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 811-21893
-----------------------
Nuveen Global Government Enhanced Income 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: December 31
-------------------
Date of reporting period: December 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.
ANNUAL REPORT DECEMBER 31, 2006
NUVEEN INVESTMENTS
CLOSED-END
FUNDS
NUVEEN
GLOBAL GOVERNMENT
ENHANCED INCOME
FUND
JGG
HIGH CURRENT INCOME
AND GAINS FROM AN
ENHANCED GLOBAL
DEBT STRATEGY
NUVEEN LOGO
COVER PHOTO
INSIDE COVER PHOTO
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<Table>
WWW.INVESTORDELIVERY.COM OR WWW.NUVEEN.COM/ACCOUNTACCESS
if you get your Nuveen Fund if you get your Nuveen Fund
dividends and statements from dividends and statements directly
your financial advisor or from Nuveen.
brokerage account.
(Be sure to have the address
sheet that accompanied this
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</Table>
NUVEEN LOGO
(TIMOTHY R. SCHWERTFEGER PHOTO)
Timothy R. Schwertfeger
Chairman of the Board
CHAIRMAN'S
LETTER TO SHAREHOLDERS
Dear Shareholder,
I am very pleased to report that since its inception in late June, your
Fund continued to provide you with attractive income and enhanced total
return potential. For more information on your Fund's performance, please
read the Portfolio Manager's 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 income, an investment like your Fund may help you achieve and
benefit from greater portfolio diversification. Your financial advisor can
explain these potential advantages in more detail. I urge you to contact
him or her soon for more information on this important investment
strategy.
"PORTFOLIO DIVERSIFICATION IS A RECOGNIZED WAY TO TRY TO REDUCE SOME OF THE RISK
THAT COMES WITH INVESTING."
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,
(TIMOTHY R. SCHWERTFEGER SIG)
Timothy R. Schwertfeger
Chairman of the Board
February 15, 2007
Nuveen Investments Closed-End Funds (JGG)
PORTFOLIO MANAGER'S
COMMENTS
The Fund is managed by Nuveen Asset Management (NAM), a wholly-owned subsidiary
of Nuveen Investments. NAM's taxable fixed income team has worked together since
2000, with senior professionals averaging over 17 years of investment
experience. The team is led by Andrew Stenwall, who is responsible for
developing and administering the Fund's portfolio strategy. Mr. Stenwall, who
has 18 years of industry experience, has been a Managing Director of NAM since
August 2004. Here Andy discusses the performance of the Fund.
WHAT WERE THE GENERAL ECONOMIC CONDITIONS AND MARKET TRENDS OVER THE SECOND HALF
OF 2006?
Economic conditions throughout the second half of 2006 were generally favorable.
While the inflation-adjusted growth of the U.S. Gross Domestic Product (GDP)
slowed substantially during the 2nd and 3rd quarters of 2006, estimated GDP
growth for 2006 actually increased to 3.3% from 3.1% in 2005. The U.S. inflation
rate, as measured by the Consumer Price Index, dropped to 2.5% in 2006 from 3.5%
in 2005.
In contrast, Euro-zone and Japanese inflation-adjusted GDP accelerated to growth
rates of 2.7% and 2.2% in 2006 from 1.0% and 1.4% in 2005, respectively. The
rate of inflation in the Euro-zone declined to 1.9% in 2006 from 2.2% in 2005
while Japanese inflation actually accelerated to 0.3% year over year from -0.1%
in 2006. The European Central Bank (ECB) and the Bank of Japan (BOJ) both raised
rates in the second half of 2006 and are expected to continue raising rates into
2007.
The modest global inflation, high levels of global liquidity and improvements in
global growth led to strong total return performance in global equity markets
and credit-sensitive securities. In addition, the relative stability in interest
rates and high level of investor certainty led to a drop in both global interest
rates and their volatility.
WHAT STRATEGIES AND TACTICS DID YOU USE TO MANAGE THE FUND'S ASSETS OVER THIS
PERIOD?
Since the Fund's inception in late June 2006, we have managed the Fund in a
manner designed to help it achieve its investment objectives. We used an
integrated, three-part investment strategy: First, we invested substantially all
of the Fund's assets directly or indirectly in government debt securities from
several different countries, each with a relatively steep government debt yield
curve. Second, we sought to enhance the returns and reduce the risk of the
Fund's portfolio through an option strategy that involved selling slightly
out-of-the-money call options on individual or baskets of global government debt
securities representing approximately 80% of the Fund's managed
4
assets. Third, we bought the currencies of countries with relatively high
interest rates and sold the currencies of countries with relatively low interest
rates to enhance the Fund's return.
HOW DID THE FUND PERFORM SINCE INCEPTION THROUGH DECEMBER 31, 2006?
CUMULATIVE TOTAL RETURN ON NET ASSET VALUE
<Table>
<Caption>
SINCE INCEPTION RETURNS 6/27/06 THROUGH 12/31/06
- --------------------------------------------------------------------------------------------------------------
JGG 5.56%
- --------------------------------------------------------------------------------------------------------------
Citigroup Currency-Hedged World
Government Bond Index(1) 4.12%
- --------------------------------------------------------------------------------------------------------------
</Table>
During the inception period, we were able to achieve our objectives of growing
the net asset value, distributing monthly dividends of $0.135 per share since
inception, and maintaining a relatively low level of net asset value volatility.
The fund outperformed its comparative benchmark by 1.44% from the Fund's
inception through 12/31/2006.
Amid a backdrop of weaker U.S. growth and stronger global growth we invested the
portfolio in non-U.S. government bonds in countries with steep yield curves,
relatively high inflation adjusted yields that we believe offered the best total
return opportunities. To further enhance the return of the fund over the
reporting period, we sold call options on our long government bond positions to
capture premium and to shift potential return from a drop in global interest
rates to the current market environment. We further enhanced the return of the
portfolio for this period by adding non-U.S. dollar currency exposure in those
countries that we believe are most likely to appreciate verses the U.S. dollar
and other currencies.
- --------------------------------------------------------------------------------
1 The WGBI is a market capitalization weighted benchmark that tracks the
performance of local currency sovereign debt issued by 22 countries and
includes only bonds rated investment grade by either S&P or Moody's.
- --------------------------------------------------------------------------------
5
DISTRIBUTION AND SHARE PRICE
INFORMATION
This Fund has a managed distribution policy designed to provide relatively
stable monthly cash flow to investors. JGG has paid five monthly distributions
since its inception in late June 2006.
We are providing you with information regarding your Fund's distributions. This
information is as of December 31, 2006, and likely will vary over time based on
the Fund's investment activities and portfolio investment value changes.
The goal of a managed distribution program is to provide shareholders relatively
consistent and predictable cash flow by systematically converting its expected
long-term return potential into regular monthly distributions. As a result,
regular distributions throughout the year will likely include a portion of
expected long-term gains (both realized and unrealized), along with net
investment income.
Important points to understand about a managed distribution program are:
- The Fund seeks to establish a relatively stable distribution rate that
roughly corresponds to the projected total return from its investment
strategy over an extended period of time. However, you should not draw any
conclusions about the Fund's past or future investment performance from its
current distribution rate.
- Actual returns will differ from projected long-term returns (and therefore
the Fund's distribution rate), at least over shorter time periods. Over a
specific timeframe, the difference between actual returns and total
distributions will be reflected in an increasing (returns exceed
distributions) or a decreasing (distributions exceed returns) fund net asset
value.
- Each month's distributions are expected to be paid from some or all of the
following sources:
- net investment income (regular interest and dividends),
- realized capital gains, and
- unrealized gains, or, in certain cases, a return of principal
(non-taxable distributions)
- A non-taxable distribution is a payment of a portion of the Fund's capital.
When the Fund's returns exceed distributions, it may represent portfolio
gains generated, but not realized as a taxable capital gain. In periods when
the Fund's returns fall short of distributions, it will represent a portion
of your original principal unless
6
the shortfall is offset during other time periods over the life of your
investment (previous or subsequent) when the fund's total return exceeds
distributions.
- Because distribution source estimates are updated monthly during the year,
based on the Fund's performance and forecast for its current fiscal year
(which is the calendar year for the Fund), these estimates may differ from
both the tax information reported to you in your Fund's 1099 statement
provided at year end, as well as the ultimate economic sources of
distributions over the life of your investment.
The following table provides information regarding the Fund's distributions and
total return performance for the fiscal year ended December 31, 2006. The
distribution information is presented on a tax basis rather than on a generally
accepted accounting principles (GAAP) basis. This information is intended to
help you better understand whether the Fund's returns for the specified time
period was sufficient to meet the Fund's distributions. Information regarding
such distributions in the future will likely vary based on the Fund's investment
activities and portfolio investment value changes at that time.
<Table>
<Caption>
- ------------------------------------------------------------------------------
AS OF 12/31/2006 JGG
- ------------------------------------------------------------------------------
Inception date 6/27/06
Since Inception:
Per share distribution:
From net investment income $0.68
From short-term capital gains --
From long-term capital gains --
From return of capital --
--------
Total per share distribution $0.68
--------
Distribution rate on NAV 3.49%
Cumulative since inception total return on NAV 5.56%
- ------------------------------------------------------------------------------
</Table>
At the end of the reporting period, the Fund's share price was trading at 4.72%
premium to its NAV.
7
Nuveen Global Government Enhanced Income Fund
JGG
PERFORMANCE
OVERVIEW As of December 31, 2006
(2006 MONTHLY DISTRIBUTIONS PER SHARE BAR CHART)
<Table>
Aug 0.135
Sep 0.135
Oct 0.135
Nov 0.135
Dec 0.135
</Table>
(SHARE PRICE PERFORMANCE CHART)
Past performance is not predictive of future results.
<Table>
6/30/2006 20.01
20.00
20.00
19.75
19.39
19.50
19.10
19.36
19.28
19.54
19.35
19.59
19.39
19.70
19.72
19.48
19.35
19.35
19.29
19.41
19.35
19.40
19.91
19.95
19.91
19.99
20.40
12/31/2006 20.40
</Table>
FUND SNAPSHOT
<Table>
- -------------------------------------------------------------------------------------
Share Price $20.40
- -------------------------------------------------------------------------------------
Net Asset Value $19.48
- -------------------------------------------------------------------------------------
Premium/(Discount) to NAV 4.72%
- -------------------------------------------------------------------------------------
Current Distribution Rate(1) 7.94%
- -------------------------------------------------------------------------------------
Net Assets ($000) $180,593
- -------------------------------------------------------------------------------------
</Table>
CUMULATIVE TOTAL RETURN
(Inception 6/27/06)
<Table>
<Caption>
- -------------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
- -------------------------------------------------------------------------------------
Since Inception 5.55% 5.56%
- -------------------------------------------------------------------------------------
</Table>
PORTFOLIO COMPOSITION
(as a % of total investments)
<Table>
- -------------------------------------------------------------------------------------
Sovereign Debt 21.9%
- -------------------------------------------------------------------------------------
Short-Term Investments(2) 78.1%
- -------------------------------------------------------------------------------------
</Table>
1 Current Distribution Rate 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 return of capital for tax purposes.
2 Substantially all of the Fund's short-term investments are used as collateral
for the derivative transactions.
