UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-10491
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Nuveen Real Estate Income Fund
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(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Jessica R. Droeger
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: October 31st
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Date of reporting period: April 30th
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMIANNUAL REPORT April 30, 2003
Nuveen
Closed-End
Exchange-Traded
Funds
NUVEEN
REAL ESTATE
INCOME FUND
JRS
PHOTO OF: WOMAN AND GIRL LOOKING AT A STARFISH.
PHOTO OF: CHILD PLAYING VIOLIN.
HIGH CURRENT INCOME
FROM A PORTFOLIO OF
COMMERCIAL REAL ESTATE
INVESTMENTS
Logo: NUVEEN Investments
FASTER INFORMATION
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NUVEEN FUND REPORT
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your Nuveen Fund information is available. Click on the link and you will be
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Registering is easy and only takes a few minutes (see instructions at right).
SOME COMMON CONCERNS:
WILL MY E-MAIL ADDRESS BE DISTRIBUTED TO OTHER COMPANIES?
No, your e-mail address is strictly confidential and will not be used for
anything other than notification of shareholder information.
WHAT IF I CHANGE MY MIND AND WANT TO RECEIVE INVESTOR MATERIALS THROUGH REGULAR
MAIL DELIVERY AGAIN?
If you decide you do not like receiving your reports electronically, it's a
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IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME FROM YOUR FINANCIAL ADVISOR OR BROKERAGE ACCOUNT,
FOLLOW THE STEPS OUTLINED BELOW:
1 Go to WWW.INVESTORDELIVERY.COM
2 Refer to the address sheet that accompanied this report. Enter the personal
13-CHARACTER ENROLLMENT NUMBER imprinted near your name.
3 You'll be taken to a page with several options. Select the NEW
ENROLLMENT-CREATE screen. Once there, enter your e-mail address (e.g.
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(Pick a number that's easy to remember.)
4 Click Submit. Confirm the information you just entered is correct, then
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IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME DIRECTLY TO YOU FROM NUVEEN,
FOLLOW THE STEPS OUTLINED BELOW:
1 Go to WWW.NUVEEN.COM
2 Select ACCESS YOUR ACCOUNT. Select the E-REPORT ENROLLMENT section. Click
on Enrollment Today.
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5 Use this same process if you need to change your registration information
or cancel internet viewing.
Logo: NUVEEN Investments
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Sidebar text: "NO ONE KNOWS WHAT THE FUTURE WILL BRING, WHICH IS WHY WE THINK A
WELL-BALANCED PORTFOLIO ..... IS AN IMPORTANT COMPONENT IN ACHIEVING YOUR
LONG-TERM FINANCIAL GOALS."
Dear
SHAREHOLDER
Once again, I am pleased to report that over the most recent reporting period
your Fund continued to provide you with attractive monthly income. For more
specific information about the performance of your Fund, please see the
Portfolio Manager's Comments and Performance Overview sections of this report.
With interest rates at historically low levels, many have begun to wonder how
real estate investments will perform if interest rates begin to rise. 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 a real estate investment like your
Fund can be an important building block in a portfolio crafted to perform well
through a variety of market conditions.
I'd also like to direct your attention to the inside front cover of this report,
which explains the quick and easy process to begin receiving Fund reports like
this via e-mail and the internet. Thousands of Nuveen Fund shareholders already
have signed-up, and they are getting their Fund information faster and more
conveniently than ever. I urge you to consider joining them.
Since 1898, Nuveen Investments has offered financial products and solutions that
incorporate careful research, diversification, and the application of
conservative risk-management principles. We are grateful that you have chosen us
as a partner as you pursue your financial goals. We look forward to continuing
to earn your trust in the months and years ahead.
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
June 16, 2003
1
Nuveen Real Estate Income Fund
(JRS)
Manager's
PERSPECTIVE
The Fund is managed by a team of real estate investment professionals at
Security Capital Research & Management Incorporated, a wholly-owned subsidiary
of General Electric Capital Services, Inc. Tony Manno and Ken Statz, who each
have more than 21 years' experience in managing real estate investments, lead
the team. Here they review the economic environment and performance of the Fund.
WHAT WERE THE MAJOR ECONOMIC DRIVERS OF THE REAL ESTATE AND REIT MARKETS DURING
THE TWELVE-MONTH PERIOD ENDED APRIL 30, 2003?
During this reporting period, there was a continuation, and in some cases a
sharpening, of several existing general trends and conditions. These included a
sluggish U.S. economy, a historically low interest rate environment and a
general sense of investor wariness brought on by corporate and securities
industry scandals, geopolitical uncertainties and global health issues.
In our opinion, all of these factors combined to enhance the desirability and
prominence of real estate assets in the portfolios of all types of investors.
