We consider the problem of localization of sources of brain electrical activity from electroencephalographic (EEG) and magnetoencephalographic (MEG) measurements using spatial filtering techniques. We propose novel reduced-rank activity indices based on the minimum-variance pseudo-unbiased reduced-rank estimation (MV-PURE) framework. The main results of this paper establish the key unbiasedness property of the proposed indices and their higher spatial resolution compared with full-rank indices in challenging task of localizing closely positioned and possibly highly correlated sources, especially in low signal-to-noise regime. Numerical examples are provided to illustrate the practical applicability of the proposed activity indices using both simulated and real data.