SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
NUVEEN REAL ESTATE INCOME FUND
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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* JULY 2002 *
IMPORTANT NOTICE
TO NUVEEN REAL ESTATE INCOME FUND SHAREHOLDERS
Although we recommend that you read the complete Proxy Statement, for your
convenience, we have provided a brief overview of the issue to be voted on.
Q. WHY AM I RECEIVING THIS PROXY STATEMENT?
A. Nuveen Institutional Advisory Corp. ("NIAC") serves as the investment
adviser of the Nuveen Real Estate Income Fund (the "Fund"). NIAC has entered
into an Investment Sub-Advisory Agreement (the "Sub-Advisory Agreement") with
Security Capital Research & Management Incorporated (the "Sub-Adviser") through
which the Sub-Adviser is retained to furnish investment advisory services to the
Fund. Until May 14, 2002, the Sub-Adviser was an indirect wholly-owned
subsidiary of Security Capital Group Incorporated ("Security Capital"). On May
14, 2002, Security Capital approved an Agreement and Plan of Merger (the "Merger
Agreement") by and among Security Capital, General Electric Capital Corporation
("GE Capital") and EB Acquisition Corp., an indirect, wholly-owned subsidiary of
GE Capital (the "Merger Sub"), pursuant to which the Merger Sub merged with and
into Security Capital (the "Merger"), with Security Capital surviving the Merger
as an indirect wholly-owned subsidiary of GE Capital.
As a result of the Merger, the Sub-Advisory Agreement has terminated. In order
for the Sub-Adviser to continue to serve as sub-adviser of the Fund, the Fund's
shareholders must approve a new agreement. The enclosed Proxy Statement gives
you additional information on GE Capital and the proposed new sub-advisory
agreement as well as certain other matters. The Board of Trustees of the Fund,
including those who are not affiliated with NIAC or the Sub-Adviser, recommends
that you vote FOR the approval of the new sub-advisory agreement for your Fund.
Q. WHY IS A VOTE ON THE PROPOSED NEW SUB-ADVISORY AGREEMENT REQUIRED?
A. The Investment Company Act of 1940, which regulates investment companies in
the United States such as the Fund, generally requires a shareholder vote to
approve a new investment management or sub-advisory agreement whenever there is
a "change in control" of a fund's investment adviser or sub-adviser. The sale of
Security Capital to GE Capital resulted in such a change in control. As a
result, shareholder approval of a new sub-advisory agreement is necessary to
permit the Sub-Adviser to continue to serve the Fund.
Q. WHAT WILL HAPPEN IF SHAREHOLDERS DO NOT APPROVE THE NEW SUB-ADVISORY
AGREEMENT?
A. The Sub-Advisory Agreement has terminated. As a result, the Fund's Board of
Trustees has entered into an interim sub-advisory agreement with the Sub-Adviser
that allows the Sub-Adviser to continue to serve the Fund for a limited period
of time until a new sub-
advisory agreement is approved. If the new sub-advisory agreement is not
approved, the Fund's Board will take such actions as it deems to be in the best
interests of the Fund. This is discussed in more detail in the Proxy Statement.
Q. HOW WILL THE MERGER WITH GE CAPITAL AFFECT ME AS A FUND SHAREHOLDER?
A. Your investment in the Fund will not change as a result of the Merger. You
will still own the same shares in the Fund, and the value of your investment
will not change as a result of the Merger. The new sub-advisory agreement will
still be with the Sub-Adviser and the terms of the new sub-advisory agreement
are substantially identical to the terms of the original Sub-Advisory Agreement.
Q. WILL THE INVESTMENT MANAGEMENT AND SUB-ADVISORY FEE RATES BE THE SAME UPON
THE APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT?
A. Yes, the investment management and sub-advisory fee rates paid by the Fund
will remain the same.
Q. WILL THE FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED WITH
THE APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT?
A. No, neither you nor the Fund will bear any costs associated with the
approval of the new sub-advisory agreement. The Sub-Adviser has agreed to bear
these costs.
Q. HOW DO THE TRUSTEES OF THE FUND SUGGEST THAT I VOTE IN CONNECTION WITH THE
NEW SUB-ADVISORY AGREEMENT?
A. After careful consideration, the Board of Trustees of the Fund recommends
that you vote "FOR" the approval of the new sub-advisory agreement.
Q. WILL MY VOTE MAKE A DIFFERENCE?
A. Your vote is needed to ensure that the proposal can be acted upon. We
encourage all shareholders to participate in the governance of the Fund.
Q. WHO DO I CALL IF I HAVE QUESTIONS?
A. If you need any assistance, or have any questions regarding the proposal or
how to vote your shares, please call NIAC at (800) 257-8787 weekdays during its
business hours from 7:00 a.m. to 7:00 p.m. Central time or call your financial
advisor.
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by completing and signing the enclosed proxy card,
and mailing it in the enclosed postage-paid envelope. In addition, you may vote
by telephone by calling the toll-free number on the proxy card or by computer
over the Internet (www.proxyvote.com) and using the control number on the proxy
card.
Q. WILL ANYONE CONTACT ME?
A. You may receive a call to verify that you received your proxy materials, to
answer any questions you may have about the proposal and to encourage you to
vote.
NOTICE OF SPECIAL MEETING 333 West Wacker Drive
OF SHAREHOLDERS - JULY 24, 2002 Chicago, Illinois 60606
(800) 257-8787
NUVEEN REAL ESTATE INCOME FUND
JULY 5, 2002
TO THE COMMON AND PREFERRED SHAREHOLDERS OF THE NUVEEN REAL ESTATE INCOME FUND:
Notice is hereby given that the Special Meeting of holders of Common Shares and
Taxable Auctioned Preferred Shares, Series M, T, W and F (FundPreferred(TM)
shares) (collectively, the "Shareholders") of the Nuveen Real Estate Income Fund
(the "Fund"), a Massachusetts business trust, will be held in the 31st Floor
Conference Room of Nuveen Investments, 333 West Wacker Drive, Chicago, Illinois,
on Wednesday, July 24, 2002, at 10:30 a.m., Chicago time, for the following
purpose:
1. To approve or disapprove a new sub-advisory agreement between Security
Capital Research & Management Incorporated (the "Sub-Adviser") and Nuveen
Institutional Advisory Corp. ("NIAC"), the Fund's investment adviser, on behalf
of the Fund.
2. To transact such other business as may properly come before the Special
Meeting.
Shareholders of record of the Fund at the close of business on May 28, 2002 are
entitled to notice of and to vote at the Fund's Special Meeting.
YOU MAY VOTE BY MAIL, TELEPHONE OR OVER THE INTERNET. TO VOTE BY MAIL, PLEASE
MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES. TO VOTE BY TELEPHONE, PLEASE CALL THE TOLL-FREE
NUMBER LOCATED ON YOUR PROXY CARD, ENTER THE CONTROL NUMBER FOUND ON YOUR PROXY
CARD, AND FOLLOW THE RECORDED INSTRUCTIONS, USING YOUR PROXY CARD AS A GUIDE. TO
VOTE OVER THE INTERNET, GO TO WWW.PROXYVOTE.COM, ENTER THE CONTROL NUMBER FOUND
ON YOUR PROXY CARD, AND FOLLOW THE INSTRUCTIONS, USING YOUR PROXY CARD AS A
GUIDE.
Gifford R. Zimmerman,
Vice President and Secretary
PROXY STATEMENT 333 West Wacker Drive
JULY 5, 2002 Chicago, Illinois 60606
(800) 257-8787
NUVEEN REAL ESTATE INCOME FUND
GENERAL INFORMATION
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION BY THE
BOARD OF TRUSTEES OF THE NUVEEN REAL ESTATE INCOME FUND (THE "FUND") OF PROXIES
TO BE VOTED AT THE SPECIAL MEETING OF SHAREHOLDERS OF THE FUND TO BE HELD ON
JULY 24, 2002 (THE "SPECIAL MEETING"), AND AT ANY AND ALL ADJOURNMENTS THEREOF.
