------------------
Total 17,981,259
-------------------------------------------------------------------------------------
TO APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEN NUVEEN ASSET MANAGEMENT AND
SECURITY CAPITAL RESEARCH & MANAGEMENT INCORPORATED:
For 12,667,229
Against 513,296
Abstain 459,371
Broker Non-Votes 4,341,363
-------------------------------------------------------------------------------------
Total 17,981,259
-------------------------------------------------------------------------------------
TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
FOR THE CURRENT FISCAL YEAR:
For 17,428,588
Against 253,675
Abstain 298,996
-------------------------------------------------------------------------------------
Total 17,981,259
-------------------------------------------------------------------------------------
12
Report of INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
THE BOARD OF TRUSTEES AND SHAREHOLDERS
NUVEEN REAL ESTATE INCOME FUND
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Nuveen Real Estate Income Fund (the "Fund") as
of December 31, 2007, and the related statements of operations and cash flows
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for 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
audits.
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, 2007, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. 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, 2007, the results of its operations and
cash flows for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods indicated therein in conformity with U.S. generally accepted accounting
principles.
(ERNST & YOUNG LLP LOGO)
Chicago, Illinois
February 26, 2008
13
JRS
Nuveen Real Estate Income Fund
Portfolio of INVESTMENTS
as of December 31, 2007
SHARES DESCRIPTION (1) VALUE
---------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST COMMON STOCKS - 119.4% (71.3% OF TOTAL INVESTMENTS)
INDUSTRIAL - 4.2%
1,823,900 DCT Industrial Trust Inc. $ 16,980,509
90,500 First Industrial Realty Trust, Inc. 3,131,300
---------------------------------------------------------------------------------------------------------------------------
Total Industrial 20,111,809
--------------------------------------------------------------------------------------------------------------
OFFICE - 20.1%
153,400 Boston Properties, Inc. 14,083,654
1,195,300 Brandywine Realty Trust 21,431,729
1,090,500 Mack-Cali Realty Corporation 37,077,000
246,400 SL Green Realty Corporation 23,028,544
---------------------------------------------------------------------------------------------------------------------------
Total Office 95,620,927
--------------------------------------------------------------------------------------------------------------
RESIDENTIAL - 20.3%
315,300 Apartment Investment & Management Company, Class A 10,950,369
464,500 AvalonBay Communities, Inc. 43,728,030
727,700 Equity Residential 26,539,219
443,700 Post Properties, Inc. 15,582,744
---------------------------------------------------------------------------------------------------------------------------
Total Residential 96,800,362
--------------------------------------------------------------------------------------------------------------
RETAIL - 32.6%
413,800 Federal Realty Investment Trust 33,993,670
691,000 Macerich Company 49,102,460
450,000 Simon Property Group, Inc. 39,087,000
449,800 Weingarten Realty Investors Trust 14,141,712
1,043,100 Westfield Group 19,070,541
---------------------------------------------------------------------------------------------------------------------------
Total Retail 155,395,383
--------------------------------------------------------------------------------------------------------------
SPECIALIZED - 42.2%
3,430,000 Ashford Hospitality Trust Inc. 24,661,700
791,400 Cogdell Spencer Inc. 12,607,002
1,029,600 DiamondRock Hospitality Company 15,423,408
1,960,000 Extra Space Storage Inc. 28,008,400
933,800 Health Care Property Investors Inc. 32,477,564
1,716,100 Senior Housing Properties Trust 38,921,149
1,081,600 Ventas Inc. 48,942,400
---------------------------------------------------------------------------------------------------------------------------
Total Specialized 201,041,623
--------------------------------------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUST COMMON STOCKS 568,970,104
(COST $524,316,937)
==============================================================================================================
SHARES DESCRIPTION (1) COUPON VALUE
---------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST PREFERRED STOCKS - 47.1% (28.1% OF TOTAL INVESTMENTS)
DIVERSIFIED - 8.0%
529,942 Duke-Weeks Realty Corporation 6.950% $ 10,678,331
150,000 Lexington Corporate Properties Trust, Series B 8.050% 3,127,500
850,000 Lexington Realty Trust 7.550% 16,235,000
400,000 PS Business Parks, Inc., Series O 7.375% 8,140,000
---------------------------------------------------------------------------------------------------------------------------
Total Diversified 38,180,831
--------------------------------------------------------------------------------------------------------------
MORTGAGE - 1.7%
400,000 Gramercy Capital Corporation 8.125% 7,880,000
---------------------------------------------------------------------------------------------------------------------------
OFFICE - 8.4%
160,000 Alexandria Real Estate Equities Inc., Series C 8.375% 4,200,000
200,000 Corporate Office Properties Trust, Series G 8.000% 4,350,000
12,141 Highwoods Properties, Inc., Series A 8.625% 13,484,098
57,612 Highwoods Properties, Inc., Series B 8.000% 1,370,013
81,000 HRPT Properties Trust, Series C 7.125% 1,636,200
1,062,200 Maguire Properties, Inc., Series A 7.625% 14,807,068
---------------------------------------------------------------------------------------------------------------------------
Total Office 39,847,379
--------------------------------------------------------------------------------------------------------------
14
SHARES DESCRIPTION (1) COUPON VALUE
---------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL - 5.5%
511,100 Apartment Investment & Management Company, Series 7.750% $ 10,692,212
U
183,000 Apartment Investment & Management Company, Series 7.875% 3,665,490
Y
101,900 BRE Properties, Series C 6.750% 1,970,746
505,900 BRE Properties, Series D 6.750% 10,118,000
---------------------------------------------------------------------------------------------------------------------------
Total Residential 26,446,448
--------------------------------------------------------------------------------------------------------------
RETAIL - 6.5%
160,000 Cedar Shopping Centers Inc., Series A 8.875% 3,760,000
113,000 Glimcher Realty Trust, Series F 8.750% 2,322,150
154,300 Glimcher Realty Trust, Series G 8.125% 2,947,130
400,000 Kimco Realty Corporation, Series G 7.750% 9,274,000
125,000 Saul Centers, Inc., Series A 8.000% 3,087,500
400,000 Taubman Centers, Inc., Series H 7.625% 9,520,000
---------------------------------------------------------------------------------------------------------------------------
Total Retail 30,910,780
--------------------------------------------------------------------------------------------------------------
SPECIALIZED - 17.0%
640,000 Ashford Hospitality Trust, Inc., Series D 8.450% 12,160,000
130,000 Ashford Hospitality Trust, Series A 8.550% 2,437,500
546,900 FelCor Lodging Trust Inc., Series C 8.000% 10,144,995
120,000 Hersha Hospitality Trust, Series A 8.000% 2,568,000
800,000 Hospitality Properties Trust, Series C 7.000% 14,400,000
1,000,000 Public Storage, Inc., Series I 7.250% 21,040,000
151,700 Public Storage, Inc. 6.750% 2,980,905
175,000 Strategic Hotel Capital Inc., Series B 8.250% 3,368,750
320,000 Strategic Hotel Capital Inc., Series C 8.250% 6,240,000
300,000 Sunstone Hotel Investors Inc., Series A 8.000% 5,859,000
---------------------------------------------------------------------------------------------------------------------------
Total Specialized 81,199,150
--------------------------------------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUST PREFERRED 224,464,588
STOCKS (COST $279,109,857)
==============================================================================================================
PRINCIPAL
AMOUNT (000) DESCRIPTION (1) COUPON MATURITY VALUE
-----------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.0% (0.6% OF TOTAL INVESTMENTS)
$ 4,947 Repurchase Agreement with Fixed Income Clearing 1.000% 1/02/08 $ 4,947,040
Corporation, dated 12/31/07, repurchase price
$4,947,315, collateralized by $3,620,000 U.S.