Indeed, the period ended April 30, 2003, was noteworthy for its very active and
liquid market for private real estate assets, as well as a steady flow of
capital into the publicly traded securities of REITs and other real estate
operating companies ("REOCs").
At the same time, many of the economic forces that drove the public and private
real estate investment markets also led to a difficult environment for real
estate operators. The absence of a strong, sustained economic recovery continued
to dampen the demand for most types of real estate space. With the notable
exceptions of malls and shopping centers, this has led to further declines in
occupancy levels and, in turn, to downward pressure on rents for newly signed
leases. None of this came as a surprise to many industry observers, since real
estate fundamentals often lag changes in the macro-economy. However, these
effects were unevenly distributed among the major property categories:
o Apartment rentals continued to face sluggish demand due to a weak job
market and heightened competition from home-ownership brought on by low
mortgage rates. Compounding matters, construction of new units nationwide
has continued at a relatively fast pace, leaving many operators with little
choice but to compete aggressively on price.
o Office rents and occupancy levels also remained under pressure due to
stagnant demand. Industries that typically employ office workers and need
office space have not been adding significantly to their payrolls.
o Bucking this trend, shopping malls and other types of retail centers
remained a beacon of strength. Leasing activity in these sectors was
bolstered by a sustained consumer appetite for goods, and by retailers'
continued demand for new stores. The strength of this sector also has
helped it absorb some major chain store closures (KMart is the notable
example).
WHAT WERE THE KEY STRATEGIES AND TACTICS USED TO MANAGE JRS OVER THE PERIOD
ENDED APRIL 30, 2003?
During the reporting period, we continued to focus on those preferred and common
securities that we believed were best positioned to generate sustainable income
and potential price appreciation. In managing the portfolio, we sought to
structure as diversified a portfolio as possible while taking into account
company credit quality issues, sector and geographic exposure and security-type
allocations. Every decision was based on a multi-layered analysis of the
company, the real estate it owns, its management, and the relative price of the
security.
One important tool we employed in attempting to manage JRS for income and
long-term capital appreciation was the ability to shift the portfolio's
allocation between preferred and common stocks
2
based upon the relative attractiveness of these two distinct markets. As of
October 31, 2002, the portfolio was split nearly evenly between preferred and
common stock (48% and 52%, respectively, excluding cash equivalents). Such an
allocation had been achieved to take advantage of the relative value and
inherent stability of preferreds during a deteriorating market environment.
Gradually, as market pricing mechanisms adjusted over the subsequent six months,
we tilted the portfolio moderately toward common stocks. As of April 30, 2003,
the portfolio allocations were 41% preferred and 59% common stock (excluding
cash equivalents). This shift was principally undertaken to exploit specific
emergent opportunities among common stocks, and in recognition that many
preferred securities had reached or exceeded our target valuations. It also
exemplified the value of having such security-type flexibility - over this six
month period, many widely followed real estate common stock benchmarks handily
outperformed those measuring real estate preferreds.
WERE THERE ANY SPECIFIC AREAS OR TYPES OF PROPERTIES YOU FOCUSED ON IN
PARTICULAR?
Throughout the reporting period, we believed the portfolio was well diversified
by property type, geography, and issuer, and that this diversification dampened
the Fund's exposure to an adverse event that might affect one or a small group
of issuers. Here again, JRS's ability to invest in preferred securities allowed
us to capture attractive cash flows by assuming a priority position in the
capital structure of cyclically depressed property types and issuers. A good
example of how this flexibility benefited JRS was our investment in apartment
companies, many of which, as mentioned, were under significant operating stress.
By adjusting the Fund's allocation to apartments mainly through preferred stock
holdings - which ranged between 57% and 79% of the allocation - we were able to
be much more selective in our common stock investments, and still participate
commensurately in the cash flows of this important component of the real estate
industry. A similar strategy was employed for office companies (38% to 48% of
the portfolio's office allocation is in preferreds) and hotels (100% in
preferreds). We believe this extra layer of strategic flexibility enabled us to
better diversify the portfolio by property type and issuer, without adding undue
risks.
HOW DID THE FUND PERFORM OVER THE TWELVE MONTHS ENDED APRIL 30, 2003?
For the twelve months ended April 30, 2003, the Fund produced a 5.52% total
return on net asset value. This compares with a -1.53% return over the same
period for the Wilshire Real Estate Securities Index, an unmanaged index
comprised of publicly-traded REITs and REOCs.
A significant portion of the performance difference between the Fund and this
index is explained by the Fund's active program of investing in preferred
stocks, which are not included in the index.
Over the twelve-month period, the Fund raised
its regular monthly dividend, and, as of April 30, 2003, it continued to trade
at a premium to its net asset value.
WHAT IS YOUR OUTLOOK FOR THE REAL ESTATE MARKETS AND THE FUND?