This Proxy Statement is first being mailed to shareholders of the Fund on or
about July 5, 2002.
On the matter coming before the Special Meeting as to which a choice has been
specified by the shareholders of the Fund on a properly executed proxy, the
shares will be voted accordingly. If no choice is so specified on a properly
executed proxy, the shares of the Fund will be voted FOR the approval of the new
sub-advisory agreement, as listed in this Proxy Statement. Shareholders of the
Fund who execute proxies may revoke them at any time before they are voted by
filing with the Fund a written notice of revocation, by delivering a duly
executed proxy bearing a later date, or by attending the Special Meeting and
voting in person.
A quorum of shareholders is required to take action at the Special Meeting. A
majority of the shares entitled to vote at the Special Meeting, represented in
person or by proxy, will constitute a quorum of shareholders at the Special
Meeting. Votes cast by proxy or in person at the Special Meeting will be
tabulated by the inspectors of election appointed for the Special Meeting. The
inspectors of election will determine whether or not a quorum is present at the
Special Meeting. The inspectors of election will treat abstentions and "broker
non-votes" (i.e., shares held by brokers or nominees, typically in "street
name," as to which (i) instructions have not been received from the beneficial
owners or persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting powers on a particular matter) as present for purposes of
determining a quorum.
For purposes of determining the approval of the matter submitted to the
shareholders for a vote, abstentions and broker non-votes will be treated as
shares voted against the proposal. The details of the proposal to be voted on by
the shareholders of the Fund and the vote required for approval of the proposal
are set forth below.
1
Those persons who were shareholders of record at the close of business on May
28, 2002 will be entitled to one vote for each share held. As of May 28, 2002,
shares of the Fund were issued, outstanding and eligible to vote as follows:
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COMMON FUNDPREFERRED
FUND SHARES(1) SHARES
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Nuveen Real Estate Income Fund 28,107,482 1,720 Series M
1,720 Series T
1,720 Series W
1,720 Series F
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(1) Common shares of the Fund are listed on The American Stock Exchange under
the symbol "JRS".
As of May 28, 2002, the Trustees and executive officers of the Fund individually
and as a group beneficially owned less then 1% of any class of the outstanding
shares of the Fund. The Trustees and officers of the Fund are provided in
Exhibit A. The number of shares owned by Trustees and executive officers of the
Fund is also set forth in Exhibit A.
As of May 28, 2002, no shareholders were known to own beneficially 5% or more of
any class of the Fund's shares.
The following table indicates which shareholders are solicited with respect to
the proposal considered at the Special Meeting:
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COMMON FUNDPREFERRED
PROPOSAL SHARES SHARES
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1. To approve a new sub-advisory agreement
for the Fund X X
PROPOSAL 1 -- APPROVAL OR DISAPPROVAL OF THE NEW SUB-ADVISORY AGREEMENT
Background. Nuveen Institutional Advisory Corp ("NIAC") is the Fund's investment
adviser. NIAC had entered into an Investment Sub-Advisory Agreement dated
October 3, 2001 (the "Original Sub-Advisory Agreement") with Security Capital
Research & Management Incorporated (the "Sub-Adviser") through which the
Sub-Adviser was retained to furnish investment advisory services to the Fund.
Until May 14, 2002, the Sub-Adviser was an indirect wholly-owned subsidiary of
Security Capital Group Incorporated ("Security Capital").
The Original Sub-Advisory Agreement, as required by Section 15 of the Investment
Company Act of 1940, as amended (the "1940 Act"), provided for its automatic
termination in the event of its assignment. Any change in control of the
Sub-Adviser is deemed to be an assignment. On May 14, 2002, the shareholders of
Security Capital approved an Agreement and Plan of Merger (the "Merger
Agreement") by and among Security Capital, General Electric Capital Corporation
("GE Capital") and EB Acquisition Corp., an indirect, wholly-owned subsidiary of
GE Capital (the "Merger Sub"), pursuant to which the Merger Sub merged with and
into Security Capital (the "Merger"), with Security Capital surviving the Merger
as an indirect
2
wholly-owned subsidiary of GE Capital. All of the outstanding common stock of GE
Capital is owned by General Electric Capital Services, Inc. ("GECS").
Through the Merger, the Sub-Adviser became a wholly-owned subsidiary of GECIA
Holdings, Inc. ("GECIA"), which in turn is wholly-owned by GECS. All of the
outstanding common stock of GECS is owned directly or indirectly by General
Electric Company ("GE"). The business address of GECS is 260 Long Ridge Road,
Stamford, Connecticut 06927. The business address of GECIA is 292 Long Ridge
Road, Stamford, Connecticut 06927. The business address of GE is 3135 Easton
Turnpike, Fairfield, Connecticut 06431. The business of GECS consists of
ownership of two principal subsidiaries, GE Capital and GE Global Insurance
Holding Corporation, which together with their affiliates, constitute GE's
principal financial services businesses. GE is a diversified services,
technology and manufacturing company with operations worldwide.
The consummation of the Merger caused the Sub-Adviser to undergo a change in
control and caused the automatic termination of the Original Sub-Advisory
Agreement as required by the 1940 Act.
On February 20, 2002, the Board of Trustees of the Fund approved the Fund's
entering into a new sub-advisory agreement with the Sub-Adviser (the "New
Sub-Advisory Agreement") with respect to the Fund, subject to the consummation
of the Merger and Shareholder approval. The New Sub-Advisory Agreement is
substantially identical to the Original Sub-Advisory Agreement. The 1940 Act
requires that the New Sub-Advisory Agreement be approved by the Fund's
Shareholders in order for it to become effective. As more fully explained below,
a majority of the Trustees of the Fund, including a majority of the Trustees who
are not parties to the Fund's advisory agreement with NIAC, the Original
Sub-Advisory Agreement or the New Sub-Advisory Agreement, or who are not
interested persons of the Fund, NIAC or the Sub-Adviser (the "Independent
Trustees"), recommends that the Shareholders of the Fund approve the New
Sub-Advisory Agreement between the Sub-Adviser and NIAC. The Sub-Adviser does
not anticipate that the Merger will have any adverse effect on the performance
of its obligations under the New Sub-Advisory Agreement. If Shareholders of the
Fund approve the New Sub-Advisory Agreement, the New Sub-Advisory Agreement will
become effective on or about the date of the Shareholder's Meeting.
Approval of New Sub-Advisory Agreement. The Board met in person for the purpose
of considering whether it would be in the best interests of the Fund and its
Shareholders to approve the New Sub-Advisory Agreement between the Sub-Adviser
and NIAC. At its meeting and for reasons discussed below (see "The Board's
Considerations"), the Board, including the Independent Trustees, by a majority
vote (two Trustees abstained from voting on this matter due to their ownership
of securities of GE Capital's parent company which they subsequently sold),
approved the New Sub-Advisory Agreement and recommended its approval by
Shareholders, in order to assure continuity of investment advisory services to
the Fund after the Merger. The New Sub-Advisory Agreement is substantially
identical to the form attached hereto as Exhibit B.
The terms of the New Sub-Advisory Agreement, including fees payable to the
Sub-Adviser by NIAC thereunder, are identical, in all material respects, to
those of the Original Sub-Advisory Agreement, except for the date of
effectiveness. There is no change in the fees payable by NIAC to the
Sub-Adviser, nor is there a change in fees paid by the Fund to NIAC under its
investment management agreement with NIAC. Certain of the terms of the Original
3
Sub-Advisory Agreement are described below. If approved by Shareholders, the New
Sub-Advisory Agreement will expire on August 1, 2003. The New Sub-Advisory
Agreement will continue in effect from year to year thereafter if such
continuance is approved for the Fund at least annually in the manner required by
the 1940 Act and the rules and regulations thereunder. In the event that the
Shareholders of the Fund do not approve the New Sub-Advisory Agreement, the
Interim Sub-Advisory Agreement (as described below) will remain in effect until
expiration or termination and the Board will take such action as it deems to be
in the best interests of the Fund and its Shareholders.
