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 811-21407
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Nuveen Diversified Dividend and 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: December 31
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Date of reporting period: September 30, 2005
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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.
QUARTERLY REPORT September 30, 2005
Nuveen Investments
Exchange-Traded
Closed-End
Funds
NUVEEN
DIVERSIFIED
DIVIDEND AND
INCOME FUND
JDD
HIGH CURRENT INCOME AND TOTAL RETURN FROM A PORTFOLIO OF DIVIDEND-PAYING COMMON
STOCKS, REIT STOCKS, EMERGING MARKETS SOVEREIGN DEBT, AND SENIOR LOANS
Chairman's Letter
Dear Shareholder
I am very pleased to report that for the nine-month period ended September 30,
2005, your Fund continued to provide you with attractive monthly distributions
and diversified exposure to a variety of important market sectors and asset
classes.
Portfolio diversification is a recognized way to reduce some of the risk that
comes with investing. Since one part of your portfolio may be going up when
another is going down, portfolio diversification may help smooth your investment
returns over time. Your Fund, with its holdings of dividend-paying common
stocks, REIT stocks, emerging markets sovereign debt and senior corporate loans,
is specifically designed to help you achieve greater portfolio diversification.
Your financial advisor can explain the potential advantages of portfolio
diversification in more detail. I urge you to contact him or her soon for more
information on this important investment strategy.
For more than 100 years, Nuveen has specialized in offering quality investments
such as your Fund to those seeking to accumulate and preserve wealth. Our
mission continues to be to assist you and your financial advisor by offering the
investment solutions and services that can help you secure your long-term
financial goals. We thank you for choosing us as a partner as you work toward
that objective.
Sincerely,
Timothy R. Schwertfeger
Chairman of the Board
November 15, 2005
Nuveen Diversified Dividend and Income Fund
(JDD)
Portfolio Managers'
COMMENTS
The Nuveen Diversified Dividend and Income Fund features portfolio management by
teams at four subadvisers:
NWQ Investment Management Company, LLC (NWQ),an affiliate of Nuveen Investments,
invests its portion of the Fund's assets in dividend-paying common stocks. Jon
Bosse, Chief Investment Officer of NWQ, leads the Fund's management team at that
firm. He has more than 23 years of investment management experience.
Security Capital Research & Management Incorporated (Security Capital), a
wholly-owned subsidiary of J. P. Morgan Chase & Co., invests its portion of the
Fund's assets primarily in REIT common stocks. Tony Manno and Ken Statz, who
each have more than 22 years' experience in managing real estate investments,
lead the team.
Wellington Management Company, LLP (Wellington) invests its portion of the
Fund's assets in emerging markets sovereign debt. James W. Valone, who has more
than 10 years of investment management experience, heads the team.
Symphony Asset Management, LLC (Symphony), an affiliate of Nuveen Investments,
invests its portion of the Fund's assets in senior loans. The Symphony team is
led by Gunther Stein and Lenny Mason, who have more than 25 years of combined
investment management experience.
Here representatives from NWQ, Security Capital, Wellington and Symphony talk
about their management strategies and the performance of the Fund for the
nine-month period ended September 30, 2005
WHAT WAS YOUR OVERALL MANAGEMENT STRATEGY FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 2005?
For the equity portion of the Fund's portfolio, we continued to employ an
opportunistic, bottom-up strategy that focused on identifying attractively
valued companies that we thought possessed favorable risk/reward characteristics
and emerging catalysts that could unlock value or improve profitability. These
catalysts included management changes, restructuring efforts, recognition of
hidden assets, or a positive change in the underlying fundamentals. We also
continued to focus on downside protection, and paid a great deal of attention to
a company's balance sheet and cash flow statement, not just the income
statement. We believed that cash flow analysis offered a more objective and
truer picture of a company's financial position than an evaluation based on
earnings alone.
During the course of this nine-month reporting period, we took new common stock
positions in American Home Mortgage Investment Corp., Dominion Resources Inc.,
Dow Jones & Co., POSCO, Merck & Co Inc., Wachovia Corp., and Energias de
Portugal SA. Our analysis led us to conclude that these companies possessed
solid fundamentals, compelling valuations, and an attractive risk/reward
relationship. We eliminated Tate & Lyle PLC, Weyerhauser Co., and DSM NV from
the portfolio based on valuation concerns. We also sold Delphi Corp. in
early-April (prior to its bankruptcy) because of deteriorating fundamentals and
management credibility. May Company and Unocal Corp. were acquired during the
period. We maintained a large position in energy stocks during the period based
on our analysis of global supply conditions for crude oil and its impact on
industry fundamentals, the outlook on company cash flow growth, and valuations.
The Fund's energy holdings include Chevron Corp. Conocophillips, ENI Spa,
Kerr-McGee Corp., and Total S.A.
For the portion of the Fund's portfolio that was invested in real estate
securities, we continued to focus on finding what we believed would be the best
opportunities to generate sustainable income and potential price appreciation
over the long-run. In particular, we sought to maintain significant
diversification within this sector while taking into account company credit
quality, sector and geographic exposure and security-type allocations. Every
investment decision was based on a multi-layered analysis of the company, the
real estate it owns, its management and the relative price of the security.
In general, over this period, we favored real estate companies with high quality
management teams, strong balance sheets and potential for price appreciation
generally situated in urban markets characterized by high barriers-to-entry. In
each case, we sought real estate securities that were priced at a discount
according to our long-term discounted cash flow valuation analysis.
For the portion of the portfolio invested in emerging markets sovereign debt, we
sought opportunities in the market by identifying countries and securities with
a combination of modest market sensitivity, stable to improving fundamental
prospects, and reasonable valuations. In this camp, we place Indonesia and the
Philippines. In Latin America, our exposure to high yielding countries and oil
exporters such as Brazil and Colombia contributed to performance. Relative to
our benchmark, we maintained an overweight to Brazil, whose economy and markets
have remained strong this year in the face of large scale political scandals.
Colombia's exports benefited from high commodity prices, in particular, oil,
coal and coffee. We decreased exposure to countries that, in our opinion, had
unfavorable long-term prospects or were highly susceptible to adverse market
conditions, such as Peru.
For the senior loan portion of the portfolio, we continued to focus on executing
a conservative portfolio management strategy that emphasized carefully selecting
both industry sectors and individual companies. We analyzed opportunities to
upgrade the portfolio by selling loans in sectors that we believed could have
problems over the coming months and rotating into what we believed were safer,
less cyclical sectors that would provide stronger asset protection. This
strategy led us to sell a large portion of our automotive exposure before the
sector experienced significant volatility in May due to fears surrounding
General Motors and Ford. The loan market showed signs of strength during the
third quarter, although skyrocketing energy prices and rising interest rates
caused uneasiness in the financial markets. Energy prices continued their upward
climb, causing speculation that corporate earnings growth could come under
pressure in the coming quarters.
Given the robust volume of new offerings, we were able to rotate into senior
loans that we felt provided more asset protection and less likelihood of
earnings volatility. When evaluating loans, we continued to look at the
fundamentals of the issuer. At the same time, we also closely monitored the
relative value of the loans we held or were considering as compared with other
closely related loans or securities in the high yield bond market.
HOW DID THE FUND PERFORM?
Fund performance results, as well as the performance of a comparative benchmark,
are shown in the accompanying table.
Total returns on net asset value*
For periods ended September 30, 2005
9 - MONTH 1-YEAR
- --------------------------------------------------------------------------------
JDD 8.01% 17.94%
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Comparative Benchmark(1) 7.72% 16.98%
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*Nine-month returns are cumulative; one-year return is annualized.
Past performance does not guarantee future results. Current performance may be
higher or lower than the data shown. Returns do not reflect the deduction of
taxes that a shareholder may have to pay on Fund distributions or upon the sale
of Fund shares.
See the Performance Overview Page for additional information.
For the nine months ended September 30, 2005, the Fund outperformed an
unleveraged, unmanaged comparative benchmark. Each of the four asset classes in
which the Fund invests provided positive overall performance during this period.
Looking at the common stock portion of the Fund's portfolio, overall market
conditions were difficult in the first six-months of 2005, but began to improve
in the third quarter of the year. In particular, the portfolio generated solid
third quarter gains based on the strength of its energy stocks, stepped-up
corporate restructuring activities, and news that portfolio holding Albertson's
Inc. has put itself up for sale. None of the Fund's equity investments suffered
material losses as a consequence of Hurricanes Katrina and Rita that devastated
the Gulf Coast region in August and September.
Also contributing to performance were tobacco holdings Altria Group Inc. (parent
of Philip Morris) and Carolina Group. The stocks rallied after the Illinois
Supreme Court reversed a $1.05 billion class-action judgment against State Farm
Insurance related to consumer fraud. The decision had positive implications for
the tobacco industry as a similar class-action judgment for $10.1 billion
against Altria Group is now expected to be reversed.
1 Comparative benchmark performance is a blended return consisting of 1)
18.75% of the return of the Russell 3000 Value Index, which measures the
performance of those Russell 3000 Index companies with lower price-to-book
ratios and lower forecasted growth values, 2) 6.25% of the return of the
MSCI EAFE ex-Japan Value Index, a capitalization-weighted index that
selects the lower 50% of the price-to-book ranked value stocks traded
in the developed markets of Europe, Asia and the Far East, excluding Japan,
3) 25% of the return of the Dow Jones Wilshire Real Estate Securities
Index, an unmanaged, market-capitalization-weighted index comprised of
publicly traded REITs and real estate companies, 4) 25% of the return of
the JP Morgan EMBI Global Diversified Index, which tracks total returns for
U.S.-dollar-denominated debt instruments issued by emerging markets
sovereign and quasi-sovereign entities, and 5) 25% of the return of the
CSFB Leveraged Loan Index, which consists of approximately $150 billion of
tradable term loans with at least one year to maturity and rated BBB or
lower. Index returns do not include the effects of any sales charges or
management fees. It is not possible to invest directly in an index.
Fund holdings POSCO and Rio Tinto PLC also outperformed during the reporting
period as global economic growth, especially in China, has led to an increase in
the demand for most industrial commodities, including steel and iron ore. Both
companies have a meaningful exposure to that country. Meanwhile, new management
and structural changes continued to yield improvements in top-line growth and
operating margins at insurance broker, Aon Corp. The company is also poised to
benefit as one of its competitors struggles to repair its reputation following a
recent settlement with the government related to bid rigging and overcharging
its customers.
