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 811-21705
---------------------
Nuveen Tax-Advantaged Floating Rate Fund
------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Jessica R. Droeger
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
- ------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
-------------------
Date of fiscal year end: July 31
------------------
Date of reporting period: January 31, 2006
------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMIANNUAL REPORT January 31, 2006
Nuveen Investments
Exchange-Traded
Closed-End
Funds
NUVEEN
TAX-ADVANTAGED
FLOATING RATE
FUND
JFP
Photo of: Man, woman and child at the beach.
Photo of: A child.
OPPORTUNITIES FOR
TAX-ADVANTAGED MONTHLY
INCOME FROM A PORTFOLIO
CONSISTING PREDOMINANTLY
OF ADJUSTABLE RATE
PREFERRED SECURITIES
Logo: NUVEEN Investments
Photo of: Woman
Photo of: Man and child
Photo of: Woman
NOW YOU CAN RECEIVE YOUR
NUVEEN FUND REPORTS FASTER.
NO MORE WAITING.
SIGN UP TODAY TO RECEIVE NUVEEN FUND INFORMATION BY E-MAIL.
It only takes a minute to sign up for E-Reports. Once enrolled, you'll receive
an e-mail as soon as your Nuveen Investments Fund information is ready -- no
more waiting for delivery by regular mail. Just click on the link within the
e-mail to see the report, and save it on your computer if you wish.
----------------------
DELIVERY DIRECT TO
YOUR E-MAIL INBOX
----------------------
IT'S FAST, EASY & FREE:
WWW.INVESTORDELIVERY.COM
if you get your Nuveen Fund dividends
and statements from your financial
advisor or brokerage account.
OR
WWW.NUVEEN.COM/ACCOUNTACCESS
if you get your Nuveen Fund dividends
and statements directly from Nuveen.
(Be sure to have the address sheet that accompanied this report handy. You'll
need it to complete the enrollment process.)
Logo: NUVEEN Investments
Chairman's
LETTER TO SHAREHOLDERS
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
I am very pleased to report that over the six-month period covered by this
report, your Fund continued to provide you with attractive monthly income from a
portfolio that over time will be primarily composed of preferred stocks issued
by middle market banks. For more information on your Fund's performance, please
read the Portfolio Managers' Comments, the Distribution and Share Price
Information, and the Performance Overview sections of this report.
Portfolio diversification is a recognized way to try 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. In addition to providing regular monthly
"PORTFOLIO DIVERSIFICATION IS A RECOGNIZED WAY TO TRY TO REDUCE SOME OF THE RISK
THAT COMES WITH INVESTING."
income, a preferred stock investment like your Fund may help you achieve and
benefit from greater portfolio diversification. Your financial advisor can
explain these advantages in more detail. I encourage you to contact him or her
for more information on this and other important investment strategies.
As you look through this report, be sure to review the inside front cover. This
contains information on how you can receive future Fund reports and other Fund
information faster by using e-mails and the Internet. Sign up is quick and easy
- - just follow the step-by-step instructions.
At Nuveen Investments, our mission continues to be to assist you and your
financial advisor by offering investment services and products that can help you
to secure your financial objectives. We are grateful that you have chosen us as
a partner as you pursue your financial goals, and we look forward to continuing
to earn your trust in the months and years ahead.
Sincerely,
/s/Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
March 15, 2006
Nuveen Tax-Advantaged Floating Rate Fund (JFP)
Portfolio Managers'
COMMENTS
The Nuveen Tax-Advantaged Floating Rate Fund features portfolio management by a
team of specialists at Spectrum Asset Management, Inc., an affiliate of
Principal CapitalSM. Mark Lieb, Bernie Sussman and Phil Jacoby, who have more
than 70 years of combined experience in the securities markets, lead the team.
Here Mark, Bernie and Phil talk about their management strategy and the
performance of the Fund for the six-month period ended January 31, 2006
WHAT WAS YOUR OVERALL MANAGEMENT STRATEGY FOR THE SIX-MONTH PERIOD ENDED JANUARY
31, 2006?
The Fund's primary investment objective is to provide an attractive level of
after-tax current income by investing primarily in adjustable rate securities
that are eligible to pay dividends consisting primarily of tax-advantaged
dividend income. To achieve this objective, we continued to employ the basic
strategies and tactics during this reporting period that we've been using since
the Fund's inception in March 2005. In particular, during this six-month period
we continued to seek adjustable rate non-cumulative perpetual preferred stock
issued by small- to mid-sized banks with assets generally ranging from $200
million to $10 billion. We were able to purchase more than $35 million of this
type of stock during this six-month period. By the end of the period, we had
crossed the halfway mark for our objective of having approximately 60% of the
Fund's assets invested in middle-market bank adjustable rate securities. This
left about $80 million still to transition into these types of securities.
As we looked for these opportunities, we maintained a fully-invested position
for the Fund by holding adjustable-rate securities issued by larger-tier banks
and fixed-income securities issued by small- and mid-sized banks. Generally, we
tended to sell the fixed-income securities first when opportunities to purchase
mid-tier bank adjustable rate preferred stock became available.
