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 811-09571
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Nuveen Senior 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: July 31, 2003
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Date of reporting period: July 31, 2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Nuveen
Closed-End
Exchange-Traded
Funds
ANNUAL REPORT July 31, 2003
NUVEEN SENIOR
INCOME FUND
NSL
PHOTO OF: BOY AND GIRL TALKING.
PHOTO OF: MAN AND GIRL WORKING ON COMPUTER.
HIGH CURRENT INCOME
FROM A PORTFOLIO OF
SENIOR CORPORATE LOANS
Logo: NUVEEN Investments
FASTER INFORMATION
RECEIVE YOUR
NUVEEN FUND REPORT
ELECTRONICALLY
By registering for electronic delivery, you will receive an e-mail as soon as
your Nuveen Fund information is available. Click on the link and you will be
taken directly to the report. Your Fund report can be viewed and saved on your
computer. Your report will arrive faster via e-mail than by traditional mail.
Registering is easy and only takes a few minutes (see instructions at right).
--------------------------------------------------------------------------------
SOME COMMON CONCERNS:
WILL MY E-MAIL ADDRESS BE DISTRIBUTED TO OTHER COMPANIES?
No, your e-mail address is strictly confidential and will not be used for
anything other than notification of shareholder information.
WHAT IF I CHANGE MY MIND AND WANT TO RECEIVE INVESTOR MATERIALS THROUGH REGULAR
MAIL DELIVERY AGAIN?
If you decide you do not like receiving your reports electronically, it's a
simple process to go back to regular mail delivery.
IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME FROM YOUR FINANCIAL ADVISOR OR BROKERAGE ACCOUNT,
FOLLOW THE STEPS OUTLINED BELOW:
1 Go to WWW.INVESTORDELIVERY.COM
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.
yourID@providerID.com), and a personal, 4-digit PIN number of your choice.
(Pick a number that's easy to remember.)
4 Click Submit. Confirm the information you just entered is correct, then
click Submit again.
5 You should get a confirmation e-mail within 24 hours. If you do not, go
back through these steps to make sure all the information is correct.
6 Use this same process if you need to change your registration information
or cancel internet viewing.
IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME DIRECTLY TO YOU FROM NUVEEN,
FOLLOW THE STEPS OUTLINED BELOW:
1 Go to WWW.NUVEEN.COM
2 Select ACCESS YOUR ACCOUNT. Select the E-REPORT ENROLLMENT section. Click
on Enrollment Today.
3 You'll be taken to a screen that asks for your Social Security number and
e-mail address. Fill in this information, then click Enroll.
4 You should get a confirmation e-mail within 24 hours. If you do not, go
back through these steps to make sure all the information is correct.
5 Use this same process if you need to change your registration information
or cancel internet viewing.
Logo: NUVEEN Investments
Photo of: TIMOTHY R. SCHWERTFEGER
CHAIRMAN OF THE BOARD
SIDEBAR TEXT: "WE REMAIN CONVINCED THAT MAINTAINING A WELL-BALANCED PORTFOLIO
....... IS AN IMPORTANT WAY TO HELP YOU REDUCE OVERALL INVESTMENT RISK."
Dear SHAREHOLDER
I am pleased to report that over the twelve-months ended July 31, 2003, your
Nuveen Senior Income Fund continued to provide you with attractive monthly
income and total return, and the opportunity for enhanced diversification within
your investment portfolio. For more specific information about the performance
of the Fund, please see the Portfolio Managers' Comments and Performance
Overview sections of this report.
The strong recent performance of this Fund may lead you to consider increasing
your investment. While we would welcome such a vote of confidence, I urge you to
first discuss your plans with your financial advisor. We remain convinced that
maintaining a well-balanced portfolio, structured and monitored with the help of
an investment professional, is an important way to help you reduce overall
investment risk and position yourself to achieve your long-term financial goals.
In this context, the senior loans in your Nuveen Fund can be important building
blocks 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.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
September 15, 2003
1
NUVEEN SENIOR INCOME FUND (NSL)
Managers' PERSPECTIVE
The Nuveen Senior Income Fund is managed by Gunther Stein and Lenny Mason of
Symphony Asset Management, an affiliate of Nuveen Investments. This team has
more than 25 years of combined investment management experience, much of it in
evaluating and purchasing senior corporate loans and other high yield debt. Here
Gunther and Lenny review the prevailing economic conditions and performance of
NSL for the period ended July 31, 2003.
WHAT WAS THE GENERAL MARKET ENVIRONMENT FOR SENIOR CORPORATE DEBT OVER THE
TWELVE MONTHS ENDED JULY 31, 2003?
The general market environment for senior corporate debt over the twelve months
ended July 31, 2003, was characterized by periods of uncertainty and uneasiness
as well as by periods of robust demand and strong market conditions. During the
second half of 2002, the loan market felt the effects of generally deteriorating
capital markets sentiment and decreased liquidity. From July to November 2002,
the CSFB Leveraged Loan Index, a benchmark consisting of approximately $150
billion of tradable term loans with at least one year to maturity and rated BBB
or lower, posted a -2.93% return. In December, however, fundamentals began to
improve. A growing belief in an economic recovery and an increased focus on
yield led to greater demand for both high yield investments and senior loans,
which caused the high yield and leveraged loan markets to begin to improve
dramatically. The period from January 1, 2003, through July 31, 2003, was a good
one for the loan market. Over this period, the CSFB Leveraged Loan Index posted
a 7.25% return.
IN THIS ENVIRONMENT, HOW DID NSL PERFORM?
For the year ended July 31, 2003, the Nuveen Senior Income Fund produced a total
return on net asset value (NAV) of 14.25%. This compares with the 8.92% total
return posted by the CSFB Leveraged Loan Index over the same period.
The Fund's overall performance benefited from the solid performance of several
stressed/distressed holdings. These included loans issued by Conseco, Centennial
Cellular, RCN, AES and Century Cable (Adelphia). However, these results were
offset to a degree by the weak performance of some of the Fund's holdings within
the retail sector, including Micro Warehouse and Kmart.
2
WHAT STRATEGIES DID YOU EMPLOY IN MANAGING THE FUND?
Our team continued to pursue a value- oriented management strategy. We focused
on what we judged to be high-quality loans with tangible assets that would help
support the value of the loans. We employed an approach that began with a
fundamental analysis to evaluate cash flow and asset quality, and we looked to
leverage Symphony's extensive, proprietary quanti tative evaluation and
signaling tools. Over the course of the last six months of the reporting period,
as the new-issue market became more robust, we focused on purchasing
higher-quality new issue loans with strong asset coverage, solid business
fundamentals and above average LIBOR spreads. We continuously evaluated the
entire portfolio in an attempt to eliminate positions which, in our view, had
the potential for credit problems, limited upside potential or significant
downside risk.
WHAT IS YOUR STRATEGY GOING FORWARD?
Looking forward, we are optimistic about the prospects for continued improvement
in the underlying fundamentals of the senior loan asset class. If the economy
continues to recover, leveraged companies may enjoy improvements in their
earnings power, which may cause default risks to subside. Additionally, if short
term interest rates rise as the economy improves, the senior loan asset class
may benefit since leveraged loans are floating rate instruments.
In this dynamic environment, we will continue to focus on investing in higher
quality loans, seeking to purchase credits that may benefit from an economic
recovery and looking to sell stressed holdings that have appreciated
meaningfully and may have limited additional upside potential. Currently, we
generally favor the gaming, consumer products and industrial segments, as asset
levels remain strong and profitability is expected to continue to improve.