The Original Sub-Advisory Agreement. The Original Sub-Advisory Agreement
provided that, subject always to the supervision of Fund's Board of Trustees and
NIAC, the Sub-Adviser would furnish an investment program in respect of, make
investment decisions for, and place all orders for the purchase and sale of
securities for the Fund, all on behalf of the Fund. In the performance of its
duties, the Sub-Adviser was required to satisfy its fiduciary duties to the
Fund, monitor the Fund's investments, and comply with the provisions of Fund's
Declaration of Trust and By-laws, as amended from time to time, and the stated
investment objectives, policies and restrictions of the Fund. The Sub-Adviser
was also required to report to the Board of Trustees and to NIAC with respect to
the implementation of such program, prepare necessary books and records and make
persons available to communicate with the Board of Trustees and NIAC. In
addition, the Sub-Adviser was authorized to select the brokers or dealers that
executed the purchases and sales of portfolio securities for the Fund.
Expenses Paid by the Sub-Adviser. The Original Sub-Advisory Agreement also
provided that the Sub-Adviser would pay all expenses incurred by it in
connection with its activities under the Original Sub-Advisory Agreement other
than the cost of securities (including brokerage commission, if any) purchased
for the Fund.
Compensation. Pursuant to the investment management agreement between NIAC and
the Fund, the Fund has agreed to pay an annual management fee, payable on a
monthly basis, for the services and facilities provided by NIAC according to the
following schedule:
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AVERAGE DAILY MANAGED ASSETS(1) MANAGEMENT FEE
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Up to $500 million .9000%
$500 million to $1 billion .8750%
$1 billion to $1.5 billion .8500%
$1.5 billion to $2 billion .8250%
$2 billion and over .8000%
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(1) Net assets including assets attributable to FundPreferred shares and the
principal amount of borrowings.
4
The Original Sub-Advisory Agreement provided that the Sub-Adviser would receive
from NIAC a percent of the management fee (net of the reimbursements described
below) that accrued daily and was paid monthly according to the following
schedule:
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PERCENTAGE OF
DAILY NET ASSETS MANAGEMENT FEE
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Up to $125 million 50.0%
$125 million to $150 million 47.5%
$150 million to $175 million 45.0%
$175 million to $200 million 42.5%
$200 million and over 40.0%
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For the first ten years of the Fund's operation, NIAC has contractually agreed
to reimburse the Fund for fees and expenses in the amounts, and for the time
periods, set forth below. NIAC has not agreed to reimburse the Fund for any
portion of its fees and expenses beyond November 31, 2011.
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AMOUNT REIMBURSED
YEAR ENDING (AS A PERCENTAGE OF
NOVEMBER 30 AVERAGE DAILY MANAGED ASSETS)(2)
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2001(3) 0.30%
2002 0.30%
2003 0.30%
2004 0.30%
2005 0.30%
2006 0.30%
2007 0.25%
2008 0.20%
2009 0.15%
2010 0.10%
2011 0.05%
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(2) Net assets including assets attributable to FundPreferred shares and the
principal amount of borrowings.
(3) From the commencement of operations.
From the Fund's inception on November 15, 2001 through March 31, 2002, NIAC
received $1,129,448 in advisory fees (net of reimbursements) and the Sub-Adviser
received $488,355 in sub-advisory fees.
Limitation on Liability. The Original Sub-Advisory Agreement also provided that
NIAC would not take any action against the Sub-Adviser to hold the Sub-Adviser
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of the Sub-Adviser's duties under
the Original Sub-Advisory Agreement, except for a loss resulting from the
Sub-Adviser's willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under the Original Sub-Advisory Agreement.
5
Termination. The Original Sub-Advisory Agreement provided that it may be
terminated at any time without the payment of any penalty by NIAC on sixty (60)
days' written notice to the Sub-Adviser. The Original Sub-Advisory Agreement may
also have been terminated by the Sub-Adviser as of July 31 of any year after
2003 without payment of any penalty upon sixty (60) days' prior written notice
to NIAC. In addition, the Original Sub-Advisory Agreement may have been
terminated by the Fund with respect to the Fund by action of the Board of
Trustees or by a vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund on sixty (60) days' written notice to the
Sub-Adviser by the Fund.
The Original Sub-Advisory Agreement may also have been terminated with respect
to the Fund at any time without the payment of any penalty, by NIAC, the Board
of Trustees or by vote of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act) in the event that it was established by a
court of competent jurisdiction that the Sub-Adviser or any officer or director
of the Sub-Adviser had taken any action which resulted in a breach of the
covenants of the Sub-Adviser set forth in the Original Sub-Advisory Agreement.
The Original Sub-Advisory Agreement was executed on October 3, 2001.
Interim Sub-Advisory Agreement. To provide sub-advisory services to the Fund
prior to Shareholder approval of the New Sub-Advisory Agreement, on February 20,
2002 at a meeting held in person, the Board of Trustees, including the
Independent Trustees, by a majority vote (two Trustees abstained from voting on
the matter due to their ownership of securities of the parent company of GE
Capital), approved NIAC's entering into an interim sub-advisory agreement with
the Sub-Adviser (the "Interim Sub-Advisory Agreement") on behalf of the Fund.
The Interim Sub-Advisory Agreement was effective on the date of the Merger.
Pursuant to Rule 15a-4 under the 1940 Act, the Board of Trustees, including the
Independent Trustees, determined that the scope and quality of services to be
provided to the Fund under the Interim Sub-Advisory Agreement would be at least
equivalent to the scope and quality of services provided under the Original
Sub-Advisory Agreement. The Interim Sub-Advisory Agreement contains
substantially the same terms and conditions as the Original Sub-Advisory
Agreement, including the fee to be received by the Sub-Adviser, but includes
special provisions required by Rule 15a-4, including:
- a maximum term of 150 days;
- a provision that the Board or holders of a majority of the Fund's outstanding
voting securities (as defined in the 1940 Act) may terminate the agreement at
any time without penalty on not more than 10 days' written notice; and
- a provision that the compensation earned by the Sub-Adviser under the
agreement would be held in an interest-bearing escrow account until
Shareholder approval of the New Sub-Advisory Agreement is obtained, after
which the amount in the escrow account (together with any interest) would be
paid to the Sub-Adviser.
If the Fund has not received the requisite Shareholder approval for the New
Sub-Advisory Agreement within 150 days after the Merger, sub-advisory fees (less
reasonable expenses and interest) will be returned to the Fund and the Board
will consider other appropriate arrangements subject to approval in accordance
with the 1940 Act.
The Board's Considerations. In determining whether to approve the Interim
Sub-Advisory Agreement and New Sub-Advisory Agreement, the Board evaluated the
implications of the
6
Merger for the Sub-Adviser and its ability to continue to provide services to
the Fund of substantially the same scope and quality as are currently provided.
In particular, the Board inquired as to the impact of the Merger on the
Sub-Adviser's personnel, facilities and financial capabilities. The Board
received assurances in this regard from representatives of Security Capital that
there were no current plans to make any material personnel changes affecting the
management or administration of the Fund. They also received assurances from
Security Capital and the Sub-Adviser that the Merger would not adversely affect
the Sub-Adviser's ability to fulfill its obligations to the Fund or to operate
its business in a manner consistent with past practices.