In our last shareholder report, we described how we made some investments in
fixed-rate DRD (dividends received deduction) or QDI (qualified dividend income)
securities, and then used interest rate swaps to effectively convert these
fixed-rate issues into floating-rate investments. Over this most recent
six-month period, we started to reverse this process by switching some
floating-rate securities for fixed-rate issues. After implementing a
commensurate interest rate swap, this allowed us to pick up a net of more than
100 basis points (1%) of additional income for the portfolio.
4
HOW DID THE FUND PERFORM OVER THIS PERIOD?
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 the six-months ended January 31, 2006
JFP 4.40%
- --------------------------------------------------------------------------------
Merrill Lynch Adjustable
Rate Preferred Index1 4.38%
- --------------------------------------------------------------------------------
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.
The Fund performed in line with the Merrill Lynch index for the six-month
period. In general, the Fund's performance over this period benefited from the
strong performance of the top-tier bank floating rate DRD market and the agency
preferred stock market. In addition, the Fund's assets that were invested in
middle market bank DRD securities performed well, in some cases providing yields
approximately 350 basis points above the comparable London Interbank Offered
Rate (LIBOR). Finally, a rising interest rate market led to net unrealized gains
on many of our fixed-rate positions that had been swapped into floating rate
positions.
The major factor that constrained the Fund's performance was the
slower-than-anticipated invest up process into the adjustable rate securities of
middle market banks. While larger bank issues did perform well over this period,
these returns did not match those provided by middle market bank securities.
We expect that, over time, preferred stocks issued by middle market banks will
be a major source of investment opportunities for the Fund. Although we saw some
signs during this period that these banks might be ready to increase their
issuance of floating rate preferred stocks, the pace of this new issuance was
tempered by several factors, including:
o The Federal Reserve's extension to 2009 from 2007 of the effective date for
new capital rules that will likely make traditional forms of financing less
attractive to banks and bank holding companies, and make the issuance of
non-cumulative preferred stock a more efficient financing option.
o The longer-than-expected learning curve for many potential issuers
concerning the features and benefits of this relatively new type of core
capital security.
o Concerns among some potential issuers that rising shorter-term rates could
unacceptably increase their financing expenses if they were to issue
adjustable- rate preferred stock.
1 The Merrill Lynch Adjustable Rate Preferred Index is an unmanaged index
composed of dollar-denominated investment-grade preferred securities,
predominantly from larger issuers. The Fund may invest a substantial
portion of its assets in below-investment-grade securities, often from
smaller issuers.
5
Distribution and Share Price
INFORMATION
In addition to owning preferred stocks in its portfolio, 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 common shareholder distributions over this reporting period.
It is the Fund's policy to seek to pay dividends that are relatively stable from
month to month, and that reflect the Fund's past results and projected future
performance. Over the course of this reporting period, the Fund maintained a
monthly distribution of $0.0655 per share.
During certain periods, the Fund may pay dividends at a rate that may be more or
less than the amount of net investment income actually earned by the Fund during
the period. If a Fund has cumulatively earned more than it has paid in
dividends, it holds the excess in reserve as undistributed net investment income
(UNII) as part of the Fund's NAV. Conversely, if a Fund has cumulatively paid
dividends in excess of its earnings, the excess constitutes negative UNII that
is likewise reflected in the Fund's NAV. The Fund will, over time, pay all of
its net investment income as dividends to shareholders.
Since the Fund's inception in March 2005, we have purchased more securities
issued by larger, higher-quality financial institutions than we originally
anticipated. These securities generally had lower yields than the issues from
middle market banks we were looking to purchase. Given the monthly distribution
level established by the Fund, this was one reason the Fund had a negative UNII
balance for financial statement purposes as of January 31, 2006. The Fund also
had a negative UNII balance for tax purposes, based on our best estimates, as of
January 31, 2006.
As of January 31, 2006, the Fund was trading at a share price discount of
- -11.16% to its net asset value per share. This compares with an average share
price discount of -9.45% for the entire six-month reporting period.