3
NUVEEN SENIOR INCOME FUND
Performance
OVERVIEW As of July 31, 2003
NSL
PORTFOLIO STATISTICS
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Share Price $8.43
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Common Share Net Asset Value $7.84
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Net Assets Applicable to
Common Shares ($000) $233,220
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% OF TOTAL
TOP 5 ISSUERS(1) INVESTMENTS
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MGM Grand 4.1%
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Park Place Entertainment 2.7%
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Conseco, Inc. 2.7%
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Fitness Holdings Worldwide, Inc. 2.3%
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Charter Communications Operating, LLC 2.3%
--------------------------------------------------
% OF TOTAL
TOP 5 INDUSTRIES INVESTMENTS
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Hotels, Motels, Inns & Gaming 14.4%
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Printing & Publishing 8.0%
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Beverage, Food & Tobacco 7.4%
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Automotive 5.2%
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Buildings & Real Estate 4.7%
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AVERAGE ANNUAL TOTAL RETURN
INCEPTION DATE 10/29/99
--------------------------------------------------
Market NAV
--------------------------------------------------
1-Year 25.93% 14.25%
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Since Inception 4.56% 4.17%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY DIVIDENDS PER SHARE
Aug 0.049
Sep 0.047
Oct 0.047
Nov 0.047
Dec 0.043
Jan 0.043
Feb 0.043
Mar 0.043
Apr 0.043
May 0.043
Jun 0.043
Jul 0.043
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
8/1/02 7.15
6.94
6.73
6.85
6.9
6.86
6.79
6.84
6.78
6.84
6.65
6.59
6.4
6.43
6.39
6.38
7.04
7.21
7.1
7
7.06
7.1
7.2
7.44
7.7
7.51
7.51
7.58
7.58
7.62
7.8
7.83
7.75
7.78
8.04
8
8.08
8.03
7.96
8.11
8.25
8.36
8.48
8.25
8.1
8.38
8.42
8.32
8.41
8.69
7/31/03 8.43
(1) Top 5 Issuers excluding short-term investments.
4
Report of
INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
NUVEEN SENIOR INCOME FUND:
We have audited the accompanying statement of assets and liabilities of Nuveen
Senior Income Fund (the "Fund"), including the portfolio of investments, as of
July 31, 2003, and the related statements of operations, and cash flows for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
three years in the period then ended and for the period October 29, 1999
(commencement of investment operations) to July 31, 2000. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
investments owned as of July 31, 2003, by correspondence with the custodian and
selling or agent banks or by other appropriate auditing procedures where replies
from selling or agent banks were not received. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Nuveen Senior Income Fund as of July 31, 2003, the results of its operations and
its cash flows for the year then ended, the changes in net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended and for the period from October 29,
1999 (commencement of investment operations) to July 31, 2000, in conformity
with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
Chicago, Illinois
September 18, 2003
5
Nuveen Senior Income Fund (NSL)
Portfolio of
INVESTMENTS July 31, 2003
RATINGS*
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PRINCIPAL STATED MARKET
AMOUNT (000) DESCRIPTION(1) MOODY'S S&P MATURITY** VALUE
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VARIABLE RATE SENIOR LOAN INTERESTS(2) AND INTEREST
BEARING SECURITIES - 146.0% (89.0% OF TOTAL ASSETS)
AEROSPACE/DEFENSE - 4.6% (2.8% OF TOTAL ASSETS)
$ 2,533 DeCrane Aircraft Holdings, Inc., Term Loan D B2 B 12/17/06 $ 2,267,235
1,000 Transdigm Inc., Term Loan B B1 B+ 07/22/10 1,010,938
4,194 United Defense Industries, Inc., Term Loan B Ba3 BB 08/13/09 4,209,041
224 Vought Aircraft Industries, Inc., Term Loan B Ba3 B+ 07/26/07 224,171
156 Vought Aircraft Industries, Inc., Term Loan C Ba3 B+ 07/26/08 156,522
2,933 Vought Aircraft Industries, Inc., Term Loan X Ba3 B+ 12/31/06 2,925,886
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10,793,793
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AUTOMOTIVE - 8.4% (5.0% OF TOTAL ASSETS)
1,224 Federal-Mogul Corporation, Term Loan A (b) NR NR 02/24/04 942,857
5,551 Federal-Mogul Corporation, Term Loan B (b) NR NR 02/24/05 4,246,304
2,881 Meridian Automotive Systems, Term Loan A NR NR 06/30/06 2,672,079
5,704 Metaldyne Company/Metalync Company, LLC, Term Loan D B2 BB- 12/31/09 5,451,994
9,318 MetalForming Technologies, Inc., Term Loan B (a) NR NR 06/30/06 3,727,315
1,033 Tenneco Automotive, Revolver Loan B1 B 11/04/05 811,968
674 Tenneco Automotive, Term Loan A B1 B 11/04/05 674,633
1,000 United Components, Inc., Term Loan B B1 BB- 06/30/10 1,008,958
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19,536,108
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BEVERAGE, FOOD & TOBACCO - 11.9% (7.2% OF TOTAL ASSETS)
1,985 Birds Eye Foods, Inc., Term Loan B Ba3 B+ 08/20/08 1,991,617
3,000 Constellation Brands, Inc., Term Loan B Ba1 BB 11/30/08 3,030,750
320 Cott Corporation, Purchase Money Term Loan NR BB+ 12/31/06 321,400
170 Cott Corporation, Working Capital Term Loan NR NR 12/31/06 170,638
2,468 Dean Foods Company, Term Loan B Ba1 BB+ 07/15/08 2,480,506
4,975 Del Monte Corporation, Term Loan B Ba3 BB- 12/20/10 5,017,288
946 Dr. Pepper/Seven UP Bottling Group, Inc., Term Loan A NR NR 10/07/06 940,839
7,112 Dr. Pepper/Seven UP Bottling Group, Inc., Term Loan B NR NR 10/07/07 7,093,283
1,838 Eagle Family Foods, Inc., Term Loan B2 B 12/31/05 1,723,403
2,985 Jack in the Box Inc., Term Loan B Ba2 BB+ 07/22/07 3,018,581
1,000 Merisant Company, Term Loan B Ba3 BB- 07/11/10 1,007,500
1,000 Nellson Nutraceutical, Inc., Term Loan NR NR 10/04/09 1,008,750
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27,804,555
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BROADCASTING/CABLE - 6.5% (3.9% OF TOTAL ASSETS)
4,000 Century Cable Holdings, LLC (Adelphia), Discretionary Term Loan (b) NR NR 12/31/09 3,362,000
1,640 Century Cable Holdings, LLC (Adelphia), Revolver (b) NR NR 10/25/10 1,366,667
2,000 Century Cable Holdings, LLC (Adelphia), Revolver (b) NR NR 10/25/10 1,666,667
5,292 Charter Communications Operating, LLC, Incremental Term Loan B2 B 09/18/08 4,984,089
2,000 Charter Communications Operating, LLC, Term Loan A B2 B 09/18/07 1,851,250
1,990 Charter Communications Operating, LLC, Term Loan B B2 B 03/18/08 1,879,373
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15,110,046
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BROADCASTING/RADIO - 2.2% (1.4% OF TOTAL ASSETS)
3,451 Citadel Broadcasting Company, Term Loan B NR NR 06/26/09 3,464,633
1,737 Emmis Communications Corporation, Term Loan B Ba2 B+ 08/31/09 1,748,332
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5,212,965
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6
RATINGS*
---------------
PRINCIPAL STATED MARKET
AMOUNT (000) DESCRIPTION(1) MOODY'S S&P MATURITY** VALUE
------------------------------------------------------------------------------------------------------------------------------------
BROADCASTING/TELEVISION - 0.9% (0.5% OF TOTAL ASSETS)
$ 2,000 Gray Television, Term Loan C Ba3 B+ 12/31/10 $ 2,017,500
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BUILDINGS & REAL ESTATE - 5.3% (3.3% OF TOTAL ASSETS)
3,000 D.R. Horton, Inc., Bond, 10.500% Ba1 BB 04/01/05 3,285,000
3,000 D.R. Horton, Inc., Bond, 7.500% Ba1 BB 12/01/07 3,180,000