Treasury Bond, 7.625%, due 2/15/25, value
$5,049,900
========== --------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $4,947,040) 4,947,040
==============================================================================================================
TOTAL INVESTMENTS (COST $808,373,834) - 167.5% 798,381,732
--------------------------------------------------------------------------------------------------------------
BORROWINGS - (14.7)% (2) (70,000,000)
--------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (6.2)% (29,877,348)
==============================================================================================================
TAXABLE AUCTIONED PREFERRED SHARES, AT LIQUIDATION (222,000,000)
VALUE - (46.6)% (2)
--------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES - 100% $ 476,504,384
==============================================================================================================
INTEREST RATE SWAPS OUTSTANDING AT DECEMBER 31, 2007:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (DEPRECIATION)
----------------------------------------------------------------------------------------------------------------------------
Citigroup Inc. $43,000,000 Receive 1-Month USD-LIBOR 5.190% Monthly 2/06/09 $ (580,419)
============================================================================================================================
USD-LIBOR (United States Dollar-London Interbank Offered Rate)
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable
to Common shares unless otherwise noted.
(2) Borrowings and Taxable Auctioned Preferred Shares, at Liquidation Value as a percentage of
total investments are (8.8)% and (27.8)%, respectively.
See accompanying notes to financial statements.
15
Statement of
ASSETS & LIABILITIES
December 31, 2007
----------------------------------------------------------------------------
ASSETS
Investments, at value (cost $808,373,834) $798,381,732
Dividends and interest receivable 7,631,890
Other assets 110,717
----------------------------------------------------------------------------
Total assets 806,124,339
----------------------------------------------------------------------------
LIABILITIES
Borrowings 70,000,000
Payable for federal corporate income tax 34,250,000
Unrealized depreciation on interest rate swaps 580,419
Payable for investments purchased 1,437,224
Accrued expenses:
Management fees 473,753
Interest on borrowings 373,498
Other 349,900
Taxable Auctioned Preferred shares dividends payable 155,161
----------------------------------------------------------------------------
Total liabilities 107,619,955
----------------------------------------------------------------------------
Taxable Auctioned Preferred shares, at liquidation value 222,000,000
----------------------------------------------------------------------------
Net assets applicable to Common shares $476,504,384
----------------------------------------------------------------------------
Common shares outstanding 28,302,032
----------------------------------------------------------------------------
Net asset value per Common share outstanding (net assets
applicable to Common shares, divided by Common shares
outstanding) $ 16.84
============================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
----------------------------------------------------------------------------
Common shares, $.01 par value per share $ 283,020
Paid-in surplus(1) 487,012,448
Undistributed (Over-distribution of) net investment income (218,563)
Accumulated net realized gain (loss) from investments and
derivative transactions --
Net unrealized appreciation (depreciation) of investments
and derivative transactions (10,572,521)
----------------------------------------------------------------------------
Net assets applicable to Common shares $476,504,384
============================================================================
Authorized shares:
Common Unlimited
Taxable Auctioned Preferred Unlimited
============================================================================
(1) Includes retained realized long-term capital gains of $97,857,143, net of
federal corporate income taxes of $34,250,000.
See accompanying notes to financial statements.
16
Statement of
OPERATIONS
Year ended December 31, 2007
------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 30,956,363
Interest 996,627
------------------------------------------------------------------------------
Total investment income 31,952,990
------------------------------------------------------------------------------
EXPENSES
Management fees 8,425,326
Taxable Auctioned Preferred shares - auction fees 555,000
Taxable Auctioned Preferred shares - dividend disbursing
agent fees 24,750
Shareholders' servicing agent fees and expenses 3,949
Interest expense on borrowings 3,826,095
Fees on borrowings 252,366
Custodian's fees and expenses 163,666
Trustees' fees and expenses 39,664
Professional fees 71,760
Shareholders' reports - printing and mailing expenses 144,552
Stock exchange listing fees 2,395
Investor relations expense 152,061
Other expenses 42,632
------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense
reimbursement 13,704,216
Custodian fee credit (6,509)
Expense reimbursement (2,383,592)
------------------------------------------------------------------------------
Net expenses 11,314,115
------------------------------------------------------------------------------
Net investment income 20,638,875
------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (net of federal corporate income taxes of
$34,250,000 on long-term capital gains retained) 118,618,365
Interest rate swaps 87,093
Foreign currencies (62,660)
Change in net unrealized appreciation (depreciation) of:
Investments (334,383,157)
Interest rate swaps (479,391)
------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (216,219,750)
------------------------------------------------------------------------------
DISTRIBUTIONS TO TAXABLE AUCTIONED PREFERRED SHAREHOLDERS
From net investment income (1,391,546)
From accumulated net realized gains (10,185,715)
------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Taxable Auctioned Preferred shareholders (11,577,261)
------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common
shares from operations $(207,158,136)
------------------------------------------------------------------------------
See accompanying notes to financial statements.
17
Statement of
CHANGES in NET ASSETS
YEAR ENDED YEAR ENDED
12/31/07 12/31/06
----------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 20,638,875 $ 28,427,511
Net realized gain (loss) from:
Investments (net of federal corporate income taxes of
$34,250,000 and $15,719,306, respectively,
on long-term capital gains retained) 118,618,365 52,460,690
Interest rate swaps 87,093 (17,122)
Foreign currencies (62,660) --
Change in net unrealized appreciation (depreciation) of:
Investments (334,383,157) 98,615,287
Interest rate swaps (479,391) 551,230
Distributions to Taxable Auctioned Preferred shareholders:
From net investment income (1,391,546) (3,850,141)
From accumulated net realized gains (10,185,715) (5,800,915)
----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common
shares from operations (207,158,136) 170,386,540
----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (19,396,670) (37,860,356)
From accumulated net realized gains (45,001,326) (17,451,897)
----------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Common shareholders (64,397,996) (55,312,253)
----------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued to shareholders due
to reinvestment of distributions 2,941,752 1,140,553
Taxable Auctioned Preferred shares offering costs and
adjustments -- (745,000)
----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common
shares from capital share transactions 2,941,752 395,553
----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common
shares (268,614,380) 115,469,840
Net assets applicable to Common shares at the beginning of
year 745,118,764 629,648,924
----------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of year $ 476,504,384 $745,118,764
----------------------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income
at the end of year $ (218,563) $ (174,171)
----------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
18
Statement of
CASH FLOWS
Year ended December 31, 2007
----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON
SHARES FROM OPERATIONS $(207,158,136)
Adjustments to reconcile the net increase (decrease) in net
assets applicable to Common shares from operations
to net cash provided by (used in) operating activities:
Purchases of investments (415,218,093)
Proceeds from sales of investments 455,796,743
Proceeds from (Purchases of) short-term investments, net 3,289,602
Proceeds from sales of interest rate swaps 87,093
(Increase) Decrease in receivable for dividends and
interest (2,166,649)
(Increase) Decrease in other assets (67,802)
Increase (Decrease) in payable for federal corporate
income tax 18,530,694
Increase (Decrease) in payable for investments purchased 1,437,224
Increase (Decrease) in accrued management fees (79,989)
Increase (Decrease) in interest on borrowings 31,273
Increase (Decrease) in accrued other liabilities 161,180
Increase (Decrease) in Taxable Auctioned Preferred shares
dividends payable 3,060
Net realized (gain) loss from investments (118,618,365)
Net realized (gain) loss from interest rate swaps (87,093)
Net realized gain (loss) from foreign currencies 62,660
Change in net unrealized (appreciation) depreciation of
investments 334,383,157
Change in net unrealized (appreciation) depreciation of
interest rate swaps 479,391
Federal corporate income taxes on retained capital gains (34,250,000)
Capital gain and return of capital distributions from
investments 24,895,058
----------------------------------------------------------------------------
Net cash provided by (used in) operating activities 61,511,008
----------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions paid to Common shareholders (61,456,244)
(Increase) Decrease in deferred Taxable Auctioned Preferred
offering costs (54,764)
----------------------------------------------------------------------------
Net cash provided by (used in) financing activities (61,511,008)
----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH --
Cash at the beginning of year --
----------------------------------------------------------------------------
CASH AT THE END OF YEAR $ --
============================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest on borrowings during the fiscal year ended December 31,
2007, was $3,794,822.
Cash paid for federal corporate income taxes was $15,719,306.