6
Nuveen Tax-Advantaged Floating Rate Fund
JFP
Performance
OVERVIEW As of January 31, 2006
Pie Chart:
PORTFOLIO ALLOCATION
(as a % of total investments)
- ------------------------------------
$25 Par (or similar)
Preferred Securities 85.0%
- ------------------------------------
Capital
Preferred Securities 15.0%
- ------------------------------------
Bar Chart:
2005-2006 MONTHLY DISTRIBUTIONS PER SHARE
May 0.0655
Jun 0.0655
Jul 0.0655
Aug 0.0655
Sep 0.0655
Oct 0.0655
Nov 0.0655
Dec 0.0655
Jan 0.0655
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/28/05 15
15
15
14.95
15
14.96
14.95
14.97
14.98
15.01
15.01
15.01
15.01
15
15.05
15
15.02
14.99
15
14.99
14.97
14.93
14.9
14.85
14.78
14.78
14.53
14.55
14.6
14.58
14.54
14.51
14.48
14.48
14.5
14.43
14.6
14.62
14.57
14.52
14.55
14.5
14.51
14.46
14.45
14.42
14.51
14.4
14.45
14.35
14.15
14.3
14.4
14.38
14.4
14.25
14.1
14.05
14.15
14
13.86
13.75
13.8
13.5
13.25
13.31
13.21
13.17
13.39
13.43
13.49
13.41
13.32
13.4
13.46
13.59
13.65
13.5
13.58
13.5
13.52
13.6
13.54
13.41
13.35
13.49
13.55
13.49
13.42
13.42
13.34
13.42
13.43
13.48
13.5
13.95
14
13.97
13.9
13.95
13.96
13.51
13.48
13.55
13.47
13.5
13.45
13.5
13.4
13.5
13.51
13.6
13.69
13.72
13.69
13.95
13.89
13.75
13.71
13.6
13.68
13.43
13.3
13.44
13.3
13.31
13.04
12.87
13
13.06
13.04
13.21
13.05
13.03
13.09
13.14
13.04
13.11
13.15
13.02
13
12.88
12.75
12.61
12.49
12.48
12.5
12.49
12.49
12.49
12.52
12.5
12.52
12.64
12.51
12.66
12.64
12.65
12.65
12.8
12.76
12.77
13.03
12.96
12.68
12.48
12.4
12.41
12.48
12.4
12.38
12.26
12.14
12.1
12.14
12.15
12.18
12.29
12.2
12.25
12.19
12.17
12.24
12.24
12.14
12.02
12.05
12.01
12.05
12
12.03
12.1
12.11
12.1
12.32
12.28
12.34
12.34
12.4
12.48
12.5
12.46
12.37
12.47
12.51
12.53
12.51
12.56
12.55
12.65
12.65
12.68
12.6
12.59
12.62
12.64
12.6
1/31/06 12.74
FUND SNAPSHOT
- ------------------------------------
Common Share Price $12.74
- ------------------------------------
Common Share
Net Asset Value $14.34
- ------------------------------------
Premium/(Discount) to NAV -11.16%
- ------------------------------------
Market Yield1 6.17%
- ------------------------------------
Net Assets Applicable to
Common Shares ($000) $198,587
- ------------------------------------
CUMULATIVE TOTAL RETURN
(Inception 3/28/05)
- ------------------------------------
ON SHARE PRICE ON NAV
- ------------------------------------
6-Month -2.10% 4.40%
- ------------------------------------
Since
Inception -11.15% 4.31%
- ------------------------------------
INDUSTRIES
(as a % of total investments)
- ------------------------------------
Commercial Banks 51.5%
- ------------------------------------
Capital Markets 15.2%
- ------------------------------------
Insurance 13.6%
- ------------------------------------
Diversified Financial Services 9.9%
- ------------------------------------
U.S. Agency 6.8%
- ------------------------------------
Consumer Finance 3.0%
- ------------------------------------
7
Special Shareholder
MEETING REPORT
The Shareholder Meeting was held at the offices of Nuveen Investments on
November 15, 2005.
JFP
- ------------------------------------------------------------------------------------------------------------------------------------
Common and
FundPreferred FundPreferred
shares shares
voting together voting together
as a class as a class
====================================================================================================================================
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS:
Robert P. Bremner
For 13,570,507 --
Withhold 58,869 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 13,629,376 --
====================================================================================================================================
Lawrence H. Brown
For 13,574,229 --
Withhold 55,147 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 13,629,376 --
====================================================================================================================================
Jack B. Evans
For 13,577,229 --
Withhold 52,147 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 13,629,376 --
====================================================================================================================================
William C. Hunter
For 13,578,229 --
Withhold 51,147 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 13,629,376 --
====================================================================================================================================
David J. Kundert
For 13,578,229 --
Withhold 51,147 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 13,629,376 --
====================================================================================================================================
William J. Schneider
For -- 2,825
Withhold -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,825
====================================================================================================================================
Timothy R. Schwertfeger
For -- 2,825
Withhold -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,825
====================================================================================================================================
Judith M. Stockdale
For 13,572,396 --
Withhold 56,980 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 13,629,376 --
====================================================================================================================================
Eugene S. Sunshine
For 13,578,229 --
Withhold 51,147 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 13,629,376 --
====================================================================================================================================
8
Nuveen Tax-Advantaged Floating Rate Fund (JFP)
Portfolio of
INVESTMENTS January 31, 2006 (Unaudited)
SHARES DESCRIPTION (1) COUPON RATINGS (2) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
$25 PAR (OR SIMILAR) SECURITIES - 117.7% (85.0% OF TOTAL INVESTMENTS)