1,987 Lennar Corporation, Term Loan C Baa3 NR 12/15/08 1,989,398
2,000 Standard Pacific Corporation, Bond, 8.500% Ba2 BB 06/15/07 2,060,000
1,965 Williams Scotsman, Inc., Term Loan B1 BB- 12/31/06 1,962,006
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12,476,404
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CARGO TRANSPORTATION - 2.6% (1.6% OF TOTAL ASSETS)
6,068 North American Van Lines, Inc., Term Loan B B1 B+ 11/18/07 5,982,494
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CHEMICALS, PLASTICS & RUBBER - 4.3% (2.6% OF TOTAL ASSETS)
3,570 Buckeye Technologies, Inc., Revolver Loan NR NR 03/31/05 3,419,767
974 CP Kelco ApS, Inc., Term Loan B B3 B+ 03/31/08 973,996
323 CP Kelco ApS, Inc., Term Loan C B3 B+ 09/30/08 322,983
2,492 Ethyl Corporation, Term Loan Ba3 B+ 04/30/09 2,507,127
1,755 Polymer Group, Inc., Term Loan NR NR 12/31/06 1,705,211
1,000 Rockwood Specialties Group, Inc., Term Loan B B1 B+ 07/23/10 1,012,500
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9,941,584
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CONTAINERS, PACKAGING & GLASS - 7.0% (4.3% OF TOTAL ASSETS)
2,000 Crown Cork & Seal, Term Loan B-1 Ba3 NR 02/26/08 2,009,375
7,000 Graham Packaging Company, Term Loan B B2 B 02/14/10 7,001,750
3,772 Smurfit-Stone Container Corporation, Term Loan B NR NR 06/30/09 3,791,355
1,044 United States Can Company, Term Loan A B2 B 01/04/06 1,033,128
2,462 United States Can Company, Term Loan B B2 B 10/04/08 2,446,264
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16,281,872
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DIVERSIFIED MANUFACTURING - 2.9% (1.8% OF TOTAL ASSETS)
1,011 GenTek, Inc., Revolver (b) NR NR 04/30/05 675,100
335 GenTek, Inc., Term Loan A (b) NR NR 04/30/05 223,869
543 GenTek, Inc., Term Loan B (b) NR NR 04/30/07 354,819
2,932 GenTek, Inc., Term Loan C (b) NR NR 10/31/07 1,932,514
5,341 Western Industries Holding Inc., Term Loan B NR NR 06/23/06 3,605,172
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6,791,474
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DURABLE CONSUMER PRODUCTS - 1.3% (0.8% OF TOTAL ASSETS)
3,000 Jostens, Inc., Term Loan B Ba3 BB- 07/29/10 3,028,125
------------------------------------------------------------------------------------------------------------------------------------
ECOLOGICAL - 1.1% (0.7% OF TOTAL ASSETS)
2,571 Allied Waste North America, Inc., Term Loan B Ba3 BB 01/15/10 2,596,401
------------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS & ELECTRONIC SERVICES - 1.7% (1.1% OF TOTAL ASSETS)
3,980 Sanmina SCI Corporation, Term Loan B Ba1 BB 12/23/07 4,023,947
------------------------------------------------------------------------------------------------------------------------------------
FARMING & AGRICULTURAL - 1.4% (0.8% OF TOTAL ASSETS)
3,387 Shemin Holdings Corporation, Term Loan B NR NR 01/28/07 3,150,287
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 4.9% (3.0% OF TOTAL ASSETS)
1,918 Alaris Medical Systems, Inc., Term Loan B1 BB 06/30/09 1,938,750
1,000 CB Richard Ellis Services, Inc., Term Loan B B1 B+ 07/20/08 1,007,500
1,000 Community Health Systems, Inc., Incremental Term Loan NR NR 01/16/11 1,003,750
4,466 Community Health Systems, Inc., Term Loan B NR NR 07/16/09 4,482,998
998 Fisher Scientific International Inc., Term Loan B Ba3 BB+ 03/31/10 1,003,485
1,962 Triad Hospitals, Inc., Term Loan B Ba3 BB 09/30/08 1,976,644
------------------------------------------------------------------------------------------------------------------------------------
11,413,127
------------------------------------------------------------------------------------------------------------------------------------
7
Nuveen Senior Income Fund (NSL) (continued)
Portfolio of INVESTMENTS July 31, 2003
RATINGS*
---------------
PRINCIPAL STATED MARKET
AMOUNT (000) DESCRIPTION(1) MOODY'S S&P MATURITY** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOTELS, MOTELS, INNS & GAMING - 23.0% (14.1% OF TOTAL ASSETS)
$ 3,950 Alliance Gaming Corporation, LLC, Term Loan B1 BB- 12/31/06 $ 3,962,344
2,414 Ameristar Casino, Inc., Term Loan B Ba3 BB- 12/20/06 2,428,470
2,382 Argosy Gaming Company, Term Loan B Ba2 BB 07/31/06 2,395,170
3,745 Mandalay Resort Group, Bond, 6.700% (Putable 11/15/03) Ba2 BB+ 11/15/96 3,796,494
3,670 MGM Grand, Bond, 7.250% Ba1 BBB- 10/15/06 3,926,900
10,798 MGM Grand, Bond, 6.950% Ba1 BBB- 02/01/05 11,310,905
1,443 Park Place Entertainment, Bond, 7.875% Ba2 BB+ 12/15/05 1,529,580
6,040 Park Place Entertainment, Bond, 8.500% Ba1 BBB- 11/15/06 6,583,600
2,190 Park Place Entertainment, Revolver NR BBB- 12/31/03 2,116,001
5,985 Penn National Gaming, Term Loan B B1 B+ 09/01/07 6,008,940
3,393 Pinnacle Entertainment, Bond, 9.500% Caa1 CCC+ 08/01/07 3,376,035
6,184 Wyndham International, Inc., Increasing Rate Loan NR NR 06/30/04 5,344,028
1,237 Wyndham International, Inc., Term Loan B NR NR 06/30/06 1,045,706
------------------------------------------------------------------------------------------------------------------------------------
53,824,173
------------------------------------------------------------------------------------------------------------------------------------
INSURANCE 6.2% (3.8% OF TOTAL ASSETS)
9,957 Conseco, Inc., Term Loan (a)(b) NR NR 12/31/03 10,056,104
4,725 GAB Robbins North America, Inc., Term Loan B NR NR 12/01/05 4,488,750
------------------------------------------------------------------------------------------------------------------------------------
14,544,854
------------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 3.8% (2.3% OF TOTAL ASSETS)
3,042 Fitness Holdings Worldwide, Inc., Term Loan B NR B 11/02/06 3,021,309
5,785 Fitness Holdings Worldwide, Inc., Term Loan C NR B 11/02/07 5,744,741
------------------------------------------------------------------------------------------------------------------------------------
8,766,050
------------------------------------------------------------------------------------------------------------------------------------
MACHINERY - 0.6% (0.4% OF TOTAL ASSETS)
1,458 Rexnord, Term Loan B1 B+ 11/25/09 1,472,309
------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 1.3% (0.8% OF TOTAL ASSETS)
1,000 Regal Cinemas Corporation, Term Loan D Ba2 BB- 06/30/09 1,011,250
2,000 Vivendi Universal Entertainment, Term Loan B Ba2 BB+ 06/30/08 2,012,813
------------------------------------------------------------------------------------------------------------------------------------
3,024,063
------------------------------------------------------------------------------------------------------------------------------------
MINING, STEEL, IRON & NON-PRECIOUS METALS - 0.9% (0.5% OF TOTAL ASSETS)
1,995 Peabody Energy Corporation, Term Loan B Ba1 BB+ 03/19/10 2,014,950
------------------------------------------------------------------------------------------------------------------------------------
NATURAL RESOURCES/OIL & GAS - 3.1% (1.9% OF TOTAL ASSETS)
4,156 Tesoro Petroleum Corp., Term Loan Ba3 BB 04/17/07 4,192,617
2,993 Tesoro Petroleum Corp., Term Loan B Ba3 BB 04/15/08 3,013,875
------------------------------------------------------------------------------------------------------------------------------------
7,206,492
------------------------------------------------------------------------------------------------------------------------------------
NON-DURABLE CONSUMER PRODUCTS - 5.1% (3.1% OF TOTAL ASSETS)
2,000 Central Garden & Pet Company, Term Loan B Ba2 BB+ 05/15/09 2,013,125
6,891 Norwood Promotional Products, Inc., Term Loan A NR NR 02/01/05 6,236,586
5,573 Norwood Promotional Products, Inc., Term Loan B NR NR 02/01/05 1,476,925
1,459 Norwood Promotional Products, Inc., Term Loan C NR NR 02/01/05 109,406
2,000 Playtex Products, Inc., Term Loan C B1 B+ 05/31/09 2,001,458