8
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
NUVEEN GLOBAL GOVERNMENT ENHANCED INCOME FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Nuveen Global Government Enhanced
Income Fund (the "Fund") at December 31, 2006, the results of its operations,
the changes in its net assets and the financial highlights for the period June
26, 2006 (commencement of operations) through December 31, 2006, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at December 31, 2006 with the
custodian, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Chicago, Illinois
February 28, 2007
9
Nuveen Global Government Enhanced Income Fund (JGG)
Portfolio of
INVESTMENTS December 31, 2006
<Table>
<Caption>
PRINCIPAL
AMOUNT (000) DESCRIPTION COUPON MATURITY RATINGS (1) VALUE
- ------------------------------------------------------------------------------------------------------------------------
SOVEREIGN DEBT - 21.3%(2)
GERMANY - 11.0%
15,000 EUR Deutschland Republic 4.000% 7/04/16 AAA $19,865,916
- ------------------------------------------------------------------------------------------------------------------------
SWEDEN - 10.3%
135,000 SEK Republic of Sweden 3.000% 7/12/16 AAA 18,519,923
- ------------------------------------------------------------------------------------------------------------------------
TOTAL SOVEREIGN DEBT (COST $36,986,212) 38,385,839
===================================================================================================
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT (000) DESCRIPTION COUPON MATURITY RATINGS (1) VALUE
- ------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 75.8%
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 75.3%
$ 35,000 Federal National Mortgage Association 0.000% 1/03/07 Aaa $34,990,113
18,000 Federal Home Loan Banks, Discount Notes 0.000% 1/26/07 Aaa 17,935,875
25,000 Federal Home Loan Mortgage Corporation, Discount 0.000% 2/08/07 Aaa 24,864,361
Notes
58,500 Federal Home Loan Mortgage Corporation, Discount 0.000% 2/16/07 Aaa 58,122,113
Notes
- ------------------------------------------------------------------------------------------------------------------------
136,500 Total U.S. Government and Agency Obligations 135,912,462
(cost $135,912,462)
- ------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 0.5%
951 Repurchase Agreement with Fixed Income Clearing 4.580% 1/02/07 N/R 951,208
Corporation, dated 12/29/06,
repurchase price $951,692, collateralized by
$830,000 U.S. Treasury Bonds,
6.250%, due 8/15/23, value $972,245
- ------------------------------------------------------------------------------------------------------------------------
$ 137,451 TOTAL SHORT-TERM INVESTMENTS (COST $136,863,670) 136,863,670
========================================================================================================================
</Table>
<Table>
<Caption>
PAY/RECEIVE
FLOATING RATE FLOATING EXERCISE EXPIRATION
DESCRIPTION COUNTERPARTY INDEX RATE RATE DATE
---------------------------------------------------------------------------------------------------------------
PUT SWAPTIONS - 0.0%
OTC - 10-Year Interest
Rate Swap Citigroup 6-Month WIBOR Pay 6.440% 3/06/07
OTC - 10-Year Interest
Rate Swap Citigroup 3-Month STIBOR Pay 4.945% 3/06/07
OTC - 10-Year Interest
Rate Swap Citigroup 6-Month PRIBOR Pay 5.100% 3/06/07
OTC - 10-Year Interest
Rate Swap Citigroup 6-Month JPY LIBOR Pay 2.847% 3/07/07
OTC - 10-Year Interest
Rate Swap Goldman Sachs 6-Month CIBOR Pay 5.055% 3/07/07
OTC - 10-Year Interest
Rate Swap Goldman Sachs 6-Month NIBOR Pay 5.750% 3/07/07
OTC - 10-Year Interest
Rate Swap JPMorgan 28-Day MXN TIIE Pay 9.480% 2/28/07
OTC - 10-Year Interest
Rate Swap Merrill Lynch 6-Month EURIBOR Pay 4.915% 3/06/07
OTC - 10-Year Interest
Rate Swap Merrill Lynch 3-Month CAD Pay 5.274% 3/06/07
BA-CDOR
OTC - 10-Year Interest
Rate Swap Merrill Lynch 6-Month CHF LIBOR Pay 3.653% 3/06/07
---------------------------------------------------------------------------------------------------------------
<Caption>
NOTIONAL
DESCRIPTION AMOUNT PREMIUM VALUE
------------------------- --------------------------------------------------------------------------------------------------
OTC - 10-Year Interest $ 2,323
Rate Swap 56,000,000 PLN 25,200 PLN
OTC - 10-Year Interest 3,848
Rate Swap 130,000,000 SEK 14,300 SEK
OTC - 10-Year Interest 628
Rate Swap 395,000,000 CZK 79,000 CZK
OTC - 10-Year Interest 8
Rate Swap 2,000,000,000 JPY 400,000 JPY
OTC - 10-Year Interest 13,420
Rate Swap 105,000,000 DKK 7,875 DKK
OTC - 10-Year Interest 1,680
Rate Swap 110,000,000 NOK 8,250 NOK
OTC - 10-Year Interest 2,553
Rate Swap 200,000,000 MXN 70,000 MXN
OTC - 10-Year Interest 423
Rate Swap 14,000,000 EUR 1,000 EUR
OTC - 10-Year Interest 157
Rate Swap 19,500,000 CAD 2,500 CAD
OTC - 10-Year Interest 197
Rate Swap 21,500,000 CHF 1,500 CHF
-------------------------
</Table>
<Table>
TOTAL PUT SWAPTIONS (COST $32,068) 25,237
=============================================================================================================
TOTAL INVESTMENTS (COST $173,881,950) - 97.1% 175,274,746
=============================================================================================================
</Table>
<Table>
<Caption>
PAY/RECEIVE
FLOATING RATE FLOATING EXERCISE EXPIRATION
DESCRIPTION COUNTERPARTY INDEX RATE RATE DATE
---------------------------------------------------------------------------------------------------------------
CALL SWAPTIONS WRITTEN - (0.1)%
OTC - 10-Year Interest
Rate Swap Goldman Sachs 28-Day MXN TIIE Receive 7.820% 1/08/07
OTC - 10-Year Interest
Rate Swap Goldman Sachs 6-Month CIBOR Receive 4.095% 1/15/07
OTC - 10-Year Interest
Rate Swap Goldman Sachs 6-Month NIBOR Receive 4.845% 1/15/07
OTC - 10-Year Interest
Rate Swap Goldman Sachs 3-Month STIBOR Receive 4.005% 1/15/07
OTC - 10-Year Interest
Rate Swap Goldman Sachs 6-Month WIBOR Receive 4.965% 1/22/07
OTC - 10-Year Interest
Rate Swap Goldman Sachs 6-Month JPY LIBOR Receive 1.685% 1/22/07
OTC - 10-Year Interest
Rate Swap Merrill Lynch 6-Month EURIBOR Receive 3.997% 1/18/07
OTC - 10-Year Interest
Rate Swap Merrill Lynch 3-Month CAD Receive 4.375% 1/18/07
BA-CDOR
OTC - 10-Year Interest
Rate Swap Morgan Stanley 6-Month CHF LIBOR Receive 2.724% 1/17/07
---------------------------------------------------------------------------------------------------------------
<Caption>
NOTIONAL
DESCRIPTION AMOUNT PREMIUM VALUE
------------------------- ------------------------------------------------------------------------------------
OTC - 10-Year Interest $ (48,037)
Rate Swap (200,000,000) MXN (680,000) MXN
OTC - 10-Year Interest (299)
Rate Swap (105,000,000) DKK (252,000) DKK
OTC - 10-Year Interest (3,336)
Rate Swap (110,000,000) NOK (286,000) NOK
OTC - 10-Year Interest (520)
Rate Swap (130,000,000) SEK (338,000) SEK
OTC - 10-Year Interest (15,407)
Rate Swap (56,000,000) PLN (165,729) PLN
OTC - 10-Year Interest (96,621)
Rate Swap (2,000,000,000) JPY (3,700,000) JPY
OTC - 10-Year Interest (2,152)
Rate Swap (14,000,000) EUR (57,400) EUR
OTC - 10-Year Interest (19,818)
Rate Swap (19,500,000) CAD (51,675) CAD
OTC - 10-Year Interest (16,038)
Rate Swap (21,500,000) CHF (37,625) CHF
-------------------------
</Table>
<Table>
TOTAL CALL SWAPTIONS WRITTEN (PREMIUMS RECEIVED $440,905) (202,228)
=============================================================================================================
OTHER ASSETS LESS LIABILITIES - 3.0% 5,520,625
=============================================================================================================
NET ASSETS - 100% $180,593,143
=============================================================================================================
</Table>
10
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS OUTSTANDING AT DECEMBER 31, 2006:
<Table>
<Caption>
UNREALIZED
CURRENCY APPRECIATION
CONTRACTS TO AMOUNT IN EXCHANGE AMOUNT SETTLEMENT (DEPRECIATION)
DELIVER (LOCAL CURRENCY) FOR CURRENCY (LOCAL CURRENCY) DATE (U.S. DOLLARS)
-----------------------------------------------------------------------------------------------
Canadian
Dollar 5,000,000 U.S. Dollar 4,448,399 1/26/07 $ 157,514
Czech Koruna 100,000,000 U.S. Dollar 4,780,800 3/27/07 (54,377)
Danish Krone 26,000,000 U.S. Dollar 4,400,812 1/26/07 (207,374)
Euro 3,500,000 U.S. Dollar 4,420,010 1/26/07 (206,123)
Euro 15,000,000 U.S. Dollar 19,322,250 2/26/07 (532,210)
Euro 3,503,761 U.S. Dollar 4,625,000 3/19/07 (16,539)
Japanese Yen 525,000,000 U.S. Dollar 4,504,891 1/04/07 90,941
Japanese Yen 537,665,500 U.S. Dollar 4,625,000 3/19/07 60,236
Norwegian
Krone 14,500,000 U.S. Dollar 2,326,552 2/07/07 (3,032)
Pound
Sterling 1,000,000 U.S. Dollar 1,888,750 2/20/07 (69,757)
Singapore
Dollar 7,000,000 U.S. Dollar 4,463,716 1/29/07 (106,924)
Swedish
Krona 33,000,000 U.S. Dollar 4,543,077 1/10/07 (280,485)
Swedish
Krona 124,000,000 U.S. Dollar 17,563,739 2/26/07 (614,699)
U.S. Dollar 4,521,769 Japanese Yen 525,000,000 1/04/07 (107,820)
Brazilian
U.S. Dollar 2,268,603 Real 5,000,000 1/10/07 67,264
Brazilian
U.S. Dollar 2,084,298 Real 4,500,000 1/10/07 17,983
Swedish
U.S. Dollar 4,608,102 Krona 33,000,000 1/10/07 215,460
U.S. Dollar 4,461,847 Mexican Peso 49,000,000 1/16/07 70,834
New Turkish
U.S. Dollar 2,360,811 Lira 3,600,000 1/16/07 166,884
New Turkish
U.S. Dollar 1,956,947 Lira 2,900,000 1/16/07 79,251
South
African
U.S. Dollar 2,421,402 Rand 18,600,000 1/16/07 225,802
U.S. Dollar 4,470,772 Danish Krone 26,000,000 1/26/07 137,415
U.S. Dollar 4,486,370 Euro 3,500,000 1/26/07 139,763
Hungarian
U.S. Dollar 2,398,879 Forint 505,000,000 1/26/07 247,470
New Zealand
U.S. Dollar 4,752,000 Dollar 7,200,000 1/26/07 312,665
Norwegian
U.S. Dollar 2,257,090 Krone 14,500,000 2/07/07 72,494
Pound
U.S. Dollar 1,933,180 Sterling 1,000,000 2/20/07 25,327
Hungarian
U.S. Dollar 1,984,324 Forint 400,000,000 3/02/07 106,547
-----------------------------------------------------------------------------------------------
$ (5,490)
===============================================================================================
</Table>
11
Nuveen Global Government Enhanced Income Fund (JGG) (continued)
Portfolio of INVESTMENTS December 31, 2006
INTEREST RATE SWAPS OUTSTANDING AT DECEMBER 31, 2006:
<Table>
<Caption>
FUND FIXED RATE
NOTIONAL PAY/RECEIVE FIXED RATE PAYMENT TERMINATION
COUNTERPARTY AMOUNT FLOATING RATE FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE
----------------------------------------------------------------------------------------------------------------------
Goldman Sachs 110,000,000 NOK Pay 6-Month NOK LIBOR 4.810% Annual 7/10/16
Goldman Sachs 196,000,000 MXN Pay 28-Day MXN TIIE 9.150 28-Day 7/12/16