The Fund did see a fall off in the performance of several of its financial
services holdings during the reporting period, particularly in the third quarter
as a persistently flat yield curve put pressure on net interest margins and the
outlook for company fundamentals. Shares of Fannie Mae were also pressured as
the company has been actively reducing its retained portfolio in order to meet
new surplus capital requirements mandated by its government regulator.
Pharmaceutical manufacturer Merck & Co. declined as well following a wrongful
death verdict against the company related to its anti-inflammatory drug, Vioxx.
For the nine months ended September 30, 2005, the real estate portion of the
portfolio modestly underperformed an all common stock industry benchmark.
However, the common stocks within this sector of the Fund's holdings performed
well, especially in the second and third quarters, due to the increased
representation of more cyclically sensitive real estate common stocks such as
those of apartment companies. Holding preferred real estate stocks hurt the
Fund's comparative performance during this period because broad real estate
indices are composed of only common equity securities. However, the inclusion of
preferred stock in the portfolio reflected our belief that many of the higher
dividend-paying real estate securities were overvalued.
In the emerging markets sovereign debt portion of the portfolio, the Fund
benefited from strong country selection within emerging Europe, Latin America
and Asia over the past nine months. Relative to our benchmark, our overweight
positions in Brazil and Russia added to performance as did an underweight to
Thailand and avoiding China and Hungary during the period. The Fund also
benefited from positive security selection in Latin America, namely Panama,
Colombia, Ecuador and Brazil. Relative detractors from the Fund's year to date
performance included muted performance from some Russian and South African
securities and an overweight and negative security selection in Malaysia and
Mexico.
In the senior loan sector, the market continued its strong performance during
the nine-month period, although at a more subdued pace than in previous
quarters. Universal Compression and Vought Aircraft had a positive impact on the
Fund's performance (our Universal Compression position was sold prior to the end
of this reporting period). Given some weakness in the high-yield market over
this reporting period, several holdings detracted from Fund performance. For
example, Federal Mogul remained in Chapter 11 bankruptcy proceedings as of
September 30, 3005, and the term loan we held had a negative impact on
performance during this nine-month period.
DISTRIBUTION AND SHARE PRICE INFORMATION
In addition to owning preferred stocks, the Fund has issued its own preferred
shares, called FundPreferredTM. FundPreferred provides a degree of financial
leverage that can enhance the Fund's returns and supplement the income available
to pay common shareholder distributions, but also can increase share price
volatility. This leveraging strategy provided incremental income and helped
enhance shareholder distributions over this reporting period.
The Fund has a managed distribution policy designed to provide relatively stable
monthly cash flow to investors. Under this policy, the Fund's monthly
distributions will be paid from net investment income generated by its
underlying securities as well as from net realized capital gains and/or returns
of capital, generally representing net unrealized capital gains. Over this
nine-month reporting period, the Fund implemented one increase in its monthly
distribution, bringing the amount to $0.1075 per share.
As of September 30, 2005, the Fund was trading at a -8.13% discount to its net
asset value. This discount was more than the average -8.02% discount the Fund
exhibited over the course of the entire reporting period.
Nuveen Diversified Dividend and Income Fund
JDD
Performance
OVERVIEW As of September 30, 2005
PORTFOLIO ALLOCATION
(as a % of total investments)
- ------------------------------------
Real Estate Investment
Trust Common Stocks
and Preferred Stocks 27.7%
- ------------------------------------
Common Stocks 24.4%
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Emerging Markets
Sovereign Debt and
Foreign Cororate Bonds 22.9%
- ------------------------------------
Variable Rate Senior
Loan Interests 16.7%
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U.S. Corporate Bonds 3.3%
- ------------------------------------
U.S. Convertible Bonds 1.0%
- ------------------------------------
Repurchase Agreements 4.0%
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Bar Chart:
2004-2005 MONTHLY DISTRIBUTIONS PER SHARE
Oct .1025
Nov .1025
Dec .1025
Jan .1025
Feb .1025
Mar .1025
Apr .1025
May .1025
Jun .1025
Jul .1025
Aug .1025
Sep .1075
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
10/1/2004 14.92
10/4/2004 14.94
10/5/2004 14.94
10/6/2004 14.99
10/7/2004 15.00
10/8/2004 15.06
10/11/2004 15.06
10/12/2004 15.06
10/13/2004 15.04
10/14/2004 15.03
10/15/2004 15.07
10/18/2004 15.00
10/19/2004 14.92
10/20/2004 14.93
10/21/2004 14.90
10/22/2004 14.99
10/25/2004 14.91
10/26/2004 14.72
10/27/2004 14.78
10/28/2004 14.95
10/29/2004 15.07
11/1/2004 15.04
11/2/2004 15.09
11/3/2004 15.12
11/4/2004 15.29
11/5/2004 14.99
11/8/2004 14.90
11/9/2004 14.83
11/10/2004 15.06
11/11/2004 15.06
11/12/2004 15.12
11/15/2004 15.23
11/16/2004 15.45
11/17/2004 15.49
11/18/2004 15.50
11/19/2004 15.57
11/22/2004 15.44
11/23/2004 15.39
11/24/2004 15.28
11/26/2004 15.37
11/29/2004 15.35
11/30/2004 15.30
12/1/2004 15.38
12/2/2004 15.43
12/3/2004 15.47
12/6/2004 15.56
12/7/2004 15.62
12/8/2004 15.48
12/9/2004 15.50
12/10/2004 15.62
12/13/2004 15.53
12/14/2004 15.37
12/15/2004 15.35
12/16/2004 15.33
12/17/2004 15.20
12/20/2004 15.31
12/21/2004 15.30
12/22/2004 15.29
12/23/2004 15.30
12/27/2004 15.30
12/28/2004 15.28
12/29/2004 15.37
12/30/2004 15.50
12/31/2004 15.57
1/3/2005 15.52
1/4/2005 15.55
1/5/2005 15.27
1/6/2005 15.30
1/7/2005 15.50
1/10/2005 15.42
1/11/2005 15.48
1/12/2005 15.35
1/13/2005 15.39
1/14/2005 15.36
1/18/2005 15.33
1/19/2005 15.25
1/20/2005 15.25
1/21/2005 15.23
1/24/2005 15.20
1/25/2005 15.13
1/26/2005 15.02
1/27/2005 15.10
1/28/2005 15.19
1/31/2005 15.24
2/1/2005 15.23
2/2/2005 15.24
2/3/2005 15.42
2/4/2005 15.72
2/7/2005 15.72
2/8/2005 15.72
2/9/2005 15.76
2/10/2005 15.80
2/11/2005 15.49
2/14/2005 15.39
2/15/2005 15.40
2/16/2005 15.37
2/17/2005 15.48
2/18/2005 15.27
2/22/2005 15.10
2/23/2005 15.28
2/24/2005 15.40
2/25/2005 15.50
2/28/2005 15.52
3/1/2005 15.70
3/2/2005 15.66
3/3/2005 15.67
3/4/2005 15.71
3/7/2005 15.69
3/8/2005 15.58
3/9/2005 15.50
3/10/2005 15.39
3/11/2005 15.30
3/14/2005 15.05
3/15/2005 14.81
3/16/2005 14.38
3/17/2005 14.42
3/18/2005 14.46
3/21/2005 14.36
3/22/2005 14.31
3/23/2005 13.84
3/24/2005 14.10
3/28/2005 13.93
3/29/2005 14.10
3/30/2005 14.38
3/31/2005 14.33
4/1/2005 14.40
4/4/2005 14.53
4/5/2005 14.41
4/6/2005 14.67
4/7/2005 14.41
4/8/2005 14.33
4/11/2005 14.39
4/12/2005 14.54
4/13/2005 14.20
4/14/2005 14.20
4/15/2005 14.09
4/18/2005 14.22
4/19/2005 14.41
4/20/2005 14.47
4/21/2005 14.56
4/22/2005 14.60
4/25/2005 14.34
4/26/2005 14.48
4/27/2005 14.60
4/28/2005 14.71
4/29/2005 14.88
4/30/2005 14.88
5/2/2005 14.86
5/3/2005 14.84
5/4/2005 14.96
5/5/2005 15.09
5/6/2005 15.15
5/9/2005 15.19
5/10/2005 15.13
5/11/2005 15.02
5/12/2005 14.98
5/13/2005 14.72
5/16/2005 14.78
5/17/2005 14.81
5/18/2005 14.87
5/19/2005 14.97
5/20/2005 15.11
5/23/2005 15.14
5/24/2005 15.10
5/25/2005 15.01
5/26/2005 15.17
5/27/2005 15.14
5/31/2005 15.06
6/1/2005 15.15
6/2/2005 15.22
6/3/2005 15.31
6/6/2005 15.22
6/7/2005 15.30
6/8/2005 15.20
6/9/2005 15.25
6/10/2005 15.41
6/13/2005 15.14
6/14/2005 15.22
6/15/2005 15.15
6/16/2005 15.35
6/17/2005 15.33
6/20/2005 15.22
6/21/2005 15.23
6/22/2005 15.15
6/23/2005 15.16
6/24/2005 15.21
6/27/2005 15.20
6/28/2005 15.30
6/29/2005 15.29
6/30/2005 15.22
7/1/2005 15.27
7/5/2005 15.33
7/6/2005 15.48
7/7/2005 15.65
7/8/2005 15.53
7/11/2005 15.58
7/12/2005 15.60
7/13/2005 15.44
7/14/2005 15.45
7/15/2005 15.77
7/18/2005 15.72
7/19/2005 15.64
7/20/2005 15.67
7/21/2005 15.56
7/22/2005 15.66
7/25/2005 15.65
7/26/2005 15.94
7/27/2005 15.99
7/28/2005 16.00
7/29/2005 16.00
7/31/2005 16.00
8/1/2005 16.05
8/2/2005 16.14
8/3/2005 16.16
8/4/2005 16.16
8/5/2005 16.20
8/8/2005 15.93
8/9/2005 15.79
8/10/2005 15.90
8/11/2005 15.86
8/12/2005 15.80
8/15/2005 15.71
8/16/2005 15.77
8/17/2005 15.86
8/18/2005 15.88
8/19/2005 16.00
8/22/2005 15.94
8/23/2005 15.99
8/24/2005 15.93
8/25/2005 15.65
8/26/2005 15.53
8/29/2005 15.44
8/30/2005 15.43
8/31/2005 15.59
9/1/2005 15.84
9/2/2005 15.90
9/6/2005 16.12
9/7/2005 16.23
9/8/2005 16.12
9/9/2005 16.24
9/12/2005 16.39
9/13/2005 16.19
9/14/2005 16.05
9/15/2005 15.95
9/16/2005 15.92
9/19/2005 15.90
9/20/2005 15.94
9/21/2005 15.80
9/22/2005 15.72
9/23/2005 15.76
9/26/2005 15.74
9/27/2005 15.68
9/28/2005 15.77
9/29/2005 15.95
9/30/2005 15.82
FUND SNAPSHOT
- ------------------------------------
Common Share Price $15.82
- ------------------------------------
Common Share Net
Asset Value $17.22
- ------------------------------------
Premium / (Discount) to NAV -8.13%
- ------------------------------------
Market Yield(1) 8.15%
- ------------------------------------
Net Assets Attributable to
Common Shares ($000) $346,806
- ------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/03)
- ------------------------------------
ON SHARE PRICE ON NAV
- ------------------------------------
9-Month
(Cumulative) 7.93% 8.01%
- ------------------------------------
1-Year 15.76% 17.94%
- ------------------------------------
Since Inception 10.97% 17.84%
- ------------------------------------
INDUSTRIES
(as a % of total investments)
- ------------------------------------
Real Estate 28.6%
- ------------------------------------
Sovereign Debt 22.9%
- ------------------------------------
Media 4.5%
- ------------------------------------
Hotels, Restaurants & Leisure 3.7%
- ------------------------------------
Diversified Telecommunication
Services 3.4%
- ------------------------------------
Metals & Mining 3.3%
- ------------------------------------
Oil, Gas, & Consumable Fuels 3.0%
- ------------------------------------
Aerospace & Defense 2.7%
- ------------------------------------
Tobacco 2.3%
- ------------------------------------
Household Durables 2.1%
- ------------------------------------
Containers & Packaging 1.7%
- ------------------------------------
Diversified Financial Services 1.6%
- ------------------------------------
Thrifts & Mortgage Finance 1.6%
- ------------------------------------
Insurance 1.5%
- ------------------------------------
Commercial Services & Supplies 1.5%
- ------------------------------------
Repurchase Agreements 4.0%
- ------------------------------------
Other 11.6%