CAPITAL MARKETS - 21.0%
322,163 Goldman Sachs Group Inc., (3) 4.993% A2 $ 8,313,416
85,910 Goldman Sachs Group Inc., (3) 6.200% A2 2,218,196
339,000 Lehman Brothers Holdings Inc., Series G (3) 5.220% A- 8,590,260
288,300 Merrill Lynch & Company Inc., (3) 5.011% A2 7,397,778
155,000 Merrill Lynch & Company Inc., Series H, (3) 5.141% A2 3,916,850
10,000 River Valley Bancorp, Series A (MMB) 8.450% N/R 10,375,000
35,600 UBS Preferred Funding Trust IV 5.230% AA- 893,560
- ------------------------------------------------------------------------------------------------------------------------------------
Total Capital Markets 41,705,060
--------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS - 57.9%
10,000 ABN AMRO North America Capital Funding,
Series 144A, (3) 6.968% A2 10,628,125
120,000 Banco Santander 6.410% A2 3,040,800
7,000 City National Bancshares Corporation,
Series F, 144A (MMB) 8.533% N/R 7,248,938
10,000 FBOP Corporation, Series 144A (MMB) 7.230% N/R 9,977,500
7,000 First Tennessee Bank, 144A, (3) 5.371% A3 7,071,750
10,000 Heartland Bank, Series A (MMB) 8.471% N/R 10,352,500
443,900 HSBC USA Inc., (3) 5.300% A2 11,439,303
5,000 MidCarolina Financial Corporation, Series 144A (MMB) 8.342% N/R 5,179,375
10,000 Pedcor Bancorp, Series A (MMB) 8.270% N/R 10,302,500
5,000 Pedcor Financial Bancorp. (MMB) 8.388% N/R 5,151,250
5,000 Regent Bancorp Inc., Series A (MMB) 8.481% N/R 5,177,813
10,000 Shorebank Corporation, 144A (MMB) 8.350% N/R 10,375,000
5,000 Sleepy Hollow Bank, Series A, 144A (MMB) 8.336% N/R 5,187,500
3,500 Truman Bancorp Inc. (MMB) 8.638% N/R 3,610,250
10,000 Vineyard National Bancorp, Series C, 144A (MMB) 8.400% N/R 10,378,125
- ------------------------------------------------------------------------------------------------------------------------------------
Total Commercial Banks 115,120,729
--------------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE - 4.1%
79,500 SLM Corporation, (3) 5.180% BBB+ 8,166,145
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 8.1%
320,000 CIT Group Inc., Series A, (3) 6.350% BBB+ 8,435,200
7,400 SG Preferred Capital II LLC, (3) 6.302% A1 7,623,850
- ------------------------------------------------------------------------------------------------------------------------------------
Total Diversified Financial Services 16,059,050
--------------------------------------------------------------------------------------------------------------------
INSURANCE - 17.1%
386,500 Aegon N.V. 6.375% A- 9,759,125
108,750 MetLife Inc., Series A, (3) 5.491% Baa1 2,839,463
200,000 MetLife Inc., Series B, (3) 6.500% Baa1 5,250,000
320,000 Prudential plc 6.500% A 8,070,400
8,000 Zurich RegCaPS Funding Trust VI, Series 144A, (3) 5.040% Baa2 8,012,500
- ------------------------------------------------------------------------------------------------------------------------------------
Total Insurance 33,931,488
--------------------------------------------------------------------------------------------------------------------
U.S. AGENCY - 9.5%
100,100 Fannie Mae, (3) 6.129% AA- 5,047,543
125,000 Fannie Mae, (3) 5.396% AA- 6,340,625
19,600 Freddie Mac, (3) 6.140% Aa3 990,976
71,000 Freddie Mac, (3) 5.100% AA- 3,206,097
58,200 Freddie Mac, (3) 4.590% AA- 2,444,400
17,600 Freddie Mac, (3) 3.840% AA- 737,440
- ------------------------------------------------------------------------------------------------------------------------------------
Total U.S. Agency 18,767,081
--------------------------------------------------------------------------------------------------------------------
Total $25 Par (or similar) Securities (cost $231,300,452) 233,749,553
====================================================================================================================
9
Nuveen Tax-Advantaged Floating Rate Fund (JFP) (continued)
Portfolio of INVESTMENTS January 31, 2006 (Unaudited)
PRINCIPAL
AMOUNT (000) DESCRIPTION (1) COUPON MATURITY RATINGS (2) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL PREFERRED SECURITIES - 20.7% (15.0% OF TOTAL INVESTMENTS)
COMMERCIAL BANKS - 13.3%
$ 2,000 Abbey National Capital Trust I 8.963% 6/30/50 A2 $ 2,689,964
5,000 Barclays Bank plc 6.278% 12/15/55 Aa3 4,987,500
3,985 Barnett Capital III 5.126% 2/01/27 Aa3 3,893,449
5,820 CoresStates Capital Trust III, 144A 4.910% 5/15/07 A1 5,660,520
1,000 J.P. Morgan Chase Capital XIII, Floating Rate 5.471% 9/30/34 A1 1,011,187
Capital Securities, Series M
1,000 KBC Bank Fund Trust III, 144A 9.860% 5/02/50 A2 1,150,541
1,000 St. George Funding Company LLC, 144A 8.485% 12/31/47 Baa1 1,079,553
5,000 SunTrust Capital Trust I, Series A 5.020% 5/15/27 A1 4,905,660
1,000 Swedbank ForeningsSparbanken AB, 144A 9.000% 9/17/50 A2 1,145,819
- ------------------------------------------------------------------------------------------------------------------------------------
25,805 Total Commercial Banks 26,524,193
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 5.6%
11,000 RBS Capital Trust IV 5.336% 9/30/54 A1 11,131,571
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.8%
3,500 Twin Reefs Trust Pass Through to XL Financial 5.420% 1/10/55 Aa2 3,503,589
Assurance Ltd. Preferred Stock Series B
- ------------------------------------------------------------------------------------------------------------------------------------
$ 40,305 Total Capital Preferred Securities (cost $41,413,760) 41,159,353
====================================================================================================================================
Total Investments (cost $272,714,212) - 138.4% 274,908,906
====================================================================================================================
Other Assets Less Liabilities - 0.9% 1,678,126
====================================================================================================================
FundPreferred Shares, at Liquidation Value - (39.3)% (78,000,000)