Goldman Sachs 138,000,000 ZAR Receive 3-Month ZAR JIBAR SAFEX 8.870 Quarterly 10/23/16
JPMorgan 56,000,000 PLN Pay 6-Month PLN LIBOR 5.650 Annual 7/11/16
JPMorgan 126,000,000 ZAR Pay 3-Month ZAR LIBOR 8.808 Quarterly 7/12/16
Merrill Lynch 19,500,000 CAD Pay 3-Month CAD BA-CDOR 4.353 Semiannual 11/21/16
Morgan Stanley 103,000,000 DKK Pay 6-Month DKK LIBOR 4.458 Annual 7/07/16
Morgan Stanley 21,500,000 CHF Pay 6-Month CHF LIBOR 3.185 Annual 7/11/16
Morgan Stanley 395,000,000 CZK Pay 6-Month CZK LIBOR 4.060 Annual 7/11/16
Morgan Stanley 2,000,000,000 JPY Pay 6-Month JPY LIBOR 2.194 Semiannual 7/10/16
----------------------------------------------------------------------------------------------------------------------
======================================================================================================================
<Caption>
UNREALIZED
APPRECIATION
(DEPRECIATION)
COUNTERPARTY (U.S. DOLLARS)
-------------- --------------
Goldman Sachs $ (99,593)
Goldman Sachs 1,622,452
Goldman Sachs (811,210)
JPMorgan 973,470
JPMorgan 638,961
Merrill Lynch (137,504)
Morgan Stanley 286,673
Morgan Stanley 709,308
Morgan Stanley 720,921
Morgan Stanley 747,933
-----------------------------
$ 4,651,411
=============================
</Table>
<Table>
(1) Ratings (not covered by the report of independent registered public accounting firm):
Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard &
Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below
investment grade.
(2) Additional Sovereign Debt exposure is obtained from the Interest Rate Swap transactions.
N/R Not Rated.
CAD Canadian Dollar
CHF Swiss Franc
CZK Czech Koruna
DKK Danish Krone
EUR Euro
JPY Japanese Yen
MXN Mexican Peso
NOK Norwegian Krone
PLN Polish Zloty
SEK Swedish Krona
ZAR South African Rand
BA-CDOR Bankers Acceptances Offered Rate
CIBOR Copenhagen Inter-Bank Offered Rate
EURIBOR Euro Inter-Bank Offered Rate
JIBAR-SAFEX Johannesburg Inter-Bank Agreed Rate-South African Futures Exchange
LIBOR London Inter-Bank Offered Rate
NIBOR Norway Inter-Bank Offered Rate
PRIBOR Prague Inter-Bank Offered Rate
STIBOR Stockholm Inter-Bank Offered Rate
TIIE Mexican Peso-Inter-Bank Equilibrium Interest Rate
WIBOR Warsaw Inter-Bank Offered Rate
</Table>
See accompanying notes to financial statements.
12
Statement of
ASSETS AND LIABILITIES December 31, 2006
<Table>
- ------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $37,018,280) $ 38,411,076
Short-term investments (at cost, which approximates value) 136,863,670
Cash denominated in foreign currencies (cost $684,570) 685,029
Unrealized appreciation on forward foreign currency exchange
contracts 2,193,850
Unrealized appreciation on interest rate swaps 4,788,915
Interest receivable 770,660
Other assets 1,180
- ------------------------------------------------------------------------------
Total assets 183,714,380
- ------------------------------------------------------------------------------
LIABILITIES
Call swaptions written, at value (premiums received
$440,905) 202,228
Unrealized depreciation on forward foreign currency exchange
contracts 2,199,340
Unrealized depreciation on interest rate swaps 137,504
Accrued expenses:
Management fees 139,767
Offering costs 308,303
Other 134,095
- ------------------------------------------------------------------------------
Total liabilities 3,121,237
- ------------------------------------------------------------------------------
Net assets $ 180,593,143
- ------------------------------------------------------------------------------
Shares outstanding 9,269,802
- ------------------------------------------------------------------------------
Net asset value per share outstanding $ 19.48
- ------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------
Shares, $.01 par value per share $ 92,698
Paid-in surplus 176,596,847
Undistributed (Over-distribution of) net investment income (482,706)
Accumulated net realized gain (loss) from investments and
derivative transactions (1,916,437)
Net unrealized appreciation (depreciation) of investments
and derivative transactions 6,302,741
- ------------------------------------------------------------------------------
Net assets $ 180,593,143
- ------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements.
13
Statement of
OPERATIONS
For the Period June 27, 2006 (commencement of operations)
through December 31, 2006
<Table>
- -----------------------------------------------------------------------------
INVESTMENT INCOME $ 4,470,018
- -----------------------------------------------------------------------------
EXPENSES
Management fees 806,841
Shareholders' servicing agent fees and expenses 51
Custodian's fees and expenses 32,815
Trustees' fees and expenses 5,640
Professional fees 43,700
Shareholders' reports - printing and mailing expenses 59,277
Investor relations expense 31,912
Other expenses 2,711
- -----------------------------------------------------------------------------
Total expenses before custodian fee credit 982,947
Custodian fee credit (4,654)
- -----------------------------------------------------------------------------
Net expenses 978,293
- -----------------------------------------------------------------------------
Net investment income 3,491,725
- -----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (1,262)
Foreign currencies 206,698
Forwards 117,750
Swaps 708,315
Call swaptions written (670,616)
Change in net unrealized appreciation (depreciation) of:
Investments 1,392,796
Foreign currencies 25,347
Forwards (5,490)
Swaps 4,651,411
Call swaptions written 238,677
- -----------------------------------------------------------------------------
Net realized and unrealized gain (loss) 6,663,626
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $ 10,155,351
- -----------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements.
14
Statement of
CHANGES IN NET ASSETS
For the Period June 27, 2006 (commencement of operations)
through December 31, 2006
<Table>
- ------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,491,725
Net realized gain (loss) from:
Investments (1,262)
Foreign currencies 206,698
Forwards 117,750
Swaps 708,315
Call swaptions written (670,616)
Change in net unrealized appreciation (depreciation) of:
Investments 1,392,796
Foreign currencies 25,347
Forwards (5,490)
Swaps 4,651,411
Call swaptions written 238,677
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 10,155,351
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (6,251,758)
- ------------------------------------------------------------------------------
Increase (decrease) in net assets
from distributions to shareholders (6,251,758)
- ------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares, net of offering costs 176,305,000
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 284,466
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital share
transactions 176,589,466
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets 180,493,059
Net assets at the beginning of period 100,084
- ------------------------------------------------------------------------------
Net assets at the end of period $ 180,593,143
- ------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income
at the end of period $ (482,706)
- ------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements.
15
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
Nuveen Global Government Enhanced Income Fund (the "Fund") is a non-diversified,
closed-end management investment company registered under the Investment Company
Act of 1940, as amended. The Fund's shares are listed on the New York Stock
Exchange and trade under the ticker symbol "JGG." The Fund was organized as a
Massachusetts business trust on April 13, 2006.
Prior to the commencement of operations, the Fund had no operations other than
those related to organizational matters, the initial capital contribution of
$100,084 by Nuveen Asset Management (the "Adviser"), a wholly owned subsidiary
of Nuveen Investments, Inc. ("Nuveen"), the recording of the organization
expenses ($10,000) and their reimbursement by Nuveen Investments, LLC, also a
wholly owned subsidiary of Nuveen.
The Fund's primary investment objective is to provide a high level of current
income and gains. The Fund's secondary investment objective is to seek capital
preservation. The Fund intends to pursue its investment objectives primarily by
investing in global government debt securities directly, or indirectly by
investing in debt related derivative instruments. In addition, the Fund will
employ an option strategy and a currency strategy.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with
accounting principles generally accepted in the United States.
Investment Valuation
The prices of fixed-income securities and derivative instruments are generally
provided by an independent pricing service approved by the Fund's Board of
Trustees. When price quotes are not readily available, the pricing service or,
in the absence of a pricing service for a particular investment, the Board of
Trustees of the Fund, or its designee, may establish fair 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 Trustees' designee. If the pricing service
is unable to supply a price for a derivative investment the Fund may use a
market quote provided by a major broker/dealer in such investments. If it is
determined that the market price for an investment is unavailable or
inappropriate, the Board of Trustees of the Fund, or its designee, may establish
fair value in accordance with procedures established in good faith by the Board
of Trustees. Short-term investments are valued at amortized cost, which
approximates market value.
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/delayed delivery
basis may have extended settlement periods. Any investments so purchased are
subject to market fluctuation during this period. The Fund has instructed the
custodian to segregate assets with a current value at least equal to the amount
of the when-issued/delayed delivery purchase commitments. At December 31, 2006,
the Fund had no such outstanding purchase commitments.
Investment Income
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, if any.
Federal Income Taxes
The Fund intends to comply with the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies. The Fund intends to
distribute substantially all of its investment company taxable income to
shareholders. In any year when the Fund realizes net capital gains, the Fund may
choose to distribute all or a portion of its net capital gains to shareholders,
or alternatively, to retain all or a portion of its net capital gains and pay
Federal corporate income taxes on such retained gains.