Non-cash financing activities not included herein consist of reinvestments of
Common share distributions of $2,941,752.
See accompanying notes to financial statements.
19
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").
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. The prices of fixed-income securities and
interest rate swap contracts are generally provided by an independent pricing
service approved by the Fund's Board of Trustees. When price quotes are not
readily available, the pricing service or, in the absence of a pricing service
for a particular investment, the Board of Trustees of the Fund, or its designee,
may establish fair value using a wide variety of market data including yields or
prices of investments of comparable quality, type of issue, coupon, maturity and
rating, market quotes or indications of value from security dealers, evaluations
of anticipated cash flows or collateral, general market conditions and other
information and analysis, including the obligor's credit characteristics
considered relevant by the pricing service or the Board of Trustees' designee.
If the pricing service is unable to supply a price for a security or interest
rate swap contract, the Fund may use a market quote provided by a major
broker/dealer in such investments. If it is determined that the market price for
an investment or derivative instrument is 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.
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/delayed delivery
basis may have extended settlement periods. Any investments so purchased are
subject to market fluctuation during this period. The Fund has instructed the
custodian to segregate assets with a current value at least equal to the amount
of the when-issued/delayed delivery purchase commitments. At December 31, 2007,
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 comply with the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies. The Fund intends to
distribute substantially all of its investment company taxable income to
shareholders. In any year when the Fund realizes net capital gains, the Fund may
choose to distribute all or a portion of its net capital gains to shareholders,
or alternatively, to retain all or a portion of its net capital gains and pay
federal corporate income taxes on such retained gains. During the tax year ended
December 31, 2007, the Fund retained $97,857,143 of realized long-term capital
gains and accrued a provision for federal corporate income taxes of $34,250,000,
the net of which has been reclassified to Paid-in surplus. During the tax year
ended December 31, 2006, the Fund retained $44,912,302 of realized long-term
capital gains and accrued a provision for federal corporate income taxes of
$15,719,306.
Effective June 29, 2007, the Fund adopted Financial Accounting Standards Board
(FASB) Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN
48). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the affirmative evaluation of tax positions taken or expected to be
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" (i.e. greater than 50-percent) of being sustained by
the applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold may result in a tax benefit or expense in the
current year.
Implementation of FIN 48 required management of the Fund to analyze all open tax
years, as defined by the statute of limitations, for all major jurisdictions,
which includes federal and certain states. Open tax years are those that are
open for examination by taxing authorities (i.e. the last four tax year ends and
the interim tax period since then). The Fund has no examinations in progress.
20
For all open tax years and all major taxing jurisdictions through the end of the
reporting period, management of the Fund has reviewed all tax positions taken or
expected to be taken in the preparation of the Fund's tax return and concluded
the adoption of FIN 48 resulted in no impact to the Fund's net assets or results
of operations as of and during the fiscal year ended December 31, 2007.
The Fund is also not aware of any tax positions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will significantly
change in the next twelve months.
Dividends and Distributions to Common Shareholders
Distributions to Common shareholders are recorded on the ex-dividend date. The
amount and timing of distributions are determined in accordance with federal
corporate income tax regulations, which may differ from U.S. generally accepted
accounting principles.
The Fund makes quarterly cash distributions to Common shareholders of a stated
dollar amount per share. Subject to approval and oversight by the Fund's Board
of Trustees, the Fund seeks to maintain a stable distribution level designed to
deliver the long-term return potential of the Fund's investment strategy through
regular quarterly distributions (a "Managed Distribution Program"). Total
distributions during a calendar year generally will be made from the Fund's net
investment income, net realized capital gains and net unrealized capital gains
in the Fund's portfolio, if any. The portion of distributions paid from net
unrealized gains, if any, would be distributed from the Fund's assets and would
be treated by shareholders as a non-taxable distribution for tax purposes. In
the event that total distributions during a calendar year exceed the Fund's
total return on net asset value, the difference will be treated as a return of
capital for tax purposes and will reduce net asset value per share. If the
Fund's total return on net asset value exceeds total distributions during a
calendar year, the excess will be reflected as an increase in net asset value
per share. The final determination of the source and character of all
distributions for the fiscal year are made after the end of the fiscal year and
are reflected in the accompanying financial statements.
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, 2007, the
character of distributions to the Fund from the REITs was 56.24% ordinary
income, 35.04% long-term and short-term capital gains, and 8.72% return of REIT
capital. For the fiscal year ended December 31, 2006, the character of
distributions to the Fund from the REITs was 64.23% ordinary income, 26.69%
long-term and short-term capital gains, and 9.08% return of REIT capital.
For the fiscal years ended December 31, 2007 and December 31, 2006, the Fund
applied the actual character of distributions reported by the REITs in which the
Fund invests to its receipts from the REITs. If a REIT held in the portfolio of
investments did not report the actual character of its distributions during the
period, the Fund treated the distributions as ordinary income.
The actual character of distributions made by the Fund during the fiscal years
ended December 31, 2007 and December 31, 2006, are reflected in the accompanying
financial statements.
Taxable Auctioned Preferred Shares
The Fund has issued and outstanding 1,720 Series M, 1,720 Series T, 1,720 Series
W, 2,000 Series Th 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.
Interest Rate Swap Transactions
The Fund is authorized to invest in interest rate swap transactions. 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 or receive a fixed rate
payment in exchange for the counterparty paying or receiving 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 Nuveen Asset Management (the
"Adviser"), a wholly owned subsidiary of Nuveen Investments, Inc. ("Nuveen"),
believes have the financial resources to honor their obligations and by having
the Adviser continually monitor the financial stability of the swap
counterparties.
21
Notes to
FINANCIAL STATEMENTS (continued)
Foreign Currency Transactions
The Fund is authorized to engage in foreign currency exchange transactions,
including foreign currency forward, options and futures contracts. To the extent
that the Fund invests in securities and/or contracts that are denominated in a
currency other than U.S. dollars, the Fund will be subject to currency risk,
which is the risk that an increase in the U.S. dollar relative to the foreign
currency will reduce returns or portfolio value. Generally, when the U.S. dollar
rises in value against a foreign currency, the Fund's investments denominated in
that currency will lose value because its currency is worth fewer U.S. dollars;
the opposite effect occurs if the U.S. dollar falls in relative value.
Investments and other assets and liabilities denominated in foreign currencies
are converted into U.S. dollars on a spot (i.e. cash) basis at the spot rate
prevailing in the foreign currency exchange market at the time of valuation.
Purchases and sales of investments and dividend and interest income denominated
in foreign currencies are translated into U.S. dollars on the respective dates
of such transactions. The gains or losses resulting from changes in foreign
exchange rates are included in "Realized gain (loss) on foreign currencies" and
"Change in net unrealized appreciation (depreciation) of foreign currencies" in
the Statement of Operations.
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at 4:00 p.m. Eastern time. Investments and income and expenses are
translated on the respective dates of such transactions. Net realized foreign
currency gains and losses resulting from changes in exchange rates include
foreign currency gains and losses between trade date and settlement date of the
transactions, foreign currency transactions, and the difference between the
amounts of interest and dividends recorded on the books of a Fund and the
amounts actually received.
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 net credits earned on the Fund's cash on
deposit with the bank. Such deposit arrangements are an alternative to overnight
investments. Credits for cash balances may be offset by charges for any days on
which the Fund overdraws its account at the custodian bank.
Indemnifications
Under the Fund's organizational documents, its Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, in the normal course of business, the Fund
enters into contracts that provide general indemnifications to other parties.
The Fund's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Fund that have not yet
occurred. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with U.S. 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
During the fiscal years ended December 31, 2007 and December 31, 2006, 121,125
and 44,494 shares were issued to shareholders due to reinvestment of
distributions, respectively.
On May 25, 2006, the Fund issued 2,000 Series Th Taxable Auctioned Preferred
shares, $25,000 stated value per share, with a total liquidation value of
$50,000,000.
3. INVESTMENT TRANSACTIONS
Purchases and sales (excluding short-term investments and derivative
transactions) during the fiscal year ended December 31, 2007, aggregated
$415,218,093 and $455,796,743, respectively.