====================================================================================================================
Net Assets Applicable to Common Shares - 100% $ 198,587,032
====================================================================================================================
10
INTEREST RATE SWAPS OUTSTANDING AT JANUARY 31, 2006:
FIXED RATE FLOATING
PAID FIXED RATE FLOATING RATE RATE UNREALIZED
NOTIONAL BY THE FUND PAYMENT RECEIVED PAYMENT TERMINATION APPRECIATION
COUNTERPARTY AMOUNT (ANNUALIZED) FREQUENCY BY THE FUND(4) FREQUENCY DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs $7,000,000 4.563% Semi-Annually 4.521% Quarterly 9/29/10 $ 32,460
Goldman Sachs 2,500,000 5.278 Semi-Annually 4.460 Quarterly 12/09/35 (50,852)
JPMorgan 5,000,000 4.592 Semi-Annually 4.350 Quarterly 8/17/10 12,073
JPMorgan 5,000,000 4.511 Semi-Annually 4.406 Quarterly 8/31/10 30,889
JPMorgan 1,300,000 4.962 Semi-Annually 4.640 Quarterly 7/27/35 18,577
JPMorgan 4,000,000 4.955 Semi-Annually 4.660 Quarterly 7/28/35 61,746
Morgan Stanley 3,000,000 4.590 Semi-Annually 4.600 Quarterly 7/15/15 60,849
Morgan Stanley 6,500,000 4.850 Semi-Annually 4.600 Quarterly 7/14/35 204,672
Morgan Stanley 4,000,000 4.880 Semi-Annually 4.600 Quarterly 7/15/35 85,793
Morgan Stanley 1,750,000 4.900 Semi-Annually 4.600 Quarterly 7/18/35 41,548
Morgan Stanley 2,300,000 4.890 Semi-Annually 4.601 Quarterly 7/20/35 58,340
Morgan Stanley 1,700,000 4.930 Semi-Annually 4.614 Quarterly 7/21/35 32,536
- ------------------------------------------------------------------------------------------------------------------------------------
$588,631
====================================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Ratings: Using the higher of Standard & Poor's or
Moody's rating. Ratings below Baa by Moody's Investor
Service, Inc. or BBB by Standard and Poor's Group are
considered to be below investment grade.
(3) Security is eligible for the Dividends Received
Deduction.
(4) Based on LIBOR (London Inter-Bank Offered Rate).
N/R Investment is not rated.
144A Securities 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.
(MMB) Middle Market Bank.
See accompanying notes to financial statements.
11
Statement of
ASSETS AND LIABILITIES January 31, 2006 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $272,714,212) $274,908,906
Unrealized appreciation on interest rate swaps 639,483
Receivables:
Dividends 186,569
Interest 356,891
Investments sold 1,028,666
Other assets 4,475
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 277,124,990
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 212,023
Unrealized depreciation on interest rate swaps 50,852
Accrued expenses:
Management fees 137,564
Organization and offering costs 30,050
Other 64,725
FundPreferred share dividends payable 42,744
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 537,958
- ------------------------------------------------------------------------------------------------------------------------------------
FundPreferred shares, at liquidation value 78,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $198,587,032
====================================================================================================================================
Common shares outstanding 13,851,500
====================================================================================================================================
Net asset value per Common share outstanding (net assets applicable to
Common shares, divided by Common shares outstanding) $ 14.34
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 138,515
Paid-in surplus 196,248,911
Undistributed (Over-distribution of) net investment income (1,214,612)
Accumulated net realized gain (loss) from investments and derivative transactions 630,893
Net unrealized appreciation (depreciation) of investments and derivative transactions 2,783,325
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $198,587,032
====================================================================================================================================
Authorized shares:
Common Unlimited
FundPreferred Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
12
Statement of
OPERATIONS Six Months Ended January 31, 2006 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $5,979,500
Interest 1,748,800
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income 7,728,300
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,231,103
FundPreferred shares - auction fees 99,764
FundPreferred shares - dividend disbursing agent fees 3,883
Shareholders' servicing agent fees and expenses 49
Custodian's fees and expenses 33,905
Trustees' fees and expenses 2,226
Professional fees 14,265
Shareholders' reports - printing and mailing expenses 24,305
Stock exchange listing fees 834
Investor relations expense 24,606
Other expenses 1,435
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,436,375
Custodian fee credit (1,488)
Expense reimbursement (415,042)
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,019,845
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 6,708,455
- ------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from investments (138,579)
Net realized gain (loss) from interest rate swaps 753,751
Change in net unrealized appreciation (depreciation) of investments 2,286,697
Change in net unrealized appreciation (depreciation) of interest rate swaps 235,021
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 3,136,890
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO FUNDPREFERRED SHAREHOLDERS
From net investment income (1,439,807)
From accumulated net realized gains (1,410)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions to
FundPreferred shareholders (1,441,217)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from operations $8,404,128
====================================================================================================================================
See accompanying notes to financial statements.