The Board further considered: (i) the quality of the operations and services
which have been provided to the Fund by the Sub-Adviser and which are expected
to continue to be provided after the Merger, with no change in fee rates, (ii)
the overall experience and reputation of the Sub-Adviser in providing such
services to investment companies, and the likelihood of its continued financial
stability, (iii) the reputation and capitalization of GE and its affiliates, and
(iv) the benefits of continuity in the services to be provided under the New
Sub-Advisory Agreement. Based upon its review, the Board has determined that
continuity and efficiency of portfolio management services after the Merger can
best be assured by approving the New Sub-Advisory Agreement. The Board believes
that the New Sub-Advisory Agreement will enable the Fund to continue to obtain
investment advisory services of high quality at costs which it deems appropriate
and reasonable under the circumstances, and that approval of the New
Sub-Advisory Agreement is in the best interests of the Fund and its
Shareholders. Accordingly, the Board recommended approval of the New
Sub-Advisory Agreement and its submission to the Shareholders for their
approval.
Furthermore, the Board recognized that NIAC and the Sub-Adviser have each
assured the Trustees that they intend to comply with Section 15(f) of the 1940
Act. Section 15(f) provides a non-exclusive safe harbor for an investment
adviser or sub-adviser to an investment company or any affiliated persons to
receive any amount or benefit in connection with a change in control of the
investment adviser or sub-adviser to an investment company as long as two
conditions are satisfied.
First, an "unfair burden" must not be imposed on investment company clients of
the adviser as a result of the transaction, or any express or implied terms,
conditions or understandings applicable to the transaction. The term "unfair
burden" (as defined in the 1940 Act) includes any arrangement during the
two-year period after the transaction whereby the investment adviser or
sub-adviser (or predecessor or successor adviser or sub-adviser), or any
"interested person" (as defined in the 1940 Act) (an "Interested Person") of any
such adviser or sub-adviser, receives or is entitled to receive any
compensation, directly or indirectly, from such an investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any other person in connection with the purchase or sale of
securities or other property to, from or on behalf of such investment company.
The Board has been advised that neither the Sub-Adviser nor Security Capital is
aware of any circumstances arising from the Merger that might result in an
unfair burden being imposed on the Fund.
Second, for a period of three years after the change in control, at least 75% of
the board members of the investment company must be persons who are not
Interested Persons of the predecessor or successor investment adviser or
sub-adviser.
7
The Sub-Adviser has undertaken to pay the costs of preparing and distributing
proxy materials to the Fund's shareholders, as well as other fees and expenses
in connection with the Merger, including the fees and expenses of legal counsel
and consultants to the Fund and the Trustees relating to their review of the
Merger.
To maintain their status as Independent Trustees of the Fund, two Trustees of
the Fund, Messrs. Bennett and Leafstrand, sold securities of the parent of GE
Capital which they had acquired prior to the announcement of the Merger. Messrs.
Bennett and Leafstrand abstained from all votes relating to the approval of the
Interim Sub-Advisory Agreement and the New Sub-Advisory Agreement.
Information About the Sub-Adviser. The principal executive officers and
directors of the Sub-Adviser and their principal occupations are respectively as
follows: Anthony R. Manno Jr., President, Director and Managing Director;
Kenneth D. Statz, Managing Director; Kevin W. Bedell, Senior Vice President;
David E. Rosenbaum, Senior Vice President; and Jeffrey C. Nellessen, Vice
President, Secretary, Treasurer and Controller. The business address of the
Sub-Adviser and each of the foregoing individuals is 11 South LaSalle Street,
2nd Floor, Chicago, Illinois 60603.
Shareholder Approval. To become effective, the New Sub-Advisory Agreement must
be approved by a vote of a majority of the outstanding voting securities of the
Fund, with the common and FundPreferred shareholders voting together as a single
class. The "vote of a majority of the outstanding voting securities" is defined
in the 1940 Act as the lesser of the vote of (i) 67% or more of the shares of
the Fund entitled to vote thereon present at the meeting if the holders of more
than 50% of such outstanding shares are present in person or represented by
proxy; or (ii) more than 50% of such outstanding shares of the Fund entitled to
vote thereon. The Interim Sub-Advisory Agreement and the New Sub-Advisory
Agreement were approved by the Board of Trustees of the Fund after consideration
of all factors which it determined to be relevant to its deliberations,
including those discussed above. The Board of Trustees also determined to submit
the New Sub-Advisory Agreement for consideration by the Shareholders of the
Fund.
The Board recommends that Shareholders of the Fund vote FOR approval of the New
Sub-Advisory Agreement for the Fund.
INFORMATION ABOUT THE FUND'S INVESTMENT ADVISER
NIAC, located at 333 West Wacker Drive, Chicago, Illinois, serves as the
investment adviser for the Fund. The principal executive officer of NIAC is
Timothy R. Schwertfeger, who also serves as Chairman of the Board of Directors
of NIAC. John P. Amboian serves as President and Director of NIAC. The business
address of NIAC and such persons is 333 West Wacker Drive, Chicago, Illinois
60606. NIAC is a wholly owned subsidiary of JNC, which in turn is approximately
78% owned by The St. Paul Companies, Inc. ("St. Paul"). St. Paul is located at
385 Washington Street, St. Paul, Minnesota 55102, and is principally engaged in
providing property-liability insurance through subsidiaries. Nuveen Investments,
a wholly owned subsidiary of JNC, acted as co-managing underwriter in the
initial public offering of the common shares of the Fund and FundPreferred
shares. Nuveen Investments is located at 333 West Wacker Drive, Chicago,
Illinois 60606.
8
SHAREHOLDER PROPOSALS
To be considered for presentation at the Annual Meeting of shareholders of the
Fund, expected to be held on February 5, 2003, a shareholder proposal submitted
pursuant to Rule 14a-8 of the 1934 Act must be received at the offices of the
Fund, 333 West Wacker Drive, Chicago, Illinois 60606, not later than August 23,
2002. A shareholder wishing to provide notice in the manner prescribed by Rule
14a-4(c)(1) of a proposal submitted outside the process of Rule 14a-8 must
submit such written notice not later than November 5, 2002. Timely submission of
a proposal does not mean that such proposal will be included.
EXPENSES OF PROXY SOLICITATION
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and Proxy Statement, and all other costs in connection with the
solicitation of proxies will be paid by the Sub-Adviser. Additional solicitation
may be made by letter, telephone or telegraph by officers of the Fund, by
officers or employees of Nuveen Investments or NIAC, or by dealers and their
representatives. The Fund has engaged D. F. King to assist in the solicitation
of proxies of an estimated cost of $2,500 plus reasonable expenses that will be
paid by the Sub-Adviser.
ANNUAL REPORT DELIVERY
Annual reports will be sent following the Fund's fiscal year to shareholders
then of record. The Fund's fiscal year end is October 31. The Fund will furnish,
without charge, a copy of its annual and semi-annual reports to shareholders
upon request once they are available. Such written or oral requests should be
directed to the Fund at 333 West Wacker Drive, Chicago, Illinois 60606, or by
calling 1-800-257-8787.
Please note that only one annual report or Proxy Statement may be delivered to
two or more shareholders of the Fund who share an address, unless the Fund has
received instructions to the contrary. To request a separate copy of an annual
report or Proxy Statement, or, for instructions as to how to request a separate
copy of such documents or as to how to request a single copy if multiple copies
of such documents are received, shareholders should contact the Fund at the
address and phone number set forth above.
INTEREST OF CERTAIN PERSONS
The Sub-Adviser and certain of its directors, officers, and employees, including
the Fund's portfolio managers, may be deemed to have an interest in the proposal
described in this Proxy Statement to the extent that failure to approve it may
affect its and their compensation. Such company and persons may thus be deemed
to derive benefits from the approval by Shareholders of this proposal.
GENERAL
Management does not intend to present and does not have reason to believe that
others will present any other items of business at the Fund's Special Meeting.