Dividends and Distributions to Shareholders
Distributions to 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 accounting principles generally accepted in
the United States.
16
The Fund intends to make monthly cash distributions to shareholders of a stated
dollar amount per share. Subject to approval and oversight by the Fund's Board
of Trustees, the Fund seeks to maintain a stable distribution level designed to
deliver the long-term return potential of the Fund's investment strategy through
regular monthly distributions (a "Managed Distribution Policy"). Total
distributions during a calendar year generally will be made from the Fund's net
investment income, net realized capital gains and net unrealized capital gains
in the Fund's portfolio, if any. The portion of distributions paid from net
unrealized gains, if any, would be distributed from the Fund's assets and would
be treated by shareholders as a non-taxable distribution for tax purposes. If
the Fund's total return on net asset value exceeds total distributions during a
calendar year, the excess will be reflected as an increase in net asset value
per share. In the event that total distributions during a calendar year exceed
the Fund's total return on net asset value, the difference will be treated as a
return of capital for tax purposes and will reduce net asset value per share.
The final determination of the source and character of all distributions for the
fiscal year are made after the end of the fiscal year and reflected in the
financial statements contained in the annual report as of December 31 each year.
Organization and Offering Costs
Nuveen Investments, LLC has agreed to reimburse all organization expenses
(approximately $10,000) and pay all offering costs (other than the sales load)
that exceed $.04 per share. The Fund's share of offering costs of $370,000 was
recorded as a reduction of the proceeds from the sale of shares.
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.
Foreign Currency Transactions
The Fund is authorized to engage in foreign currency exchange transactions. The
Fund may engage in foreign currency swap, forward, options and futures
contracts. To the extent that the Fund invests in contracts that are denominated
in a currency other than U.S. dollars, the Fund will be subject to currency
risk, which is the risk that an increase in the U.S. dollar relative to the
foreign currency will reduce returns or portfolio value. Generally, when the
U.S. dollar rises in value against a foreign currency, the Fund's investments
denominated in that currency will lose value because its currency is worth fewer
U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative
value. Investments and other assets and liabilities denominated in foreign
currencies are converted into U.S. dollars on a spot (i.e. cash) basis at the
spot rate prevailing in the foreign currency exchange market at the time of
valuation. Purchases and sales of investments and dividend income denominated in
foreign currencies are translated into U.S. dollars on the respective dates of
such transactions.
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at 4:00 p.m. Eastern time. Investments and income and expenses are
translated on the respective dates of such transactions. Net realized foreign
currency gains and losses resulting from changes in exchange rates include
foreign currency gains and losses between trade date and settlement date of the
transactions, foreign currency transactions, and the difference between the
amounts of interest and dividends recorded on the books of a Fund and the
amounts actually received.
Interest Rate Swap Contracts
The Fund is authorized to enter into interest rate swap contracts consistent
with its investment objectives and policies to obtain a desired return at a
lower cost than if the Fund had invested directly in the asset that yielded the
desired return. In connection with these contracts, securities in the Fund's
portfolio may be identified as collateral in accordance with the terms of the
respective swap contract. Interest rate swap contracts involve the exchange by a
Fund with another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating rate payments for fixed rate payments
with respect to a specified notional amount of principal.
Interest rate swap contracts are valued daily. Unrealized gains are reported as
an asset and unrealized losses are reported as a liability on the Statement of
Assets and Liabilities. Income received or paid by the Fund on a interest rate
swap contract is reported as a realized gain or loss on the Statement of
Operations. Additionally, realized gains or losses are recorded upon the
termination of a interest rate swap contract and are equal to the difference
between the Fund's basis in the interest rate swap and the proceeds from (or
cost of) the closing transaction. Notional principal amounts are used to express
the extent of involvement in these transactions, reducing the amounts
potentially subject to counterparty credit risk.
Entering into interest rate swap contracts involves, to varying degrees,
elements of credit, market and documentation risk in excess of the amounts
recognized on the Statements of Assets and Liabilities. Such risks involve the
possibility that there will be no liquid market for these contracts, that there
may be unfavorable changes in interest rates, and default by the counterparty on
its obligation to perform or disagree as to the meaning of the contractual terms
in the contracts. If there is a default by the counterparty to an interest rate
swap contract, the Fund will be limited to contractual remedies pursuant to the
contracts related to the transaction. There is no assurance that the
counterparty to an interest rate swap will be able to meet their obligations
pursuant to the swap contracts or that, in the event of default, the Fund will
succeed in pursuing contractual remedies. The Fund thus assumes the risk that it
may be delayed in, or prevented from, obtaining payments owed to it pursuant to
the interest rate swap contracts. The creditworthiness of the counterparty to an
interest rate swap is closely monitored in order to minimize this risk.
Options Transactions
The Fund may purchase put options and write (sell) call options on securities,
swaps or currencies. The purchase of put options involves the risk of loss of
all or a part of the cash paid for the options. Put options purchased are
accounted for in the same manner as portfolios securities. When the Fund writes
a call option, an amount equal to the net premium received (the premium
17
Notes to
FINANCIAL STATEMENTS (continued)
less commission) is recorded as a liability and is subsequently adjusted to the
current value of the written option until the option expires or the Fund enters
into a closing purchase transaction. When a call option expires or the Fund
enters into a closing purchase transaction, the difference between the net
premium received and any amount paid at expiration or on effecting a closing
purchase transaction, including commission, is treated as a net realized gain on
option contracts written or, if the net premium received is less than the amount
paid, as a net realized loss on option contracts written. The Fund, as writer of
a call option, bears the risk of an unfavorable change in the market value of
the security, swap or currency underlying the written option.
Forward Foreign Currency Exchange Contracts
Generally, the Fund may enter into forward foreign currency exchange contracts
under two circumstances: (i) when a Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency to "lock in" the U.S.
exchange rate of the transaction, with such period being a short-dated contract
covering the period between transaction date and settlement date; or (ii) when
the Adviser believes that the currency of a particular foreign country may
experience a substantial movement against the U.S. dollar or against another
foreign currency. Forward foreign currency contracts are valued daily at the
forward rate. The change in market value is recorded as an unrealized gain or
loss by a Fund. When the contract is closed or offset with the same
counterparty, a Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed or offset.
Forward foreign currency contracts will generally not be entered into for terms
greater than three months. The use of forward foreign currency contracts does
not eliminate fluctuations in the underlying prices of a Fund's investment
securities; however, it does establish a rate of exchange that can be achieved
in the future. The use of forward foreign currency contracts involves the risk
that anticipated currency movements will not be accurately predicted. A forward
foreign currency contract would limit the risk of loss due to a decline in the
value of a particular currency; however, it also would limit any potential gain
that might result should the value of the currency increase instead of decrease.
These contracts may involve market risk in excess of the unrealized gain or loss
reflected in the Statements of Assets and Liabilities. In addition, the Funds
could be exposed to risks if counterparties to the contracts are unable to meet
the terms of their contracts. The counterparty risk exposure is, therefore,
closely monitored and contracts are only executed with high credit quality
financial institutions.
Foreign Currency Translation
To the extent that the Fund invests in securities that are denominated in a
currency other than U.S. dollars, the Fund will be subject to currency risk,
which is the risk that an increase in the U.S. dollar relative to the foreign
currency will reduce returns or portfolio value. Generally, when the U.S. dollar
rises in value against a foreign currency, the Fund's investments in securities
denominated in that currency will lose value because its currency is worth fewer
U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative
value. Investments and other assets and liabilities denominated in foreign
currencies are converted into U.S. dollars on a spot (i.e. cash) basis at the
spot rate prevailing in the foreign currency exchange market at the time of
valuation. Purchases and sales of investments and dividend income denominated in
foreign currencies are translated into U.S. dollars on the respective dates of
such transactions. The gains or losses resulting from changes in foreign
exchange rates on investments and derivative transactions are included with Net
realized gain (loss) from foreign currencies and Change in net unrealized
appreciation (depreciation) of foreign currencies in the Statement of
Operations.
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.
18
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results may differ from those estimates.
2. FUND SHARES
Transactions in shares for the period June 27, 2006 (commencement of operations)
through December 31, 2006, were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
Shares sold 9,250,000
Shares issued to shareholders due to reinvestment of
distributions 14,562
- --------------------------------------------------------------------------------
9,264,562
- --------------------------------------------------------------------------------
</Table>
3. INVESTMENT TRANSACTIONS
Purchases and sales (excluding put swaptions, short-term investments and
derivative transactions) for the period June 27, 2006 (commencement of
operations) through December 31, 2006, were as follows:
<Table>
<Caption>
- -------------------------------------------------------------------------------
Purchases $36,920,799
Sales --
- -------------------------------------------------------------------------------
</Table>
Transactions in call swaptions written during the period June 27, 2006
(commencement of operations) through December 31, 2006, were as follows:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- -------------------------------------------------------------------------------
Outstanding, beginning of period -- $ --
Call swaptions written 12,458,750,000 2,546,052
Call swaptions terminated in closing
purchase transactions (8,328,750,000) (1,245,201)
Call swaptions expired (1,474,000,000) (859,946)
- -------------------------------------------------------------------------------
Outstanding, end of period 2,656,000,000 $440,905
- -------------------------------------------------------------------------------
</Table>
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 amortization of premium and timing differences in recognizing
certain gains and losses on investment transactions. To the extent that
differences arise that are permanent in nature, such amounts are reclassified
within the capital accounts on the Statement of Assets and Liabilities presented
in the annual report, based on their Federal tax basis treatment; temporary
differences do not require reclassification. Temporary and permanent differences
do not impact the net asset value of the Fund.
<Table>
<Caption>
- -------------------------------------------------------------------------------
Cost of investments $174,304,269
- -------------------------------------------------------------------------------
</Table>
Gross unrealized appreciation and gross unrealized depreciation of investments
(excluding call swaptions written) at December 31, 2006, were as follows:
<Table>
<Caption>
- -------------------------------------------------------------------------------
Gross unrealized:
Appreciation $1,409,105
Depreciation (438,628)
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $970,477
- -------------------------------------------------------------------------------
</Table>
The tax components of undistributed net ordinary income and net long-term
capital gains at December 31, 2006, the Fund's tax year end, were as follows:
<Table>
- -------------------------------------------------------------------------------
Undistributed net ordinary income * $296,450
Undistributed net long-term capital gains --
- -------------------------------------------------------------------------------
</Table>
* 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 period June 27, 2006
(commencement of operations) through December 31, 2006, was designated for
purposes of the dividends paid deduction as follows:
<Table>
<Caption>
2006
- -------------------------------------------------------------------------------
Distributions from net ordinary income * $6,251,758
Distributions from net long-term capital gains ** --
- -------------------------------------------------------------------------------
</Table>
* 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 the
Internal Revenue Code Section 852(b)(3), the amount necessary to reduce the
earnings and profits of the Fund related to net capital gain to zero for the
tax year ended December 31, 2006.