Our current outlook is for continued occupancy weakness among office and hotel
companies, gradual improvement in occupancy rates for the more cyclically
sensitive apartment companies, and strong occupancy and rental rate levels for
retail oriented properties. With a small handful of exceptions, we believe the
companies in the real estate industry generally are healthy, and we expect the
industry to emerge from any current operating weakness poised to grow if and
when the overall economy begins to expand.
We expect to continue managing JRS for both income and capital appreciation by
adjusting, as needed, the allocations between common and preferred securities.
After a sustained period of economic weakness during which an income-focused
strategy has been appropriate, we are watching closely for, and are prepared to
act on, signs of a shift in the overall economy from weakness to moderate
growth. This may lead to a scenario in which common stocks of well positioned
companies begin to look more attractive to us.
Overall, we believe JRS currently is well positioned, and that the Fund
continues to offer investors opportunities for strong returns and portfolio
diversification.
3
Nuveen Real Estate Income Fund
Performance
OVERVIEW As of April 30, 2003
JRS
PORTFOLIO STATISTICS
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Share Price $15.94
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Common Share Net Asset Value $14.89
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Net Assets Attributable to
Common Shares ($000) $418,554
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TOP 5 COMMON % OF TOTAL
STOCK HOLDINGS INVESTMENTS
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Mack-Cali Realty Corporation 7.1%
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The Macerich Company 5.7%
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Arden Realty, Inc. 5.5%
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HRPTProperties Trust 5.5%
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First Industrial Realty Trust, Inc. 4.1%
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TOP 5 PREFERRED % OF TOTAL
STOCK HOLDINGS INVESTMENTS
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Crescent Real Estate Equities Company 7.3%
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Apartment Investment & Management
Company 4.5%
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Home Properties of New York, Inc. 4.4%
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Federal Realty Investment Trust 3.6%
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LaSalle Hotel Properties 2.7%
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% OF TOTAL
TOP 5 SECTORS INVESTMENTS
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Office 38.5%
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Retail 25.4%
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Multifamily 15.9%
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Healthcare 8.1%
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Industrial 6.3%
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AVERAGE ANNUAL TOTAL RETURN
(Inception 11/01)
--------------------------------------------------
MARKET NAV
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1-Year 9.59% 5.52%
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Since Inception 13.47% 11.97%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE1
5/02 0.1125
6/02 0.1125
7/02 0.1125
8/02 0.1125
9/02 0.115
10/02 0.115
11/02 0.115
12/02 0.115
1/03 0.115
2/03 0.115
3/03 0.115
4/03 0.115
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
5/1/02 15.96
16
15.9
15.84
16
16.02
16.16
16.18
16.02
16.14
15.85
15.05
14.99
15.53
15.52
15.85
15.62
16
16.2
16.13
15.85
15.92
15.78
14.45
14.69
14.31
14.57
15.1
15.12
14.89
14.92
15.05
14.88
14.92
15.02
15.31
15.2
15.15
15.29
15.37
15.4
15.25
15.59
15.67
15.71
15.35
15.55
15.56
15.99
16
15.88
4/30/03 15.77
PORTFOLIO HOLDINGS BY TYPE OF INVESTMENT
(AS A % OF TOTAL INVESTMENTS)
Common Stocks 58%
Preferred Stocks 41%
Short-Term Investments 1%
1 The fund also paid shareholders a net ordinary income distribution in
December 2002 of $0.038 per share.