However, if other matters are properly presented to the Special Meeting for a
vote, the proxies will be voted upon such matters in accordance with the
judgment of the persons acting under the proxies.
9
Shareholders do not have dissenters' or appraisal rights with respect to any
manner to be acted upon at the Special Meeting.
A list of shareholders entitled to be present and to vote at the Fund's Special
Meeting will be available at the offices of the Fund, 333 West Wacker Drive,
Chicago, Illinois, for inspection by any shareholder during regular business
hours for ten days prior to the date of the Special Meeting.
Failure of a quorum to be present at the Fund's Special Meeting will necessitate
adjournment. The persons named in the enclosed proxy may also move for an
adjournment of the Special Meeting to permit further solicitation of proxies
with respect to the proposal if they determine that adjournment and further
solicitation is reasonable and in the best interests of the shareholders. Under
the Fund's By-laws, an adjournment of a meeting requires the affirmative vote of
a majority of the shares present in person or represented by proxy at the
meeting.
IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE REQUESTED TO VOTE YOUR SHARES
PROMPTLY.
Gifford R. Zimmerman
Vice President and Secretary
10
EXHIBIT A
TRUSTEES OF THE FUND
The following table sets forth information with respect to each Trustee of the
Fund, such as the positions held with the Fund, the term of office and length of
time served, the principal occupation of each Trustee during the past five
years, the number of portfolios in the Nuveen Fund complex overseen by each
Trustee, and other directorships held by each Trustee.
----------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
POSITION(S) TERM OF OFFICE FUND COMPLEX
NAME, ADDRESS AND HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN
DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE
----------------------------------------------------------------------------------------------------------------------------
Trustees who are not
interested persons of the
Fund
James E. Bacon Trustee - Term - Until next Treasurer, Cathedral of St. John the Divine 18
333 West Wacker Drive annual meeting in (New York City) 1997-present; formerly,
Chicago, IL 60606 2003 Director of Lone Star Industries, Inc.
(2/27/31) - Length of Service - (1992-1999); previously, Director and
Since Inception Executive Vice President of U.S. Trust
Corporation and Trustee of United States
Trust Company of New York.
William E. Bennett Trustee - Term - Until next Private Investor; previously President and 18
333 West Wacker Drive annual meeting in C.E.O., Draper & Kramer, Inc. (a private
Chicago, IL 60606 2003 company that handles mortgage banking, real
(10/16/46) - Length of Service - estate development, pension advising and
Since Inception real estate management) (1995-1998).
Jack B. Evans Trustee - Term - Until next President, The Hall-Perrine Foundation (a 18
333 West Wacker Drive annual meeting in private philanthropic corporation);
Chicago, IL 60606 2003 Director, Alliant Energy; Director and Vice
(10/22/48) - Length of Service - Chairman United Fire & Casualty Company;
Since Inception Director, Federal Reserve Bank of Chicago;
previously President and Chief Operating
Officer, SCI Financial Group, Inc. (a
regional financial services firm).
------------------------- ------------
OTHER
DIRECTOR-
SHIPS
NAME, ADDRESS AND HELD BY
DATE OF BIRTH TRUSTEE
------------------------- ------------
Trustees who are not
interested persons of the
Fund
James E. Bacon N/A
333 West Wacker Drive
Chicago, IL 60606
(2/27/31)
William E. Bennett N/A
333 West Wacker Drive
Chicago, IL 60606
(10/16/46)
Jack B. Evans See
333 West Wacker Drive Principal
Chicago, IL 60606 Occupation
(10/22/48) description.
11
----------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
POSITION(S) TERM OF OFFICE FUND COMPLEX
NAME, ADDRESS AND HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN
DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE
----------------------------------------------------------------------------------------------------------------------------
William L. Kissick Trustee - Term - Until next Emeritus Professor, School of Medicine and 18
333 West Wacker Drive annual meeting in the Wharton School of Management and former
Chicago, IL 60606 2003 Chairman, Leonard Davis Institute of Health
(7/29/32) - Length of Service - Economics, University of Pennsylvania;
Since Inception Adjunct Professor, Health Policy and
Management, Yale University.
Thomas E. Leafstrand(1) Trustee - Term - Until next Retired; previously, Vice President in 18
333 West Wacker Drive annual meeting in charge of Municipal Underwriting, Trading,
Chicago, IL 60606 2003 and Dealer Sales at The Northern Trust
(11/11/31) - Length of Service - Company.
Since Inception
Sheila W. Wellington Trustee - Term - Until next President of Catalyst (a not-for-profit 18
333 West Wacker Drive annual meeting in organization focusing on women's leadership
Chicago, IL 60606 2003 development in business and the
(2/24/32) - Length of Service - professions).
Since Inception
------------------------- ------------
OTHER
DIRECTOR-
SHIPS
NAME, ADDRESS AND HELD BY
DATE OF BIRTH TRUSTEE
------------------------- ------------
William L. Kissick N/A
333 West Wacker Drive
Chicago, IL 60606
(7/29/32)
Thomas E. Leafstrand(1) N/A
333 West Wacker Drive
Chicago, IL 60606
(11/11/31)
Sheila W. Wellington N/A
333 West Wacker Drive
Chicago, IL 60606
(2/24/32)
12
----------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
POSITION(S) TERM OF OFFICE FUND COMPLEX
NAME, ADDRESS AND HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN
DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE
----------------------------------------------------------------------------------------------------------------------------
Trustee who is an
interested person of the
Fund
*Timothy R. Schwertfeger Chairman, - Term - Until next Chairman (since May 1999), President and 130
333 West Wacker Drive President and annual meeting in Trustee of the funds advised by Nuveen
Chicago, IL 60606 Trustee 2003 Institutional Advisory Corp. (since July
(3/28/49) - Length of Service - 1996) and the funds advised by Nuveen
Since Inception Senior Loan Asset Management Inc. (since
1999); Chairman (since July 1996) and
Director of The John Nuveen Company, Nuveen
Investments, Nuveen Advisory Corp., Nuveen
Institutional Advisory Corp. and the funds
advised by Nuveen Advisory Corp.; Chairman
and Director (since January 1997) of Nuveen
Asset Management, Inc.; Chairman and
Director of Rittenhouse Financial Services,
Inc. (since March 1999); Chief Executive
Officer and Director of Nuveen Senior Loan
Asset Management Inc. (since September
1999).
----------------------------------------------------------------------------------------------------------------------------
------------------------- ------------
OTHER
DIRECTOR-
SHIPS
NAME, ADDRESS AND HELD BY
DATE OF BIRTH TRUSTEE
------------------------- ------------
Trustee who is an
interested person of the
Fund
*Timothy R. Schwertfeger See
333 West Wacker Drive Principal
Chicago, IL 60606 Occupation
(3/28/49) description.
-------------------------
* "Interested Person" as defined in the Investment Company Act of 1940, as
amended, by reason of being an officer and director of the Fund's investment
adviser, NIAC.
(1) As of February 28, 2002, the only Trustee or executive officer of the Fund
who owned shares of the Fund was Mr. Leafstrand who owned 500 common shares
of the Fund.
In addition to the Fund, the Trustees are also Trustees of two funds managed by
Nuveen Senior Loan Asset Management, Inc. ("NSLAM") and 9 open-end funds and 6
closed-end funds advised by NIAC. In addition, Mr. Schwertfeger is a director of
82 closed-end funds and 30 open-end funds advised by Nuveen Advisory Corp.
("NAC").
13
THE FUND'S OFFICERS
The following table sets forth information with respect to each officer of the
Fund, other than Mr. Schwertfeger who is a Trustee and is included in the table
relating to the Board of Trustees. Officers of the Fund receive no compensation
from the Fund. The term of office of all officers will expire in July 2002. The
Board will consider the election of officers in July 2002.