- ------------------------------------
REAL ESTATE INVESTMENT TRUST
TOP FIVE SUB-INDUSTRIES
(as a % of total investments)
- ------------------------------------
Office Property 10.4%
- ------------------------------------
Apartments 6.8%
- ------------------------------------
Shopping Center 2.9%
- ------------------------------------
Healthcare 2.0%
- ------------------------------------
Storage 1.8%
- ------------------------------------
EMERGING MARKETS SOVEREIGN DEBT
AND FOREIGN CORPORATE BONDS
TOP FIVE COUNTRIES
(as a % of total investments)
- ------------------------------------
Mexico 1.9%
- ------------------------------------
Malaysia 1.6%
- ------------------------------------
Argentina 1.5%
- ------------------------------------
Russia 1.4%
- ------------------------------------
South Africa 1.3%
- ------------------------------------
1 Market yield is based on the Fund's current annualized monthly distribution
divided by the Fund's current market price. The Fund's monthly distributions
to its shareholders may be comprised of ordinary income, net realized capital
gains and, if at the end of the calendar year the Fund's cumulative net
ordinary income and net realized gains are less than the amount of the Fund's
distributions, a tax return of capital.
PORTFOLIO OF INVESTMENTS (UNAUDITED)
NUVEEN DIVERSIFIED DIVIDEND AND INCOME FUND (JDD)
September 30, 2005
SHARES DESCRIPTION(1) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 33.2% (24.4% OF TOTAL INVESTMENTS)
AEROSPACE & DEFENSE - 1.8%
50,000 Lockheed Martin Corporation $ 3,052,000
85,000 Raytheon Company 3,231,700
- ------------------------------------------------------------------------------------------------------------------------------------
6,283,700
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS - 1.7%
69,200 Bank of America Corporation 2,913,320
65,000 Wachovia Corporation 3,093,350
- ------------------------------------------------------------------------------------------------------------------------------------
6,006,670
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES - 1.3%
105,000 Pitney Bowes Inc. 4,382,700
- ------------------------------------------------------------------------------------------------------------------------------------
CONTAINERS & PACKAGING - 0.8%
146,300 Packaging Corp of America 2,839,683
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 2.1%
100,000 Citigroup Inc. 4,552,000
85,000 JPMorgan Chase & Co 2,884,050
- ------------------------------------------------------------------------------------------------------------------------------------
7,436,050
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 4.1%
90,000 KT Corporation, Sponsored ADR 2,025,000
175,500 SBC Communications Inc. 4,206,735
135,000 Sprint Corporation 3,210,300
52,500 Telecom Italia S.p.A., Sponsored ADR 1,711,500
90,600 Verizon Communications Inc. 2,961,714
- ------------------------------------------------------------------------------------------------------------------------------------
14,115,249
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 1.4%
93,000 EDP - Energias de Portugal, S.A., Sponsored ADR 2,594,700
118,000 Korea Electric Power Corporation (KEPCO), Sponsored ADR 2,089,780
- ------------------------------------------------------------------------------------------------------------------------------------
4,684,480
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING - 0.8%
66,700 Albertson's, Inc. 1,710,855
60,812 J Sainsbury plc, Sponsored ADR 1,201,037
- ------------------------------------------------------------------------------------------------------------------------------------
2,911,892
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES - 0.7%
112,000 Newell Rubbermaid Inc. 2,536,800
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 1.3%
73,000 Kimberly-Clark Corporation 4,345,690
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.8%
120,000 Aon Corporation 3,849,600
30,000 Hartford Financial Services Group, Inc. 2,315,100
- ------------------------------------------------------------------------------------------------------------------------------------
6,164,700
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 0.5%
48,900 Dow Jones & Company, Inc. 1,867,491
- ------------------------------------------------------------------------------------------------------------------------------------
METALS & MINING - 2.6%
146,000 Alumina Limited, Sponsored ADR 2,757,940
33,000 POSCO, ADR 1,866,480
26,500 Rio Tinto plc, Sponsored ADR 4,353,950
- ------------------------------------------------------------------------------------------------------------------------------------
8,978,370
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER - 1.2%
25,000 Dominion Resources, Inc. 2,153,500
82,800 United Utilities plc, Sponsored ADR 1,940,004
- ------------------------------------------------------------------------------------------------------------------------------------
4,093,504
- ------------------------------------------------------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS - 4.0%
33,000 ChevronTexaco Corporation 2,136,090
41,800 ConocoPhillips 2,922,238
23,000 Eni S.p.A., Sponsored ADR 3,406,300
14,605 Kerr-McGee Corporation 1,418,292
30,000 Total SA, Sponsored ADR 4,074,600
- ------------------------------------------------------------------------------------------------------------------------------------
13,957,520
- ------------------------------------------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.9%
105,500 International Paper Company 3,143,900
- ------------------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS - 0.9%
110,000 Merck & Co. Inc. 2,993,100
- ------------------------------------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE - 2.1%
81,600 Fannie Mae 3,657,312
94,100 IndyMac Bancorp, Inc. 3,724,478
- ------------------------------------------------------------------------------------------------------------------------------------
7,381,790
- ------------------------------------------------------------------------------------------------------------------------------------
TOBACCO - 3.2%
88,200 Altria Group, Inc. 6,501,222
113,000 Loews Corp - Carolina Group 4,478,190
- ------------------------------------------------------------------------------------------------------------------------------------
10,979,412
- ------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (cost $94,279,359) 115,102,701
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST COMMON STOCKS - 36.6% (26.9% OF TOTAL INVESTMENTS)
APARTMENTS - 8.1%
242,800 AMLI Residential Properties Trust 7,786,596
114,900 Archstone-Smith Trust 4,581,063
57,500 AvalonBay Communities, Inc. 4,927,750
86,200 Camden Property Trust 4,805,650
164,400 Post Properties, Inc. 6,123,900
- ------------------------------------------------------------------------------------------------------------------------------------
28,224,959
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 2.7%
166,000 Nationwide Health Properties, Inc. 3,867,800
293,800 Senior Housing Properties Trust 5,582,200
- ------------------------------------------------------------------------------------------------------------------------------------
9,450,000
- ------------------------------------------------------------------------------------------------------------------------------------
HOTELS - 2.2%
350,000 DiamondRock Hospitality Company 4,112,500
338,736 Hersha Hospitality Trust 3,363,648
- ------------------------------------------------------------------------------------------------------------------------------------
7,476,148
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 0.6%
50,000 First Industrial Realty Trust, Inc. 2,002,500
- ------------------------------------------------------------------------------------------------------------------------------------
MORTGAGE - 0.8%
45,000 American Home Mortgage Investment Corp 1,363,500
220,000 MFA Mortgage Investments, Inc. 1,348,600
- ------------------------------------------------------------------------------------------------------------------------------------
2,712,100
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE PROPERTY - 14.2%
180,300 Arden Realty, Inc. 7,422,951
200,300 Brandywine Realty Trust 6,227,327
219,100 Equity Office Properties Trust 7,166,761
192,000 Glenborough Realty Trust Inc. 3,686,400
130,000 Highwoods Properties, Inc. 3,836,300
435,600 HRPT Properties Trust 5,405,796
158,900 Mack-Cali Realty Corporation 7,140,966
146,800 Maguire Properties, Inc. 4,411,340
115,400 Reckson Associates Realty Corporation 3,987,070
- ------------------------------------------------------------------------------------------------------------------------------------
49,284,911
- ------------------------------------------------------------------------------------------------------------------------------------
REGIONAL MALLS - 1.6%
32,400 Simon Property Group, Inc. 2,401,488
49,900 The Macerich Company 3,240,506
- ------------------------------------------------------------------------------------------------------------------------------------
5,641,994
- ------------------------------------------------------------------------------------------------------------------------------------
SHOPPING CENTER - 4.0%
252,900 Cedar Shopping Centers Inc. 3,659,463
73,500 Federal Realty Investment Trust 4,478,355
221,000 Kite Realty Group Trust 3,297,320
107,100 New Plan Excel Realty Trust 2,457,945
- ------------------------------------------------------------------------------------------------------------------------------------
13,893,083
- ------------------------------------------------------------------------------------------------------------------------------------
STORAGE - 2.4%
90,700 Shurgard Storage Centers, Inc. 5,067,409
165,800 U-Store-It Trust 3,360,766
- ------------------------------------------------------------------------------------------------------------------------------------
8,428,175
- ------------------------------------------------------------------------------------------------------------------------------------
Total Real Estate Investment Trust Common Stocks (cost $99,610,202) 127,113,870
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES DESCRIPTION(1) COUPON VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST PREFERRED STOCKS - 1.1%
(0.8% OF TOTAL INVESTMENTS)
APARTMENTS - 1.1%
150,000 Apartment Investment & Management Company, Series U 7.750% 3,754,500
- ------------------------------------------------------------------------------------------------------------------------------------
Total Real Estate Investment Trust Preferred Stocks (cost $3,707,925) 3,754,500
---------------------------------------------------------------------------------------------------------------------