------------------------------------------------------------------------------------------------------------------------------------
11,837,500
------------------------------------------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.2% (0.1% OF TOTAL ASSETS)
1,072 California Pollution Control Financing Authority, CanFibre NR NR 07/01/19 147,387
of Riverside Project, Bonds (a)(b)(c)
1,985 California Pollution Control Financing Authority, CanFibre NR NR 07/01/14 272,938
of Riverside Project, Bonds (a)(b)(c)
------------------------------------------------------------------------------------------------------------------------------------
420,325
------------------------------------------------------------------------------------------------------------------------------------
8
RATINGS*
---------------
PRINCIPAL STATED MARKET
AMOUNT (000) DESCRIPTION(1) MOODY'S S&P MATURITY** VALUE
------------------------------------------------------------------------------------------------------------------------------------
PERSONAL & MISCELLANEOUS SERVICES - 4.9% (3.0% OF TOTAL ASSETS)
$ 4,426 Adams Outdoor Advertising Limited Partnership, Term Loan B B1 B+ 02/01/08 $ 4,447,014
3,000 Lamar Media Corp., Term Loan B Ba2 BB- 06/30/10 3,012,500
1,430 Weight Watchers International, Inc., Term Loan B Ba1 BB 09/30/06 1,442,490
847 Weight Watchers International, Inc., Term Loan C Ba1 BB 09/30/06 854,809
1,708 Weight Watchers International, Inc., Term Loan D Ba1 BB 12/31/08 1,718,578
------------------------------------------------------------------------------------------------------------------------------------
11,475,391
------------------------------------------------------------------------------------------------------------------------------------
PRINTING & PUBLISHING - 12.8% (7.7% OF TOTAL ASSETS)
6,800 American Media Operations, Inc., Term Loan C Ba3 B+ 04/01/07 6,838,607
1,990 Bell Actimedia, Inc., Term Loan B NR NR 11/29/09 2,025,447
2,725 Bell Actimedia, Inc., Term Loan C NR NR 11/29/10 2,751,719
3,369 Dex Media East, LLC, Term Loan B Ba3 BB- 11/08/09 3,423,252
5,000 Media News Group, Term Loan NR NR 12/31/06 4,929,168
3,523 PRIMEDIA, Inc., Term Loan B NR B 06/30/09 3,440,697
4,477 R.H. Donnelley , Term Loan B Ba3 NR 06/30/10 4,568,292
1,920 Sun Media Corporation, Term Loan B NR BB- 02/07/09 1,926,737
------------------------------------------------------------------------------------------------------------------------------------
29,903,919
------------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS & FOOD SERVICE - 2.1% (1.3% OF TOTAL ASSETS)
4,754 Domino's, Inc., Term Loan B1 B+ 06/25/10 4,804,611
------------------------------------------------------------------------------------------------------------------------------------
RETAIL/CATALOG - 0.7% (0.4% OF TOTAL ASSETS)
2,377 Micro Warehouse, Inc., Term Loan A NR NR 01/30/07 1,330,869
2,165 Micro Warehouse, Inc., Term Loan B NR NR 01/30/07 200,265
------------------------------------------------------------------------------------------------------------------------------------
1,531,134
------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/CELLULAR/PCS - 5.5% (3.4% OF TOTAL ASSETS)
429 Airgate PCS, Inc., Tranche I Loan NR NR 06/06/07 374,560
4,694 Airgate PCS, Inc., Tranche II Loan NR NR 09/30/08 4,054,235
8,710 Centennial Cellular Operating Company, LLC, Term Loan A B3 B 11/30/06 8,439,712
------------------------------------------------------------------------------------------------------------------------------------
12,868,507
------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/COMPETITIVE LOCAL EXCHANGE CARRIER (CLEC) - 2.6% (1.6% OF TOTAL ASSETS)
6,696 RCN Corporation, Term Loan B Caa3 CCC+ 06/03/07 6,054,302
5,000 WCI Capital Corporation, Term Loan B (a)(b) NR NR 09/30/07 6,250
------------------------------------------------------------------------------------------------------------------------------------
6,060,552
------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/HYBRID 0.8% (0.5% OF TOTAL ASSETS)
1,850 Nextel Communications Inc., Term Loan A Ba2 BB 12/31/07 1,795,772
------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/WIRELESS MESSAGING - 0.3% (0.2% OF TOTAL ASSETS)
58 Arch Wireless Holding, Inc., Senior Subordinated Secured Notes NR NR 05/15/07 58,290
646 Arch Wireless Holding, Inc., Subordinated Secured Compounding NR NR 05/15/09 714,213
Notes (PIK)
------------------------------------------------------------------------------------------------------------------------------------
772,503
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION/RAIL MANUFACTURING - 3.4% (2.1% OF TOTAL ASSETS)
7,920 Laidlaw Inc., Term Loan B Ba3 BB+ 06/19/09 7,979,400
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.7% (1.0% OF TOTAL ASSETS)
3,973 Westar Energy, Term Loan B NR NR 01/01/09 3,992,533
------------------------------------------------------------------------------------------------------------------------------------
Total Variable Rate Senior Loan Interests and Interest Bearing 340,455,720
Securities (cost $360,693,410)
------------------------------------------------------------------------------------------------------------------------------------
9
Nuveen Senior Income Fund (NSL) (continued)
Portfolio of INVESTMENTS July 31, 2003
MARKET
SHARES (000) DESCRIPTION(1) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EQUITIES - 2.6% (1.6% OF TOTAL ASSETS)
BUILDINGS & REAL ESTATE - 2.2% (1.3% OF TOTAL ASSETS)
205 Washington Group International, Inc., Equity Shares (a) $ 4,720,347
5 Washington Group International, Inc., Warrants, Series A (a) 16,132
5 Washington Group International, Inc., Warrants, Series B (a) 14,440
3 Washington Group International, Inc., Warrants, Series C (a) 6,832
-- Washington Group International, Inc., Residual Unsecured Claim (a)(d) 374,268
------------------------------------------------------------------------------------------------------------------------------------
5,132,019
------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/COMPETITIVE LOCAL EXCHANGE CARRIER (CLEC) - 0.0% (0.0% OF TOTAL ASSETS)
Teligent, Inc., Equity Shares, 50 Shares (a) 52,735
------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/WIRELESS MESSAGING - 0.4% (0.3% OF TOTAL ASSETS)
101 Arch Wireless Holding, Inc., Equity Shares (a) 957,849
------------------------------------------------------------------------------------------------------------------------------------
Total Equities (cost $7,426,157) 6,142,603
--------------------------------------------------------------------------------------------------------------------
PRINCIPAL STATED MARKET
AMOUNT (000) DESCRIPTION(1) MATURITY VALUE
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 11.9% (7.2% OF TOTAL ASSETS)
$ 27,671 State Street Treasury Repurchase Agreement, 0.98%, dated 7/31/03, 08/01/03 27,670,561
------------- repurchase price $27,671,314, collateralized by U.S. Treasury Note
--------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $27,670,561) 27,670,561
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $395,790,128) - 160.5% (97.8% of total assets) 374,268,884
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.4% 7,950,639
--------------------------------------------------------------------------------------------------------------------
Borrowings Payable - (44.2)%+ (103,000,000)
--------------------------------------------------------------------------------------------------------------------
Taxable Auctioned Preferred Shares, at Liquidation Value - (19.7)% (46,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $233,219,523
====================================================================================================================
NR Not rated.