4
Nuveen Real Estate Income Fund (JRS)
Portfolio of
INVESTMENTS April 30, 2003 (Unaudited)
MARKET
SHARES DESCRIPTION(1) VALUE
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COMMON STOCKS - 83.5% - (58.0% OF TOTAL INVESTMENTS)
HEALTHCARE - 10.8%
1,672,300 Nationwide Health Properties, Inc. $ 23,412,200
1,740,300 Senior Housing Properties Trust 21,718,944
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INDUSTRIAL - 5.9%
890,400 First Industrial Realty Trust, Inc. 24,895,584
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MULTIFAMILY - 9.9%
276,300 Amli Residential Properties Trust 6,255,432
150,000 Apartment Investment & Management Company - Series A 5,664,000
385,000 Archstone-Smith Trust 8,778,000
516,400 Avalonbay Communities, Inc. 20,599,196
------------------------------------------------------------------------------------------------------------------------------------
OFFICE - 34.4%
1,388,800 Arden Realty, Inc. 33,095,104
374,900 Brandywine Realty Trust 8,360,270
114,900 Highwoods Properties, Inc. 2,326,725
3,642,100 HRPT Properties Trust 32,888,163
1,351,500 Mack-Cali Realty Corporation 42,653,340
1,305,600 Reckson Associates Realty Corporation 24,610,560
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RETAIL - 22.0%
413,800 Federal Realty Investment Trust 12,753,316
332,800 Glimcher Realty Trust 6,875,648
585,000 Heritage Property Investment Trust 14,859,000
1,044,100 The Macerich Company 34,455,300
1,159,400 New Plan Excel Realty Trust 23,164,812
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STORAGE - 0.5%
76,900 Public Storage, Inc. 2,099,370
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Total Common Stocks (cost $329,548,956) 349,464,964
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PREFERRED STOCKS - 59.0% (41.0% OF TOTAL INVESTMENTS)
HEALTHCARE - 0.8%
46,530 Health Care Property Investors, Inc. - Series B, 8.700% 1,183,723
32,558 Nationwide Health Properties, Inc. - Series A, 7.677% 2,357,404
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HOTEL - 6.0%
360,000 Boykin Lodging Company - Series A, 10.500% 9,144,000
600,000 LaSalle Hotel Properties - Series A, 10.250% 16,020,000
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INDUSTRIAL - 3.1%
497,623 PS Business Parks, Inc. - Series F, 8.750% 13,172,081
5
Nuveen Real Estate Income Fund (JRS) (continued)
Portfolio of INVESTMENTS April 30, 2003 (Unaudited)
MARKET
SHARES DESCRIPTION(1) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MULTIFAMILY - 13.1%
Apartment Investment & Management Company:
91,600 Series G, 9.375% $ 2,450,300
59,400 Series H, 9.500% 1,506,978
51,050 Series Q, 10.100% 1,378,350
803,500 Series R, 10.000% 21,533,800
970,000 Home Properties of New York, Inc. - Series F, 9.000% 26,481,000
51,300 United Dominion Realty Trust, Inc. - Series B, 8.600% 1,374,327
------------------------------------------------------------------------------------------------------------------------------------
OFFICE - 21.1%
223,200 Alexandria Real Estate Equities, Inc. - Series B, 9.100% 6,021,936
CarrAmerica Realty Corp.:
83,757 Series B, 8.570% 2,127,428
503,800 Series C, 8.550% 12,796,520
Crescent Real Estate Equities Company:
835,100 Series A (Convertible), 6.750% 16,952,530
1,050,000 Series B, 9.500% 27,300,000
136,500 Glenborough Realty Trust Incorporated - Series A (Convertible), 7.750% 3,112,200
Highwoods Properties, Inc.:
12,141 Series A, 8.625% 12,319,327
33,600 Series B, 8.000% 808,416
250,000 HRPT Properties Trust - Series B, 8.750% 6,502,500
------------------------------------------------------------------------------------------------------------------------------------
RETAIL - 14.6%
140,000 CBL & Associates Properties, Inc. - Series B, 8.750% 7,567,000
Developers Diversified Realty Corporation:
49,000 Series C, 8.375% 1,247,050
96,200 Series F, 8.600% 2,547,376
480,000 Series G, 8.000% 12,163,200
816,000 Federal Realty Investment Trust - Series B, 8.500% 21,868,800
237,300 Glimcher Realty Trust - Series B, 9.250% 6,010,809
The Mills Corp.:
123,200 Series C, 9.000% 3,184,720
225,000 Series E, 8.750% 5,625,000
24,500 Taubman Centers, Inc. - Series A, 8.300% 608,825
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STORAGE - 0.3%
Shurgard Storage Centers, Inc.:
30,000 Series C, 8.700% 770,100
24,600 Series D, 8.750% 664,200
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Total Preferred Stocks (cost $232,540,034) 246,799,900
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PRINCIPAL
AMOUNT (000) DESCRIPTION(1) VALUE
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SHORT-TERM INVESTMENTS (COST 6,028,000) - 1.4% (1.0% OF TOTAL INVESTMENTS)
$ 6,028 State Street Bank Repurchase Agreement, 1.160%, dated 4/30/03 , due 5/01/03, 6,028,000
============= repurchase price $6,028,194, collateralized by U.S. Treasury Bonds
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $568,116,990) - 143.9% 602,292,864
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (2.8)% (11,738,713)
--------------------------------------------------------------------------------------------------------------------
Taxable Auctioned Preferred Shares, at Liquidation Value - (41.1)% (172,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 418,554,151
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net
assets applicable to Common shares unless otherwise noted.
See accompanying notes to financial statements.