19
Notes to
FINANCIAL STATEMENTS (continued)
At December 31, 2006, the Fund had an unused capital loss carryforward of $1,262
available for Federal income tax purposes to be applied against future capital
gains, if any. If not applied the carryforwards will expire in 2014.
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 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:
<Table>
<Caption>
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 billon .6000
- -------------------------------------------------------------------------------
</Table>
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 December 31, 2006, the complex level fee rate was .1845%.
<Table>
<Caption>
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
- -------------------------------------------------------------------------------
</Table>
(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
preferred stock issued by or borrowings 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 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.
20
6. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Interpretation No. 48
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 Accounting for Uncertainty in Income Taxes (FIN 48). FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. Recent SEC guidance allows funds
to delay implementing FIN 48 into NAV calculations until the fund's last NAV
calculation in the first required financial statement reporting period. As a
result, the Fund must begin to incorporate FIN 48 into its NAV calculation on
June 29, 2007. At this time, management is continuing to evaluate the
implications of FIN 48 and does not expect the adoption of FIN 48 will have a
significant impact on the net assets or results of operations of the Fund.
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 157
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The changes to current generally accepted accounting principles from the
application of this standard relate to the definition of fair value, the methods
used to measure fair value, and the expanded disclosures about fair value
measurements. As of December 31, 2006, the Fund does not believe the adoption of
SFAS No. 157 will impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements included within the Statement of
Operations for the period.
7. SUBSEQUENT EVENTS
Distributions to Shareholders
The Fund declared a distribution of $.1350 per share which was paid on February
1, 2007, to shareholders of record on January 15, 2007.
21
Financial
HIGHLIGHTS
Selected data for a share outstanding throughout each period:
<Table>
<Caption>
Investment Operations Less Distributions
-------------------------------- ----------------------------
Net
Beginning Net Realized/ Net
Net Asset Investment Unrealized Investment Capital
Value Income(a) Gain (Loss) Total Income Gains Total
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended 12/31:
2006(b) $ 19.10 $ .38 $ .72 $1.10 $ (.68) $ - $(.68)
- --------------------------------------------------------------------------------------------------------------------------------
<Caption>
Ending Ending
Offering Net Asset Market
Costs Value Value
- -------------------------------------------------- -----------------------------------
Year Ended 12/31:
2006(b) $ (.04) $ 19.48 $ 20.40
- -------------------------------------------------- -----------------------------------
</Table>
* 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 Net Asset Value is the combination
of changes in 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.
(a) Per share Net Investment Income is calculated using the average daily
shares method.
(b) For the period June 27, 2006 (commencement of operations) through December
31, 2006.
22
<Table>
<Caption>
Ratios/Supplemental Data
----------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Total Returns Before Credit After Credit
-------------------- ----------------------------- -----------------------------
Based on Based on Net Net Portfolio
Market Net Asset Ending Net Investment Investment Turnover
Value** Value** Assets (000) Expenses Income Expenses Income Rate
- --------------------------------------------------------------------------------------------------------------------
5.55% 5.56% $ 180,593 1.07%* 3.79%* 1.06%* 3.79%* --%
- --------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements.
23
Board Members
AND OFFICERS
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board
Members of the Funds. The number of board members of the Fund is currently set
at ten. None of the board members who are not "interested" persons of the Funds
has ever been a director or employee of, or consultant to, Nuveen or its
affiliates. The names and business addresses of the board members and officers
of the Funds, their principal occupations and other affiliations during the past
five years, the number of portfolios each oversees and other directorships they
hold are set forth below.
<Table>
<Caption>
NUMBER OF PORTFOLIOS
PRINCIPAL OCCUPATION(S) IN FUND COMPLEX
NAME, BIRTHDATE POSITION(S) HELD YEAR FIRST ELECTED INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS WITH THE FUNDS OR APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER
- -------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS:
- -------------------------------------------------------------------------------------------------------------------------------
Timothy R. Chairman of the 1994 Chairman (since 1996) and Director 172
Schwertfeger(1) Board and Board of Nuveen Investments, Inc., Nuveen
3/28/49 Member Investments, LLC; Chairman and
333 W. Wacker Drive Director (since 1997) of Nuveen
Chicago, IL 60606 Asset Management; Chairman and
Director of Rittenhouse Asset
Management, Inc. (since 1999);
Chairman of Nuveen Investments
Advisers Inc. (since 2002);
formerly, Chairman and Director
(1996-2004) Nuveen Advisory Corp.
and Nuveen Institutional Advisory
Corp.(3); formerly, Director
(1996-2006) of Institutional
Capital Corporation.
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
- -------------------------------------------------------------------------------------------------------------------------------
Robert P. Bremner Lead Independent 1997 Private Investor and Management 172
8/22/40 Board member Consultant.
333 W. Wacker Drive
Chicago, IL 60606
- -------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown Board member 1993 Retired (since 1989) as Senior Vice 172
7/29/34 President of The Northern Trust
333 W. Wacker Drive Company; Director (since 2002)
Chicago, IL 60606 Community Advisory Board for
Highland Park and Highwood, United
Way of the North Shore; Director
(since 2006) of the Michael Rolfe
Pancreatic Cancer Foundation.
- -------------------------------------------------------------------------------------------------------------------------------
Jack B. Evans Board member 1999 President, The Hall-Perrine 172
10/22/48 Foundation, a private philanthropic
333 W. Wacker Drive corporation (since 1996); Director
Chicago, IL 60606 and Vice Chairman, United Fire
Group, a publicly held company;
Adjunct Faculty Member, University
of Iowa; Director, Gazette
Companies; Life Trustee of Coe
College and Iowa College
Foundation; formerly, Director,
Alliant Energy; formerly, Director,
Federal Reserve Bank of Chicago;
formerly, President and Chief
Operating Officer, SCI Financial
Group, Inc., a regional financial
services firm.
- -------------------------------------------------------------------------------------------------------------------------------
William C. Hunter Board member 2004 Dean, Tippie College of Business, 172
3/6/48 University of Iowa (since July
333 W. Wacker Drive 2006); formerly, Dean and
Chicago, IL 60606 Distinguished Professor of Finance,
School of Business at the
University of Connecticut
(2003-2006); previously, Senior
Vice President and Director of
Research at the Federal Reserve
Bank of Chicago (1995-2003);
Director (since 1997), Credit
Research Center at Georgetown
University; Director (since 2004)
of Xerox Corporation; Director,
SS&C Technologies, Inc. (May 2005-
October 2005).
- -------------------------------------------------------------------------------------------------------------------------------
David J. Kundert Board member 2005 Director, Northwestern Mutual 170
10/28/42 Wealth Management Company; Retired
333 W. Wacker Drive (since 2004) as Chairman, JPMorgan
Chicago, IL 60606 Fleming Asset Management, President
and CEO, Banc One Investment
Advisors Corporation, and
President, One Group Mutual Funds;
prior thereto, Executive Vice
President, Banc One Corporation and
Chairman and CEO, Banc One
Investment Management Group; Board
of Regents, Luther College; member
of the Wisconsin Bar Association;
member of Board of Directors,
Friends of Boerner Botanical
Gardens; member of Board of
Directors, Milwaukee Repertory
Theater.
</Table>
24
<Table>
<Caption>
NUMBER OF PORTFOLIOS
PRINCIPAL OCCUPATION(S) IN FUND COMPLEX
NAME, BIRTHDATE POSITION(S) HELD YEAR FIRST ELECTED INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS WITH THE FUNDS OR APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER
- -------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS (CONTINUED):
- -------------------------------------------------------------------------------------------------------------------------------
William J. Schneider Board member 1997 Chairman of Miller-Valentine 172
9/24/44 Partners Ltd., a real estate
333 W. Wacker Drive investment company; formerly,
Chicago, IL 60606 Senior Partner and Chief Operating
Officer (retired, 2004) of
Miller-Valentine Group; formerly,
Vice President, Miller-Valentine
Realty; Board Member, Chair of the
Finance Committee and member of the
Audit Committee of Premier Health
Partners, the not-for-profit
company of Miami Valley Hospital;
Vice President, Dayton Philharmonic
Orchestra Association; Board
Member, Regional Leaders Forum,
which promotes cooperation on
economic development issues;
Director, Dayton Development
Coalition; formerly, Member,
Community Advisory Board, National
City Bank, Dayton, Ohio and
Business Advisory Council,
Cleveland Federal Reserve Bank.
- -------------------------------------------------------------------------------------------------------------------------------
Judith M. Stockdale Board member 1997 Executive Director, Gaylord and 172
12/29/47 Dorothy Donnelley Foundation (since
333 W. Wacker Drive 1994); prior thereto, Executive
Chicago, IL 60606 Director, Great Lakes Protection
Fund (from 1990 to 1994).
- -------------------------------------------------------------------------------------------------------------------------------
Carole E. Stone Board Member 2007 Director, Chicago Board Options 172
6/28/47 Exchange (since 2006); Chair New
333 West Wacker Drive York Racing Association Oversight
Chicago, IL 60606 Board (since 2005); Commissioner,
New York State Commission on Public
Authority Reform (since 2005);
formerly Director, New York State
Division of the Budget (2000-2004),
Chair, Public Authorities Control
Board (2000-2004) and Director,
Local Government Assistance
Corporation (2000-2004).
- -------------------------------------------------------------------------------------------------------------------------------
Eugene S. Sunshine Board member 2005 Senior Vice President for Business 172
1/22/50 and Finance, Northwestern
333 W. Wacker Drive University (since 1997); Director
Chicago, IL 60606 (since 2003), Chicago Board Options
Exchange; Chairman (since 1997),
Board of Directors, Rubicon, a pure
captive insurance company owned by
Northwestern University; Director
(since 1997), Evanston Chamber of
Commerce and Evanston Inventure, a
business development organization;
Director (since 2006), Pathways, a
provider of therapy and related
information for physically disabled
infants and young children;
formerly, Director (2003-2006),
National Mentor Holdings, a
privately-held, national provider
of home and community-based
services.
</Table>
25
Board Members
AND OFFICERS (CONTINUED)
<Table>
<Caption>
NUMBER OF PORTFOLIOS
NAME, BIRTHDATE POSITION(S) HELD YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) IN FUND COMPLEX
AND ADDRESS WITH THE FUNDS OR APPOINTED(4) DURING PAST 5 YEARS OVERSEEN BY OFFICER
- -------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUND:
- -------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), 172
9/9/56 Administrative Assistant Secretary and Associate
333 W. Wacker Drive Officer General Counsel, formerly, Vice
Chicago, IL 60606 President and Assistant General
Counsel, of Nuveen Investments,
LLC; Managing Director (2002-2004),
General Counsel (1998-2004) and
Assistant Secretary, formerly, Vice
President of Nuveen Advisory Corp.
and Nuveen Institutional Advisory
Corp.(3); Managing Director (since
2002) and Assistant Secretary and
Associate General Counsel,
formerly, Vice President (since
1997), of Nuveen Asset Management;
Managing Director (since 2004) and
Assistant Secretary (since 1994) of
Nuveen Investments, Inc.; Assistant
Secretary of NWQ Investment
Management Company, LLC. (since
2002); Vice President and Assistant
Secretary of Nuveen Investments
Advisers Inc. (since 2002);
Managing Director, Associate
General Counsel and Assistant
Secretary of Rittenhouse Asset
Management, Inc.; Assistant
Secretary of Symphony Asset
Management LLC (since 2003),
Tradewinds NWQ Global Investors,
LLC and Santa Barbara Asset
Management, LLC; (since 2006);
Chartered Financial Analyst.