--------------------------------------------------------------------------------------------------------------------------
TERM OF OFFICE
NAME, ADDRESS AND POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S)
DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS
--------------------------------------------------------------------------------------------------------------------------
Michael T. Atkinson Vice President - Term - Until July 2002 Vice President (since January 2002), formerly
333 West Wacker Drive, - Length of Service - Assistant Vice President (since March 2000),
Chicago, IL 60606 Since 2002 previously, Associate of Nuveen Investments.
(2/3/66)
Peter H. D'Arrigo Vice President and - Term - Until July 2002 Vice President of Nuveen Investments (since
333 West Wacker Drive, Treasurer - Length of Service - January 1999); prior thereto, Assistant Vice
Chicago, IL 60606 Since Inception President from January 1997 to January 1999;
(11/28/67) formerly, Associate of Nuveen Investments; Vice
President and Treasurer of Nuveen Senior Loan
Asset Management Inc. (since September 1999);
Chartered Financial Analyst.
Susan M. DeSanto Vice President - Term - Until July 2002 Vice President of the NAC and NIAC advised
333 West Wacker Drive, - Length of Service - funds since August 2001; previously, Vice
Chicago, IL 60606 Since Inception President of Van Kampen Investment Advisory
(9/8/54) Corp. (since 1998); prior thereto Assistant
Vice President of Van Kampen Investment
Advisory Corp. (since 1994).
------------------------- -------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, ADDRESS AND SERVED BY
DATE OF BIRTH OFFICER
------------------------- -------------
Michael T. Atkinson 130
333 West Wacker Drive,
Chicago, IL 60606
(2/3/66)
Peter H. D'Arrigo 130
333 West Wacker Drive,
Chicago, IL 60606
(11/28/67)
Susan M. DeSanto 130
333 West Wacker Drive,
Chicago, IL 60606
(9/8/54)
14
--------------------------------------------------------------------------------------------------------------------------
TERM OF OFFICE
NAME, ADDRESS AND POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S)
DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS
--------------------------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President and - Term - Until July 2002 Vice President (since January 2002) and
333 West Wacker Drive, Assistant Secretary - Length of Service - Assistant General Counsel (since 1998),
Chicago, IL 60606 Since Inception formerly Assistant Vice President (since May
(9/24/64) 1998) of Nuveen Investments; Vice President and
Assistant Secretary (since May 2002), formerly
Assistant Vice President (since 1998) of Nuveen
Advisory Corp. and Nuveen Institutional
Advisory Corp; prior thereto, Associate at the
law firm D'Ancona Partners LLC.
Lorna C. Ferguson Vice President - Term - Until July 2002 Vice President of Nuveen Investments (since
333 West Wacker Drive, - Length of Service - January 1998); Vice President of Nuveen
Chicago, IL 60606 Since Inception Advisory Corp. and Nuveen Institutional
(10/24/45) Advisory Corp.
William M. Fitzgerald Vice President - Term - Until July 2002 Managing Director (since 2001) and Vice
333 West Wacker Drive, - Length of Service - President (since 1995) of Nuveen Advisory Corp.
Chicago, IL 60606 Since Inception and Nuveen Institutional Advisory Corp.;
(3/2/64) Chartered Financial Analyst.
Stephen D. Foy Vice President and - Term - Until July 2002 Vice President of Nuveen Investments and (since
333 West Wacker Drive, Controller - Length of Service - May 1998) The John Nuveen Company; Certified
Chicago, IL 60606 Since Inception Public Accountant.
(5/31/54)
David J. Lamb Vice President - Term - Until July 2002 Vice President of Nuveen Investments (since
333 West Wacker Drive, - Length of Service - March 2000), prior thereto, Assistant Vice
Chicago, IL 60606 Since Inception President (since January 1999), formerly
(3/22/63) Associate of Nuveen Investments; Certified
Public Accountant.
Tina M. Lazar Vice President - Term - Until July 2002 Vice President of Nuveen Investments (since
333 West Wacker Drive, - Length of Service - 1999), prior thereto, Assistant Vice President
Chicago, IL 60606 Since 2002 (since 1993).
(8/27/61)
------------------------- -------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, ADDRESS AND SERVED BY
DATE OF BIRTH OFFICER
------------------------- -------------
Jessica R. Droeger 130
333 West Wacker Drive,
Chicago, IL 60606
(9/24/64)
Lorna C. Ferguson 130
333 West Wacker Drive,
Chicago, IL 60606
(10/24/45)
William M. Fitzgerald 130
333 West Wacker Drive,
Chicago, IL 60606
(3/2/64)
Stephen D. Foy 130
333 West Wacker Drive,
Chicago, IL 60606
(5/31/54)
David J. Lamb 130
333 West Wacker Drive,
Chicago, IL 60606
(3/22/63)
Tina M. Lazar 130
333 West Wacker Drive,
Chicago, IL 60606
(8/27/61)
15
--------------------------------------------------------------------------------------------------------------------------
TERM OF OFFICE
NAME, ADDRESS AND POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S)
DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS
--------------------------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President and - Term - Until July 2002 Vice President, Assistant Secretary and
333 West Wacker Drive, Assistant Secretary - Length of Service - Assistant General Counsel of Nuveen
Chicago, IL 60606 Since Inception Investments; Vice President and Assistant
(7/27/51) Secretary of Nuveen Advisory Corp., Nuveen
Institutional Advisory Corp. and Nuveen Senior
Loan Asset Management Inc. (since September
1999); Assistant Secretary of The John Nuveen
Company; Assistant Secretary of Nuveen Asset
Management (since January 1997).
Edward F. Neild, IV Vice President - Term - Until July 2002 Managing Director (since 2002), formerly, Vice
333 West Wacker Drive, - Length of Service - President (since September 1996) of Nuveen
Chicago, IL 60606 Since Inception Institutional Advisory Corp. and Nuveen
(7/7/65) Advisory Corp.; Chartered Financial Analyst.
Gifford R. Zimmerman Vice President and - Term-Until July 2002 Managing Director (since 2002), Assistant
333 West Wacker Drive, Secretary - Length of Service - Secretary and Associate General Counsel,
Chicago, IL 60606 Since Inception formerly, Vice President, of Nuveen
(9/9/56) Investments; Managing Director (since 2002),
General Counsel and Assistant Secretary,
formerly, Vice President, of Nuveen Advisory
Corp. and Nuveen Institutional Advisory Corp.;
Managing Director (since 2002) and Assistant
Secretary, formerly, Vice President of Nuveen
Senior Loan Asset Management Inc. (since
September 1999); Managing Director and
Assistant Secretary of Nuveen Asset Management
Inc.; Assistant Secretary of The John Nuveen
Company; Chartered Financial Analyst.
--------------------------------------------------------------------------------------------------------------------------
------------------------- -------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, ADDRESS AND SERVED BY
DATE OF BIRTH OFFICER
------------------------- -------------
Larry W. Martin 130
333 West Wacker Drive,
Chicago, IL 60606
(7/27/51)
Edward F. Neild, IV 130
333 West Wacker Drive,
Chicago, IL 60606
(7/7/65)
Gifford R. Zimmerman 130
333 West Wacker Drive,
Chicago, IL 60606
(9/9/56)
-------------------------
16
EXHIBIT B
FORM OF NEW SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT MADE THIS day of , 2002 by and between Nuveen
Institutional Advisory Corp., a Delaware corporation and a registered investment
adviser ("Manager"), and Security Capital Research & Management Incorporated, a
Delaware corporation and a registered investment adviser ("Sub-Adviser").