6
Statement of
ASSETS AND LIABILITIES April 30, 2003 (Unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments, at market value (cost $568,116,990) $ 602,292,864
Cash 954
Receivables:
Dividends and interest 2,579,957
Investments sold 10,555,136
Other assets 5,159
--------------------------------------------------------------------------------
Total assets 615,434,070
--------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 14,319,000
Interest rate swaps, at value 10,105,240
Accrued expenses:
Management fees 287,482
Other 147,898
Taxable Auctioned Preferred share dividends payable 20,299
--------------------------------------------------------------------------------
Total liabilities 24,879,919
--------------------------------------------------------------------------------
Taxable Auctioned Preferred shares, at liquidation value $ 172,000,000
--------------------------------------------------------------------------------
Net assets applicable to Common shares $ 418,554,151
================================================================================
Common shares outstanding 28,115,730
================================================================================
Net asset value per Common share outstanding (net assets
applicable to Common shares, divided by Common
shares outstanding) $ 14.89
================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
--------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 281,157
Paid-in surplus 399,513,425
Undistributed (Over-distribution of) net investment income (8,203,460)
Accumulated net realized gain from investment transactions 2,602,504
Net unrealized appreciation of investments and interest
rate swap transactions 24,360,525
--------------------------------------------------------------------------------
Net assets applicable to Common shares $ 418,554,151
================================================================================
Authorized shares:
Common Unlimited
Taxable Auctioned Preferred Unlimited
================================================================================
See accompanying notes to financial statements.
7
Statement of
OPERATIONS Six Months Ended April 30, 2003
(Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 14,671,410
Interest 44,489
--------------------------------------------------------------------------------
Total investment income 14,715,899
--------------------------------------------------------------------------------
EXPENSES
Management fees 2,531,418
Net interest expense on interest rate swap transactions 2,107,306
Taxable Auctioned Preferred shares - auction fees 213,232
Taxable Auctioned Preferred shares - dividend
disbursing agent fees 11,157
Shareholders' servicing agent fees and expenses 8,203
Custodian's fees and expenses 62,937
Trustees' fees and expenses 24,810
Professional fees 50,876
Shareholders' reports - printing and mailing expenses 76,667
Stock exchange listing fees 2,040
Investor relations expense 68,296
Other expenses 9,437
--------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 5,166,379
Custodian fee credit (285)
Expense reimbursement (846,662)
--------------------------------------------------------------------------------
Net expenses 4,319,432
--------------------------------------------------------------------------------
Net investment income 10,396,467
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain from investments 6,763,309
Change in net unrealized appreciation (depreciation)
of investments 42,607,093
Change in net unrealized appreciation (depreciation)
of interest rate swap transactions (940,488)
--------------------------------------------------------------------------------
Net gain from investments 48,429,914
--------------------------------------------------------------------------------
DISTRIBUTIONS TO TAXABLE AUCTIONED PREFERRED SHAREHOLDERS
From net investment income (1,093,188)
From accumulated net realized gains from investments (93,850)
--------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Taxable Auctioned
Preferred shareholders (1,187,038)
--------------------------------------------------------------------------------
Net increase in net assets applicable to
Common shares from operations $ 57,639,343
================================================================================
See accompanying notes to financial statements.
8
Statement of
CHANGES IN NET ASSETS (Unaudited)
FOR THE
PERIOD 11/15/01
(COMMENCEMENT
SIX MONTHS ENDED OF OPERATIONS)
4/30/03 THROUGH 10/31/02
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 10,396,467 $ 28,380,355
Net realized gain from investments 6,763,309 4,692,936
Change in net unrealized appreciation (depreciation) of investments 42,607,093 (8,431,219)
Change in net unrealized appreciation (depreciation) of interest rate swap transactions (940,488) (8,874,861)
Distributions to Taxable Auctioned Preferred shareholders:
From net investment income (1,093,188) (2,527,734)
From accumulated net realized gains from investments (93,850) (620,986)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares from operations 57,639,343 12,618,491
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (19,397,274) (24,070,270)
From accumulated net realized gains from investments (1,068,203) (7,070,702)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions to
Common shareholders (20,465,477) (31,140,972)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- 401,689,500
Net proceeds from shares issued to shareholders due to reinvestment of distributions 90,533 39,666
Taxable Auctioned Preferred shares offering costs -- (2,017,208)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares from capital share transactions 90,533 399,711,958
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares 37,264,399 381,189,477
Net assets applicable to Common shares at the beginning of period 381,289,752 100,275
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of period $418,554,151 $381,289,752
====================================================================================================================================
Undistributed (Over-distribution of) net investment income at the end of period $ (8,203,460) $ (5,801,153)
====================================================================================================================================
See accompanying notes to financial statements.
9
Notes to
FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
Nuveen Real Estate Income Fund (the "Fund") is a non-diversified, closed-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund's Common shares are listed on the American Stock
Exchange and trade under the ticker symbol "JRS." The Fund was organized as a
Massachusetts business trust on August 27, 2001.
Prior to the commencement of operations, the Fund had no operations other than
those related to organizational matters, the initial capital contribution of
$100,275 by Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned
subsidiary of Nuveen Investments, Inc. (formerly, The John Nuveen Company), and
the recording of the organizational expenses ($15,000) and their reimbursement
by Nuveen Investments, LLC (formerly, Nuveen Investments), also a wholly owned
subsidiary of Nuveen Investments, Inc.