* Bank loans rated below Baa by Moody's Investor Service,
Inc. or BBB by Standard & Poor's Group are considered
to be below investment grade. Ratings are not covered
by the Report of Independent Auditors.
** Senior Loans in the Fund's portfolio generally are
subject to mandatory and/or optional prepayment.
Because of these mandatory prepayment conditions and
because there may be significant economic incentives
for a Borrower to prepay, prepayments of Senior Loans
in the Fund's portfolio may occur. As a result, the
actual remaining maturity of Senior Loans held in the
Fund's portfolio may be substantially less than the
stated maturities shown. The Fund estimates that the
actual average maturity of the Senior Loans held in its
portfolio will be approximately 18-24 months.
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Senior Loans in which the Fund invests generally pay
interest at rates which are periodically redetermined
by reference to a base short-term, floating lending
rate plus a premium. These base lending rates are
generally (i) the lending rate offered by one or more
major European banks, such as the London Inter-Bank
Offered Rate ("LIBOR"), (ii) the prime rate offered by
one or more major United States banks, and (iii) the
certificate of deposit rate. Senior loans are generally
considered to be restricted in that the Fund ordinarily
is contractually obligated to receive approval from the
Agent Bank and/or borrower prior to the disposition of
a Senior Loan.
(a) At or subsequent to July 31, 2003, this issue was
non-income producing.
(b) At or subsequent to July 31, 2003, this issue was under
the protection of the federal bankruptcy court.
(c) On January 1, 2002, CFRHoldings, Inc. (an entity formed
by Nuveen for the benefit of the Nuveen Funds owning
various interests in CanFibre of Riverside) took
possession of the CanFibre of Riverside assets on
behalf of the various Nuveen Funds. CFR Holdings, Inc.
has determined that a sale of the facility is in the
best interest of shareholders and is proceeding
accordingly.
(d) Anticipates future distributions from equities and
warrants.
(PIK) In lieu of cash payment, interest accrued on "Payment
in Kind" security increases principal outstanding.
+ Borrowings payable as a percentage of total assets is
26.9%.
See accompanying notes to financial statements.
10
Statement of
ASSETS AND LIABILITIES July 31, 2003
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at market value (cost $395,790,128) $374,268,884
Receivables:
Interest 2,213,144
Investments sold 6,223,784
Other assets 92,313
------------------------------------------------------------------------------------------------------------------------------------
Total assets 382,798,125
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Borrowings payable 103,000,000
Management fees payable 129,570
Taxable Auctioned Preferred share dividends payable 9,246
Other liabilities 439,786
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 103,578,602
------------------------------------------------------------------------------------------------------------------------------------
Taxable Auctioned Preferred shares, at liquidation value 46,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $233,219,523
====================================================================================================================================
Common shares outstanding 29,760,154
====================================================================================================================================
Net asset value per Common share outstanding (net assets applicable
to Common shares, divided by Common shares outstanding) $ 7.84
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 297,602
Paid-in surplus 282,735,874
Undistributed net investment income 730,509
Accumulated net realized gain (loss) from investments (29,023,218)
Net unrealized appreciation (depreciation) of investments (21,521,244)
====================================================================================================================================
Net assets applicable to Common shares $233,219,523
====================================================================================================================================
Authorized shares:
Common Unlimited
Taxable Auctioned Preferred Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
11
Statement of
OPERATIONS Year Ended July 31, 2003
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $21,792,531
Fees 484,305
------------------------------------------------------------------------------------------------------------------------------------
Total investment income 22,276,836
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 3,115,922
Taxable Auctioned Preferred Shares - auction fees 118,119
Taxable Auctioned Preferred Shares - dividend disbursing agent fees 6,000
Shareholders' servicing agent fees and expenses 13,050
Interest expense 1,621,027
Commitment fees 324,792
Custodian's fees and expenses 135,043
Trustees' fees and expenses 32,091
Professional fees 250,114
Shareholders' reports - printing and mailing expenses 67,130
Stock exchange listing fees 16,133
Investor relations expense 45,956
Other expenses 48,053
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense waivers 5,793,430
Custodian fee credit (1,945)
Expense waivers from the Adviser (1,649,606)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 4,141,879
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 18,134,957
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain (loss) from investments (4,858,554)
Change in net unrealized appreciation (depreciation) of investments 16,930,021
------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 12,071,467
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO TAXABLE AUCTIONED PREFERRED SHAREHOLDERS
From net investment income (664,859)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares from operations $29,541,565
====================================================================================================================================
See accompanying notes to financial statements.
12
Statement of
CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
7/31/03 7/31/02
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 18,134,957 $ 20,176,893
Net realized gain (loss) from investments (4,858,554) (7,840,668)
Change in net unrealized appreciation (depreciation) of investments 16,930,021 (13,369,708)
Distributions to Taxable Auctioned Preferred Shareholders:
From net investment income (664,859) (1,058,165)
From accumulated net realized gains from investments -- (5,696)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from operations 29,541,565 (2,097,344)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (15,887,301) (20,328,659)
From accumulated net realized gains from investments -- (61,397)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions to Common shareholders (15,887,301) (20,390,056)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 106,705 304,528
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares 13,760,969 (22,182,872)
Net assets applicable to Common shares at the beginning of year 219,458,554 241,641,426
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of year $233,219,523 $219,458,554
====================================================================================================================================
Undistributed net investment income at the end of year $ 730,509 $ 86,642
====================================================================================================================================
Statement of
CASH FLOWS Year Ended July 31, 2003
------------------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS $ 29,541,565
------------------------------------------------------------------------------------------------------------------------------------
Adjustments to Reconcile the Change in Net Assets Applicable to Common Shares from Operations
to Net Cash provided by Operating Activities:
Increase in investments at value due to net dispositions and change in appreciation (depreciation) (5,651,376)
Increase in interest receivable (421,409)
Increase in receivable from investments sold (6,223,784)
Decrease in other assets 52,198
Increase in management fees payable 3,427
Decrease in Taxable Auctioned Preferred share dividends payable (4,736)
Decrease in other liabilities (63,197)
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 17,232,688
------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions paid to Common shareholders (17,237,764)
------------------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH (5,076)
Cash at the beginning of year 5,076
------------------------------------------------------------------------------------------------------------------------------------
CASH AT THE END OF YEAR $ --
====================================================================================================================================
See accompanying notes to financial statements.