WEIGHTED RATINGS**
PRINCIPAL AVERAGE STATED ----------------------
AMOUNT (000) DESCRIPTION(1) COUPON MATURITY* MOODY'S S&P VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
VARIABLE RATE SENIOR LOAN INTERESTS(2) - 22.8% (16.7% OF TOTAL INVESTMENTS)
AEROSPACE & DEFENSE - 1.9%
$ 2,467 Hexcel, Term Loan B 5.313% 3/01/12 B2 B+ 2,495,444
1,900 K & F Industries, Inc., Term Loan B 6.284% 11/18/12 B2 B+ 1,914,250
1,625 Vought Aircraft Industries, Inc., Term Loan 6.350% 12/22/11 Ba3 B+ 1,643,701
364 Vought Aircraft Industries, Inc., Tranche B,
Letter of Credit 5.840% 12/22/10 Ba3 B+ 368,239
- ------------------------------------------------------------------------------------------------------------------------------------
6,421,634
- ------------------------------------------------------------------------------------------------------------------------------------
AUTO COMPONENTS - 1.2%
2,500 Federal-Mogul Corporation, Term Loan A (a) 6.090% 2/24/04 N/R N/R 2,350,000
1,217 Tenneco Automotive Inc., Term Loan B 6.080% 12/12/10 B1 B+ 1,239,152
534 Tenneco Automotive Inc., Term Loan B-1 5.943% 12/12/10 B1 B+ 544,338
- ------------------------------------------------------------------------------------------------------------------------------------
4,133,490
- ------------------------------------------------------------------------------------------------------------------------------------
BUILDING PRODUCTS - 1.2%
1,980 Nortek, Inc., Term Loan B 5.915% 8/27/11 B2 B 2,007,473
994 Stile Acquisition Corporation, Canadien Term Loan 5.912% 3/21/13 B2 BB- 998,390
996 Stile Acquisition Corporation, Term Loan B 5.666% 5/13/11 B2 BB- 1,000,091
- ------------------------------------------------------------------------------------------------------------------------------------
4,005,954
- ------------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.1%
1,939 GenTek, Inc., Term Loan B 6.605% 12/31/10 B2 B+ 1,956,273
1,990 Rockwood Specialties Group, Inc., Tranche D 5.930% 7/30/12 B1 B+ 2,024,203
- ------------------------------------------------------------------------------------------------------------------------------------
3,980,476
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES - 0.7%
676 Allied Waste North America, Inc., Letter of Credit 3.100% 3/21/12 B1 BB 681,588
1,770 Allied Waste North America, Inc., Term Loan B 5.851% 3/12/21 B1 BB 1,785,515
- ------------------------------------------------------------------------------------------------------------------------------------
2,467,103
- ------------------------------------------------------------------------------------------------------------------------------------
CONTAINERS & PACKAGING - 1.5%
2,978 Graham Packaging Company, L.P., Term Loan B 6.151% 10/07/11 B2 B 3,020,768
175 Smurfit-Stone Container Corporation,
Deposit-Funded Commitment 2.100% 11/01/11 Ba3 BB- 176,607
1,389 Smurfit-Stone Container Corporation, Term Loan B 5.697% 11/01/11 Ba3 BB- 1,404,349
427 Smurfit-Stone Container Corporation, Term Loan C 5.834% 11/01/11 Ba3 BB- 432,107
- ------------------------------------------------------------------------------------------------------------------------------------
5,033,831
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.6%
1,985 Intelsat, Ltd., Term Loan B 5.813% 7/06/11 B1 B 2,011,466
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.5%
1,630 Sensus Metering Systems Inc., Term Loan B-1 5.954% 12/17/10 B2 B+ 1,649,796
254 Sensus Metering Systems Inc., Term Loan B-2 5.969% 12/17/10 B2 B+ 257,368
- ------------------------------------------------------------------------------------------------------------------------------------
1,907,164
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS - 0.8%
2,738 Michael Foods, Inc., Term Loan B 5.170% 11/20/10 B1 B+ 2,786,174
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE EQUIPMENT & SUPPLIES - 0.3%
927 Kinetic Concepts, Inc., Term Loan B-2 5.780% 8/11/10 Ba3 BB 939,672
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE PROVIDERS & SERVICES - 1.8%
1,960 Beverly Enterprises, Inc., Term Loan B 6.477% 10/22/08 Ba3 BB 1,966,125
2,000 Davita, Inc., Term Loan B (b) TBD TBD B1 BB- 2,032,084
2,175 LifePoint Hospitals, Inc., Term Loan B 5.435% 9/30/11 Ba3 BB 2,199,769
- ------------------------------------------------------------------------------------------------------------------------------------
6,197,978
- ------------------------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE - 2.6%
2,000 24 Hour Fitness Worldwide, Inc., Term Loan B 6.780% 6/06/05 B2 B 2,033,750
2,000 Burger King Corporation, Term Loan B 5.500% 7/17/12 Ba2 B+ 2,033,036
2,000 Penn National Gaming, Inc., Term Loan B (b) TBD TBD Ba3 BB- 2,027,656
513 Venetian Casino Resort, LLC, Delayed Draw,
Term Loan 5.770% 6/15/11 B1 BB- 517,909
2,487 Venetian Casino Resort, LLC, Term Loan 5.770% 6/15/11 B1 BB- 2,511,857
- ------------------------------------------------------------------------------------------------------------------------------------
9,124,208
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.3%
1,100 Conseco, Inc., Term Loan 5.768% 6/22/10 B2 BB- 1,114,094
- ------------------------------------------------------------------------------------------------------------------------------------
IT SERVICES - 1.1%
1,765 Fidelity National Information Services,
Term Loan B 5.478% 3/09/13 Ba3 BB 1,773,510
2,000 SunGard Data Systems, Inc., Term Loan B 6.280% 1/25/13 B1 B+ 2,025,228
- ------------------------------------------------------------------------------------------------------------------------------------
3,798,738
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 5.5%
1,973 Charter Communications Operating, LLC, Term Loan B 6.930% 4/07/11 B2 B 1,984,218
1,499 Dex Media West, LLC, Term Loan B 5.512% 3/09/10 Ba2 BB 1,510,767
1,985 Emmis Operating Company, Term Loan 5.518% 11/10/11 Ba2 B+ 2,001,624
1,970 Loews Cineplex Entertainment Corporation,
Term Loan B 5.880% 6/30/11 B1 B 1,982,991
2,000 Metro-Goldwyn-Mayer Studios, Inc., Term Loan B 6.270% 4/12/12 N/R N/R 2,026,250
1,735 R.H. Donnelley Inc., Tranche D 5.618% 6/30/11 B3 B+ 1,750,209
1,990 Rainbow Media Holdings LLC, Term Loan 6.438% 3/31/12 B1 BB+ 2,010,522
1,910 Regal Cinemas Corporation, Term Loan 6.020% 11/10/10 Ba3 BB- 1,932,240
2,000 UPC, Term Loan H2 6.004% 9/30/12 B1 B 2,024,375
1,968 WMG Acquisition Corp., Term Loan 5.700% 2/27/11 B1 B+ 1,993,393
- ------------------------------------------------------------------------------------------------------------------------------------
19,216,589
- ------------------------------------------------------------------------------------------------------------------------------------
METALS & MINING - 0.5%
1,804 Amsted Industries Incorporated, Term Loan B 6.198% 10/15/10 B1 BB- 1,837,141
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE - 1.2%
1,987 General Growth Properties, Inc., Term Loan B 5.850% 11/12/08 Ba2 BB+ 2,014,339
1,960 LNR Property Corporation, Term Loan 6.711% 2/03/08 B2 B+ 1,985,662
- ------------------------------------------------------------------------------------------------------------------------------------
4,000,001
- ------------------------------------------------------------------------------------------------------------------------------------
Total Variable Rate Senior Loan Interests (cost $78,181,898) 78,975,713
---------------------------------------------------------------------------------------------------------------------
RATINGS**
PRINCIPAL ----------------------
AMOUNT (000) DESCRIPTION(1) COUPON MATURITY MOODY'S S&P VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS SOVEREIGN DEBT AND FOREIGN CORPORATE BONDS - 31.2%
(22.9% OF TOTAL INVESTMENTS)
ARGENTINA - 2.1%
$ 5,750 Argentina Republic 1.330% 12/31/38 N/R B- 2,285,625
1,652 Argentina Republic 8.280% 12/31/33 N/R B- 1,708,563
1,623 Argentina Republic 3.010% 8/03/12 B3 B- 1,309,050
885 Argentine Beverages Financial Trust,144A 7.375% 3/22/12 N/R N/R 918,188
570 Banco de Galicia y Buenos Aires, South America,
Reg S 7.190% 1/01/10 N/R N/R 562,191
345 Transportadora de Gas del Sur S.A., Series B-A,
Reg S 7.000% 12/15/13 N/R CCC+ 343,275
- ------------------------------------------------------------------------------------------------------------------------------------
7,126,892
- ------------------------------------------------------------------------------------------------------------------------------------
BRAZIL - 1.2%
1,620 Brazil Republic 11.000% 8/17/40 B1 BB- 1,988,145
250 Brazil Republic 12.000% 4/15/10 B1 BB- 306,750
1,000 Brazil Republic 7.875% 3/07/15 B1 BB- 1,040,000
800 Brazil Republic 4.250% 4/15/24 B1 BB- 772,000
- ------------------------------------------------------------------------------------------------------------------------------------
4,106,895
- ------------------------------------------------------------------------------------------------------------------------------------
BULGARIA - 0.4%
1,100 Bulgaria Republic, Reg S 8.250% 1/15/15 Ba2 BBB- 1,354,210
- ------------------------------------------------------------------------------------------------------------------------------------
CHILE - 0.8%
550 Chile Republic 6.875% 4/28/09 Baa1 A 589,875
600 Coldelco Inc., Reg S 6.375% 11/30/12 A2 A- 650,940
430 Corporacion Nacional del Cobre, 144A 5.500% 10/15/13 Aa3 A 442,120
1,100 Corporacion Nacional del Cobre, 144A 4.750% 10/15/14 Aa3 A 1,069,460
- ------------------------------------------------------------------------------------------------------------------------------------
2,752,395
- ------------------------------------------------------------------------------------------------------------------------------------
CHINA - 0.2%
610 China Development Bank (b) 5.000% 10/15/15 A2 A- 602,070
- ------------------------------------------------------------------------------------------------------------------------------------
COLOMBIA - 1.0%
350 Colombia Republic 11.750% 2/25/20 Ba2 BB 488,600
700 Colombia Republic 10.000% 1/23/12 Ba2 BB 847,000
610 Colombia Republic 10.375% 1/28/33 Ba2 BB 799,100
1,350 Colombia Republic 8.125% 5/21/24 Ba2 BB 1,454,625
- ------------------------------------------------------------------------------------------------------------------------------------
3,589,325
- ------------------------------------------------------------------------------------------------------------------------------------
DOMINICAN REPUBLIC - 0.5%
1,489 Dominican Republic 4.520% 1/23/18 B3 B 1,658,458
- ------------------------------------------------------------------------------------------------------------------------------------
ECUADOR - 1.2%
3,925 Ecuador Republic, Reg S 9.000% 8/15/30 Caa1 CCC+ 3,722,863
400 Ecuador Republic, 144A 9.000% 8/15/30 Caa1 CCC+ 378,000
- ------------------------------------------------------------------------------------------------------------------------------------