The Fund seeks to provide high current income by investing primarily in a
portfolio of income-producing common stocks, preferred stocks, convertible
preferred stocks and debt securities issued by real estate companies, such as
Real Estate Investment Trusts ("REITs").
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
Securities are valued at the last sales price on the securities exchange or
Nasdaq on which such securities are primarily traded. Securities traded on a
securities exchange or Nasdaq for which there are no transactions on a given day
or securities not listed on a securities exchange or Nasdaq are valued at the
mean of the closing bid and asked price. Effective April 14, 2003, the Fund
began pricing securities traded on Nasdaq at the Nasdaq Official Closing Price.
If it is determined that market prices for a security are unavailable or
inappropriate, the Board of Trustees of the Fund, or its designee, may establish
a fair value for the security. Short-term securities are valued at amortized
cost, which approximates market value.
Because the Fund may invest a substantial portion of its assets in REITs, the
Fund may be subject to certain risks associated with direct investments in
REITs. REITs may be affected by changes in value of their underlying properties
and by defaults by tenants. REITs depend generally on their ability to generate
cash flow to make distributions to shareholders, and certain REITs have
self-liquidation provisions by which mortgages held may be paid in full and
distributions of capital returns may be made at any time.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on an accrual basis (see Dividends and Distributions to Common
Shareholders for REIT income recognition policy).
Income Taxes
The Fund intends to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all
of its net investment income to its shareholders. Therefore, no federal income
tax provision is required.
Dividends and Distributions to Common Shareholders
Dividends to Common shareholders are declared and paid monthly. The Fund's
policy is to pass through to its shareholders, each month, substantially all
REIT distributions it receives, together with other operating income less
operating expenses. REIT distributions received by the Fund are generally
comprised of investment income, long-term and short-term capital gains, and a
return of REIT capital. The actual character of amounts received during the
period is not known until after both the fiscal and calendar year ends. For the
twelve months ended December 31, 2002, the character of distributions to the
Fund from REITs was 71.47% ordinary income, 12.21% long-term and short-term
capital gains, and 16.32% return of REIT capital.
The Fund applies a percentage estimate, such as those shown above, or uses a
similar estimation of the breakdown of income type, to its receipts from REITs
and treats as income in the Statement of Operations only the amount of ordinary
income so calculated. The Fund adjusts that estimated breakdown of income type
(and consequently its net investment income) as necessary early in the following
calendar year when REITs inform their shareholders of the actual breakdown of
income type.
10
During the period, the Fund treats each distribution to its shareholders from
the portfolio REITs as being entirely from net investment income. The Fund
recharacterizes those distributions as being from ordinary income, long-term and
short-term capital gains, and a return of capital, if necessary, at the
beginning of the subsequent calendar year, based upon the income type breakdown
information conveyed at that time by the REITs whose securities are held in the
Fund's portfolio. Consequently, the financial statements may reflect an
over-distribution of net investment income that is at least partly attributable
to the fact that, as of the date of the financial statements, some of the
amounts received by the Fund from portfolio REITs, but none of the dividends
paid by the Fund to shareholders from the portfolio REITs, during the current
fiscal year, will have been treated as something other than ordinary income.
The Fund may also generate capital gains from trading investments in its
portfolio which are distributed to shareholders not less frequently than
annually. Such capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Taxable Auctioned Preferred Shares
The Fund has issued and outstanding 1,720 Series M, 1,720 Series T, 1,720 Series
W and 1,720 Series F, $25,000 stated value Taxable Auctioned Preferred shares.
The dividend rate on each series may change every seven days, as set pursuant to
a dutch auction process by the auction agent, and is payable at or near the end
of each rate period.
Interest Rate Swap Transactions
The Fund is authorized to enter into hedging transactions, including interest
rate swap transactions. The Fund uses interest rate swaps with the intent to
reduce or eliminate the risk that an increase in short-term interest rates could
have on Common share net earnings as a result of leverage. Interest rate swaps
involve the Fund's agreement with the swap counterparty to pay a fixed rate
payment in exchange for the counterparty paying the Fund a variable rate payment
that is intended to approximate the Fund's variable rate payment obligation on
Taxable Auctioned Preferred shares or any variable rate borrowing. The payment
obligation is based on the notional amount of the swap. Interest rate swaps do
not involve the delivery of securities or other underlying assets or principal.
Accordingly, the risk of credit loss with respect to interest rate swaps is
limited to the net amount of interest payments that the Fund is to receive. The
Fund has instructed the custodian to segregate assets with a current value at
least equal to the amount of the net payment obligations under any interest rate
swap transactions. Interest rate swap positions are marked to market daily.