- -------------------------------------------------------------------------------------------------------------------------------
Julia L. Antonatos Vice President 2004 Managing Director (since 2005), 172
9/22/63 formerly, Vice President (since
333 W. Wacker Drive 2002); formerly, Assistant Vice
Chicago, IL 60606 President (since 2000) of Nuveen
Investments, LLC; Chartered
Financial Analyst.
- -------------------------------------------------------------------------------------------------------------------------------
Michael T. Atkinson Vice President 2000 Vice President (since 2002), 172
2/3/66 and Assistant formerly, Assistant Vice President
333 W. Wacker Drive Secretary (since 2000) of Nuveen Investments,
Chicago, IL 60606 LLC.
- -------------------------------------------------------------------------------------------------------------------------------
Peter H. D'Arrigo Vice President 1999 Vice President and Treasurer of 172
11/28/67 Nuveen Investments, LLC and of
333 W. Wacker Drive Nuveen Investments, Inc. (since
Chicago, IL 60606 1999); Vice President and Treasurer
of Nuveen Asset Management (since
2002) and of Nuveen Investments
Advisers Inc. (since 2002);
Assistant Treasurer of NWQ
Investment Management Company, LLC.
(since 2002); Vice President and
Treasurer of Nuveen Rittenhouse
Asset Management, Inc. (since
2003); Treasurer of Symphony Asset
Management LLC (since 2003) and
Santa Barbara Asset Management, LLC
(since 2006); Assistant Treasurer,
Tradewinds NWQ Global Investors,
LLC (since 2006); formerly, Vice
President and Treasurer (1999-2004)
of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(3);
Chartered Financial Analyst.
- -------------------------------------------------------------------------------------------------------------------------------
John N. Desmond Vice President 2005 Vice President, Director of 172
8/24/61 Investment Operations, Nuveen
333 W. Wacker Drive Investments, LLC (since January
Chicago, IL 60606 2005); formerly, Director, Business
Manager, Deutsche Asset Management
(2003- 2004), Director, Business
Development and Transformation,
Deutsche Trust Bank Japan
(2002-2003); previously, Senior
Vice President, Head of Investment
Operations and Systems, Scudder
Investments Japan, (2000-2002),
Senior Vice President, Head of Plan
Administration and Participant
Services, Scudder Investments
(1995-2002).
</Table>
26
<Table>
<Caption>
NUMBER OF PORTFOLIOS
NAME, BIRTHDATE POSITION(S) HELD YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) IN FUND COMPLEX
AND ADDRESS WITH THE FUNDS OR APPOINTED(4) DURING PAST 5 YEARS OVERSEEN BY OFFICER
- -------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President 1998 Vice President (since 2002), 172
9/24/64 and Secretary Assistant Secretary and Assistant
333 W. Wacker Drive General Counsel (since 1998)
Chicago, IL 60606 formerly, Assistant Vice President
(since 1998) of Nuveen Investments,
LLC; Vice President (2002-2004) and
Assistant Secretary (1998-2004)
formerly, Assistant Vice President
of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(3);
Vice President and Assistant
Secretary (since 2005) of Nuveen
Asset Management.
- -------------------------------------------------------------------------------------------------------------------------------
Lorna C. Ferguson Vice President 1998 Managing Director (since 2004), 172
10/24/45 formerly, Vice President of Nuveen
333 W. Wacker Drive Investments, LLC, Managing Director
Chicago, IL 60606 (2004) formerly, Vice President
(1998-2004) of Nuveen Advisory
Corp. and Nuveen Institutional
Advisory Corp.(3); Managing
Director (since 2005) of Nuveen
Asset Management.
- -------------------------------------------------------------------------------------------------------------------------------
William M. Fitzgerald Vice President 1995 Managing Director (since 2002), 172
3/2/64 formerly, Vice President of Nuveen
333 W. Wacker Drive Investments, LLC; Managing Director
Chicago, IL 60606 (1997-2004) of Nuveen Advisory
Corp. and Nuveen Institutional
Advisory Corp.(3); Managing
Director (since 2001) of Nuveen
Asset Management; Vice President
(since 2002) of Nuveen Investments
Advisers Inc.; Chartered Financial
Analyst.
- -------------------------------------------------------------------------------------------------------------------------------
Stephen D. Foy Vice President 1998 Vice President (since 1993) and 172
5/31/54 and Controller Funds Controller (since 1998) of
333 W. Wacker Drive Nuveen Investments, LLC; formerly,
Chicago, IL 60606 Vice President and Funds Controller
(1998-2004) of Nuveen Investments,
Inc.; Certified Public Accountant.
- -------------------------------------------------------------------------------------------------------------------------------
Walter M. Kelly Chief Compliance 2003 Vice President and Assistant 172
2/24/70 Officer and Vice Secretary (since 2006) formerly,
333 West Wacker Drive President Assistant Vice President and
Chicago, IL 60606 Assistant General Counsel (since
2003) of Nuveen Investments, LLC;
Vice President (since 2006) and
Assistant Secretary (since 2003)
formerly, Assistant Vice President
of Nuveen Asset Management;
previously, Associate (2001-2003)
at the law firm of Vedder, Price,
Kaufman & Kammholz.
- -------------------------------------------------------------------------------------------------------------------------------
David J. Lamb Vice President 2000 Vice President (since 2000) of 172
3/22/63 Nuveen Investments, LLC; Certified
333 W. Wacker Drive Public Accountant.
Chicago, IL 60606
- -------------------------------------------------------------------------------------------------------------------------------
Tina M. Lazar Vice President 2002 Vice President of Nuveen 172
8/27/61 Investments, LLC (since 1999).
333 W. Wacker Drive
Chicago, IL 60606
</Table>
27
Board Members
AND OFFICERS (CONTINUED)
<Table>
<Caption>
NUMBER OF PORTFOLIOS
NAME, BIRTHDATE POSITION(S) HELD YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) IN FUND COMPLEX
AND ADDRESS WITH THE FUNDS OR APPOINTED(4) DURING PAST 5 YEARS OVERSEEN BY OFFICER
- -------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President 1988 Vice President, Assistant Secretary 172
7/27/51 and Assistant and Assistant General Counsel of
333 W. Wacker Drive Secretary Nuveen Investments, LLC; formerly,
Chicago, IL 60606 Vice President and Assistant
Secretary of Nuveen Advisory Corp.
and Nuveen Institutional Advisory
Corp.(3); Vice President (since
2005) and Assistant Secretary of
Nuveen Investments, Inc.; Vice
President (since 2005) and
Assistant Secretary (since 1997) of
Nuveen Asset Management; Vice
President (since 2000), Assistant
Secretary and Assistant General
Counsel (since 1998) of Rittenhouse
Asset Management, Inc.; Vice
President and Assistant Secretary
of Nuveen Investments Advisers Inc.
(since 2002); Assistant Secretary
of NWQ Investment Management
Company, LLC (since 2002), Symphony
Asset Management LLC (since 2003)
and Tradewinds NWQ Global
Investors, LLC and Santa Barbara
Asset Management, LLC (since 2006).
</Table>
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and board member of
the Adviser.
(2) Board members serve a three year term until his/her successor is elected.
The year first elected or appointed represents the year in which the board
member was first elected or appointed to any fund in the Nuveen Complex.
(3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
(4) Officers serve one year terms through July of each year. The year first
elected or appointed represents the year in which the Officer was first
elected or appointed to any fund in the Nuveen Complex.
28
Investment
MANAGEMENT AGREEMENT APPROVAL PROCESS
The Board of Trustees is responsible for overseeing the performance of the
investment adviser to the Fund and determining whether to approve the advisory
arrangement. At a meeting held on May 11, 2006 (the "May Meeting"), the Board of
Trustees of the Fund, including the independent Trustees, unanimously approved
the Investment Management Agreement between the Fund and NAM.
THE APPROVAL PROCESS
To assist the Board in its evaluation of an advisory contract with NAM, the
independent Trustees have received, in advance of this meeting or at prior
meetings, materials which outlined, among other things, the services currently
provided by NAM to other Nuveen funds and expected to be provided to the Fund;
the organization of Nuveen, including the responsibilities of various
departments and key personnel; NAM's (and NAM's predecessor's) performance
record with other funds; the profitability of NAM (which incorporated Nuveen
Investments other wholly-owned advisory subsidiaries); the expenses of NAM in
providing the various services; the proposed management fees of NAM, including
comparisons of such fees with the management fees of comparable, unaffiliated
funds as well as with other comparable Nuveen funds, and the soft dollar
practices of NAM, if any.
In addition to the foregoing materials, independent legal counsel to the
independent Trustees reviewed with the independent Trustees their duties as
Trustees under the 1940 Act as well as the general principles of relevant state
law in reviewing and approving advisory contracts; the requirements of the 1940
Act in such matters; an adviser's fiduciary duty with respect to advisory
agreements and compensation; the standards used by courts in determining whether
investment company boards of directors have fulfilled their duties and factors
to be considered by the Board in voting on advisory agreements.
At the Board meeting, NAM made a presentation to and responded to questions from
the Board. In connection with their continued service as Trustees of Nuveen
funds, the Trustees have a good understanding of NAM's operations and
capabilities. After the presentation and after reviewing the written materials,
the independent Trustees met privately with their legal counsel to review the
Board's duties in reviewing advisory contracts and consider the approval of the
advisory contract. It is with this background that the Trustees considered the
Investment Management Agreement with NAM. The independent Trustees, in
consultation with independent counsel, reviewed the factors set out in judicial
decisions and SEC directives relating to the approval of advisory contracts. As
outlined in more detail below, the Trustees considered all factors they believed
relevant with respect to the Fund, including the following: (a) the nature,
extent and quality of the services to be provided by NAM; (b) the investment
performance of NAM; (c) the costs of services and profitability of NAM; (d) the
extent to which economies of scale would be realized as the Fund grows; and (e)
whether fee levels reflect these economies of scale for the benefit of Fund
investors.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In evaluating the nature, extent and quality of NAM's services, the Trustees
considered the types of services that NAM or its affiliates currently provide to
other Nuveen funds (as applicable) and that are expected to be provided to the
Fund as well as narrative and/or statistical information concerning NAM's
performance record with other funds they advise. In connection with their
service as Trustees, the Trustees have previously reviewed information
describing Nuveen's organization and its various departments, the experience and
responsibilities of key personnel, and available resources. As noted, given the
Trustees' experience with the other Nuveen funds and NAM, the Trustees noted
that they were familiar with and continue to have a good understanding of the
organization, operations and personnel of NAM. The Trustees also reviewed
information regarding the various management tools to be employed in advising
this Fund.