4,100,863
- ------------------------------------------------------------------------------------------------------------------------------------
EL SALVADOR - 0.9%
850 El Salvador Republic, 144A 7.650% 6/15/35 Baa3 BB+ 890,375
750 El Salvador Republic, Reg S 8.500% 7/25/11 Baa3 BB+ 870,305
1,080 El Salvador Republic, Reg S 7.750% 1/24/23 Baa3 BB+ 1,216,462
- ------------------------------------------------------------------------------------------------------------------------------------
2,977,142
- ------------------------------------------------------------------------------------------------------------------------------------
GERMANY - 0.4%
500 Aries Vermogensverwaltung Federation Sovereign
Collateralized Debt, Reg S 9.600% 10/25/14 Ba2 BBB- 661,235
646 Dresdner Bank AG, Ukreximbank LoanParticipation
Notes 7.750% 9/23/09 Ba2 N/R 677,783
- ------------------------------------------------------------------------------------------------------------------------------------
1,339,018
- ------------------------------------------------------------------------------------------------------------------------------------
GUATEMALA - 0.3%
880 Republic of Guatemala, 144A 8.125% 10/06/34 Ba2 BB- 990,000
175 Republic of Guatemala, Reg S 10.250% 11/08/11 Ba2 BB- 215,121
- ------------------------------------------------------------------------------------------------------------------------------------
1,205,121
- ------------------------------------------------------------------------------------------------------------------------------------
HONG KONG - 0.3%
890 Hong Kong, 144A 5.125% 8/01/14 A1 AA- 901,723
- ------------------------------------------------------------------------------------------------------------------------------------
INDONESIA - 0.8%
2,730 Republic of Indonesia, 144A 7.250% 4/20/15 B2 B+ 2,736,825
- ------------------------------------------------------------------------------------------------------------------------------------
KAZAKHSTAN - 0.3%
800 Development Bank of Kazakhstan 7.375% 11/12/13 Baa3 BBB- 902,080
- ------------------------------------------------------------------------------------------------------------------------------------
LUXEMBOURG - 0.9%
300 Tengizchevroil LLP, 144A 6.124% 11/15/14 Baa3 BBB- 308,250
550 UBS Luxembourg SA 6.230% 2/11/15 Baa2 N/R 563,090
1,000 VTB Capital SA, 144A 7.500% 10/12/11 Baa2 BB+ 1,100,000
1,100 VTB Capital SA, 144A 6.250% 7/02/35 Baa2 BB+ 1,148,125
- ------------------------------------------------------------------------------------------------------------------------------------
3,119,465
- ------------------------------------------------------------------------------------------------------------------------------------
MALAYSIA - 2.1%
1,100 Malaysia Republic 8.750% 6/01/09 A3 A- 1,247,766
2,000 Malaysia Republic 7.500% 7/15/11 A3 A- 2,272,262
2,725 Petronas Capital Limited, Reg S 7.000% 5/22/12 A2 A- 3,055,188
200 Petronas Capital Limited, Reg S 7.875% 5/22/22 Baa1 A- 248,899
550 Sarawak International Inc. 5.500% 8/03/15 Baa1 A- 543,593
- ------------------------------------------------------------------------------------------------------------------------------------
7,367,708
- ------------------------------------------------------------------------------------------------------------------------------------
MEXICO - 2.5%
550 America Movil S.A. de C.V. 5.500% 3/01/14 A3 BBB 545,159
895 Conproca SA, Reg S 12.000% 6/16/10 Baa3 BBB- 1,098,613
240 Controladora Comercial Mexicana, 144A 6.625% 6/01/15 Baa2 BBB- 243,471
1,100 Empresa Nacional del Petroleo, 144A 4.875% 3/15/14 A2 A 1,056,315
1,200 Pemex Project Funding Master Trust, 144A 5.750% 12/15/15 Baa1 BBB 1,189,500
750 Pemex Project Funding Master Trust, RegS 6.625% 6/15/35 Baa1 BBB 738,563
1,200 Pemex Project Funding Master Trust 8.500% 2/15/08 Baa1 BBB 1,297,500
275 Petroleos Mexicanos 8.850% 9/15/07 Baa1 BBB 296,863
590 Petroleos Mexicanos 9.375% 12/02/08 Baa1 BBB 665,225
1,000 United Mexican States, Series A 6.375% 1/16/13 Baa1 BBB 1,066,500
220 United Mexican States 8.125% 12/30/19 Baa1 BBB 267,300
200 United Mexican States 8.300% 8/15/31 Baa1 BBB 250,500
430 United Mexican States 6.625% 3/03/15 Baa1 BBB 468,270
- ------------------------------------------------------------------------------------------------------------------------------------
9,183,779
- ------------------------------------------------------------------------------------------------------------------------------------
PANAMA - 0.9%
1,400 Panama Republic 9.375% 4/01/29 Ba1 BB 1,785,000
650 Panama Republic 9.625% 2/08/11 Ba1 BB 780,000
460 Panama Republic 9.375% 1/16/23 Ba1 BB 583,050
- ------------------------------------------------------------------------------------------------------------------------------------
3,148,050
- ------------------------------------------------------------------------------------------------------------------------------------
PERU - 1.5%
1,911 Peru Republic 5.000% 3/07/17 Ba3 BB 1,863,225
1,169 Peru Republic 5.000% 3/07/17 Ba3 BB 1,159,736
915 Peru Republic 8.750% 11/21/33 Ba3 BB 1,109,438
450 Peru Republic 8.375% 5/03/16 Ba3 BB 528,750
610 Peru Republic 7.350% 7/21/25 Ba3 BB 649,650
- ------------------------------------------------------------------------------------------------------------------------------------
5,310,799
- ------------------------------------------------------------------------------------------------------------------------------------
PHILIPPINES - 1.2%
750 National Power Corporation, 144A 8.073% 8/23/11 B1 BB- 752,368
1,500 Philippines Republic 9.375% 1/18/17 B1 BB- 1,651,875
1,193 Philippines Republic 8.375% 2/15/11 B1 BB- 1,251,159
670 Philippines Republic 8.000% 1/15/16 B1 BB- 675,863
- ------------------------------------------------------------------------------------------------------------------------------------
4,331,265
- ------------------------------------------------------------------------------------------------------------------------------------
POLAND - 0.1%
500 Poland Republic 5.250% 1/15/14 A2 BBB+ 515,625
- ------------------------------------------------------------------------------------------------------------------------------------
QATAR - 0.6%
373 Ras Laffan Liquefied Natural Gas Company
Limited, 144A 3.437% 9/15/09 Baa1 A- 360,576
780 Ras Laffan Liquified Natural Gas Company
Limited, Reg S 3.437% 9/15/09 Baa1 A- 758,122
550 State of Qatar, Reg S 9.750% 6/15/30 A1 A+ 844,250
- ------------------------------------------------------------------------------------------------------------------------------------
1,962,948
- ------------------------------------------------------------------------------------------------------------------------------------
RUSSIA - 1.8%
830 GazStream SA, 144A 5.625% 7/22/13 Baa2 BB- 836,225
1,000 Russia Federation, Reg S 5.000% 3/31/30 Baa3 BBB- 1,151,554
2,050 Russia Ministry of Finance 3.000% 5/14/08 Ba2 BBB- 1,956,520
600 Russia Ministry of Finance 3.000% 5/14/11 Ba1 BBB- 535,560
750 Russian Federation, Reg S 11.000% 7/24/18 Baa3 BBB- 1,148,585
400 Russian Ministry of Finance, Reg S 12.750% 6/24/28 Ba2 BB+ 755,156
- ------------------------------------------------------------------------------------------------------------------------------------
6,383,600
- ------------------------------------------------------------------------------------------------------------------------------------
SAINT LUCIA - 0.1%
300 First Citizens Saint Lucia Limited, Reg S 5.125% 2/14/11 A2 BBB 297,266
- ------------------------------------------------------------------------------------------------------------------------------------
SERBIA - 0.6%
2,500 Serbia Republic, 144A 3.750% 11/01/24 N/R BB- 2,246,875
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA - 1.8%
5,450 South Africa Republic 9.125% 5/19/09 Baa1 BBB+ 6,213,000
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH KOREA - 0.4%
410 Hanarotelecom Inc., 144A 7.000% 2/01/12 Ba2 BB 405,264
895 Korea Development Bank 4.625% 9/16/10 A3 A 884,125
- ------------------------------------------------------------------------------------------------------------------------------------
1,289,389
- ------------------------------------------------------------------------------------------------------------------------------------
THAILAND - 0.1%
250 Bangkok Bank Public Company Limited, Reg S 9.025% 3/15/29 Baa2 BB- 318,715
- ------------------------------------------------------------------------------------------------------------------------------------
TRINIDAD - 0.5%
1,233 Republic of Trinidad and Tobago, Reg S 9.750% 7/01/20 Baa3 A- 1,757,256
- ------------------------------------------------------------------------------------------------------------------------------------
TUNISIA - 0.6%
1,700 Banque de Tunisie 7.375% 4/25/12 Baa2 BBB 1,929,500
- ------------------------------------------------------------------------------------------------------------------------------------
TURKEY - 1.3%
825 Turkey Republic 9.000% 6/30/11 B1 BB- 953,906
1,875 Turkey Republic 7.375% 2/05/25 B1 BB- 1,882,031
1,275 Turkey Republic 7.000% 6/05/20 B1 BB- 1,263,844
350 Turkey Republic 11.750% 6/15/10 B1 BB- 437,500
- ------------------------------------------------------------------------------------------------------------------------------------
4,537,281
- ------------------------------------------------------------------------------------------------------------------------------------
UKRAINE - 0.4%
600 Republic of Ukraine, Reg S 6.875% 3/04/11 B1 BB- 633,420
644 Ukraine Government, Reg S 11.000% 3/15/07 B1 B 682,367
- ------------------------------------------------------------------------------------------------------------------------------------
1,315,787
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM - 0.2%
550 Vedanta Resources PLC, Reg S 6.625% 2/22/10 Ba2 BB+ 546,963
- ------------------------------------------------------------------------------------------------------------------------------------
URUGUAY - 1.1%
970 Uruguay Republic 9.250% 5/17/17 B3 B 1,092,463
2,150 Uruguay Republic 7.250% 2/15/11 B3 B 2,246,750
315 Uruguay Republic 7.500% 3/15/15 B3 B 324,450
- ------------------------------------------------------------------------------------------------------------------------------------
3,663,663
- ------------------------------------------------------------------------------------------------------------------------------------
VENEZUELA - 1.4%
1,000 Venezuela Republic 9.375% 1/13/34 B2 B+ 1,186,500
550 Venezuela Republic 8.500% 10/08/14 B2 B+ 611,875
10 Venezuela Republic 9.250% 9/15/27 B2 B+ 11,855
1,200 Venezuela Republic 7.650% 4/21/25 B2 B 1,216,200
1,935 Venezuela Republic, Reg S 5.375% 8/07/10 Caa1 B- 1,889,522