22
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 recognition of income on REIT investments
and timing differences in recognizing certain gains and losses on investment
transactions. To the extent that differences arise that are permanent in nature,
such amounts are reclassified within the capital accounts on the Statement of
Assets and Liabilities presented in the annual report, based on their federal
tax basis treatment; temporary differences do not require reclassification.
Temporary and permanent differences do not impact the net asset value of the
Fund.
At December 31, 2007, the cost of investments was $808,373,834.
Gross unrealized appreciation and gross unrealized depreciation of investments
at December 31, 2007, were as follows:
-----------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 117,875,583
Depreciation (127,867,685)
-----------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ (9,992,102)
-----------------------------------------------------------------------------------
The tax components of undistributed net ordinary income and net long-term
capital gains at December 31, 2007, the Fund's tax year end, were as follows:
----------------------------------------------------------------------------
Undistributed net ordinary income * $ --
Undistributed net long-term capital gains --
----------------------------------------------------------------------------
* Net ordinary income consists of net taxable income derived from dividends,
interest, and net short-term capital gains, if any.
The tax character of distributions paid during the Fund's tax years ended
December 31, 2007 and December 31, 2006, was designated for purposes of the
dividends paid deduction as follows:
2007
----------------------------------------------------------------------------
Distributions from net ordinary income * $20,785,156
Distributions from net long-term capital gains** 55,187,041
----------------------------------------------------------------------------
2006
----------------------------------------------------------------------------
Distributions from net ordinary income * $41,681,126
Distributions from net long-term capital gains 23,218,809
----------------------------------------------------------------------------
* Net ordinary income consists of net taxable income derived from dividends,
interest, and net short-term capital gains, if any.
** The Fund hereby designates this amount paid during the fiscal year ended
December 31, 2007, as long-term capital gain dividends pursuant to Internal
Revenue Code Section 852(b)(3).
5. MANAGEMENT FEES 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, 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 tables below. As
of December 31, 2007, the complex-level fee rate was .1846%.
23
Notes to
FINANCIAL STATEMENTS (continued)
Effective August 20, 2007, the complex-level fee schedule is as follows:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
------------------------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1691
$125 billion .1599
$200 billion .1505
$250 billion .1469
$300 billion .1445
------------------------------------------------------------------------------------------------
Prior to August 20, 2007, the complex-level fee schedule was as follows:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
------------------------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1698
$125 billion .1617
$200 billion .1536
$250 billion .1509
$300 billion .1490
------------------------------------------------------------------------------------------------
(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
preferred stock issued by or borrowings by the Nuveen funds) of
Nuveen-sponsored funds in the U.S.
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.
24
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.
Agreement and Plan of Merger
On June 20, 2007, Nuveen Investments announced that it had entered into a
definitive Agreement and Plan of Merger ("Merger Agreement") with Windy City
Investments, Inc. ("Windy City"), a corporation formed by investors led by
Madison Dearborn Partners, LLC ("Madison Dearborn"), pursuant to which Windy
City would acquire Nuveen Investments. Madison Dearborn is a private equity
investment firm based in Chicago, Illinois. The merger was consummated on
November 13, 2007.
The consummation of the merger was deemed to be an "assignment" (as that term is
defined in the Investment Company Act of 1940) of the investment management
agreement between the Fund and the Adviser and, if applicable, the sub-advisory
agreement between the Adviser and the sub-adviser of the Fund, and resulted in
the automatic termination of each such agreement. The Board of Trustees of the
Fund considered and approved a new investment management agreement with the
Adviser, and, if applicable, a new sub-advisory agreement between the Adviser
and the sub-adviser on the same terms as the previous agreements. Each new
ongoing investment management agreement and sub-advisory agreement, if
applicable, was approved by the shareholders of the Fund and took effect on
November 13, 2007.
The investors led by Madison Dearborn include an affiliate of Merrill Lynch. As
a result, Merrill Lynch is an indirect "affiliated person" (as that term is
defined in the Investment Company Act of 1940) of the Fund. Certain conflicts of
interest may arise as a result of such indirect affiliation. For example, the
Fund is generally prohibited from entering into principal transactions with
Merrill Lynch and its affiliates. The Adviser does not believe that any such
prohibitions or limitations as a result of Merrill Lynch's affiliation will
significantly impact the ability of the Fund to pursue its investment objectives
and policies.
6. BORROWINGS
On August 15, 2006, the Fund entered into a commercial paper program ($70
million maximum) with CITIBANK, N.A.'s conduit financing agency, CHARTA, LLC
("CHARTA"). CHARTA issues high grade commercial paper and uses the proceeds to
make advances to the Fund. For the fiscal year ended December 31, 2007, the
average daily balance of borrowings under the commercial paper program agreement
was the full $70 million maximum allowed. The interest expense incurred on
borrowings is recognized as "Interest expense on borrowings" in the Statement of
Operations. The average annualized interest rate on such borrowings for the
fiscal year ended December 31, 2007, was 5.47%. In addition to the interest
expense, the Fund also pays a .21% per annum program fee, a .10% per annum
liquidity fee and a .05% per annum dealer commission fee all of which are
recognized as "Fees on borrowings" in the Statement of Operations.
7. NEW ACCOUNTING PRONOUNCEMENT
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 157
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. The changes to current generally accepted accounting principles from the
application of this standard relate to the definition of fair value, the methods
used to measure fair value, and the expanded disclosures about fair value
measurements. As of December 31, 2007, management does not believe the adoption
of SFAS No. 157 will impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements included within the Statement of
Operations for the period.
25
Notes to
FINANCIAL STATEMENTS (continued)
8. SUBSEQUENT EVENTS
During February 2008, regularly scheduled auctions for the Taxable Auctioned
Preferred shares issued by the Fund began attracting more shares for sale than
offers to buy. This meant that these auctions "failed to clear," and that many
Taxable Auctioned Preferred shareholders who wanted to sell their shares in
these auctions were unable to do so. Taxable Auctioned Preferred shareholders
unable to sell their shares received distributions at the "maximum rate"
calculated in accordance with the pre-established terms of the Taxable Auctioned
Preferred stock.
These developments do not affect the management or investment policies of the
Fund. However, one implication of these auction failures for Common shareholders
is that the Fund's cost of leverage will be higher than it otherwise would have
been had the auctions been successful. As a result, the Fund's future Common
share earnings may be lower than they otherwise might have been.