In addition to advisory services, the independent Trustees considered the
quality of any administrative or non-advisory services to be provided. In this
regard, NAM is expected to provide the Fund with such administrative and other
services (exclusive of, and in addition to, any such services provided by others
for the Fund) and officers and other personnel as are necessary for the
operations of the Fund. In addition to investment management services, NAM and
its affiliates will provide the Fund with a wide range of services, including:
preparing shareholder reports; providing daily accounting; providing quarterly
financial statements; overseeing and coordinating the activities of other
service providers; administering and organizing Board meetings and preparing the
Board materials for such meetings; providing legal support (such as helping to
prepare registration statements, amendments thereto and proxy statements and
responding to regulatory inquiries); and performing other Fund administrative
tasks necessary for the operation of the Fund (such as tax reporting and
fulfilling regulatory filing requirements). In evaluating the administrative
services, the Trustees also considered, in particular, NAM's policies and
procedures for assuring compliance with applicable laws and regulations in light
of the enhanced SEC regulations governing compliance. In this regard, the
Trustees previously have recognized NAM's focus on compliance and its compliance
systems. In connection with their review of the advisory contracts of other
Nuveen funds at their May 2005 meeting, the Trustees had previously received
information regarding the additions of experienced personnel to NAM's compliance
group and modifications and other enhancements to NAM's computer systems. The
Trustees are
29
Investment
MANAGEMENT AGREEMENT APPROVAL PROCESS (continued)
familiar with the level and quality of services NAM provides to the various
Nuveen funds and the same level and quality of services can be expected to be
provided to the Fund.
Based on their review, the Trustees found that, overall, the nature, extent and
quality of services expected to be provided to the Fund under the Investment
Management Agreement were sufficient.
B. THE INVESTMENT PERFORMANCE OF NAM
As the Fund is new and does not have its own performance history, the Board
reviewed (either at this meeting and/or earlier meetings) and considered
performance information regarding NAM's past performance record with other funds
or accounts.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
In evaluating the management fees and expenses that the Fund is expected to
bear, the Trustees considered the Fund's proposed management fee structure,
in absolute terms as well as compared with the fees of comparable,
unaffiliated funds and of comparable Nuveen closed-end funds. At prior
meetings, the Trustees reviewed the financial information of NAM and its
affiliates, including revenues, expenses and profitability. In reviewing
fees, the Trustees, among other things, reviewed comparisons of the Fund's
proposed management fees with the gross and net (after waivers, if any)
advisory fees of unaffiliated, comparable funds and with comparable Nuveen
closed-end funds. In this regard, the Trustees also considered the fund-level
and complex-wide breakpoint schedules. The complex-wide breakpoint schedule
was instituted in 2004 and is described in further detail below in Section D
entitled "Economies of Scale and Whether Fee Levels Reflect These Economies
of Scale."
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
Due to their experience with other Nuveen funds, the Trustees were familiar
with the fees assessed to other clients of Nuveen or its affiliates. With
respect to separately managed accounts, the advisory fees to such separately
managed accounts are generally lower than those charged to the Fund. The
Trustees have noted, however, the additional services that are provided and
the costs incurred by Nuveen in managing and operating registered investment
companies, such as the Fund, compared to individually managed separate
accounts. For instance, as described above, NAM and its affiliates will
provide numerous services to the Fund including, but not limited to,
preparing shareholder reports; providing daily accounting; preparing
quarterly financial statements; overseeing and coordinating the activities of
other service providers; administering and organizing Board meetings and
preparing the Board materials for such meetings; providing legal support; and
administering all other aspects of the Fund's operations. Further, the
Trustees noted the increased compliance requirements for funds in light of
SEC regulations and other legislation. These services are generally not
required to the same extent, if at all, for separate accounts. In addition to
the differences in services, the Trustees also have considered, among other
things, the differences in product distribution, investor profiles and
account sizes between the product lines. Accordingly, the Trustees believe
that the nature and number of services provided to operate a Fund merit the
higher fees than those to separate managed accounts.
3. PROFITABILITY OF NUVEEN
In conjunction with its review of fees, the Trustees also have previously
reviewed the profitability of NAM (which included Nuveen Investments other
wholly-owned advisory subsidiaries). At their Board meeting in May, 2005, the
Trustees reviewed NAM's revenues, expenses and profitability margins (on both
a pre-tax and after-tax basis). In reviewing profitability, the Trustees had
recognized that one of the most difficult issues in determining profitability
is establishing a method of allocating expenses. At the May, 2005 meeting,
the Trustees reviewed Nuveen's assumptions and methodology of allocating
expenses and noted that the methods of allocation used appeared reasonable
but also had recognized the inherent limitations in allocating costs among
various advisory products. In reviewing profitability, the Trustees had
recognized that individual fund or product line profitability of other
advisers is generally not publicly available. Further, profitability may be
affected by numerous factors including the types of funds managed, expense
allocations, business mix, etc. and therefore comparability of profitability
is somewhat limited. Nevertheless, to the extent available, the Trustees had
considered NAM's profit margin compared to the profitability of various
publicly-traded investment management companies and/or investment management
companies that publicly disclose some or all of their financial results
compiled by three independent third-party service providers. In their review,
the Trustees also reviewed the revenues, expenses and profit margins of
various unaffiliated advisory firms with similar amounts of assets under
management for the last year prepared by Nuveen. Based on the foregoing, the
Trustees were satisfied that the level of profitability was reasonable in
light of the services provided.
30
In evaluating the reasonableness of the compensation, the Trustees also
considered any other revenues paid to NAM as well as any indirect benefits (such
as soft dollar arrangements, if any) NAM and its affiliates are expected to
receive that are directly attributable to their management of the Fund, if any.
See Section E below for additional information. Based on their review of the
overall fee arrangements of the Fund, the Trustees determined that the advisory
fees and expenses of the Fund were reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
In reviewing compensation, the Trustees have long understood the benefits of
economies of scale as the assets of a fund grow and have sought to ensure that
shareholders share in these benefits. One method for shareholders to share in
economies of scale is to include breakpoints in the advisory fee schedules that
reduce fees as fund assets grow. Accordingly, the Trustees received and reviewed
the schedule of proposed advisory fees for the Fund, including fund-level
breakpoints thereto. In addition, after lengthy negotiations with management,
the Board in May, 2004 approved a complex-wide fee arrangement pursuant to which
fees of the funds in the Nuveen complex, which will include the Fund, are
reduced as the assets in the fund complex reach certain levels. In evaluating
the complex-wide fee arrangement, the Trustees considered, among other things,
the historic and expected fee savings to shareholders as assets grow, the amount
of fee reductions at various asset levels, and that the arrangement would extend
to all funds in the Nuveen complex. The Trustees also considered the impact, if
any, the complex-wide fee arrangement may have on the level of services
provided. Based on their review, the Trustees concluded that the breakpoint
schedules and complex-wide fee arrangement currently was acceptable and
desirable in providing benefits from economies of scale to shareholders.
E. INDIRECT BENEFITS
In evaluating fees, the Trustees also considered any indirect benefits or
profits NAM or its affiliates may receive as a result of its relationship with
the Fund. In this regard, the Trustees considered any benefits from soft dollar
arrangements. The Trustees have recognized that although NAM manages a large
amount of assets, it has very little, if any, brokerage to allocate. This is due
to the fact that NAM typically manages the portfolios of the municipal funds in
the Nuveen complex and municipal bonds generally trade on a principal basis.
Accordingly, NAM does not currently have any soft dollar arrangements and does
not pay excess brokerage commissions (or spreads on principal transactions) in
order to receive research services. In addition to soft dollar arrangements, the
Trustees also considered any other revenues, if any, received by NAM or its
affiliates.
F. APPROVAL
The Trustees did not identify any single factor discussed previously as
all-important or controlling. The Trustees, including a majority of independent
Trustees, concluded that the terms of the Investment Management Agreement were
fair and reasonable, that NAM's fees are reasonable in light of the services
provided to the Fund and the NAM Investment Management Agreement should be and
was approved.
31
Reinvest Automatically
EASILY AND CONVENIENTLY
NUVEEN CLOSED-END FUNDS
DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End 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
NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO
SET UP YOUR REINVESTMENT ACCOUNT.
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, however, if shares begin trading at or above net
asset value during the purchase period, the Fund will issue new shares at the
greater of the net asset value of 95% of the then current market price.
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.
32
Notes
33
Notes
34
OTHER USEFUL
INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
The Fund's (i) quarterly portfolio of investments and (ii) 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. Information regarding how the Fund voted proxies relating to
portfolio securities held during the 12-month period ending June 30, 2007 will
be available in July, 2007.
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.
CEO CERTIFICATION DISCLOSURE
The Fund's Chief Executive Officer has submitted to the New York Stock Exchange
the annual CEO certification as required by Section 303A.12(a) of the NYSE
Listed Company Manual.
The Fund has filed with the Securities and Exchange Commission the certification
of its Chief Executive Officer and Chief Financial Officer required by Section
302 of the Sarbanes-Oxley Act.
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 Preferred 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
Carole E. Stone
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
PriceWaterhouseCoopers LLP
Chicago, IL
35
(BACK COVER PHOTO)
NUVEEN INVESTMENTS:
SERVING INVESTORS
FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past
century, Nuveen Investments has adhered to the belief that the best
approach to investing is to apply conservative risk-management principles
to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity
and fixed-income solutions that are integral to a well-diversified core
portfolio. Our clients have come to appreciate this diversity, as well as
our continued adherence to proven, long-term investing principles.
WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT
NEEDS.
Managing $162 billion in assets, as of December 31, 2006, 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 six distinct brands: Nuveen, a leader in
fixed-income investments; NWQ, a leader in value-style equities;
Rittenhouse, a leader in growth-style equities; Symphony, a leading
institutional manager of market-neutral alternative investment
portfolios; Santa Barbara, a leader in growth equities; and Tradewinds
NWQ, a leader in global equities.
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.
LEARN MORE
ABOUT NUVEEN FUNDS AT
WWW.NUVEEN.COM/CEF
- Share prices
- Fund details
- Daily financial news
- Investor education
- Interactive planning tools
EAN-G-1206D
NUVEEN LOGO
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. [There were no amendments to or waivers
from the Code during the period covered by this report.] The registrant has
posted the code of ethics on its website at www.nuveen.com/etf. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees determined that the registrant
has at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its Audit Committee. The registrant's audit committee
financial expert is Jack B. Evans, Chairman of the Audit Committee, who is
"independent" for purposes of Item 3 of Form N-CSR.