- ------------------------------------------------------------------------------------------------------------------------------------
4,915,952
- ------------------------------------------------------------------------------------------------------------------------------------
VIETNAM - 0.7%
2,593 Socialist Republic of Vietnam 4.813% 3/14/16 B1 BB- 2,413,960
- ------------------------------------------------------------------------------------------------------------------------------------
Total Emerging Markets Sovereign Debt and Foreign Corporate Bonds (cost $102,625,432) 108,121,863
---------------------------------------------------------------------------------------------------------------------
U.S. CONVERTIBLE BONDS - 1.4% (1.0% OF TOTAL INVESTMENTS)
METALS & MINING - 1.4%
5,000 Trizec Hahn Corporation 3.000% 1/29/21 N/R N/R 4,756,250
- ------------------------------------------------------------------------------------------------------------------------------------
Total U.S. Convertible Bonds (cost $3,639,668) 4,756,250
---------------------------------------------------------------------------------------------------------------------
U.S. CORPORATE BONDS - 4.5% (3.3% OF TOTAL INVESTMENTS)
HOTELS, RESTAURANTS & LEISURE - 2.4%
2,000 Aztar Corporation 9.000% 8/15/11 Ba3 B+ 2,135,000
2,150 Harrahs Entertainment 7.875% 12/15/05 Ba1 BB+ 2,168,813
2,000 MGM Mirage, Inc. 6.750% 8/01/07 Ba1 BB+ 2,045,000
2,000 Park Place Entertainment 7.875% 12/15/05 Ba2 BB- 2,017,500
- ------------------------------------------------------------------------------------------------------------------------------------
8,366,313
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES - 2.1%
2,000 D.R. Horton, Inc. 7.500% 12/01/07 Ba1 BB+ 2,103,084
2,000 KB Home 8.625% 12/15/08 Ba2 BB- 2,135,888
3,000 Standard Pacific Corporation 6.500% 10/01/08 Ba2 BB 2,988,750
- ------------------------------------------------------------------------------------------------------------------------------------
7,227,722
- ------------------------------------------------------------------------------------------------------------------------------------
Total U.S. Corporate Bonds (cost $15,803,509) 15,594,035
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT (000) DESCRIPTION(1) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 5.4% (4.0% TOTAL INVESTMENTS)
State Street Bank, 3.150%, dated 9/30/05, due 10/03/05, repurchase price $18,821,396
$ 18,816 collateralized by $19,495,000 U.S. Treasury Bills, 3.930%, due 3/02/06, value $19,192,828 18,816,457
===========-------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements (cost $18,816,457) 18,816,457
---------------------------------------------------------------------------------------------------------------------
Total Investments (cost $416,664,450) - 136.2% 472,235,389
---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (1.6)% (5,429,558)
---------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (34.6)% (120,000,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $346,805,831
=====================================================================================================================
(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 adjusted by reference to a base
short-term, floating lending rate plus an assigned fixed rate.
These floating lending rates are generally (i) the lending rate
referenced by the London Inter-Bank Offered Rate ("LIBOR"), or
(ii) the prime rate offered by one or more major United States
banks.
Senior loans may be considered 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.
* 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.
** Ratings below Baa by Moody's Investor Service, Inc. or BBB by
Standard & Poor's Group are considered to be below investment
grade.
(a) At or subsequent to September 30, 2005, this issue was under the
protection of Federal Bankruptcy Court.
(b) Purchased on a when-issued or delayed delivery basis.
ADR American Depositary Receipt.
144A 144A securities are those which are exempt from registration
under Rule 144A of the Securities Act of 1933, as amended. These
securities may only be resold in transactions exempt from
registration which are normally those transactions with
qualified institutional buyers.
Reg S Regulation S allows U.S. companies to sell securities to
persons or entities located outside of the U.S. without
registering those securities with the SEC. Specifically, Reg S
provides a safe harbor from the registration requirements of the
Securities Act for the offers and sales of securities by both
foreign and domestic issuers that are made outside the United
States.
TBD Senior Loan purchased on a when-issued basis in the primary
market. Certain details associated with this purchase are not
known prior to the settlement date of the transaction. In
addition, Senior Loans typically trade without accrued interest
and therefore a weighted average coupon rate is not available
prior to settlement. At settlement, if still unknown, the
borrower or counterparty will provide the Fund with the final
weighted average coupon rate and maturity date.
N/R Investment is not rated.
See accompanying notes to financial statements.
Statement of
ASSETS AND LIABILITIES September 30, 2005 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $416,664,450) $472,235,389
Receivables:
Dividends 1,008,462
Interest 2,644,719
Investments sold 5,868,286
Reclaims 12,159
Other assets 15,018
- --------------------------------------------------------------------------------
Total assets 481,784,033
- --------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 14,594,986
Accrued expenses:
Management fees 218,312
Other 133,454
FundPreferred share dividends payable 31,450
- --------------------------------------------------------------------------------
Total liabilities 14,978,202
- --------------------------------------------------------------------------------
FundPreferred shares, at liquidation value 120,000,000
- --------------------------------------------------------------------------------
Net assets applicable to Common shares $346,805,831
================================================================================
Common shares outstanding 20,145,123
================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 17.22
================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
- --------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 201,451
Paid-in surplus 284,729,686
Undistributed (Over-distribution of) net investment income (9,858,276)
Accumulated net realized gain from investments 16,162,031
Net unrealized appreciation of investments 55,570,939
- --------------------------------------------------------------------------------
Net assets applicable to Common shares $346,805,831
================================================================================
Authorized shares:
Common Unlimited
FundPreferred shares Unlimited
================================================================================
See accompanying notes to financial statements.
Statement of
OPERATIONS Nine Months Ended September 30, 2005 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign tax withheld of $103,252) $ 5,746,928
Interest (net of foreign tax withheld of $11,237) 9,231,335
- --------------------------------------------------------------------------------
Total investment income 14,978,263
- --------------------------------------------------------------------------------
EXPENSES
Management fees 3,032,711
FundPreferred shares - auction fees 224,384
FundPreferred shares - dividend disbursing agent fees 9,920
Shareholders' servicing agent fees and expenses 1,279
Custodian's fees and expenses 123,043
Trustees' fees and expenses 10,004
Professional fees 32,328
Shareholders' reports - printing and mailing expenses 51,850
Stock exchange listing fees 7,835
Investor relations expense 51,452
Other expenses 18,964
- --------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 3,563,770
Custodian fee credit (303)
Expense reimbursement (1,087,206)
- --------------------------------------------------------------------------------
Net expenses 2,476,261
- --------------------------------------------------------------------------------
Net investment income 12,502,002
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain from investments 16,308,670
Change in net unrealized appreciation (depreciation) of investments (113,405)
- --------------------------------------------------------------------------------
Net realized and unrealized gain 16,195,265
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO FUNDPREFERRED SHAREHOLDERS
From net investment income (2,645,139)
From accumulated net realized gains from investments --
- --------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to FundPreferred shareholders (2,645,139)
- --------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from operations $26,052,128
================================================================================
See accompanying notes to financial statements.
Statement of
CHANGES IN NET ASSETS (Unaudited)
NINE MONTHS ENDED YEAR ENDED
9/30/05 12/31/04
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $12,502,002 $ 16,226,149
Net realized gain from investments 16,308,670 9,195,966
Change in net unrealized appreciation (depreciation) of investments (113,405) 35,806,329
Distributions to FundPreferred shareholders:
From net investment income (2,645,139) (1,200,397)
From accumulated net realized gains from investments -- (601,610)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from operations 26,052,128 59,426,437
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (18,684,601) (16,301,063)
From accumulated net realized gains from investments -- (8,284,807)
Tax return of capital -- (187,892)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Common shareholders (18,684,601) (24,773,762)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares (4,043) --
Net proceeds from shares issued to shareholders due to
reinvestment of distributions -- 411,807
FundPreferred shares offering costs (4,043) (4,868)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from
capital share transactions (8,086) 406,939
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares 7,359,441 35,059,614
Net assets applicable to Common shares at the beginning of period 339,446,390 304,386,776
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of period $346,805,831 $339,446,390
====================================================================================================================================
Undistributed (Over-distribution of) net investment income at the end of period $ (9,858,276) $ (1,030,538)
====================================================================================================================================
See accompanying notes to financial statements.