WHEREAS, Manager serves as the investment manager for the Nuveen Real Estate
Income Fund (the "Fund"), a closed-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act") pursuant
to an Investment Management Agreement between Manager and the Fund (as such
agreement may be modified from time to time, the "Management Agreement"); and
WHEREAS, Manager desires to retain Sub-Adviser as its agent to furnish
investment advisory services for the Fund, upon the terms and conditions
hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Appointment. Manager hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Fund for the period and on the terms set
forth in this Agreement. Sub-Adviser accepts such appointments and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Services to be Performed. Subject always to the supervision of Fund's Board
of Trustees and the Manager, Sub-Adviser will furnish an investment program in
respect of, make investment decisions for, and place all orders for the purchase
and sale of securities for the Fund, all on behalf of the Fund. In the
performance of its duties, Sub-Adviser will satisfy its fiduciary duties to the
Fund, will monitor the Fund's investments, and will comply with the provisions
of Fund's Declaration of Trust and By-laws, as amended from time to time, and
the stated investment objectives, policies and restrictions of the Fund. Manager
will provide Sub-Adviser with current copies of the Fund's Declaration of Trust,
By-laws, prospectus and any amendments thereto, and any objectives, policies or
limitations not appearing therein as they may be relevant to Sub-Adviser's
performance under this Agreement. Sub-Adviser and Manager will each make its
officers and employees available to the other from time to time at reasonable
times to review investment policies of the Fund and to consult with each other
regarding the investment affairs of the Fund. Sub-Adviser will report to the
Board of Trustees and to Manager with respect to the implementation of such
program.
Sub-Adviser is authorized to select the brokers or dealers that will execute the
purchases and sales of portfolio securities for the Fund, and is directed to use
its best efforts to obtain best execution, which includes most favorable net
results and execution of the Fund's orders, taking into account all appropriate
factors, including price, dealer spread or commission, size and difficulty of
the transaction and research or other services provided. It is understood that
the Sub-Adviser will not be deemed to have acted unlawfully, or to have breached
a fiduciary duty to the Fund, or be in breach of any obligation owing to the
Fund under this Agreement,
17
or otherwise, solely by reason of its having caused the Fund to pay a member of
a securities exchange, a broker or a dealer a commission for effecting a
securities transaction for the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have charged if the
Sub-Adviser determined in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Sub-Adviser's
overall responsibilities with respect to its accounts, including the Fund, as to
which it exercises investment discretion. In addition, if in the judgment of the
Sub-Adviser, the Fund would be benefited by supplemental services, the
Sub-Adviser is authorized to pay spreads or commissions to brokers or dealers
furnishing such services in excess of spreads or commissions which another
broker or dealer may charge for the same transaction, provided that the
Sub-Adviser determined in good faith that the commission or spread paid was
reasonable in relation to the services provided. The Sub-Adviser will properly
communicate to the officers and trustees of the Fund such information relating
to transactions for the Fund as they may reasonably request. In no instance will
portfolio securities be purchased from or sold to the Manager, Sub-Adviser or
any affiliated person of either the Fund, Manager, or Sub-Adviser, except as may
be permitted under the 1940 Act;
Sub-Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has investment
responsibilities;
(b) will conform to all applicable Rules and Regulations of the Securities and
Exchange Commission in all material respects and in addition will conduct
its activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to its investment
advisory activities;
(c) will report regularly to Manager and to the Board of Trustees of the Fund
and will make appropriate persons available for the purpose of reviewing
with representatives of Manager and the Board of Trustees on a regular basis
at reasonable times the management of the Fund, including, without
limitation, review of the general investment strategies of the Fund, the
performance of the Fund in relation to standard industry indices and general
conditions affecting the marketplace and will provide various other reports
from time to time as reasonably requested by Manager; and
(d) will prepare such books and records with respect to the Fund's securities
transactions as requested by the Manager and will furnish Manager and Fund's
Board of Trustees such periodic and special reports as the Board or Manager
may reasonably request.
3. Expenses. During the term of this Agreement, Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commission, if any)
purchased for the Fund.
4. Compensation. For the services provided and the expenses assumed pursuant to
this Agreement, Manager will pay the Sub-Adviser, and the Sub-Adviser agrees to
accept as full compensation therefor, a portfolio management fee equal to the
portion specified below of the investment management fee payable by the Fund to
the Manager based on average daily net assets which includes net assets
attributable to Fund Preferred Shares and the principal amount of borrowings
pursuant to the Management Agreement, as the net amount of such fee is reduced
by the obligation of Manager to reimburse certain fees and expenses to the
18
Fund pursuant to an Expense Reimbursement Agreement dated October 3, 2001 by and
between the Fund and the Manager, as such agreement may be modified from time to
time:
-------------------------------------------------------------
PERCENTAGE OF NET
DAILY NET ASSETS MANAGEMENT FEE
-------------------------------------------------------------
Up to $125 million 50.0%
$125 million to $150 million 47.5%
$150 million to $175 million 45.0%
$175 million to $200 million 42.5%
$200 million and over 40.0%
-------------------------------------------------------------
The portfolio management fee shall accrue on each calendar day, and shall be
payable monthly on the first business day of the next succeeding calendar month.
The daily fee accrual shall be computed by multiplying the fraction of one
divided by the number of days in the calendar year by the applicable annual rate
of fee, and multiplying this product by the net assets of the Fund, determined
in the manner established by the Fund's Board of Trustees, as of the close of
business on the last preceding business day on which the Fund's net asset value
was determined.
For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement is in effect during the month and year, respectively.
5. Services to Others. Manager understands, and has advised Fund's Board of
Trustees, that Sub-Adviser now acts, or may in the future act, as an investment
adviser to fiduciary and other managed accounts, and as investment adviser or
sub-investment adviser to one other investment company that is not a series of
the Fund, provided that whenever the Fund and one or more other investment
advisory clients of Sub-Adviser have available funds for investment, investments
suitable and appropriate for each will be allocated in a manner believed by
Sub-Adviser to be equitable to each. Manager recognizes, and has advised Fund's
Board of Trustees, that in some cases this procedure may adversely affect the
size of the position that the Fund may obtain in a particular security. It is
further agreed that, on occasions when the Sub-Adviser deems the purchase or
sale of a security to be in the best interests of the Fund as well as other
accounts, it may, to the extent permitted by applicable law, but will not be
obligated to, aggregate the securities to be so sold or purchased for the Fund
with those to be sold or purchased for other accounts in order to obtain
favorable execution and lower brokerage commissions. In addition, Manager
understands, and has advised Fund's Board of Trustees, that the persons employed
by Sub-Adviser to assist in Sub-Adviser's duties under this Agreement will not
devote their full such efforts and service to the Fund. It is also agreed that
the Sub-Adviser may use any supplemental research obtained for the benefit of
the Fund in providing investment advice to its other investment advisory
accounts or for managing its own accounts.
6. Limitation of Liability. Manager will not take any action against
Sub-Adviser to hold Sub-Adviser liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the performance of
Sub-Adviser's duties under this Agreement, except for a loss resulting from
Sub-Adviser's willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
19
7. Term; Termination; Amendment. This Agreement shall become effective with
respect to the Fund upon approval by a vote of a majority of the outstanding
voting securities of the Fund in accordance with the requirements of the 1940
Act, and shall remain in full force until August 1, 2003 unless sooner
terminated as hereinafter provided. This Agreement shall continue in force from
year to year thereafter with respect to the Fund, but only as long as such
continuance is specifically approved for the Fund at least annually in the
manner required by the 1940 Act and the rules and regulations thereunder;
provided, however, that if the continuation of this Agreement is not approved
for the Fund, the Sub-Adviser may continue to serve in such capacity for the
Fund in the manner and to the extent permitted by the 1940 Act and the rules and
regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment and
may be terminated at any time without the payment of any penalty by the Manager
on sixty (60) days' written notice to the Sub-Adviser. This Agreement may be
terminated by the Sub-Adviser as of July 31 of any year after 2003 without
payment of any penalty upon sixty (60) days' prior written notice to the
Manager. This Agreement may also be terminated by the Fund with respect to the
Fund by action of the Board of Trustees or by a vote of a majority of the
outstanding voting securities of such Fund on sixty (60) days' written notice to
the Sub-Adviser by the Fund.