26
Financial
HIGHLIGHTS
27
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations
-------------------------------------------------------------------------
Distributions
from Net Distributions
Investment from Capital
Income to Gains to
Beginning Net Taxable Taxable
Common Realized/ Auctioned Auctioned
Share Net Unrealized Preferred Preferred
Net Asset Investment Gain Share- Share-
Value Income(a) (Loss)(b) holders+ holders+ Total
---------------------------------------------------------------------------------------------------------------------------
Year Ended 12/31:
2007 $26.44 $.73 $(7.64) $(.05) $(.36) $(7.32)
2006 22.38 1.01 5.40 (.14) (.21) 6.06
2005 22.46 .84 .93 (.03) (.16) 1.58
2004(c) 18.57 .88 4.56 (.05) (.04) 5.35
2003(d) 17.30 .12 1.38 (.01) -- 1.49
Year Ended 10/31:
2003 13.56 .85 4.38 (.05) (.02) 5.16
---------------------------------------------------------------------------------------------------------------------------
Less Distributions
-------------------------------------------
Offering
Costs
and
Net Taxable
Investment Capital Auctioned Ending
Income to Gains to Tax Preferred Common
Common Common Return Share Share Ending
Share- Share- of Underwriting Net Asset Market
holders holders Capital Total Discounts Value Value
---------------------------------------------------------------------------------------------------------------------------
Year Ended 12/31:
2007 $(.69) $(1.59) $ -- $(2.28) $ -- $16.84 $15.88
2006 (1.35) (.62) -- (1.97) (.03) 26.44 28.48
2005 (.29) (1.37) -- (1.66) -- 22.38 19.99
2004(c) (.69) (.63) (.14) (1.46) -- 22.46 20.75
2003(d) (.01) (.08) (.13) (.22) -- 18.57 18.73
Year Ended 10/31:
2003 (.97) (.41) (.04) (1.42) -- 17.30 17.81
---------------------------------------------------------------------------------------------------------------------------
Cumulative Taxable Auctioned Preferred
at End of Period Borrowings at End of Period
--------------------------------------------- ----------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Per Coverage Outstanding Coverage
(000) Share Per Share (000) Per $1,000
----------------------------------------------------------------------------------------------------------
Year Ended 12/31:
2007 $222,000 $25,000 $78,660 $70,000 $10,979
2006 222,000 25,000 108,910 70,000 14,816
2005 172,000 25,000 116,519 -- --
2004(c) 172,000 25,000 116,857 -- --
2003(d) 172,000 25,000 100,956 -- --
Year Ended 10/31:
2003 172,000 25,000 95,758 -- --
----------------------------------------------------------------------------------------------------------
28
Total Returns Ratios/Supplemental Data
------------------ -------------------------------------------------------
Ratios to Average Net Assets Applicable
Based to Common Shares Before
on Credit/Reimbursement
Common Ending Net ----------------------------------------
Based Share Assets
on Net Applicable to Net
Market Asset Common Investment
Value** Value** Shares (000) Expenses++ Income++
---------------------------------------------------------------------------------
(38.06)% (29.30)% $476,504 2.03% 2.71%
54.49 27.87 745,119 1.54 3.74
4.75 7.42 629,649 1.28 3.46
19.80 30.12 631,979 1.34 4.13
6.49 8.69 522,576 2.31* 4.07*
35.40 39.80 486,814 2.51 5.17
---------------------------------------------------------------------------------
Ratios/Supplemental Data
----------------------------------------------------
Ratios to Average Net Assets Applicable
to Common Shares After
Credit/Reimbursement***
----------------------------------------
Net Portfolio
Investment Turnover
Expenses++ Income++ Rate
---------------------------------------------------------------------------------
1.68% 3.06% 44%
1.15 4.13 25
.90 3.85 13
.94 4.52 14
1.91* 4.47* 2
2.09 5.59 26
---------------------------------------------------------------------------------
* 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. The last dividend declared
in the period, which is typically paid on the first business day of the
following month, is assumed to be reinvested at the ending market price.
The actual reinvestment for the last dividend declared in the period
takes place over several days, and in some instances may not be based on
the market price, so the actual reinvestment price may be different from
the price used in the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of
changes in Common share net asset value, reinvested divided income at
net asset value and reinvested capital gains distributions at net asset
value, if any. The last dividend declared in the period, which is
typically paid on the first business day of the following month, is
assumed to be reinvested at the ending net asset value. The actual
reinvest price for the last dividend declared in the period may often be
based on the Fund's market price (and not its net asset value), and
therefore may be different from the price used in the calculation. Total
returns are not annualized.
- The Fund elected to retain a portion of its realized long-term capital
gains for the tax years ended December 31, and pay required federal
corporate income taxes on these amounts. As reported on Form 2439, Common
shareholders on record date must include their pro-rata share of these
gains on their applicable federal tax returns, and are entitled to take
offsetting tax credits, for their pro-rata share of the taxes paid by the
Fund. The standardized total returns shown above do not include the
economic benefit to Common shareholders on record date of these tax
credits/refunds. The Fund's corresponding Total Return on Market Value
and Common Share Net Asset Value when these benefits are included are as
follows:
Total Returns
--------------------------------
Common Based on
Shareholders Based on Common Share
of Record on Market Value Net Asset Value
----------------------------------------------------------------------------------
Tax Year Ended 12/31:
2007 December 31 (33.51)% (24.40)%
2006 December 29 57.50 30.56
2005 N/A N/A N/A
2004(c) N/A N/A N/A
2003(d) N/A N/A N/A
Tax Year Ended 10/31:
2003 N/A N/A N/A
N/A The Fund did not elect to retain a portion of its realized
long-term capital gains prior to the tax year ended December 31,
2006.
*** 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 and borrowings, where applicable.
- For periods ended prior to December 31, 2004, each ratio included the
effect of the net interest expense incurred on interest rate swap
transactions as follows:
Year Ended 12/31:
2003(d) .91*
Year Ended 10/31:
2003 1.03
- Each ratio includes the effect of the interest expense paid on borrowings
as follows:
Ratio of Borrowing Interest Expense to
Average Net Assets Applicable to Common Shares
---------------------------------------------------------------------
Year Ended 12/31:
2007 .57%
2006 .21
2005 --
2004(c) --
2003(d) --
Year Ended 10/31:
2003 --
(a) Per share Net Investment Income is calculated using the average daily
shares method.
(b) Net of federal corporate income taxes on long-term capital gains retained
by the Fund of $1.21 and $0.56 per share for the fiscal years ended
December 31, 2007 and December 31, 2006, respectively .
(c) 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 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.
(d) For the period November 1, 2003 through December 31, 2003.
See accompanying notes to financial statements.
29
BOARD MEMBERS & 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 eight. 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.
NAME, BIRTHDATE POSITION(S) HELD WITH YEAR FIRST NUMBER OF PORTFOLIOS
& ADDRESS THE FUNDS ELECTED OR IN FUND COMPLEX PRINCIPAL OCCUPATION(S)
APPOINTED OVERSEEN BY INCLUDING OTHER DIRECTORSHIPS
AND TERM(2) BOARD MEMBER DURING PAST 5 YEARS
BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS:
- TIMOTHY R.
SCHWERTFEGER(1)
3/28/49 Chairman of 1994 Former director
333 W. Wacker Drive the Board ANNUAL (1994-November 12, 2007),
Chicago, IL 60606 and Board Member Chairman (1996-June 30,
2007), Non-Executive Chairman
(July 1, 2007-November 12,
2007) and Chief Executive
Officer (1996-June 30, 2007)
184 of Nuveen Investments, Inc.
and Nuveen Asset Management
and certain other
subsidiaries of Nuveen
Investments, Inc.; formerly,
Director (1992-2006) of
Institutional Capital
Corporation.
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
- ROBERT P. BREMNER
8/22/40 Lead Independent 1997 184 Private Investor and
333 W. Wacker Drive Board member CLASS III Management Consultant.
Chicago, IL 60606
- JACK B. EVANS
10/22/48 1999 President, The Hall-Perrine
333 W. Wacker Drive Board member CLASS III Foundation, a private phil-
Chicago, IL 60606 anthropic corporation (since
1996); Director and Vice
Chairman, United Fire Group,
a publicly held company;
Member of the Board of
Regents Companies; for the
State of Iowa University
System; Director, Gazette
Life Trustee of Coe College
184 and Iowa College Foundation;
Member of the Advisory
Council of the Department of
Finance in the Tippie College
of Business, University of
Iowa; 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
3/6/48 2004 Dean, Tippie College of
333 W. Wacker Drive Board member CLASS II Business, University of Iowa
Chicago, IL 60606 (since July 2006); formerly,
Dean and Distinguished
Professor of Finance, School
of Business at the University
of Connecticut (2003-2006);
previously, Senior Vice
President and Director of
Research at the Federal
184 Reserve Bank of Chicago
(1995-2003); Director (since
1997), Credit Research Center
at George Washington
University; Director (since
2004) of Xerox Corporation;
Director (since 2005) Beta
Gamma Sigma International
Honor Society; Director, SS&C
Technologies, Inc. (May
2005-October 2005).
30
NAME, BIRTHDATE POSITION(S) HELD WITH YEAR FIRST NUMBER OF PORTFOLIOS
& ADDRESS THE FUNDS ELECTED OR IN FUND COMPLEX PRINCIPAL OCCUPATION(S)
APPOINTED OVERSEEN BY INCLUDING OTHER DIRECTORSHIPS
AND TERM(2) BOARD MEMBER DURING PAST 5 YEARS
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS (CONTINUED):
- WILLIAM J. SCHNEIDER
9/24/44 1997 Chairman of Miller-Valentine
333 W. Wacker Drive Board member ANNUAL Partners Ltd., a real estate
Chicago, IL 60606 investment company, formerly,
Senior Partner and Chief
184 Operating Officer (retired,
2004); Director, Dayton
Development Coalition;
formerly, Member, Business
Advisory Council, Cleveland
Federal Reserve Bank.