Statement of
CASH FLOWS Nine Months Ended September 30, 2005 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS $ 26,052,128
Adjustments to reconcile the net increase in net assets applicable to Common shares from operations
to net cash provided by operating activities:
Purchases of investment securities (179,673,515)
Proceeds from short-term investment securities, net 732,386
Proceeds from sales of investment securities 179,680,423
Amortization/(Accretion) of premiums and discounts of investment securities, net 413,047
Decrease in receivable for dividends 199,754
Decrease in receivable for interest 3,100
Increase in receivable for investments sold (4,013,173)
Decrease in receivable for reclaims 6,724
Increase in other assets (7,993)
Increase in payable for investments purchased 8,594,986
Decrease in management fees payable (3,225)
Decrease in other liabilities (37,112)
Increase in FundPreferred share dividends payable 9,723
Net realized (gain) from investments (16,308,670)
Change in net unrealized (appreciation)/depreciation of investments 113,405
Net realized (gain)/loss from paydowns 138,737
Capital gain and return of capital distributions from investments 2,791,962
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 18,692,687
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions paid to Common shareholders (18,684,601)
Net proceeds from sale of Common shares (4,043)
FundPreferred shares offering costs (4,043)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (18,692,687)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH --
Cash at the beginning of period --
- ------------------------------------------------------------------------------------------------------------------------------------
CASH AT THE END OF PERIOD --
====================================================================================================================================
See accompanying notes to financial statements.
Notes to
FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
Nuveen Diversified Dividend and Income Fund (the "Fund") is a 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 "JDD." The Fund was organized
as a Massachusetts business trust on July 18, 2003.
The Fund seeks to provide high current income and total return by investing
primarily in a portfolio of dividend-paying common stocks, securities issued by
Real Estate Investment Trusts ("REITs"), debt securities and other non-equity
instruments that are issued by, or that are related to, government,
government-related and supernational issuers located, or conducting their
business, in emerging market countries ("emerging markets sovereign debt and
foreign corporate bonds") and senior loans.
Effective January 1, 2005, Nuveen Institutional Advisory Corp. ("NIAC"), the
Fund's previous Adviser, and its affiliate, Nuveen Advisory Corp. ("NAC"), were
merged into Nuveen Asset Management ("NAM"), each wholly owned subsidiaries of
Nuveen Investments, Inc. ("Nuveen"). As a result of the merger, NAM is now the
Adviser to all funds previously advised by either NIAC or NAC.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with U.S.
generally accepted accounting principles.
Investment Valuation
Exchange-listed securities are generally valued at the last sales price on the
securities exchange on which such securities are primarily traded. Securities
traded on a securities exchange for which there are no transactions on a given
day or securities not listed on a securities exchange are valued at the mean of
the closing bid and asked prices. Securities traded on Nasdaq are valued at the
Nasdaq Official Closing Price. The prices of fixed-income securities and senior
loans are generally provided by an independent pricing service approved by the
Fund's Board of Trustees and based on the mean between the bid and asked prices.
When price quotes are not readily available, the pricing service or, in the
absence of a pricing service for a particular security, the Board of Trustees of
the Fund, or its designee, may establish fair market value using a wide variety
of market data including yields or prices of investments of comparable quality,
type of issue, coupon, maturity and rating, market quotes or indications of
value from security dealers, evaluations of anticipated cash flows or
collateral, general market conditions and other information and analysis,
including the obligor's credit characteristics considered relevant by the
pricing service or the Board of Trustee's designee. Short-term securities are
valued at amortized cost, which approximates market value.
The senior loans in which the Fund invests are not listed on an organized
exchange and the secondary market for such investments may be less liquid
relative to markets for other fixed income securities. Consequently, the value
of senior loans, 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. Trade date for
senior loans purchased in the "primary market" is considered the date on which
the loan allocations are determined. Trade date for senior loans purchased in
the "secondary market" is the date on which the transaction is entered into.
Realized gains and losses from investment transactions are determined on the
specific identification method. Investments purchased on a when-issued or
delayed delivery basis may have extended settlement periods. Any investments so
purchased are subject to market fluctuation during this period. The Fund
maintains liquid assets with a current value at least equal to the amount of the
when-issued and delayed delivery purchase commitments. At September 30, 2005,
the Fund had outstanding delayed delivery commitments of $4,633,046.
Investment Income
Dividend income is recorded on the ex-dividend date or, for foreign securities,
when information is available. Interest income, which includes the amortization
of premiums and accretion of discounts for financial reporting purposes, is
recorded on an accrual basis. Interest income also includes paydown gains and
losses on senior loans. Fee income consists primarily of amendment fees.
Amendment fees are earned as compensation for evaluating and accepting changes
to the original loan agreement and are recognized when received.
Income Taxes
The Fund intends to distribute substantially all net investment income and net
capital gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required.
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
Dividends and Distributions to Common Shareholders
Distributions to Common shareholders are recorded on the ex-dividend date. The
amount and timing of distributions are determined in accordance with federal
income tax regulations, which may differ from U.S. generally accepted accounting
principles.
The Fund intends to make monthly cash distributions to Common Shareholders of a
stated dollar amount based primarily on the Fund's net investment income but
also secondarily on net realized capital gains and/or on net unrealized capital
gains in the Fund's portfolio (stated in terms of a fixed cents per Common Share
dividend rate) ("Managed Distribution Policy"). The Fund seeks to maintain a
stable distribution level, subject to approval and oversight by the Fund's Board
of Trustees. Distributions will be made only after paying any accrued dividends
or making any redemption or liquidation payments to FundPreferred shares, if
any, and interest and required principal payments on borrowings, if any. Under
the Managed Distribution Policy, if, for any monthly distribution, net
investment income and net realized capital gain were less than the amount of the
distribution, the difference would be distributed from the Fund's assets and
would be treated by shareholders as a return of capital for tax purposes.
Distributions during the first nine months of the fiscal year are classified as
having been paid from net investment income; consequently, this will negatively
impact the amount of undistributed net investment income shown in the financial
statements in this interim report. The final determination of the source of all
distributions for the year are made after the end of the year and reflected in
the financial statements contained in the annual report.
REIT distributions received by the Fund are generally comprised of investment
income, long-term and short-term capital gains, and a return of REIT capital.
The actual character of amounts received during the period are not known until
after the fiscal year-end of the Fund. For the twelve months ended December 31,
2004, the character of distributions to the Fund from the REITs was 51.30%
ordinary income, 28.25% long-term and short-term capital gains, and 20.45%
return of REIT capital.
For the nine months ended September 30, 2005, the Fund applied the actual
percentages for the twelve months ended December 31, 2004, described above, to
its receipts from the REITs and treated as income in the Statement of Operations
only the amount of ordinary income so calculated. The Fund adjusts that
estimated breakdown of income type (and consequently its net investment income)
as necessary early in the following calendar year when the REITs inform their
shareholders of the actual breakdown of income type. For the fiscal year ended
December 31, 2004, the Fund applied the actual character of distributions
reported by the REITs in which the Fund invests to its receipts from the REITS.
If a REIT held in the portfolio of investments did not report the actual
character of its distributions during the period, the Fund treated the
distributions as ordinary income.
During the nine months ended September 30, 2005, the Fund treated each
distribution to its shareholders from the portfolio REITs as being entirely from
net investment income. The Fund will recharacterize those distributions as being
from ordinary income, long-term and short-term capital gains, and return of
capital, if necessary, at the beginning of the subsequent year, based upon the
income type breakdown information conveyed at the time by the REITs whose
securities are held in the Fund's portfolio. Consequently, the financial
statements at September 30, 2005, reflect an over-distribution of net investment
income that is at least partly attributable to the fact that some of the amounts
received by the Fund from the portfolio REITS, but none of the dividends paid by
the Fund to shareholders, were treated as something other than ordinary income.
For the fiscal year ended December 31, 2004, the Fund applied the actual
character of distributions reported by the REITs in which the Fund invests to
the distributions paid to the Fund shareholders.
FundPreferred Shares
The Fund has issued and outstandings 2,400 Series T and 2,400 Series W,
FundPreferred shares, $25,000 stated value per share, as a means of effecting
financial leverage. The dividend rate paid by the Fund on each Series is
determined every seven days, pursuant to a dutch auction process overseen by the
auction agent, and is payable at the end of each rate period.
Derivative Financial Instruments
The Fund may use derivatives or other transactions for the purpose of hedging
the portfolio's exposure to common stock risk, high yield credit risk, foreign
currency exchange risk and the risk of increases in interest rates. Although the
Fund is authorized to invest in such financial instruments, and may do so in the
future, it did not make any such investment during the nine months ended
September 30,2005.
Repurchase Agreements
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian take possession of the underlying collateral
securities, the fair value of which exceeds the principal amount of the
repurchase transaction, including accrued interest, at all times. If the seller
defaults, and the fair value of the collateral declines, realization of the
collateral may be delayed or limited.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on the Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Indemnifications
Under the Fund's organizational documents, its Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, in the normal course of business, the Fund
enters into contracts that provide general indemnifications to other parties.
The Fund's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Fund that have not yet
occurred. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
2. FUND SHARES
The Fund did not engage in transactions in its own shares during the nine months
ended September 30, 2005.
During the fiscal year ended December 31, 2004, 26,242 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
nine months ended September 30, 2005, aggregated $179,673,515 and $179,680,423,
respectively.
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, recognition of
premium amortization on debt securities, recognition of income on REIT
securities, and timing differences in recognizing certain gains and losses on
investment transactions.
At September 30, 2005, the cost of investments was as follows:
- --------------------------------------------------------------------------------
Cost of investments $418,238,571
================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at September 30, 2005, were as follows:
- --------------------------------------------------------------------------------
Gross unrealized:
Appreciation $59,976,461
Depreciation (5,979,643)
- --------------------------------------------------------------------------------
Net unrealized appreciation of investments $53,996,818
================================================================================
The tax components of undistributed net ordinary income and net realized gains
at December 31, 2004, the Fund's last fiscal year end, were as follows:
- --------------------------------------------------------------------------------
Undistributed net ordinary income * $ --
Undistributed net long-term capital gains --
================================================================================
* Net ordinary income consists of net taxable income derived from dividends,
interest, and net short-term capital gains, if any.