Although there are economic advantages of entering into interest rate swap
transactions, there are also additional risks. The Fund helps manage the credit
risks associated with interest rate swap transactions by entering into
agreements only with firms the Adviser believes has the financial resources to
honor its obligations, by having the Adviser continually monitor the financial
stability of that swap counterparty.
At April 30, 2003, the Fund had open interest rate swap agreements with Citibank
NA as follows:
UNREALIZED
NOTIONAL TERMINATION APPRECIATION
AMOUNT FIXED RATE FLOATING RATE* DATE (DEPRECIATION)
------------------------------------------------------------------------------------------
$43,000,000 4.0225% 1.3000% 2/06/05 $(1,844,091)
43,000,000 4.8000 1.3000 2/06/07 (3,496,839)
43,000,000 5.1900 1.3000 2/06/09 (4,474,419)
------------------------------------------------------------------------------------------
$(9,815,349)
==========================================================================================
*Based on LIBOR (London Interbank Offered Rate)
Repurchase Agreements
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian take possession of the underlying collateral
securities, the fair value of which exceeds the principal amount of the
repurchase transaction, including accrued interest, at all times. If the seller
defaults, and the fair value of the collateral declines, realization of the
collateral may be delayed or limited.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on the Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Offering Costs
Nuveen Investments, LLC has agreed to pay all Common share offering costs (other
than the sales load) that exceed $.03 per Common share. The Fund's share of
offering costs ($843,000) were recorded as a reduction of the proceeds from the
sale of Common shares.
Costs incurred by the Fund in connection with its offering of Taxable Auctioned
Preferred shares ($2,017,208) were recorded as a reduction to paid-in surplus.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net asset applicable to Common shares from operations during the
reporting period. Significant estimates used in the preparation of the
accompanying financial statements includes the valuation by a third party
pricing agent of the Fund's investments at the reporting date and estimating the
composition of REIT distributions received by the Fund during the reporting
period. Actual amounts may differ from those estimates.
11
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
2. FUND SHARES
During the six months ended April 30, 2003, 6,174 Common shares were issued to
shareholders due to reinvestment of distributions.
During the period November 15, 2001 (commencement of operations) through October
31, 2002, 28,100,000 Common shares and 6,880 Taxable Auctioned Preferred shares
were sold. In addition, 2,556 Common shares were issued to shareholders due to
reinvestment of distributions during the period November 15, 2001 (commencement
of operations) through October 31, 2002.
3. SECURITIES TRANSACTIONS
Purchases and sales of investments (excluding short-term investments) during the
six months ended April 30, 2003, aggregated $107,732,576 and $105,062,499,
respectively.
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recording income and in recognizing
certain gains and losses on security transactions.
At April 30, 2003, the cost of investments was as follows:
--------------------------------------------------------------------------------
Cost of investments $571,925,080
================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
and interest rate swap transactions at April 30, 2003, were as follows:
--------------------------------------------------------------------------------
Gross unrealized:
appreciation $ 36,393,519
depreciation (15,841,084)
--------------------------------------------------------------------------------
Net unrealized appreciation of investments
and interest rate swap transactions $ 20,552,435
================================================================================
The tax components of undistributed net investment income and net realized gains
at October 31, 2002, the Fund's last fiscal year end, were as follows:
--------------------------------------------------------------------------------
Undistributed net ordinary income * $2,779,707
Undistributed net long-term capital gains --
================================================================================
*Net ordinary income consists of taxable income derived from dividends, interest
and net short-term capital gains, if any.
The tax character of distributions paid during the period ended October 31,
2002, the Fund's last fiscal year end, were as follows:
--------------------------------------------------------------------------------
Distributions from net ordinary income * $25,313,542
Distributions from net long-term capital gains $ 5,722,287
================================================================================
*Net ordinary income consists of taxable income derived from dividends, interest
and net short-term capital gains, if any.
The Fund designated as a long-term capital gain dividend, pursuant to Internal
Revenue Code Section 852(b)(3), the amount necessary to reduce the earnings and
profits of the Fund related to net capital gain to zero for the tax year ended
October 31, 2002, the Fund's last fiscal year end.
12
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Fund's investment management agreement with the Adviser, the Fund pays
an annual management fee, payable monthly, at the rates set forth below, which
are based upon the average daily managed assets of the Fund. "Managed assets"
consists of the average daily net assets applicable to Common shares, assets
attributable to Taxable Auctioned Preferred Shares and the principal amount of
borrowings, if any.