This Agreement may be terminated with respect to the Fund at any time without
the payment of any penalty by the Manager, the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund in the event that it
shall have been established by a court of competent jurisdiction that the
Sub-Adviser or any officer or director of the Sub-Adviser has taken any action
which results in a breach of the covenants of the Sub-Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of the Sub-Adviser to
receive payments on any unpaid balance of the compensation described in Section
4 earned prior to such termination. This Agreement shall automatically terminate
in the event the Investment Management Agreement between the Manager and the
Fund is terminated, assigned or not renewed.
20
8. Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party
If to the Manager: If to the Sub-Adviser:
Nuveen Institutional Advisory Security Capital Group Inc.
Corp. 11 South LaSalle Street
333 West Wacker Drive Chicago, Illinois 60603
Chicago, Illinois 60606 Attention: Anthony R. Manno,
Attention: John P. Amboian Jr.
With a copy to: With a copy to:
The John Nuveen Company Security Capital Group Inc.
333 West Wacker Drive 11 South LaSalle Street
Chicago, Illinois 60606 Chicago, Illinois 60603
Attention: General Counsel Attention: David T. Novick
or such address as such party may designate for the receipt of such notice.
9. Limitations on Liability. All parties hereto are expressly put on notice of
the Fund's Agreement and Declaration of Trust and all amendments thereto, a copy
of which is on file with the Secretary of the Commonwealth of Massachusetts, and
the limitation of shareholder and trustee liability contained therein. The
obligations of the Fund entered in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually but only in such
capacities and are not binding upon any of the Trustees, officers, or
shareholders of the Fund individually but are binding upon only the assets and
property of the Fund, and persons dealing with the Fund must look solely to the
assets of the Fund and those assets belonging to the subject Fund, for the
enforcement of any claims.
10. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of this
Agreement is held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement will not be affected thereby. This
Agreement will be binding upon and shall inure to the benefit of the parties
hereto and their respective successors.
11. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 10 hereof which shall be
construed in accordance with the laws of Massachusetts) the laws of the State of
Illinois.
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have caused this Agreement
to be executed as of the day and year first above written.
NUVEEN INSTITUTIONAL ADVISORY SECURITY CAPITAL RESEARCH &
CORP., a Delaware corporation MANAGEMENT INCORPORATED, a
Delaware corporation
By: By:
--------------------------------- ---------------------------------
Title: Vice President Title:
---------------------------------
21
[NUVEEN INVESTMENTS LOGO]
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com JRS702
[NUVEEN LOGO]
NUVEEN INVESTMENTS
333 WEST WACKER DRIVE
CHICAGO, IL 60606-1286
(800) 257-8787
SPECIAL MEETING OF SHAREHOLDERS
COMMON SHARES
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR THE SPECIAL MEETING
OF SHAREHOLDERS, JULY 24, 2002
The special meeting of shareholders will be held Wednesday, July 24,
2002, at 10:30 a.m. Central Time, in the 31st Floor Conference Room of Nuveen
Investments, 333 West Wacker Drive, Chicago, Illinois. At this meeting, you will
be asked to vote on the proposal described in the attached proxy statement. The
undersigned hereby appoints Timothy R. Schwertfeger, Jessica R. Droeger and
Gifford R. Zimmerman, and each of them, with full power of substitution, proxies
for the undersigned to represent and vote the shares of the undersigned at the
special meeting of shareholders to be held on July 24, 2002, or any adjournment
or adjournments thereof.
You are encouraged to specify your choice by marking the appropriate
box. If you do not mark any box, your proxy will be voted "FOR" the proposal.
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope if you are not voting by telephone or over the Internet. To vote by
telephone, please call (800) 690-6903. To vote over the Internet, go to
www.proxyvote.com. In either case you will be asked to enter the control number
on the right hand side of this proxy card.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
[CONTROL NUMBER]
--------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
--------------------------------------------------------------------------------
NUVEEN REAL ESTATE INCOME FUND
VOTE ON PROPOSAL
1. FOR APPROVAL OF NEW SUB-ADVISORY FOR AGAINST ABSTAIN
AGREEMENT [ ] [ ] [ ]
WHETHER OR NOT YOU PLAN TO JOIN US AT THE MEETING, PLEASE COMPLETE,
DATE AND SIGN YOUR PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE SO THAT
YOUR VOTE WILL BE
COUNTED. AS AN ALTERNATIVE, PLEASE CONSIDER VOTING BY TELEPHONE ((800) 690-6903)
OR OVER THE INTERNET (www.proxyvote.com).
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the special meeting.
The shares to which this proxy relates will be voted as specified. If
no specification is made, such shares will be voted "FOR" the proposal set forth
on this proxy.
Please be sure to sign and date this proxy if you are not voting by
telephone or over the Internet.
NOTE: Please sign your name exactly as it appears on this proxy. If shares
are held jointly, each holder must sign the proxy. If you are signing
on behalf of an estate, trust or corporation, please state your title
or capacity.
------------------------------------------ -----------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature [JOINT OWNERS] Date
-2-
[NUVEEN LOGO]
NUVEEN INVESTMENTS
333 WEST WACKER DRIVE
CHICAGO, IL 60606-1286
(800) 257-8787
SPECIAL MEETING OF SHAREHOLDERS
TAXABLE AUCTIONED PREFERRED SHARES, SERIES M, T, W AND F
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR THE SPECIAL MEETING
OF SHAREHOLDERS, JULY 24, 2002
The special meeting of shareholders will be held Wednesday, July 24,
2002, at 10:30 a.m. Central Time, in the 31st Floor Conference Room of Nuveen
Investments, 333 West Wacker Drive, Chicago, Illinois. At this meeting, you will
be asked to vote on the proposal described in the attached proxy statement. The
undersigned hereby appoints Timothy R. Schwertfeger, Jessica R. Droeger and
Gifford R. Zimmerman, and each of them, with full power of substitution, proxies
for the undersigned to represent and vote the shares of the undersigned at the
special meeting of shareholders to be held on July 24, 2002, or any adjournment
or adjournments thereof.
You are encouraged to specify your choice by marking the appropriate
box. If you do not mark any box, your proxy will be voted "FOR" the proposal.
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope if you are not voting by telephone or over the Internet. To vote by
telephone, please call (800) 690-6903. To vote over the Internet, go to
www.proxyvote.com. In either case you will be asked to enter the control number
on the right hand side of this proxy card.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
[CONTROL NUMBER]
--------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
--------------------------------------------------------------------------------
NUVEEN REAL ESTATE INCOME FUND
VOTE ON PROPOSAL
1. FOR APPROVAL OF NEW SUB-ADVISORY FOR AGAINST ABSTAIN
AGREEMENT [ ] [ ] [ ]
WHETHER OR NOT YOU PLAN TO JOIN US AT THE MEETING, PLEASE COMPLETE,
DATE AND SIGN YOUR PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE SO THAT
YOUR VOTE WILL BE
COUNTED. AS AN ALTERNATIVE, PLEASE CONSIDER VOTING BY TELEPHONE ((800) 690-6903)
OR OVER THE INTERNET (www.proxyvote.com).
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the special meeting.
The shares to which this proxy relates will be voted as specified. If
no specification is made, such shares will be voted "FOR" the proposal set forth
on this proxy.
Please be sure to sign and date this proxy if you are not voting by
telephone or over the Internet.
NOTE: Please sign your name exactly as it appears on this proxy. If shares
are held jointly, each holder must sign the proxy. If you are signing
on behalf of an estate, trust or corporation, please state your title
or capacity.
------------------------------------------ -----------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature [JOINT OWNERS] Date
-2-