The tax character of distributions paid during the fiscal year ended December
31, 2004, the Fund's last fiscal year end, was designated for purposes of the
dividends paid deduction as follows:
- --------------------------------------------------------------------------------
Distributions from net ordinary income * $22,551,616
Distributions from net long-term capital gains 3,819,302
Tax return of capital 187,892
================================================================================
* Net ordinary income consists of net taxable income derived from dividends,
interest, and net short-term capital gains, if any.
The Fund designated as a long-term capital gain dividend, pursuant to Internal
Revenue Code Section 852(b)(3), the amount necessary to reduce the earnings and
profits of the Fund related to net capital gain to zero for the tax period ended
December 31, 2004.
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all funds assets managed by the
Adviser, and a specific fund-level component, based only on the amount of assets
within the Fund. This pricing structure enables Nuveen fund shareholders to
benefit from growth in the assets within each individual fund as well as from
growth in the amount of complex-wide assets managed by the Adviser.
The annual fund-level fee, payable monthly, for the Fund is based upon the
average daily Managed Assets of the Fund as follows:
AVERAGE DAILY MANAGED ASSETS FUND-LEVEL FEE RATE
- --------------------------------------------------------------------------------
For the first $500 million .7000%
For the next $500 million .6750
For the next $500 million .6500
For the next $500 million .6250
For Managed Assets over $2 billion .6000
================================================================================
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the table below. As
of September 30, 2005, the complex-level fee rate was .1898%.
COMPLEX-LEVEL ASSETS(1) COMPLEX-LEVEL FEE RATE
- --------------------------------------------------------------------------------
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion (2) .1400
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds
in the U.S.
(2) With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level
fee rate for such complex-wide Managed Assets shall be .1400% until such
time as a different rate or rates is determined.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Adviser has entered
into Sub-Advisory Agreements with NWQ Investment Management Company, LLC
("NWQ"), Security Capital Research & Management Incorporated ("Security
Capital"), Symphony Asset Management, LLC ("Symphony") and Wellington Management
Company, LLP ("Wellington"). Nuveen owns a controlling interest in NWQ while key
management of NWQ owns a non-controlling minority interest. Symphony is an
indirect wholly owned subsidiary of Nuveen. NWQ manages the portion of the
Fund's investment portfolio allocated to dividend-paying common stocks including
American Depositary Receipts ("ADRs"). Security Capital manages the portion of
the Fund's investment portfolio allocated to securities issued by real estate
companies including REITs. Symphony manages the portion of the Fund's investment
portfolio allocated to senior loans. Wellington manages the portion of the
Fund's investment portfolio allocated to emerging markets sovereign debt and
foreign corporate bonds. NWQ, Security Capital, Symphony and Wellington are
compensated for their services to the Fund from the management fee paid to the
Adviser.
The Fund pays no compensation directly to those of its Trustees who are
affiliated with the Adviser or to its officers, all of whom receive remuneration
for their services to the Fund from the Adviser or its affiliates. The Board of
Trustees has adopted a deferred compensation plan for independent Trustees that
enables Trustees to elect to defer receipt of all or a portion of the annual
compensation they are entitled to receive from certain Nuveen advised Funds.
Under the plan, deferred amounts are treated as though equal dollar amounts had
been invested in shares of select Nuveen advised Funds.
For the first eight years of the Fund's operations, the Adviser has agreed to
reimburse the Fund, as a percentage of average daily Managed Assets, for fees
and expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
- --------------------------------------------------------------------------------
2003* .32% 2008 .32%
2004 .32 2009 .24
2005 .32 2010 .16
2006 .32 2011 .08
2007 .32
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse the Fund for any portion of its fees and
expenses beyond September 30, 2011.
6. COMMITMENTS
Pursuant to the terms of certain of the variable rate senior loan agreements,
the Fund may have unfunded senior loan commitments. The Fund 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 senior loan
commitments. At September 30, 2005, there were no such unfunded senior loan
commitments.
7. SENIOR LOAN PARTICIPATION COMMITMENTS
With respect to the senior loans held in the Fund's portfolio, the Fund may: 1)
invest in assignments; 2) act as a participant in primary lending syndicates; or
3) invest in participations. 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, rather than directly
with the Borrower. As such, the Fund not only assumes the credit risk of the
Borrower, but also that of the Selling Participant or other persons
interpositioned between the Fund and the Borrower. At September 30, 2005, there
were no such outstanding participation commitments.
8. ANNOUNCEMENT REGARDING PARENT COMPANY OF ADVISER
In early April, 2005, The St. Paul Travelers Companies, Inc. ("St. Paul
Travelers"), which owned 79% of Nuveen, (A) completed a public offering of a
substantial portion of its equity stake in Nuveen, (B) sold Nuveen $200 million
of its Nuveen shares, (C) entered into an agreement with Nuveen to sell an
additional $400 million of its Nuveen shares on a "forward" basis with payment
for and settlement of these shares delayed for several months, and (D) entered
into agreements with two unaffiliated investment banking firms to sell an amount
equal to most or all of its remaining Nuveen shares for current payment but for
future settlement. Transactions (C) and (D) above were settled in late July,
which effectively reduced St. Paul Travelers' controlling stake in Nuveen and
was deemed an "assignment" (as defined in the 1940 Act) of the investment
management agreement between the Fund and the Adviser, which resulted in the
automatic termination of the agreement under the 1940 Act. In anticipation of
such deemed assignment, the Board of Trustees had approved a new ongoing
investment management agreement for the Fund and the submission of the agreement
for approval by the Fund's shareholders, which shareholder approval was received
prior to the settlement of transactions (C) and (D). The new ongoing management
agreement took effect upon such settlement.
9. SUBSEQUENT EVENTS -- DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Fund declared a distribution of $.1075 per Common share which was paid on
November 1, 2005, to shareholders of record on October 15, 2005.
Financial
HIGHLIGHTS (Unaudited)
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 Tax
Share Net Unrealized FundPreferred FundPreferred Common Common Return
Net Asset Investment Investment Share- Share- Share- Share- of
Value Income(a) Gain holders+ holders+ Total holders holders Capital Total
====================================================================================================================================
Period Ended 12/31:
2005(c) $16.85 $.62 $ .81 $(.13) $ -- $1.30 $(.93) $ -- $ -- $ (.93)
2004 15.13 .81 2.23 (.06) (.03) 2.95 (.81) (.41) (.01) (1.23)
2003(b) 14.33 .18 1.01 (.01) -- 1.18 (.18) (.02) (.01) (.21)
====================================================================================================================================
Total Returns
-------------------
Based
Offering on
Costs and Ending Common
FundPreferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
==========================================================================================
Period Ended 12/31:
2005(c) $ -- $17.22 $15.82 7.93% 8.01%
2004 -- 16.85 15.57 8.04 20.44
2003(b) (.17) 15.13 15.65 5.76 7.04
==========================================================================================
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
------------------------------- -------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
=============================================================================================================================
Period Ended 12/31:
2005(c) $346,806 1.42%* 4.55%* .99%* 4.99%* 41%
2004 339,446 1.50 4.74 1.06 5.19 46
2003(b) 304,387 1.26* 4.51* .87* 4.89* 28
=============================================================================================================================
FundPreferred Shares at End of Period
--------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
===========================================================================
Period Ended 12/31:
2005(c) $120,000 $25,000 $97,251
2004 120,000 25,000 95,718
2003(b) 120,000 25,000 88,414
===========================================================================
* Annualized.
** Total Investment Return on Market Value is the combination of changes in
the market price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. Total Return on Common Share Net
Asset Value is the combination of changes in Common Share net asset value,
reinvested dividend income at net asset value and reinvested capital gains
distributions at net asset value, if any. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to FundPreferred
shareholders; income ratios reflect income earned on assets attributable to
FundPreferred shares.
(a) Per share Net Investment Income is calculated using the average daily
shares method.
(b) For the period September 25, 2003 (commencement of operations) through
December 31, 2003.
(c) For the nine months ended September 30, 2005.
See accompanying notes to financial statements.
Other Useful
INFORMATION
In April, 2005, The St. Paul Travelers Companies, Inc. ("St. Paul Travelers")
sold the majority of its controlling equity interest in Nuveen Investments, Inc.
("Nuveen") to the general public. Nuveen is the parent of Nuveen Asset
Management ("NAM"), which is each Fund's investment manager. This sale was
deemed to be an "assignment" of the investment management agreement between each
Fund and NAM and, if applicable, of the sub-advisory agreement between NAM and
the Fund's sub-adviser. As required by law, the shareholders of each Fund were
asked to approve a new investment management agreement and, if applicable, a new
subadvisory agreement that reflected this change in ownership. The shareholders
of each Fund voted this approval at a Shareholders' Meeting on July 26, 2005.
There were no changes to the investment objectives or management of any Fund as
a result of these actions.
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
The Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
most recent 12-month period ended June 30, 2005, and (iii) a description of the
policies and procedures that the Fund used to determine how to vote proxies
relating to portfolio securities are available without charge, upon request, by
calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at
www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
Reference Section at 450 Fifth Street NW, Washington, D.C. 20549.
GLOSSARY OF TERMS USED IN THIS REPORT
AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return that would have been necessary each year to equal the
investment's actual cumulative performance (including change in NAV or market
price and reinvested dividends and capital gains distributions, if any) over the
time period being considered.
MARKET YIELD: Market yield is based on the Fund's current annualized monthly
distribution divided by the Fund's current market price. The Fund's monthly
distributions to its shareholders may be comprised of ordinary income, net
realized capital gains and, if at the end of the calendar year the Funds'
cumulative net ordinary income and net realized gains are less than the amount
of the Fund's distributions, a tax return of capital.
NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any MuniPreferred shares
issued in order to leverage the Fund) from its total assets and then dividing
the remainder by the number of shares outstanding. Fund NAVs are calculated at
the end of each business day.
BOARD OF TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Jack B. Evans
William C. Hunter
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Eugene S. Sunshine
FUND MANAGER
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, IL
The Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the period covered by this report. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
ITEM 2. CODE OF ETHICS.
Not applicable to this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to this filing.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this filing.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable at this time.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board implemented after the registrant
last provided disclosure in response to this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")(17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form.
(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 to
this filing.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons: Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. 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 Diversified Dividend and Income Fund
-----------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: December 8, 2005
-------------------------------------------------------------------
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: December 8, 2005
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: December 8, 2005
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.