13
Statement of
CHANGES IN NET ASSETS (Unaudited)
FOR THE PERIOD
3/28/05
(COMMENCEMENT
SIX MONTHS OF OPERATIONS)
ENDED THROUGH
1/31/06 7/31/05
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 6,708,455 $ 2,100,016
Net realized gain (loss) from investments (138,579) 16,702
Net realized gain (loss) from interest rate swaps 753,751 8,000
Change in net unrealized appreciation (depreciation) of investments 2,286,697 (92,004)
Change in net unrealized appreciation (depreciation) of interest rate swaps 235,021 353,610
Distributions to FundPreferred shareholders:
From net investment income (1,439,807) (426,009)
From accumulated net realized gains (1,410) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from operations 8,404,128 1,960,315
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (5,436,207) (2,721,198)
From accumulated net realized gains (7,433) --
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Common shareholders (5,443,640) (2,721,198)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- 197,181,325
Net proceeds from shares issued to shareholders due to reinvestment of distributions -- 134,336
FundPreferred shares offering costs and adjustments (18,509) (1,010,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from capital share transactions (18,509) 196,305,661
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares 2,941,979 195,544,778
Net assets applicable to Common shares at the beginning of period 195,645,053 100,275
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of period $198,587,032 $195,645,053
====================================================================================================================================
Undistributed (Over-distribution of) net investment income at the end of period $ (1,214,612) $ (1,047,053)
====================================================================================================================================
See accompanying notes to financial statements.
14
Notes to
FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
Nuveen Tax-Advantaged Floating Rate 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 "JFP". The Fund was organized
as a Massachusetts business trust on December 29, 2004.
Prior to the commencement of operations, the Fund had no operations other than
those related to organizational matters, the initial capital contribution of
$100,275 by Nuveen Asset Management (the "Adviser"), a wholly owned subsidiary
of Nuveen Investments, Inc. ("Nuveen"), the recording of the organization
expenses ($13,500) and their reimbursement by Nuveen Investments, LLC, also a
wholly owned subsidiary of Nuveen.
The Fund's primary investment objective is to provide an attractive level of
after-tax current income. The Fund's secondary investment objective is capital
preservation. The Fund intends to pursue its investment objectives by investing
primarily in adjustable rate securities that are eligible to pay dividends
consisting primarily of tax-advantaged dividend income.
The Fund expects that substantially all of its portfolio of investments will be
comprised of securities issued by banking companies and other financial
institutions which may make the Fund more susceptible to adverse economic or
regulatory occurrences affecting these institutions. The Fund's concentration of
investments in these institutions includes the risk that banking companies and
other financial institutions may themselves have concentrated portfolios,
changes in interest rates or competition could affect their profitability, and
there could be increased costs or setbacks due to changes in the regulatory and
financial reporting requirements under which they operate.
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
The prices of preferred stocks issued by middle market and major banking
companies and other securities in the Fund's investment portfolio are generally
provided by one or more independent pricing services approved by the Fund's
Board of Trustees. The pricing services typically value exchange-listed
securities at the last sales price on that day; and value securities traded in
the over-the-counter market at the mean of the last bona fide bid and bona fide
ask prices when current quotations are readily available. The pricing services
may value preferred stocks issued by middle market and major banking companies
and other securities for which current quotations are not readily available at
fair value using a wide range of market data and other information and analysis,
including the obligor's credit characteristics considered relevant by such
pricing service to determine valuations. The Board of Trustees of the Fund has
approved procedures which permit the Adviser to determine the fair value of
investments for which the applicable pricing service or services is not
providing a price, using market data and other factors such as the obligor's
credit characteristics. The Fund may engage an independent appraiser to
periodically provide an independent determination of fair value of the preferred
stocks issued by middle market banks. Short-term investments are valued at
amortized cost, which approximates market value.
The preferred stocks issued by middle market and major banking companies in
which the Fund invests are generally not listed on an organized exchange and the
secondary market for such investments may be less liquid relative to markets for
other securities. Consequently, the value of preferred stocks issued by middle
market and major banking companies, determined as described above, may differ
significantly from the value that would have been determined had there been an
active market for that preferred stock.
15
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from investment transactions are determined on the specific
identification method. Investments purchased on a when-issued 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 January 31, 2006, the
Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income, which
includes the amortization of premiums and accretion of discounts for financial
reporting purposes, is recorded on an accrual basis.
Federal 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.
Dividends and Distributions to Common Shareholders
The Fund declares monthly distributions to Common shareholders from its net
investment income and net short-term capital gains. Net realized long-term
capital gains from investment transactions, if any, are distributed to
shareholders not less frequently than annually. Furthermore, long-term capital
gains are distributed only to the extent they exceed available capital loss
carryforwards.
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.
FundPreferred Shares
Effective May 27, 2005, the Fund issued 3,120 Series Th FundPreferred shares,
$25,000 stated value per share, as a means of effecting financial leverage. The
dividend rate paid by the Fund is determined every seven days, pursuant to a
dutch auction process overseen by the auction agent, and is payable at the end
of each rate period.
