UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-21206 AEW Real Estate Income Fund -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 399 Boylston Street, Boston, Massachusetts 02116 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Coleen Downs Dinneen, Esq. -------------------------------------------------------------------------------- IXIS Asset Management Distributors, L.P. 399 Boylston Street Boston, Massachusetts 02116 (Name and address of agent for service) Registrant's telephone number, including area code: (617) 449-2810 Date of fiscal year end: January 31, 2004 Date of reporting period: October 31, 2004 ITEM I SCHEDULE OF INVESTMENTS INVESTMENTS AS OF OCTOBER 31, 2004 -- (UNAUDITED) Shares Description Value (a) ------------------------------------------------------------------------------------------------------------------------ Common Stocks -- 95.9% of Total Net Assets REAL ESTATE -- 1.4% Apartments -- 1.4% 41,500 Municipal Mortgage & Equity LLC 1,060,325 ------------ REAL ESTATE INVESTMENT TRUSTS -- 94.5% REITs - Apartments -- 12.4% 44,000 Archstone Smith Trust 1,476,200 65,000 Camden Property Trust 2,951,000 78,500 Gables Residential Trust 2,865,250 40,000 Mid-America Apartment Communities, Inc. 1,573,200 27,000 Summit Properties, Inc. 818,910 ------------ 9,684,560 ------------ REITS - DIVERSIFIED -- 6.4% 83,500 iStar Financial, Inc. 3,458,570 70,000 Lexington Corporate Properties Trust 1,570,800 ------------ 5,029,370 ------------ REITS - FACTORY OUTLETS -- 1.2% 20,000 Tanger Factory Outlet Centers, Inc. 945,000 ------------ REITS - HEALTHCARE -- 15.2% 65,000 Health Care Property Investors, Inc. 1,808,950 121,000 Healthcare Realty Trust, Inc. 4,882,350 15,000 Omega Healthcare Investors, Inc. 169,050 100,000 Provident Senior Living Trust, 144A (b) 1,500,000 190,500 Senior Housing Properties Trust 3,573,780 ------------ 11,934,130 ------------ REITS - INDUSTRIAL -- 6.3% 25,000 EastGroup Properties, Inc. 885,750 62,400 First Potomac Realty Trust 1,261,728 68,100 Liberty Property Trust 2,761,455 ------------ 4,908,933 ------------ REITS - LODGING/RESORTS -- 4.1% 55,000 Eagle Hospitality Properties Trust, Inc. 522,500 63,000 Hospitality Properties Trust 2,699,550 ------------ 3,222,050 ------------ REITS - OFFICE -- 27.3% 77,000 Arden Realty, Inc. 2,624,160 65,000 CarrAmerica Realty Corp. 2,094,950 77,000 Glenborough Realty Trust, Inc. 1,617,000 90,000 Highwoods Properties, Inc. 2,232,900 311,300 HRPT Properties Trust 3,483,447 70,000 Kilroy Realty Corp. 2,782,500 68,000 Mack-Cali Realty Corp. 3,003,560 30,000 Maguire Properties, Inc. 784,500 76,500 Prentiss Properties Trust 2,752,470 ------------ 21,375,487 ------------ REITS - REGIONAL MALLS -- 6.7% 150,000 Borealis Retail REIT 1,587,300 62,000 Glimcher Realty Trust 1,600,840 35,000 Macerich Co. (The) 2,091,250 ------------ 5,279,390 ------------ REITS - SHOPPING CENTERS -- 12.9% 125,000 Cedar Shopping Centers, Inc. 1,691,250 100,000 Commercial Net Lease Realty, Inc. 1,923,000 30,000 Equity One, Inc. 629,700 94,000 Heritage Property Investment Trust 2,875,460 39,000 Inland Real Estate Corp. 586,560 30,000 New Plan Excel Realty Trust 784,800 39,000 Ramco-Gershenson Properties Trust 1,053,000 11,200 Realty Income Corp. 537,488 ------------ 10,081,258 ------------ REITS - SPECIALTY -- 2.0% 24,500 Correctional Properties Trust 661,010 22,000 Entertainment Properties Trust 877,800 ------------ 1,538,810 ------------ ------------ Total Real Estate Investment Trusts - Common Stocks 73,998,988 ------------ Total Common Stocks (Identified Cost $53,146,426) 75,059,313 ------------ Preferred Stocks -- 39.2% REAL ESTATE INVESTMENT TRUSTS -- 39.2% REITs - Apartments -- 4.1% 50,000 Apartment Investment & Management Co., Series G 1,342,500 29,400 Apartment Investment & Management Co., Series R 792,330 42,000 Apartment Investment & Management Co., Series U 1,035,720 ------------ 3,170,550 ------------ REITS - DIVERSIFIED -- 3.6% 50,000 Colonial Properties Trust, Series D 1,292,500 54,800 Crescent Real Estate Equities Co., Series B 1,487,820 ------------ 2,780,320 ------------ REITS - FACTORY OUTLETS -- 2.1% 35,500 Mills Corp. (The), Series B 977,315 25,000 Mills Corp. (The), Series E 677,250 ------------ 1,654,565 ------------ REITS - HEALTHCARE -- 3.8% 50,000 Health Care Property Investors, Inc., Class F 1,274,500 65,400 Omega Healthcare Investors, Inc., Series D 1,700,400 ------------ 2,974,900 ------------ REITS - LODGING/RESORTS -- 6.6% 75,000 Boykin Lodging Co., Series A 2,160,000 25,000 FelCor Lodging Trust, Inc., Series B 639,500 71,900 Hospitality Properties Trust, Series B 1,970,060 15,000 LaSalle Hotel Properties, Series A 418,650 ------------ 5,188,210 ------------ REITS - OFFICE -- 8.4% 30,000 Bedford Property Investors, Inc., Series A, 144A 1,511,250 100,000 CarrAmerica Realty Corp., Series E 2,606,000 90,400 HRPT Properties Trust, Series B 2,481,480 ------------ 6,598,730 ------------ REITS - REGIONAL MALLS -- 2.5% 75,000 Glimcher Realty Trust, Series F 1,982,250 ------------ REITS - SHOPPING CENTERS -- 8.1% 27,000 Cedar Shopping Centers, Inc., Series A (b) 712,800 42,200 Developers Diversified Realty Corp., Series F 1,135,180 21,300 Developers Diversified Realty Corp., Series G 560,190 13,000 Federal Realty Investment Trust, Series B 348,010 12,500 Ramco-Gershenson Properties Trust, Series B 344,375 9,000 Realty Income Corp., Series D 240,480 27,000 Urstadt Biddle Properties, Inc., Series C 2,963,250 ------------ 