13
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
Nuveen Senior 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 New York Stock
Exchange and trade under the ticker symbol "NSL". The Fund was organized as a
Massachusetts business trust on August 13, 1999.
The Fund seeks to provide a high level of current income by investing primarily
in senior secured loans whose interest rates float or adjust periodically based
on a benchmark interest rate index. The Fund seeks to increase the income
available for distribution to Common shareholders by utilizing financial
leverage.
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.
Investment Valuation
The prices of senior loans, bonds and other securities in the Fund's investment
portfolio are generally provided by one or more independent pricing services
approved by the Fund's Board of Trustees. The pricing services typically value
exchange-listed securities at the last sale price on that day; and value senior
loans, bonds and other securities traded in the over-the-counter market at the
mean of the highest bona fide bid and lowest bona fide ask prices when current
quotations are readily available. The pricing services value senior loans, bonds
and other securities for which current quotations are not readily available at
fair value using a wide range of market data and other information and analysis,
including the obligor's credit characteristics considered relevant by such
pricing service to determine valuations. The Board of Trustees of the Fund has
approved procedures which permit Nuveen Institutional Advisory Corp. (the
"Adviser"), a wholly owned subsidiary of Nuveen Investments, Inc. (formerly, The
John Nuveen Company), to determine the fair value of securities for which the
applicable pricing service or services is not providing a price, using market
data and other factors such as the obligor's credit characteristics, and to
override the price provided by the independent pricing service in certain
limited circumstances. Short-term investments which mature within 60 days are
valued at amortized cost, which approximates market value.
The senior loans in which the Fund primarily invests are generally not listed on
any exchange and the secondary market for those senior loans is comparatively
illiquid relative to markets for other fixed income securities. Because of the
comparatively illiquid markets for senior loans, the value of a senior loan,
determined as described above, may differ significantly from the value that
would have been determined had there been an active market for that senior loan.
Investment Transactions
Investment transactions are recorded on a trade date basis.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts, is recorded on an accrual basis. Interest income also includes
paydown gains and losses on mortgage and asset-backed securities. Facility fees
on senior loans purchased are treated as market discounts. Market premiums and
discounts are amortized over the expected life of each respective borrowing.
Fees consists primarily of amendment fees. Amendment fees are earned as
compensation for evaluating and accepting changes to the original credit
agreement.
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.
14
Dividends and Distributions to Common Shareholders
The Fund intends to declare monthly income distributions to Common shareholders.
Net realized capital gains from investment transactions, if any, are distributed
to shareholders not less frequently than annually. Furthermore, capital gains
are distributed only to the extent they exceed available capital loss
carryforwards.
Distributions to Common shareholders of net investment income and net realized
capital gains, if any, are recorded on the ex-dividend date. The amount and
timing of distributions are determined in accordance with federal income tax
regulations, which may differ from accounting principles generally accepted in
the United States.
Taxable Auctioned Preferred Shares
The Fund has issued and outstanding 1,840 Series Th, $25,000 stated value
Taxable Auctioned Preferred shares. The dividend rate paid on the Taxable
Auctioned Preferred shares may change every 28 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.
Derivative Financial Instruments
The Fund may invest in certain derivative financial instruments including
futures, forward, swap and option contracts, and other financial instruments
with similar characteristics. Although the Fund is authorized to invest in such
financial instruments, and may do so in the future, it did not make any such
investments during the fiscal year ended July 31, 2003.
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 by the Fund 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.
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 assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
2. FUND SHARES
During the fiscal year ended July 31, 2003, 14,141 Common shares were issued to
shareholders due to reinvestment of distributions.
During the fiscal year ended July 31, 2002, 36,948 Common shares were issued to
shareholders due to reinvestment of distributions.
3. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term investments) during the
fiscal year ended July 31, 2003, aggregated $273,491,225 and $268,511,918,
respectively.
15
Notes to
FINANCIAL STATEMENTS (continued)
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses on mortgage and
asset-backed securities and timing differences in recognizing certain gains and
losses on security transactions.
At July 31, 2003, the cost of investments owned was $395,825,228.
The net unrealized depreciation of investments at July 31, 2003, aggregated
$21,556,344 of which $5,229,258 related to appreciated securities and
$26,785,602 related to depreciated securities.
The tax components of undistributed net ordinary income and net realized gains
at July 31, 2003, were as follows:
--------------------------------------------------------------------------------
Undistributed net ordinary income * $ 2,019,827
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 fiscal years ended July 31,
2003, and July 31, 2002, was designated for purposes of the dividends paid
deduction as follows:
2003
--------------------------------------------------------------------------------
Distributions from net ordinary income * $16,734,378
Distributions from net long-term capital gains --
================================================================================
2002
--------------------------------------------------------------------------------
Distributions from net ordinary income * $22,353,020
Distributions from net long-term capital gains --
================================================================================
* Net ordinary income consists of taxable income derived from dividends,
interest and net short-term capital gains, if any.
At July 31, 2003, the Fund had an unused capital loss carryforward of
$28,988,118 available to be applied against future capital gains, if any. If not
applied, $18,283,863 of the carryforward will expire in 2010 and $10,704,255
will expire in 2011.
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Fund's investment management agreement with the Adviser, the Fund pays
an annual management fee, payable monthly, of .8500%, which is based upon the
average daily managed assets of the Fund. "Managed Assets" means the average
daily gross asset value of the Fund, minus the sum of the Fund's accrued and
unpaid dividends on any outstanding Taxable Auctioned Preferred shares and
accrued liabilities (other than the principal amount of any borrowings incurred,
commercial paper or notes issued by the Fund and the liquidation preference of
any outstanding Taxable Auctioned Preferred shares).
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 Symphony Asset Management ("Symphony"), an
indirect wholly owned subsidiary of Nuveen Investments, Inc. (formerly, The John
Nuveen Company), under which Symphony manages the investment portfolio of the
Fund. Symphony 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 their officers, all of whom receive
remuneration for their services to the Fund from the Adviser or its affiliates.
16
The Adviser has agreed to waive part of its management fees or reimburse certain
expenses of the Fund in an amount equal to .45% of the average daily Managed
Assets for the period October 29, 1999 (commencement of operations) through
October 31, 2004, .35% of the average daily Managed Assets for the year ended
October 31, 2005, .25% of the average daily Managed Assets for the year ended
October 31, 2006, .15% of the average daily Managed Assets for the year ended
October 31, 2007, .10% of the average daily Managed Assets for the year ended
October 31, 2008, and .05% of the average daily Managed Assets for the year
ended October 31, 2009. The Adviser has not agreed to reimburse the Fund for any
portion of its fees and expenses beyond October 31, 2009.
6. COMMITMENTS
Pursuant to the terms of certain of the variable rate senior loan agreements,
the Fund had unfunded loan commitments of approximately $8.0 million as of July
31, 2003. The Fund generally will maintain with its custodian, cash, liquid
securities and/or liquid senior loans having an aggregate value at least equal
to the amount of unfunded loan commitments.
7. SENIOR LOAN PARTICIPATION COMMITMENTS
The Fund invests primarily in assignments, participations, or acts as a party to
the primary lending syndicate of a variable rate senior loan interest to
corporations, partnerships, and other entities. If the Fund purchases a
participation of a senior loan interest, the Fund would typically enter into a
contractual agreement with the lender or other third party selling the
participation, but not with the borrower directly. As such, the Fund assumes the
credit risk of the Borrower, Selling Participant or other persons
interpositioned between the Fund and the Borrower. At July 31, 2003, the Fund
held participation commitments with Bear, Stearns &Co. Inc. and Morgan Stanley.