Interest Rate Swap Transactions
The Fund may invest in certain derivative financial instruments. The Fund's use
of interest rate swap transactions is intended to synthetically convert certain
Fund positions in fixed-rate securities effectively into adjustable rate
instruments and thereby shorten the average interest rate reset time and
duration of the Fund's portfolio of investments. Interest rate swap transactions
involve the Fund's agreement with the counterparty to pay a semiannual fixed
rate payment in exchange for the counterparty paying the Fund a quarterly
variable rate payment. The payment obligations are based on the notional amount
of the interest rate swap contract. Interest rate swaps do not involve the
delivery of securities or other underlying assets or principal. Accordingly, the
risk of loss with respect to the swap counterparty on such transactions is
limited to the net amount of interest payments that the Fund is to receive.
Interest rate swap positions are valued daily. The Fund accrues for the interim
incoming and outgoing payments on interest rate swap contracts on a daily basis,
and for the interim changes in the market value of the Fund's contractual rights
and obligations under the contracts, with the net amount recorded within net
unrealized appreciation (depreciation) of investments of interest rate swaps on
the Statement of Assets and Liabilities. Once the interim payments are settled
in cash, the net amount is recorded as net realized gain (loss) from interest
rate swaps, in addition to net realized gain (loss) recorded upon the
termination of interest rate swap contracts on the Statement of Operations.
Although there are economic advantages of entering into interest rate swap
transactions, there are also additional risks. The Fund helps manage the credit
risks associated with interest rate swap transactions by entering into
agreements only with counterparties the Adviser believes have the financial
resources to honor their obligations. In addition, all counterparties are
required to pledge collateral daily (based on the daily valuation of each swap)
on behalf of the Fund with a value approximately equal to the amount of any
unrealized gain above a pre-determined threshold. Reciprocally, when the Fund
has an unrealized loss on a swap contract, the Fund has instructed the custodian
to pledge assets of the Fund as collateral with a value approximately equal to
the amount of the unrealized loss above a pre-determined threshold. Collateral
pledges are monitored and subsequently adjusted if and when the interest rate
swap valuations fluctuate, either up or down, by at least the pre-determined
threshold amount.
16
Organization, Offering Costs and Fund Structuring Fee
Nuveen Investments, LLC has agreed to reimburse all organization expenses
(approximately $13,500) and pay all Common share offering costs (other than the
sales load and fund structuring fee) that exceed $.03 per Common share. The
Fund's share of Common share offering costs ($415,050) and fund structuring fee
($590,000) were recorded as reductions of the proceeds from the sale of Common
shares.
Costs incurred by the Fund in connection with its offering of FundPreferred
shares ($1,028,509) were recorded as a reduction to paid-in surplus.
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
Transactions in Common and FundPreferred shares were as follows:
FOR THE PERIOD
3/28/05
(COMMENCEMENT
SIX MONTHS OF OPERATIONS)
ENDED THROUGH
1/31/06 7/31/05
- ----------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- 13,835,000
Shares issued to shareholders due to reinvestment of distributions -- 9,500
- ----------------------------------------------------------------------------------------------------------
-- 13,844,500
==========================================================================================================
FundPreferred shares sold -- 3,120
==========================================================================================================
3. INVESTMENT TRANSACTIONS
Purchases and sales (excluding short-term investments and derivative
transactions) during the six months ended January 31, 2006, aggregated
$62,459,905 and $51,105,901, 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 recognition of premium amortization on debt securities, and
timing differences in recognizing certain gains and losses on investment
transactions.
At January 31, 2006, the cost of investments owned was $272,719,575.
17
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
The net unrealized appreciation of investments at January 31, 2006, aggregated
$2,189,331, of which $3,574,706 related to appreciated securities and $1,385,375
related to depreciated securities.
The tax components of undistributed net ordinary income and net realized gains
at June 30, 2005, the Fund's last tax year end, were as follows:
- --------------------------------------------------------------------------------
Undistributed net ordinary income * $228,414
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 tax year ended June 30, 2005,
was designated for purposes of the dividends paid deduction as follows:
- --------------------------------------------------------------------------------
Distributions from net ordinary income * $1,078,688
Distributions from 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.
Calculation of certain of the amounts presented above (namely, undistributed net
ordinary income for tax purposes) involves the application of complex aspects of
the Internal Revenue Code to certain securities held by the Fund. In calculating
the amount of taxable income derived from these securities, management made
assumptions as to the correct tax treatment of certain of those securities and
made estimates about the tax characteristics of income received from those
securities, based on information currently available to the Fund. The use of
these assumptions and estimates will not affect the qualification of the Fund as
a regulated investment company under Subchapter M of the Internal Revenue Code,
nor is it expected that these assumptions and estimates will be used in
computing taxable income for purposes of preparing the federal and state income
and excise tax returns.
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by the
Adviser, and a specific fund-level component, based only on the amount of assets
within the Fund. This pricing structure enables Nuveen fund shareholders to
benefit from growth in the assets within each individual fund as well as from
growth in the amount of complex-wide assets managed by the Adviser.
The annual fund-level fee, payable monthly, is based upon the average daily
Managed Assets of the Fund as follows:
AVERAGE DAILY MANAGED ASSETS FUND-LEVEL FEE RATE
- --------------------------------------------------------------------------------
For the first $500 million .7000%
For the next $500 million .6750
For the next $500 million .6500
For the next $500 million .6250
For Managed Assets over $2 billion .6000
================================================================================
18
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 January 31, 2006, the complex-level fee rate was .1891%.