6,304,285 ------------ ------------ Total Real Estate Investment Trusts - Preferred Stocks 30,653,810 ------------ Total Preferred Stocks (Identified Cost $28,985,994) 30,653,810 ------------ Principal Amount -------------- Short Term Investment -- 0.1% $ 68,040 Repurchase Agreement with Investors Bank & Trust Co. dated 10/29/2004 at 1.27% to be repuchase$ at 68,0407 on 11/01/2004, collateralized by $70,007 Federal National Mortgage Association Bond, 4.446% due 1/01/2033 valued at $71,442 68,040 ------------ Total Short Term Investment (Identified Cost $68,040) 68,040 ------------ Total Investments -- 135.2% (Identified Cost $82,200,460) (c) 105,781,163 Auction Market Preferred Shares plus cumulative unpaid dividends (35.8%) (28,005,754) Other assets less liabilities -- 0.6% 475,280 ------------ Total Net Assets -- 100% $ 78,250,689 ============ (a) Security Valuation. Equity securities for which market quotations are readily availaard ofeTrustees.tFairket price on the basis of valuations furnished to the Fund by a pricing service, which has been authorized by the Trustees. The pricing service provides the last reported sale price for securities listed on an applicable securities exchange or on the NASDAQ national market system, or, if no sale was reported and in the case of over-the-counter securities not so listed, the last reported bid price. Securities traded on the NASDAQ National Market are valued at the NASDAQ Official Closing Price ("NOCP"), or if lacking an NOCP, at the most recent bid quotation on the NASDAQ National Market. Short-term obligations with a remaining maturity of less than sixty days are stated at amortized cost, which approximates market value. All other securities and assets are valued at their fair value as determined in good faith by the Fund's investment adviser pursuant to procedures approved by the Board of Trustees. The Fund may hold securities traded in foreign markets. Foreign securities are valued at the market price in the foreign market. However, if events occuring after the close of the foreign market (but before the close of regular trading on the New York Stock Exchange) are believed to materially affect the value of those securities, such securities are fair valued pursuant to procedures approved by the Fund's Board of Trustees. (b) Non-income producing security. (c) Federal Tax Information: At October 31, 2004, the net unrealized appreciation on investments based on cost of $83,008,803 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 22,800,878 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (28,518) ------------ Net unrealized appreciation $ 22,772,360 ============ REITs Real Estate Investment Trusts 144A Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $3,011,250 or 3.8% of net assets. ITEM 2. CONTROLS AND PROCEDURES. The Trust's principal executive officer and principal financial officer have concluded that the Trust's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust in this Form N-Q was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Trust's internal controls or in other factors that could significantly affect the Trust's internal controls subsequent to the date of their evaluation. 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. AEW Real Estate Income Fund By: /S/ JOHN T. HAILER --------------------------------- Name: John T. Hailer Title: President and Chief Executive Officer Date: December 20, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. AEW Real Estate Income Fund By: /S/ JOHN T. HAILER ----------------------------------- Name: John T. Hailer Title: President and Chief Executive Officer Date: December 20, 2004 By: /S/ MICHAEL KARDOK ---------------------------------- Name: Michael Kardok Title: Treasurer Date: December 21, 2004 ITEM 3. EXHIBITS (a)(1) Certification for the principal executive officer as required by Rule 30a-2(a) of the Investment Company Act of 1940, as amended (the "Act") filed herewith. (a)(2) Certification for the principal financial officer as required by Rule 30a-2(a) of the Investment Company Act of 1940, as amended (the "Act") filed herewith. Exhibit (a)(1) AEW REAL ESTATE INCOME FUND EXHIBIT TO SEC FORM N-Q SECTION 302 CERTIFICATIONS I, John T. Hailer, certify that: 1. I have reviewed this report on Form N-Q of AEW Real Estate Income Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and 3. Based on my knowledge, the schedules of investments included in this report fairly present in all materials respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. [Reserved] c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing of this report, based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 21, 2004 /S/ JOHN T. HAILER ----------------------------- John T. Hailer President & Chief Executive Officer Exhibit (a)(2) AEW REAL ESTATE INCOME FUND EXHIBIT TO SEC FORM N-Q SECTION 302 CERTIFICATIONS I, Michael Kardok, certify that: 1. I have reviewed this report on Form N-Q of AEW Real Estate Income Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and 3. Based on my knowledge, the schedules of investments included in this report fairly present in all materials respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. [Reserved] c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing of this report, based on such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 21, 2004 /S/ MICHAEL KARDOK -------------------------- Michael Kardok Treasurer AEW Real Estate Income Fund