Mr. Evans was formerly President and Chief Operating Officer of SCI Financial
Group, Inc., a full service registered broker-dealer and registered investment
adviser ("SCI"). As part of his role as President and Chief Operating Officer,
Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and
actively supervised the CFO's preparation of financial statements and other
filings with various regulatory authorities. In such capacity, Mr. Evans was
actively involved in the preparation of SCI's financial statements and the
resolution of issues raised in connection therewith. Mr. Evans has also served
on the audit committee of various reporting companies. At such companies, Mr.
Evans was involved in the oversight of audits, audit plans, and the preparation
of financial statements. Mr. Evans also formerly chaired the audit committee of
the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Nuveen Global Government Enhanced Income Fund
The following tables show the amount of fees that PricewaterHouse Coopers, the
Fund's auditor, billed to the Fund during the Fund's last two full fiscal years.
For engagements with PricewaterHouse Coopers the Audit Committee approved in
advance all audit services and non-audit services that PricewaterHouse Coopers
provided to the Fund, except for those non-audit services that were subject to
the pre-approval exception under Rule 2-01 of Regulation S-X (the "pre-approval
exception"). The pre-approval exception for services provided directly to the
Fund waives the pre-approval requirement for services other than audit, review
or attest services if: (A) the aggregate amount of all such services provided
constitutes no more than 5% of the total amount of revenues paid by the Fund to
its accountant during the fiscal year in which the services are provided; (B)
the Fund did not recognize the services as non-audit services at the time of the
engagement; and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before the
audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
<Table>
<Caption>
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND(1) BILLED TO FUND(2) BILLED TO FUND(3) BILLED TO FUND(4)
- ----------------------------------------------------------------------------------------------------------------------------------
December 31, 2006 $32,000 $0 $0 $0
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
- ----------------------------------------------------------------------------------------------------------------------------------
December 31, 2005 N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) "Audit Fees" are the aggregate fees billed for professional services for the
audit of the Fund's annual financial statements and services provided in
connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and related
services reasonably related to the performance of the audit or review of
financial statements and are not reported under "Audit Fees".
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance, and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees", "Audit Related Fees", and "Tax Fees".
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE
ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by PricewaterHouse Coopers
to Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling,
controlled by or under common control with NAM ("Control Affiliate") that
provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for
engagements directly related to the Fund's operations and financial reporting,
during the Fund's last two full fiscal years.
The tables also show the percentage of fees subject to the pre-approval
exception. The pre-approval exception for services provided to the Adviser and
any Affiliated Fund Service Provider (other than audit, review or attest
services) waives the pre-approval requirement if: (A) the aggregate amount of
all such services provided constitutes no more than 5% of the total amount of
revenues paid to PricewaterHouse Coopers by the Fund, the Adviser and Affiliated
Fund Service Providers during the fiscal year in which the services are provided
that would have to be pre-approved by the Audit Committee; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement; and
(C) the services are promptly brought to the Audit Committee's attention, and
the Committee (or its delegate) approves the services before the Fund's audit is
completed.
<Table>
<Caption>
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES
BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER
AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
SERVICE PROVIDERS SERVICE PROVIDERS(1) SERVICE PROVIDERS
- ----------------------------------------------------------------------------------------------------------------------------------
December 31, 2006 $0 $3,500 $0
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
- ----------------------------------------------------------------------------------------------------------------------------------
December 31, 2005 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) The amounts reported for the Fund under the column heading "Tax Fees"
represents amounts billed to the Adviser exclusively for the
preparation for the Fund's tax return, the cost of which is borne by the
Adviser. In the aggregate, for all Nuveen funds for which Pricewaterhouse
Coopers serves as independent registered public accounting firm, these fees
amounted to $140,700 in 2006 and $121,500 in 2005.
NON-AUDIT SERVICES
The following table shows the amount of fees that PricewaterhouseCoopers billed
during the Fund's last two full fiscal years for non-audit services. For
engagements entered into on or after May 6, 2003, the Audit Committee is
required to pre-approve non-audit services that PricewaterhouseCoopers provides
to the Adviser and any Affiliated Fund Services Provider, if the engagement
related directly to the Fund's operations and financial reporting (except for
those subject to the de minimis exception described above). The Audit Committee
requested and received information from PricewaterhouseCoopers about any
non-audit services that PricewaterhouseCoopers rendered during the Fund's last
fiscal year to the Adviser and any Affiliated Fund Service Provider. The
Committee considered this information in evaluating PricewaterhouseCoopers'
independence.
<Table>
<Caption>
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES
PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND
RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE
TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
- ---------------------------------------------------------------------------------------------------------------------------------
December 31, 2006 $0 $3,500 $0 $3,500
December 31, 2005 N/A N/A N/A N/A
</Table>
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax
Fees" billed to Adviser in their respective amounts from the previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the Audit Committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the Audit Committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the Audit Committee at
the next Audit Committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant's Board of Directors or Trustees has a separately designated
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The
members of the audit committee are Robert P. Bremner, Lawrence H. Brown, Jack B.
Evans, William J. Schneider and Eugene S. Sunshine.
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.
The registrant invests its assets primarily in fixed income securities and cash
management securities. In the rare event that a fixed income issuer were to
issue a proxy or that the registrant were to receive a proxy issued by a cash
management security, NAM would either engage an independent third party to
determine how the proxy should be voted or vote the proxy with the consent, or
based on the instructions, of the registrant's Board of Trustees or its
representative. A member of NAM's legal department would oversee the
administration of the voting, and ensure that records were maintained in
accordance with Rule 206(4)-6, reports were filed with the SEC on Form N-PX, and
the results provided to the registrant's Board of Trustees and made available to
shareholders as required by applicable rules.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Nuveen Asset Management (NAM) is the registrant's investment adviser. (NAM is
also referred to as the "Adviser".) NAM, as Adviser, provides discretionary
investment advisory services. NAM is responsible for the selection and on-going
monitoring of the Fund's investment portfolio, managing the Fund's business
affairs and providing certain clerical, bookkeeping and administrative services.
The following section provides information on the portfolio managers at the
Adviser:
Item 8 (a)(1). PORTFOLIO MANAGER BIOGRAPHIES:
Andrew J. Stenwall leads NAM's Taxable Fixed Income Team and is responsible
for developing and administering the portfolio strategy of the team. Mr.
Stenwall has been a Managing Director of NAM since August 2004. Prior to joining
NAM, Mr. Stenwall served as the Fixed Income Chief Investment Officer for Banc
of America Capital Management ("BACAP") from 2002 through 2004, prior to which
he was a Managing Director in charge of BACAP's taxable fixed income management
and the leader of its structured products team. Mr. Stenwall joined BACAP in
June of 1997.
Saied Simozar, Ph.D is the Managing Director--Global Interest Rate
Strategies of NAM's Taxable Fixed Income Team (since December 2004), and he is
responsible for managing all active interest-rate and currency positions across
all taxable fixed-income portfolios. From October 2001 to October 2004, Dr.
Simozar was the Managing Director of Global Interest Rate Strategies for BACAP
where he was responsible for managing all non-U.S. interest rate positions and
emerging market investments. From March 1998 to May 2001, he was a senior
portfolio manager for Putnam Investments.
Item 8 (a)(2). Other Accounts Managed
Other Accounts Managed. In addition to their responsibilities for the
management of the Fund, the team listed above is primarily responsible for the
day-to-day portfolio management of the following accounts:
<Table>
<Caption>
PORTFOLIO NUMBER OF
MANAGER TYPE OF ACCOUNT MANAGED ACCOUNTS ASSETS*
- ----------- --------------------- ---------- --------------
Registered $178.4 million
Andrew J. Investment 4
Stenwall Company
Other Pooled 0 0
Investment Vehicles
Other Accounts 78 58.8 million
Saied
Simozar Registered
Investment 4 $178.4 million
Company
Other Pooled 0 0
Investment Vehicles
Other Accounts 82 57.8 million
</Table>
- -------
* Assets are as of December 31, 2006. None of the assets are subject to an
advisory fee based on performance.
Material Conflicts of Interest. NAM's Taxable Fixed Income Team's
simultaneous management of the Fund and the other registered investment
companies and other accounts noted above may present actual or apparent
conflicts of interest with respect to the allocation and aggregation of
securities and orders placed on behalf of the Fund. NAM has adopted several
policies that address such potential conflicts of interest, including best
execution and trade allocation policies that are designed to ensure (1) that
portfolio management is seeking the best price for portfolio trades under the
circumstances, (2) fair and equitable allocation of investment opportunities
among accounts over time, and (3) compliance with applicable regulatory
requirements. All accounts are to be treated in a non-preferential manner, such
that allocations are not based upon account performance, fee structure or
preference of the portfolio manager. In addition, NAM has adopted a Code of
Conduct that sets forth policies regarding conflicts of interest.
ITEM 8 (a)(3). Fund Manager Compensation
Salary and Cash Bonus. In addition to a salary and other guaranteed
compensation, each member of the investment team is eligible to receive an
annual cash bonus. The level of these bonuses and year to year changes to base
compensation are based upon evaluations and determinations made by Mr. Stenwall
for all team members reporting to him, and for all team members, including Mr.
Stenwall, upon evaluations and determinations made by the CEO and President of
Nuveen Investments. These reviews and evaluations take into account a number of
factors, including the effectiveness of the team's investment strategies, the
performance of the accounts for which the team serves as portfolio management
relative to any benchmarks established for the accounts (which for the Fund will
be the Fund's ability to meet the Fund's investment objectives, the team's and
the individual's effectiveness in communicating investment performance to
shareholders and their representatives, the team's and the individual's
contribution to NAM's investment process and execution of investment strategies,
and the team's overall assets under management. The cash bonus component is also
impacted by the overall performance of Nuveen Investments in achieving its
business objectives.
Long-Term Incentive Compensation. Each member of the investment team is
eligible to receive bonus compensation in the form of equity-based awards
comprised of securities issued by Nuveen Investments or options thereon, and/or
other forms of long-term deferred compensation. The amount of such compensation
is dependent upon the same factors articulated for cash bonus awards but also
takes into account the individual's long-term potential with the firm.
ITEM 8 (a)(4). OWNERSHIP OF JGG SECURITIES AS OF DECEMBER 31, 2006.
<Table>
<Caption>
- --------------------------------------------------------------------------------------------
NAME OF PORTFOLIO $1- $10,001- $50,001- $100,001- $500,001- OVER
MANAGER NONE $10,000 $50,000 $100,000 $500,000 $1,000,000 $1,000,000
- --------------------------------------------------------------------------------------------
Stenwall X
- --------------------------------------------------------------------------------------------
Simozar X
- --------------------------------------------------------------------------------------------
</Table>
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. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because the code is posted on registrant's website at www.nuveen.com/etf and
there were no amendments during the period covered by this report. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then Code of Conduct.)
(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 Global Government Enhanced Income Fund
-------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: March 9, 2007
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: March 9, 2007
By (Signature and Title)* /s/ Stephen D. Foy
------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: March 9, 2007
* Print the name and title of each signing officer under his or her signature.