- JUDITH M. STOCKDALE
12/29/47 1997 Executive Director, Gaylord
333 W. Wacker Drive Board member CLASS I and Dorothy Donnelley
Chicago, IL 60606 Foundation (since 1994);
184 prior thereto, Executive
Director, Great Lakes
Protection Fund (from 1990 to
1994).
- CAROLE E. STONE
6/28/47 2007 Director, Chicago Board
333 W. Wacker Drive Board member CLASS I Options Exchange (since
Chicago, IL 60606 2006); Chair New York Racing
Association Oversight Board
(2005-12/2007); Commissioner,
New York State Commission on
Public Authority Reform
184 (since 2005); formerly
Director, New York State
Division of the Budget
(2000-2004), Chair, Public
Authorities Control Board
(2000-2004) and Director,
Local Government Assistance
Corporation (2000-2004).
NAME, BIRTHDATE POSITION(S) HELD WITH NUMBER OF PORTFOLIOS
& ADDRESS THE FUNDS YEAR FIRST IN FUND COMPLEX PRINCIPAL
ELECTED OR OVERSEEN OCCUPATION(S)
APPOINTED(4) BY OFFICER DURING PAST 5 YEARS
OFFICERS OF THE FUND:
- GIFFORD R. ZIMMERMAN
9/9/56 Chief Administrative Managing Director (since
333 W. Wacker Drive Officer 1988 2002), Assistant Secretary
Chicago, IL 60606 and Associate General
Counsel, formerly, Vice
President and Assistant
General Counsel, of Nuveen
Investments, LLC; Managing
Director (since 2002),
Associate General Counsel and
Assistant Secretary, of
Nuveen Asset Management; Vice
President and Assistant
Secretary of NWQ Investment
Management Company, LLC.
(since 2002), Nuveen
Investments Advisers Inc.
(since 2002), Symphony Asset
Management LLC, and NWQ
184 Investment Management
Company, LLC (since 2003),
Tradewinds Global Inves-
tors, LLC, and Santa Barbara
Asset Management, LLC (since
2006); Nuveen HydePark Group
LLC and Richards & Tierney,
Inc. (since 2007); Managing
Director, Associate General
Counsel and Assistant
Secretary of Rittenhouse
Asset Management, Inc. (since
2003); Managing Director
(since 2004) and Assistant
Secretary (since 1994) of
Nuveen Investments, Inc.,
Assistant Secretary (since
2003) of Symphony Asset
Management LLC.
- WILLIAM ADAMS IV
6/9/55 Executive Vice President,
333 W. Wacker Drive Vice President 2007 U.S. Structured Products of
Chicago, IL 60606 120 Nuveen Investments, LLC,
(since 1999), prior thereto,
Managing Director of
Structured Investments.
31
NAME, BIRTHDATE POSITION(S) HELD WITH NUMBER OF PORTFOLIOS
& ADDRESS THE FUNDS YEAR FIRST IN FUND COMPLEX PRINCIPAL
ELECTED OR OVERSEEN OCCUPATION(S)
APPOINTED(4) BY OFFICER DURING PAST 5 YEARS
OFFICERS OF THE FUND (CONTINUED):
- JULIA L. ANTONATOS
9/22/63 Managing Director
333 W. Wacker Drive Vice President 2004 (2002-2005), formerly
Chicago, IL 60606 Vice President (since
184 2002) of Nuveen
Investments, LLC;
Chartered Financial
Analyst.
- CEDRIC H. ANTOSIEWICZ
1/11/62 Managing Director, (since
333 W. Wacker Drive Vice President 2007 120 2004) previously, Vice
Chicago, IL 60606 President (1993-2004) of
Nuveen Investments, LLC.
- MICHAEL T. ATKINSON
2/3/66 Vice President Vice President (since
333 W. Wacker Drive and Assistant 2000 184 2002) of Nuveen
Chicago, IL 60606 Secretary Investments, LLC.
- PETER H. D(#)ARRIGO
11/28/67 Vice President and
333 W. Wacker Drive Vice President 1999 Treasurer of Nuveen
Chicago, IL 60606 Investments, LLC and
Nuveen Investments, Inc.;
Vice President and
Treasurer of Nuveen Asset
Management (since 2002),
Nuveen Investments
Advisers Inc. (since
2002); NWQ Investment
Management Company, LLC.
(since 2002); Rittenhouse
Asset Management, Inc.
(since 2003), Tradewinds
NWQ Global Investors, LLC
184 (since 2006), Santa
Barbara Asset Management,
LLC (since 2006) and
Nuveen HydePark Group,
LLC and Richards &
Tierney, Inc. (since
2007); Treasurer of
Symphony Asset Management
LLC (since 2003);
formerly, Vice President
and Treasurer (1999-2004)
of Nuveen Advisory Corp.
and Nuveen Institutional
Advisory Corp.(3),
Chartered Financial
Analyst.
- LORNA C. FERGUSON
10/24/45 Managing Director (since
333 W. Wacker Drive Vice President 1998 2004), formerly, Vice
Chicago, IL 60606 President of Nuveen
Investments, LLC,
Managing Director (2004)
184 formerly, Vice President
(1998-2004) of Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.(3); Managing
Director (since 2005) of
Nuveen Asset Management.
- STEPHEN D. FOY
5/31/54 Vice President Vice President (since
333 W. Wacker Drive and Controller 1998 1993) and Funds
Chicago, IL 60606 Controller (since 1998)
of Nuveen Investments,
LLC; Vice President
(since 2005) of Nuveen
184 Asset Management;
formerly, Vice President
and Funds Controller
(1998-2004) of Nuveen
Investments, Inc.;
Certified Public
Accountant.
- WALTER M. KELLY
2/24/70 Chief Compliance Vice President (since
333 W. Wacker Drive Officer and 2003 2006) formerly, Assistant
Chicago, IL 60606 Vice President Vice President and
Assistant General Counsel
(2003-2006) of Nuveen
Investments, LLC;
184 Assistant Vice President
and Assistant Secretary
of the Nuveen Funds
(2003-2006); previously,
Associate (2001-2003) at
the law firm of
VedderPrice P.C.
- DAVID J. LAMB
3/22/63 Vice President (since
333 W. Wacker Drive Vice President 2000 2000) of Nuveen
Chicago, IL 60606 184 Investments, LLC;
Certified Public
Accountant.
32
NAME, BIRTHDATE POSITION(S) HELD WITH NUMBER OF PORTFOLIOS
& ADDRESS THE FUNDS YEAR FIRST IN FUND COMPLEX PRINCIPAL
ELECTED OR OVERSEEN OCCUPATION(S)
APPOINTED(4) BY OFFICER DURING PAST 5 YEARS
OFFICERS OF THE FUND (CONTINUED):
- TINA M. LAZAR
8/27/61 Vice President of Nuveen
333 W. Wacker Drive Vice President 2002 184 Investments, LLC (since
Chicago, IL 60606 1999).
- LARRY W. MARTIN
7/27/51 Vice President Vice President, Assistant
333 W. Wacker Drive and Assistant 1988 Secretary and Assistant
Chicago, IL 60606 Secretary General Counsel of Nuveen
Investments, LLC;
formerly, Vice President
and Assistant Secretary
of Nuveen Advisory Corp.
and Nuveen 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
184 Assistant General Counsel
(since 1998) of
Rittenhouse Asset Manage-
ment, Inc.; Vice
President and Assistant
Secretary of Nuveen
Investments Advisers Inc.
(since 2002); NWQ
Investment Management
Company, LLC (since
2002), Symphony Asset
Management LLC (since
2003), Tradewinds Global
Investors, LLC, Santa
Barbara Asset Management
LLC (since 2006) and of
Nuveen HydePark Group,
LLC and Richards &
Tierney, Inc. (since
2007).