AVERAGE DAILY MANAGED ASSETS MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $500 million .9000%
For the next $500 million .8750
For the next $500 million .8500
For the next $500 million .8250
For Managed Assets over $2 billion .8000
================================================================================
The Adviser has agreed to waive part of its management fees or reimburse certain
expenses of the Fund in an amount equal to .30% of the average daily Managed
Assets for the period November 15, 2001 (commencement of operations) through
November 30, 2006, .25% of the average daily Managed Assets for the year ended
November 30, 2007, .20% of the average daily Managed Assets for the year ended
November 30, 2008, .15% of the average daily Managed Assets for the year ended
November 30, 2009, .10% of the average daily Managed Assets for the year ended
November 30, 2010, and .05% of the average daily Managed Assets for the year
ended November 30, 2011. The Adviser has not agreed to reimburse the Fund for
any portion of its fees and expenses beyond November 30, 2011.
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.
6. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Fund declared a dividend distribution of $.1150 per Common share which was
paid on June 2, 2003, to shareholders of record on May 15, 2003.
13
Financial
HIGHLIGHTS (Unaudited)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- --------------------------------
Distributions Distributions
from Net from
Investment Capital
Income to Gains to Net
Beginning Net Taxable Taxable Investment Capital
Common Realized/ Auctioned Auctioned Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
Year Ended 10/31:
2003(b) $13.56 $ .37 $1.73 $ (.04) $-- $2.06 $ (.69) $(.04) $ (.73)
2002(a) 14.33 1.01 (.46) (.09) -- .46 (1.13) -- (1.13)
====================================================================================================================================
Total Returns
-------------------
Offering
Costs and
Taxable Based
Auctioned Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
==================================================================================
Year Ended 10/31:
2003(b) $ -- $14.89 $15.94 16.24% 15.43%
2002(a) (.10) 13.56 14.40 3.30 2.09
==================================================================================
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
----------------------------- -------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
==================================================================================================================
Year Ended 10/31:
2003(b) $418,554 2.62%* 4.85%* 2.19%* 5.28%* 18%
2002(a) 381,290 2.12* 6.71* 1.72* 7.11* 37
==================================================================================================================
Cumulative Taxable Auctioned
Preferred at End of Period
---------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
===========================================================
Year Ended 10/31:
2003(b) $172,000 $25,000 $85,836
2002(a) 172,000 25,000 80,420
===========================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income, reinvested capital
gains distributions, if any, and changes in Common share net asset value
per share. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Taxable Auctioned
Preferred shareholders; income ratios reflect income earned on assets
attributable to Taxable Auctioned Preferred shares. Each Ratio of Expenses
to Average Net Assets Applicable to Common shares and each Ratio of Net
Investment Income to Average Net Assets Applicable to Common Shares
includes the effect of the net interest expense paid on interest rate swap
transactions as follows:
2003(b) 1.07*
2002(a) .68*
(a) For the period November 15, 2001 (commencement of operations) through
October 31, 2002.
(b) For the six months ended April 30, 2003.
See accompanying notes to financial statements.
14-15 Spread
Build Your Wealth
AUTOMATICALLY
SIDEBAR TEXT: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of compounding.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
greater of the net asset value per share or 95% of the then-current market
price. If the shares are trading at less than net asset value, shares for your
account will be purchased on the open market. Dividends and distributions
received to purchase shares in the open market will normally be invested shortly
after the dividend payment date. No interest will be paid on dividends and
distributions awaiting reinvestment. Because the market price of shares may
increase before purchases are completed, the average purchase price per share
may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBILITY
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
16
Fund
INFORMATION
BOARD OF TRUSTEES
James E. Bacon
William E. Bennett
JackB. Evans
William L. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
FUND MANAGER
Nuveen Institutional
Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler
Chicago, IL
INDEPENDENT AUDITORS
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 six-month period ended April 30, 2003. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
17
Serving Investors
FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
Managing $80 billion in assets, Nuveen Investments offers access to
a number of different asset classes and investing solutions through a variety of
products. Nuveen Investments markets its capabilities under four distinct
brands: Nuveen, a leader in tax-free investments; NWQ, a leader in value-style
equities; Rittenhouse, a leader in growth-style equities; and Symphony, a
leading institutional manager of market-neutral alternative investment
portfolios
To learn more about the products and services Nuveen Investments offers and for
a prospectus, where applicable, talk to your financial advisor, or call us at
(800) 257-8787. Please read the information carefully before you invest.
Distributed by
NUVEEN INVESTMENTS, LLC | 333 West Wacker Drive | Chicago, Illinois 60606 |
www.nuveen.com
ESA-F-0403D
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable at this time.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's Disclosure Controls and Procedures are
effective, based on their evaluation of such Disclosure Controls and Procedures
as of a date within 90 days of the filing of this report on Form N-CSR.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of our evaluation.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) 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.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2) in the exact form set forth below: Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Real Estate Income Fund
-----------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date July 8, 2003
-------------------------------------------------------------------
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 July 8, 2003
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(Principal Financial Officer)
Date July 8, 2003
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.