At July 31, 2003, the par values of the commitments were $2 million and $1.64
million, respectively, while the market values were approximately $1.7 million
and $1.4 million, respectively.
8. BORROWINGS
In accordance with its current investment policies, the Fund may utilize
financial leverage for investment purposes in an amount currently anticipated to
represent approximately 40% of the Fund's total assets, and in no event
exceeding 50% of the Fund's total assets.
Through June 19, 2003, the Fund entered into a $150 million commercial paper
program with Nuveen Funding, LLC, a Delaware limited liability company whose
sole purpose was the issuance of commercial paper. On June 20th, 2003, the
commercial paper program with Nuveen Funding, LLC, was terminated. On June 20th,
2003, the Fund entered into a commercial paper program with Bank One's conduit
financing agency, Falcon Asset Securitization Corp. ("Falcon"), whose sole
purpose is the issuance of high grade commercial paper, the proceeds of which
are used to make advances to the fund. The Fund is one of many borrowers who
comprise Falcon's total borrowing base. For the fiscal year ended July 31, 2003,
the average daily balance of borrowings under the commercial paper program
agreement was $103 million with an average interest rate of 1.57%.
The Fund has also entered into a $110 million liquidity facility. If the
facility is utilized, interest on the borrowings would be charged a variable
interest rate. An unused commitment fee of .095% on 102% of the unused portion
of the $110 million facility is charged. There were no borrowings under the
revolving credit agreement during the fiscal year ending July 31, 2003.
Cash paid for interest during the fiscal year ended July 31, 2003, was
$1,654,532.
9. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Fund declared a dividend distribution of $.0430 per Common share from its
net investment income which was paid on September 2, 2003, to shareholders of
record on August 15, 2003.
17
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ ------------------------------
Distributions Distributions
from Net from Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to 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 7/31:
2003 $7.38 $ .60 $ .41 $(.02) $-- $ .99 $ (.53) $-- $ (.53)
2002 8.13 .68 (.71) (.04) -- (.07) (.68) -- (.68)
2001 9.47 1.09 (1.29) (.09) -- (.29) (1.03) (.02) (1.05)
2000(a) 9.55 .75 (.12) (.02) -- .61 (.66) -- (.66)
====================================================================================================================================
Total Returns
------------------
Based
on
Ending Common
Common Based Share
Share Ending on Net
Offering Net Asset Market Market Asset
Costs Value Value Value** Value**
==========================================================================
Year Ended 7/31:
2003 $ -- $7.84 $8.4300 25.93% 14.25%
2002 -- 7.38 7.2000 (21.16) (.65)
2001 -- 8.13 9.9600 15.35 (3.30)
2000(a) (.03) 9.47 9.6250 3.21 6.20
==========================================================================
Ratios/Supplemental Data
------------------------------------------------------------------------------------------
Before Credit/Waiver After Waiver***
-------------------------- ----------------------------
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 7/31:
2003 $233,220 2.66% 7.57% 1.90% 8.33% 80%
2002 219,459 3.12 8.20 2.37 8.95 64
2001 241,641 4.32 11.74 3.62 12.44 52
2000(a) 280,479 3.81* 9.82* 3.21* 10.42* 40
=============================================================================================================
* 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 net asset value per
share. Total returns are not annualized.
*** After expense waivers from the investment adviser, 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 interest expense paid on bank borrowings as
follows:
Ratio of Interest
Expense
to Average
Net Assets
Applicable to
Common Shares
------------------
2003 .74%
2002 1.09
2001 2.19
2000(a) 2.04*
(a) For the period October 29, 1999 (commencement of operations) through July
31, 2000.
See accompanying notes to financial statements.
18-19 SPREAD
Trustees
AND OFFICERS
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board of
Trustees of the Funds. The number of trustees of the Funds is currently set at
six. None of the trustees who are not "interested" persons of the Funds has ever
been a director or employee of, or consultant to, Nuveen or its affiliates. The
names and business addresses of the trustees and officers of the Funds, their
principal occupations and other affiliations during the past five years, the
number of portfolios each oversees and other directorships they hold are set
forth below.
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
YEAR FIRST PRINCIPAL OCCUPATION(S) OVERSEEN
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR INCLUDING OTHER DIRECTORSHIPS BY
AND ADDRESS WITH THE FUNDS APPOINTED(2) DURING PAST 5 YEARS TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
TRUSTEE WHO IS AN INTERESTED PERSON OF THE FUNDS:
Timothy R. Schwertfeger (1) Chairman of the 1994 Chairman and Director (since 1996) of Nuveen 140
3/28/49 Board and Investments, Inc. and Nuveen Investments, LLC;
333 W. Wacker Drive Trustee Director (since 1992) and Chairman (since 1996) of
Chicago, IL 60606 Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp.; Chairman and Director (since 1997)
of Nuveen Asset Management, Inc.; Director (since 1996)
of Institutional Capital Corporation; Chairman and
Director (since 1999) of Rittenhouse Asset Management,
Inc.; Chairman of Nuveen Investments Advisers Inc.
(since 2002).
TRUSTEES WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
William E. Bennett Trustee 2001 Private Investor; previously, President and 140
10/16/46 Chief Executive Officer, Draper & Kramer, Inc.,
333 W. Wacker Drive a private company that handles mortgage banking,
Chicago, IL 60606 real estate development, pension advisory and real
estate management (1995-1998). Prior thereto,
Executive Vice President and Chief Credit Officer
of First Chicago Corporation and its principal
subsidiary, The First National Bank of Chicago.
------------------------------------------------------------------------------------------------------------------------------------
Jack B. Evans Trustee 1999 President, The Hall-Perrine Foundation, a private 70
10/22/48 philanthropic corporation (since 1996); Director,
333 W. Wacker Drive Alliant Energy; Director and Vice Chairman, United
Chicago, IL 60606 Fire & Casualty Company; Director, Federal Reserve Bank
of Chicago; formerly, President and Chief Operating
Officer, SCI Financial Group, Inc., a regional
financial services firm.
------------------------------------------------------------------------------------------------------------------------------------
William L. Kissick Trustee 1992 Professor Emeritus, School of Medicine and the Wharton 70
7/29/32 School of Management and former Chairman, Leonard
333 W. Wacker Drive Davis Institute of Health Economics, University of
Chicago, IL 60606 Pennsylvania; Adjunct Professor, Health Policy and
Management, Yale University.
------------------------------------------------------------------------------------------------------------------------------------
Thomas E. Leafstrand Trustee 1992 Retired; previously, Vice President in charge of 70
11/11/31 Municipal Underwriting and Dealer Sales at The
333 W. Wacker Drive Northern Trust Company.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Sheila W. Wellington Trustee 1994 President (since 1993) of Catalyst (a not-for-profit 70
2/24/32 organization focusing on women's leadership development
333 W. Wacker Drive in business and the professions).
Chicago, IL 60606
20
NUMBER OF
PORTFOLIOS
IN FUND
YEAR FIRST COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN
AND ADDRESS WITH THE FUNDS APPOINTED (3) DURING PAST 5 YEARS BY OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary 140
9/9/56 Administrative and Associate General Counsel, formerly, Vice President
333 W. Wacker Drive Officer and Assistant General Counsel of Nuveen Investments, LLC;
Chicago, IL 60606 Managing Director (since 2002), General Counsel and
Assistant Secretary, formerly, Vice President of Nuveen
Advisory Corp. and Nuveen Institutional Advisory Corp.;
Managing Director (since 2002), Assistant Secretary and
Associate General Counsel, formerly, Vice President (since
2000), of Nuveen Asset Management, Inc.; Assistant
Secretary of Nuveen Investments, Inc. (since 1994);
Assistant Secretary of NWQ Investment Management
Company, LLC (since 2002); Vice President and
Assistant Secretary of Nuveen Investments Advisers Inc.