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 a Sub-Advisory Agreement with Spectrum Asset Management, Inc. ("Spectrum"),
under which Spectrum manages the investment portfolio of the Fund. Spectrum is
compensated for its services to the Fund from the management fee paid to the
Adviser. Spectrum also receives compensation on certain portfolio transactions
for providing brokerage services to the Fund.
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
MARCH 31, MARCH 31,
- --------------------------------------------------------------------------------
2005* .30% 2010 .30%
2006 .30 2011 .22
2007 .30 2012 .14
2008 .30 2013 .07
2009 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse the Fund for any portion of its fees and
expenses beyond March 31, 2013.
6. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Fund declared a $.0655 Common share dividend distribution from its net
investment income and net short-term capital gains which was paid on March 1,
2006, to shareholders of record on February 15, 2006.
19
Financial
HIGHLIGHTS (Unaudited)
Selected data for a Common share outstanding throughout the period:
Investment Operations Less Distributions
------------------------------------------------------------------- ---------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ FundPreferred FundPreferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income(a) Gain holders+ holders+ Total holders holders Total
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2006(c) $14.12 $.48 $.23 $(.10) $ -- $.61 $(.39) $ -- $(.39)
2005(b) 14.33 .15 .02 (.03) -- .14 (.20) -- (.20)
====================================================================================================================================
Total Returns
--------------------
Offering
Costs, Fund Based
Structuring on
Fee and Ending Common
FundPreferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
- -----------------------------------------------------------------------------------
Year Ended 7/31:
2006(c) $ -- $14.34 $12.74 (2.10)% 4.40%
2005(b) (.15) 14.12 13.42 (9.24) (.08)
===================================================================================
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
----------------------------- -----------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
- ------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2006(c) $198,587 1.45%* 6.35%* 1.03%* 6.77%* 19%
2005(b) $195,645 1.26* 2.88* .90* 3.25* 19
============================================================================================================
FundPreferred Shares at End of Period
----------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
- --------------------------------------------------------------
Year Ended 7/31:
2006(c) $78,000 $25,000 $88,650
2005(b) $78,000 $25,000 $87,707
==============================================================
* Annualized.
** Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. 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 March 28, 2005 (commencement of operations) through July 31,
2005.
(c) For the six months ended January 31, 2006.
See accompanying notes to financial statements.
20-21 SPREAD
Reinvest Automatically
EASILY AND CONVENIENTLY
Sidebar text: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS
DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of compounding.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
greater of the net asset value or 95% of the then-current market price. If the
shares are trading at less than net asset value, shares for your account will be
purchased on the open market. Dividends and distributions received to purchase
shares in the open market will normally be invested shortly after the dividend
payment date. No interest will be paid on dividends and distributions awaiting
reinvestment. Because the market price of the shares may increase before
purchases are completed, the average purchase price per share may exceed the
market price at the time of valuation, resulting in the acquisition of fewer
shares than if the dividend or distribution had been paid in shares issued by
the Fund. A pro rata portion of any applicable brokerage commissions on open
market purchases will be paid by Plan participants. These commissions usually
will be lower than those charged on individual transactions.
FLEXIBLE
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
22
Other Useful
INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
Each Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
12-month period ended June 30, 2005, and (iii) a description of the policies and
procedures that the Funds 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
References Section at 450 Fifth Street NW, Washington, D.C. 20549.
DISTRIBUTION INFORMATION
The Fund designates 57.14% of dividends declared from net investment income as
dividends qualifying for the 70% dividends received deduction for corporations
and 64.74% as qualified dividend income for individuals under the Jobs and
Growth Tax Relief Reconciliation Act of 2003.
GLOSSARY OF TERMS USED IN THIS REPORT
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
David J. Kundert
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 Company
Boston, MA
TRANSFER AGENT AND SHAREHOLDER SERVICES
State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071 Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, IL
The Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the period covered by this report. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
23
Nuveen Investments:
SERVING Investors
For GENERATIONS
Photo of: 2 women looking at a photo album.
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS.
Managing more than $135 billion in assets, Nuveen Investments offers access to a
number of different asset classes and investing solutions through a variety of
products. Nuveen Investments markets its capabilities under four distinct
brands: Nuveen, a leader in fixed-income investments; NWQ, a leader in
value-style equities; Rittenhouse, a leader in growth-style equities; and
Symphony, a leading institutional manager of market-neutral alternative
investment portfolios.
FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest.
Be sure to obtain a prospectus, where applicable. Investors should consider the
investment objective and policies, risk considerations, charges and expenses of
the Fund carefully before investing. The prospectus contains this and other
information relevant to an investment in the Fund. For a prospectus, please
contact your securities representative or Nuveen Investments, 333 W. Wacker Dr.,
Chicago, IL 60606. Please read the prospectus carefully before you invest or
send money.
o Share prices
o Fund details
Learn more o Daily financial news
about Nuveen Funds at o Investor education
WWW.NUVEEN.COM/ETF o Interactive planning tools
Logo: NUVEEN Investments
ESA-D-0106D
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 to this filing.
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 Tax-Advantaged Floating Rate Fund
-----------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: April 7, 2006
-------------------------------------------------------------------
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: April 7, 2006
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: April 7, 2006
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.