- KEVIN J. MCCARTHY
3/26/66 Vice President Vice President, Nuveen
333 W. Wacker Drive and Secretary 2007 Investments, LLC (since
Chicago, IL 60606 2007); Vice President,
and Assistant Secretary,
Nuveen Asset Management,
Rittenhouse Asset
Management, Inc., Nuveen
Investment Advisers Inc.,
Nuveen Investment
Institutional Services
Group LLC, NWQ Investment
Management Company, LLC,
Tradewinds Global
184 Investors LLC, NWQ
Holdings, LLC, Symphony
Asset Management LLC,
Santa Barbara Asset
Management LLC, Nuveen
HydePark Group, LLC and
Richards & Tierney, Inc.
(since 2007); Vice
President and Assistant
General Counsel, Nuveen
Investments, Inc. (since
2007). Prior thereto,
Partner, Bell, Boyd &
Lloyd LLP (1997-2007).
- JOHN V. MILLER
4/10/67 Managing Director (since
333 W. Wacker Drive Vice President 2007 2007), formerly, Vice
Chicago, IL 60606 184 President (2002-2007) of
Nuveen Investments, LLC;
Chartered Financial
Analyst.
- JAMES F. RUANE
7/3/62 Vice President Vice President, Nuveen
333 W. Wacker Drive and Assistant 2007 Investments (since 2007);
Chicago, IL 60606 Secretary prior thereto, Partner,
184 Deloitte & Touche USA LLP
(since 2005), formerly,
senior tax manager (since
2002); Certified Public
Accountant.
33
NAME, BIRTHDATE POSITION(S) HELD WITH NUMBER OF PORTFOLIOS
& ADDRESS THE FUNDS YEAR FIRST IN FUND COMPLEX PRINCIPAL
ELECTED OR OVERSEEN OCCUPATION(S)
APPOINTED(4) BY OFFICER DURING PAST 5 YEARS
OFFICERS OF THE FUND (CONTINUED):
- MARK L. WINGET
12/21/68 Vice President Vice President, Nuveen
333 W. Wacker Drive and Assistant 2008 Investments, LLC (since
Chicago, IL 60606 Secretary 2008); Vice President and
Assistant Secretary,
Nuveen Asset Management,
Rittenhouse Asset
Management, Inc., Nuveen
Investment Advisers Inc.,
Nuveen Investment
Institutional Services
Group LLC, NWQ Investment
Management Company, LLC,
Tradewinds Global
184 Investors, LLC, NWQ
Holdings, LLC, Symphony
Asset Management LLC,
Santa Barbara Asset
Management, LLC, Nuveen
HydePark Group, LLC and
Richards & Tierney, Inc.
(since 2008); Vice
President and Assistant
General Counsel, Nuveen
Investments Inc. (since
2008); prior thereto,
Counsel, VedderPrice P.C.
(1997-2007).
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, by reason of being the former Chairman and
Chief Executive Officer of Nuveen Investments, Inc. and having previously
served in various other capacities with Nuveen Investments, Inc. and its
subsidiaries. It is expected that Mr. Schwertfeger will resign from the
Board of Trustees by the end of the second quarter of 2008.
(2) Board Members serve three year terms, except for two board members who are
elected by the holders of Preferred Shares. The Board of Trustees is divided
into three classes, Class I, Class II, and Class III, with each being
elected to serve until the third succeeding annual shareholders' meeting
subsequent to its election or thereafter in each case when its respective
successors are duly elected or appointed, except two board members are
elected by the holders of Preferred Shares to serve until the next annual
shareholders' meeting subsequent to its election or thereafter in each case
when its respective successors are duly elected or appointed. The first year
elected or appointed represents the year in which the board member was first
elected or appointed to any fund in the Nuveen Complex.
(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.
34
Reinvest Automatically
EASILY and CONVENIENTLY
NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR
REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen 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 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
greater of the net asset value or 95% of the then-current market price. If the
shares are trading at less than net asset value, shares for your account will be
purchased on the open market. If the Plan Agent begins purchasing Fund shares on
the open market while shares are trading below net asset value, but the Fund's
shares subsequently trade at or above their net asset value before the Plan
Agent is able to complete its purchases, the Plan Agent may cease open-market
purchases and may invest the uninvested portion of the distribution in
newly-issued Fund shares at a price equal to the greater of the shares' net
asset value or 95% of the shares' market value on the last business day
immediately prior to the purchase date. 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.
35
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.
36
Glossary of
TERMS USED in this REPORT
Average Annual Total Return: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return that would have been necessary each year to equal the
investment's actual cumulative performance (including change in NAV or market
price and reinvested dividends and capital gains distributions, if any) over the
time period being considered.
Market Yield (also known as Dividend Yield or Current Yield): Market yield is
based on the Fund's current annualized quarterly distribution divided by the
Fund's current market price. The Fund's quarterly distributions to its
shareholders may be comprised of ordinary income, net realized capital gains
and, if at the end of the calendar year the Fund's cumulative net ordinary
income and net realized gains are less than the amount of the Fund's
distributions, a tax return of capital.
Net Asset Value (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any Preferred shares issued
in order to leverage the Fund) from its total assets and then dividing the
remainder by the number of shares outstanding. Fund NAVs are calculated at the
end of each business day.
37
NOTES
38
OTHER USEFUL INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
The Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Fund voted proxies relating to portfolio securities held during the most
recent twelve-month period ended June 30, 2007, and (iii) a description of the
policies and procedures that the Fund used to determine how to vote proxies
relating to portfolio securities are available without charge, upon request, by
calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at
www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
Reference Section at 450 Fifth Street NW, Washington, D.C. 20549.
CEO Certification Disclosure
The 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
Nuveen Real Estate Income Fund (JRS) hereby designates 0.00% of dividends paid
from net ordinary income as dividends qualifying for the 70% dividends received
deduction for corporations and 0.00% as qualified dividend income for
individuals under Section 1(h)(11) of the Internal Revenue Code.
Board of Trustees
Robert P. Bremner
Jack B. Evans
William C. Hunter
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Carol E. Stone
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 semi-annual report.
39
Nuveen Investments:
-----------------------------------------------------------------------
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.
We offer many different investing solutions for our clients' different needs.
Managing $170 billion in assets, as of September 30, 2007, 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
six distinct brands: Nuveen, a leader in fixed-income investments; NWQ, a leader
in value-style equities; Rittenhouse, a leader in growth-style equities;
Symphony, a leading institutional manager of market-neutral alternative
investment portfolios; Santa Barbara, a leader in growth equities; and
Tradewinds, a leader in global equities.
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.
EAN-A-1207D
Learn more about Nuveen Funds at: WWW.NUVEEN.COM/CEF
Share prices
Fund details
Daily financial news
Investor education
Interactive planning tools
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 Shareholder 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 (the "Board") 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 BILLED ALL OTHER FEES
FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) TO FUND (3) BILLED TO FUND (4)
----------------- ----------------- ------------------ --------------- ------------------
December 31, 2007 $22,100 $ 0 $1,000 $10,300
------- --- ------ -------
Percentage approved pursuant to
pre-approval exception 0% 0% 0% 0%
------- --- ------ -------
December 31, 2006 $21,000 $ 0 $ 800 $ 3,950
------- --- ------ -------
Percentage approved pursuant to
pre-approval exception 0% 0% 0% 0%
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services provided
in connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees".
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance, and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
for agreed upon procedures engagements performed for leveraged funds and
Commercial Paper.
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.
AUDIT-RELATED FEES TAX FEES BILLED ALL OTHER FEES
BILLED TO ADVISER TO ADVISER AND BILLED TO ADVISER
AND AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
FISCAL YEAR ENDED SERVICE PROVIDERS SERVICE PROVIDERS SERVICE PROVIDERS
----------------- ------------------- ----------------- -------------------
December 31, 2007 $ 0 $ 0 $ 0
--- --- ---
Percentage approved pursuant to
pre-approval exception 0% 0% 0%
--- --- ---
December 31, 2006 $ 0 $ 0 $ 0
--- --- ---
Percentage approved pursuant to
pre-approval exception 0% 0% 0%
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.