(since 2002); Managing Director, Associate General
Counsel and Assistant Secretary of Rittenhouse Asset
Management, Inc. (since May 2003); Chartered
Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant 140
2/3/66 and Assistant Vice President (since 2000), previously, Associate of
333 W. Wacker Drive Secretary Nuveen Investments, LLC.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Peter H. D'Arrigo Vice President 1999 Vice President of Nuveen Investments, LLC (since 1999), 140
11/28/67 and Treasurer prior thereto, Assistant Vice President (since 1997);
333 W. Wacker Drive Vice President and Treasurer of Nuveen Investments,
Chicago, IL 60606 Inc. (since 1999); Vice President and Treasurer of
Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp. (since 1999); Vice President and
Treasurer of Nuveen Asset Management, Inc. (since
2002) and of Nuveen Investments Advisers Inc. (since
2002); Assistant Treasurer of NWQ Investment Management
Company, LLC (since 2002); Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Susan M. DeSanto Vice President 2001 Vice President of Nuveen Advisory Corp. (since 2001); 140
9/8/54 previously, Vice President of Van Kampen Investment
333 W. Wacker Drive Advisory Corp. (since 1998); Vice President of Nuveen
Chicago, IL 60606 Institutional Advisory Corp. (since 2002); prior thereto,
Assistant Vice President of Van Kampen Investment
Advisory Corp. (since 1994).
------------------------------------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President 2000 Vice President (since 2002) and Assistant General 140
9/24/64 and Secretary Counsel (since 1998); formerly, Assistant Vice
333 W. Wacker Drive President (since 1998) of Nuveen Investments, LLC;
Chicago, IL 60606 Vice President (since 2002) and Assistant Secretary
(since 1998), formerly Assistant Vice President of
Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp.
21
Trustees
AND OFFICERS (CONTINUED)
NUMBER OF
PORTFOLIOS
IN FUND
YEAR FIRST COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN
AND ADDRESS WITH THE FUNDS APPOINTED (3) DURING PAST 5 YEARS BY OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Lorna C. Ferguson Vice President 1998 Vice President of Nuveen Investments, LLC; Vice 140
10/24/45 President (since 1998) of Nuveen Advisory Corp. and
333 W. Wacker Drive Nuveen Institutional Advisory Corp.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
William M. Fitzgerald Vice President 1995 Managing Director (since 2002) of Nuveen Investments, 140
3/2/64 LLC; Managing Director (since 2001), formerly Vice
333 W. Wacker Drive President of Nuveen Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory Corp. (since 1995); Managing
Director of Nuveen Asset Management, Inc. (since 2001);
Vice President of Nuveen Investment Advisers Inc.
(since 2002); Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller 140
5/31/54 and Controller (since 1998) of Nuveen Investments, LLC and Vice
333 W. Wacker Drive President and Funds Controller (since 1998) of Nuveen
Chicago, IL 60606 Investments, Inc.; Certified Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, LLC, 140
3/22/63 previously Assistant Vice President (since 1999); prior
333 W. Wacker Drive thereto, Associate of Nuveen Investments, LLC; Certified
Chicago, IL 60606 Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
Tina M. Lazar Vice President 2002 Vice President (since 1999), previously, Assistant Vice 140
8/27/61 President (since 1993) of Nuveen Investments, LLC.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant 140
7/27/51 and Assistant General Counsel of Nuveen Investments, LLC; Vice
333 W. Wacker Drive Secretary President and Assistant Secretary of Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory Corp.; Assistant
Secretary of Nuveen Investments, Inc. and (since 1997)
Nuveen Asset Management, Inc.; Vice President (since
2000), Assistant Secretary and Assistant General Counsel
(since 1998) of Rittenhouse Asset Management, Inc.; Vice
President and Assistant Secretary of Nuveen Investments
Advisers Inc. (since 2002); Assistant Secretary of NWQ
Investment Management Company, LLC (since 2002).
22
NUMBER OF
PORTFOLIOS
IN FUND
YEAR FIRST COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN
AND ADDRESS WITH THE FUNDS APPOINTED (3) DURING PAST 5 YEARS BY OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Edward F. Neild, IV Vice President 1996 Managing Director (since 2002) of Nuveen Investments, 140
7/7/65 LLC; Managing Director (since 1997), formerly Vice
333 W. Wacker Drive President (since 1996) of Nuveen Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional Advisory Corp.; Managing Director
of Nuveen Asset Management, Inc. (since 1999).
Chartered Financial Analyst.
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and trustee of the
Adviser.
(2) Trustees serve a one-year term until his/her successor is elected. The year
first elected or appointed represents the year in which the Trustee was
first elected or appointed to any fund in the Nuveen Complex.
(3) Officers serve a one-year term through July of each year. The year first
elected or appointed represents the year in which the Officer was first
elected or appointed to any fund in the Nuveen Complex.
23
Build Your Wealth
AUTOMATICALLY
Sidebar text: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power 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 95% of
the then-current market price or at net asset value, whichever is higher. If the
shares are trading at less than net asset value, shares for your account will be
purchased on the open market. Dividends and distributions received to purchase
shares in the open market will normally be invested shortly after the dividend
payment date. No interest will be paid on dividends and distributions awaiting
reinvestment. Because the market price of shares may increase before purchases
are completed, the average purchase price per share may exceed the market price
at the time of valuation, resulting in the acquisition of fewer shares than if
the dividend or distribution had been paid in shares issued by the Fund. A pro
rata portion of any applicable brokerage commissions on open market purchases
will be paid by Plan participants. These commissions usually will be lower than
those charged on individual transactions.
FLEXIBILITY
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
24
Fund
INFORMATION
BOARD OF TRUSTEES
William E. Bennett
Jack B. 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
FUND SUB-ADVISER
Symphony Asset
Management
555 California St.
Suite 2975
San Francisco, CA 94104
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT AUDITORS
KPMG LLP
Chicago, IL
GLOSSARY OF TERMS USED IN THIS REPORT
Average Annual Total Return: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return (including change in NAV and reinvested dividends) that
would have been necessary on an annual basis to equal the investment's actual
performance over the time period being considered.
Net Asset Value (NAV): A fund's NAV is calculated by subtracting the liabilities
of the fund from its total assets and then dividing the remainder by the number
of shares outstanding. Fund NAVs are calculated at the end of each business day.
--------
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 fiscal year ended July 31, 2003. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
25
Serving Investors
FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
Managing $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
EAN-C-0703D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. The registrant has posted such code of
ethics on its website at www.nuveen.com/etf.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of directors has determined that the registrant has
at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its audit committee. The registrant's audit committee
financial expert is William E. Bennett, who is "independent" for purposes of
Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The registrant has adopted the proxy voting policies and procedures of its
Sub-Adviser, Symphony Asset Management. Symphony uses the services of
Institutional Shareholder Services ("ISS"), an independent proxy voting service,
which handles all proxy voting for Symphony client accounts, including the
registrant. The proxy voting policies and procedures of ISS are reviewed and
approved each year by Symphony.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's last
fiscal half-year (the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because posted on registrant's website.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certification required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Senior Income Fund
-----------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: October 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: October 8, 2003
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(Principal Financial Officer)
Date: October 8, 2003
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.