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
FISCAL YEAR ENDED BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
----------------- -------------------- ------------------------ ----------------------- -------
December 31, 2007 $11,300 $ 0 $ 0 $11,300
December 31, 2006 $ 4,750 $ 0 $ 0 $ 4,750
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax
Fees" billed to Adviser in their respective amounts from the 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 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, Jack B. Evans, and William J. Schneider. Mr. Eugene S.
Sunshine, who also served as a member of the Committee during this reporting
period, has resigned from the Board. His resignation became effective on July
31, 2007.
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
("SC-R&M") 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:
SC-R&M 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, SC-R&M 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, SC-R&M 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 SC-R&M'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.
The Adviser has engaged Security Capital Research & Management Incorporated
("SC-R&M") for a portion of the registrant's investments. (SC-R&M is also
referred to as "Sub-Adviser".) SC-R&M, as Sub-Adviser, provides discretionary
investment advisory services. The following section provides information on the
portfolio managers at the Sub-Adviser:
ITEM 8 (a)(1). PORTFOLIO MANAGEMENT TEAM FROM SECURITY CAPITAL RESEARCH &
MANAGEMENT INCORPORATED
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. Mr. Manno began
his career in real estate finance at The First
National Bank of Chicago and has 34 years of
experience in the real estate investment business. He
received an MBA in Finance with honors (Beta Gamma
Sigma) from the University of Chicago and graduated
Phi Beta Kappa from Northwestern University with a BA
and MA in Economics. Mr. Manno is also a Certified
Public Accountant and was awarded an Elijah Watt
Sells award.
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. Previously, he was a REIT
Portfolio Manager and a Managing Director of
Chancellor Capital Management. Mr. Statz has 26 years
of experience in the real estate securities industry
and received an MBA and a BBA in Finance from the
University of Wisconsin.
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 $1 billion. Mr.
Bedell has 20 years of experience in the real estate
securities industry and received an MBA in Finance
from the University of Chicago and a BA from Kenyon
College.
ITEM 8 (a)(2). OTHER ACCOUNTS MANAGED BY SECURITY CAPITAL RESEARCH &
MANAGEMENT INCORPORATED
------------------------------------------------------------------------------------------------------
Nuveen Real Estate Income Fund and Nuveen Diversified Dividend and Income Fund ("Funds")
Security Capital Research & Management Incorporated ("Adviser")
------------------------------------------------------------------------------------------------------
(a)(1) Identify portfolio (a)(2) For each person identified in column (a)(1), provide number of
manager(s) of the Adviser accounts other than the Funds managed by the person within each
to be named in the Fund category below and the total assets in the accounts managed within
prospectus each category below
----------------------------- ------------------------------------------------------------------------
Registered Other Pooled Other Accounts
Investment Investment
Companies Vehicles
----------------------- ----------------------- ------------------------
Number Total Number Total Number Total
of Assets of Assets of Assets
Accounts ($billions) Accounts ($billions) Accounts ($billions)
----------------------------- ---------- ----------- --------- ----------- --------- -------------
----------------------------- ---------- ----------- --------- ----------- --------- -------------
Anthony R. Manno Jr. 4 $0.9 1 $1.0 491 $1.6
----------------------------- ---------- ----------- --------- ----------- --------- -------------
Kenneth D. Statz 4 $0.9 1 $1.0 483 $1.6
----------------------------- ---------- ----------- --------- ----------- --------- -------------
Kevin W. Bedell 4 $0.9 1 $1.0 490 $1.6
----------------------------- ---------- ----------- --------- ----------- --------- -------------
---------------------------------------------------------------------------------------------------
Nuveen Real Estate Income Fund and Nuveen Diversified Dividend and Income Fund ("Funds")
Security Capital Research & Management Incorporated ("Adviser")
---------------------------------------------------------------------------------------------------
(a)(1) Identify portfolio (a)(3) PERFORMANCE FEE ACCOUNTS. For each of the categories
manager(s) of the Adviser in column (a)(2), provide number of accounts and the total
to be named in the Fund assets in the accounts with respect to which the ADVISORY FEE
prospectus IS BASED ON THE PERFORMANCE OF THE ACCOUNT
----------------------------- --------------------------------------------------------------------
Registered Other Pooled Investment Other Accounts
Investment Vehicles
Companies
------------------- ----------------------- -----------------------
Number Total Number Total Number Total
of Assets of Assets of Assets
Accounts Accounts Accounts ($billions)
----------------------------- -------- -------- ----------- ---------- ---------- ------------
----------------------------- -------- -------- ----------- ---------- ---------- ------------
Anthony R. Manno Jr. - - - - 2 $0.2
----------------------------- -------- -------- ----------- ---------- ---------- ------------
Kenneth D. Statz - - - - 2 $0.2
----------------------------- -------- -------- ----------- ---------- ---------- ------------
Kevin W. Bedell - - - - 2 $0.2
----------------------------- -------- -------- ----------- ---------- ---------- ------------
POTENTIAL MATERIAL CONFLICTS OF INTEREST
As shown in the above tables, the portfolio managers may manage
accounts in addition to the Nuveen Funds (the "Funds"). The potential
for conflicts of interest exists when portfolio managers manage other
accounts with similar investment objectives and strategies as the Funds
("Similar Accounts"). Potential conflicts may include, for example,
conflicts between investment strategies and conflicts in the allocation
of investment opportunities.
Responsibility for managing SC-R&M'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.
SC-R&M may receive more compensation with respect to certain Similar
Accounts than that received with respect to the Nuveen Funds or may
receive compensation based in part on the performance of certain
Similar Accounts. This may create a potential conflict of interest for
SC-R&M 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 SC-R&M 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. SC-R&M may be perceived as
causing accounts it manages to participate in an offering to increase
SC-R&M'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 SC-R&M manages
accounts that engage in short sales of securities of the type in which
the Funds invests, SC-R&M 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.
SC-R&M 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 SC-R&M'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.
ITEM 8 (a)(3). FUND MANAGER COMPENSATION
The Portfolio Managers participate in a highly competitive compensation
program that is designed to attract and retain outstanding people. The
principal form of compensation for SC-R&M's professionals is a base
salary and target bonus. Base salaries are fixed for each portfolio
manager. Each professional is paid a cash salary and, in addition, a
year-end bonus based on achievement of specific objectives that the
professional's manager and the professional agree upon at the
commencement of the year. Actual bonus payments may range from below
100% of target to a multiple of target bonus depending upon actual
performance. Actual bonus is paid partially in cash and partially in
either (a) restricted stock of SC-R&M's parent company, JPMorgan Chase
& Co., which vests over a two-year period or (b) in self directed
parent company mutual funds which vests over a three-year period,
depending on the investment election of the professional. Actual bonus
paid is a function of SC-R&M achieving its financial, operating and
investment performance goals, as well as the individual achieving
measurable objectives specific to that professional's role within the
firm and the investment performance of all accounts managed by the
portfolio manager. None of the portfolio managers' compensation is
based on the performance of, or the value of assets held in, the Funds.
ITEM 8 (a)(4).
OWNERSHIP OF JRS SECURITIES AS OF DECEMBER 31, 2007.
--------------------- ---------- ------------ ----------------- ------------------- -------------------- ------------- -------------
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
--------------------- ---------- ------------ ----------------- ------------------- -------------------- ------------- -------------
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board implemented after the registrant
last provided disclosure in response to this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded
that the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of
a date within 90 days of the filing date of this report that
includes the disclosure required by this paragraph, based on their
evaluation of the controls and procedures required by Rule 30a-3(b)
under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or
15d-15(b) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. 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 Shareholder 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: See
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: See 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/ Kevin J. McCarthy
------------------------------------------
Kevin J. McCarthy
Vice President and Secretary
Date: March 7, 2008
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 7, 2008
By (Signature and Title)* /s/ Stephen D. Foy
------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: March 7, 2008
* Print the name and title of each signing officer under his or her signature.