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 811-21152
---------------------
Nuveen Georgia Dividend Advantage Municipal Fund 2
------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Jessica R. Droeger
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
-------------------
Date of fiscal year end: May 31
------------------
Date of reporting period: May 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 May 31, 2006
Nuveen Investments
Municipal Exchange-Traded
Closed-End Funds
NUVEEN GEORGIA
PREMIUM INCOME
MUNICIPAL FUND
NPG
NUVEEN GEORGIA
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NZX
NUVEEN GEORGIA
DIVIDEND ADVANTAGE
MUNICIPAL FUND 2
NKG
NUVEEN NORTH
CAROLINA PREMIUM
INCOME MUNICIPAL FUND
NNC
NUVEEN NORTH
CAROLINA DIVIDEND
ADVANTAGE MUNICIPAL
FUND
NRB
NUVEEN NORTH
CAROLINA DIVIDEND
ADVANTAGE MUNICIPAL
FUND 2
NNO
NUVEEN NORTH
CAROLINA DIVIDEND
ADVANTAGE MUNICIPAL
FUND 3
NII
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Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Chairman's
LETTER TO SHAREHOLDERS
Once again, I am pleased to report that over the twelve month period covered by
this report your Fund continued to provide you with attractive monthly tax-free
income. For more details about the management strategy and performance of your
Fund, please read the Portfolio Manager's Comments, the Dividend and Share Price
Information, and the Performance Overview sections of this report.
Municipal bonds can be an important building block in a well balanced investment
portfolio. In addition to providing attractive tax-free monthly income, a
municipal bond investment like your Fund may help you achieve and benefit from
greater portfolio diversification. Portfolio diversification is a recognized way
to try to reduce some of the risk that comes with investing. I encourage you to
contact your personal financial advisor who can help explain this important
investment strategy.
"PORTFOLIO DIVERSIFICATION IS A RECOGNIZED WAY TO TRY TO REDUCE SOME OF THE RISK
THAT COMES WITH INVESTING."
Nuveen Investments is pleased to offer you choices when it comes to receiving
your fund reports. In addition to mailed print copies, you can also sign up to
receive future Fund reports and other Fund information by e-mail and the
Internet. The inside front cover of this report contains information on how you
can sign up.
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. 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.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
July 11, 2006
Nuveen Investments Municipal Exchange-Traded Closed-End Funds
(NPG, NZX, NKG, NNC, NRB, NNO, NII)
Portfolio Manager's
COMMENTS
Portfolio manager Cathryn Steeves examines economic and municipal market
conditions at both the national and state levels, key investment strategies, and
the annual performance of these seven Nuveen Funds. Cathryn, who joined Nuveen
in 1996, has managed the Georgia and North Carolina Funds since 2004.
WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE ANNUAL
REPORTING PERIOD ENDED MAY 31, 2006?
During this reporting period, we saw a general increase in interest rates across
the yield curve, although rates at the long end of the curve remained more
stable than short-term rates during much of the period. Between June 1, 2005 and
May 31, 2006, the Federal Reserve announced eight increases of 0.25% each in the
fed funds rate, raising this short-term target by 200 basis points from 3% to
5%. By comparison, the yield on the benchmark 10-year U.S. Treasury note ended
May 2006 at 5.11%, up from 4.01% 12 months earlier, while the yield on the Bond
Buyer 25 Revenue Bond Index, a widely followed measure of longer-term municipal
market rates, was 5.22% at the end of May 2006, an increase of 44 basis points
from the beginning of June 2005. As interest rates increased, bond valuations
generally declined, and the yield curve flattened as shorter-term rates
approached the levels of longer-term rates.
Even with rising interest rates, increased energy prices, and indications of
slowing momentum in the manufacturing sector, the economy remained resilient,
with a healthy pattern of growth. After expanding at a rate of 3.3% in the
second quarter of 2005, the U.S. gross domestic product (GDP) grew by 4.1% in
the third quarter before slowing to 1.7% in the fourth quarter (all GDP numbers
annualized). In the first quarter of 2006, the GDP rebounded sharply to 5.6%,
fueled by upturns in consumer and federal spending and accelerated business
investment in equipment. The overall employment picture remained positive, with
national unemployment at 4.6% in May 2006, down from 5.1% in May 2005. Despite
an increase in inflation expectations, the year-over-year increase in the
Consumer Price Index as of May 2006 was 4.2%. However, during the first five
months of 2006, the pace of inflation picked up noticeably, rising at a rate of
5.2% annualized, compared with 3.4% for all of 2005.
Over the 12 months ended May 2006, municipal bond supply nationwide remained
strong, as $403.6 billion in new securities came to market, up 6% from the
previous 12 months. However, following record levels of issuance in calendar
year 2005, we saw a sharp in supply during the first five months of 2006, when
municipal issuance totaled $133.8 billion, off 19% from the same period in 2005.
A major factor in 2006's decline in
4
supply was the substantial reduction in pre-refunding volume, which dropped 56%
from last year's levels as rising interest rates made advance refundings less
economically attractive to issuers. Overall, demand for municipal bonds,
especially those offering higher yields, continued to be strong and broad-based,
with retail investors, property and casualty insurance companies, and hedge
funds--all participating in the market.
HOW WERE THE ECONOMIC AND MARKET ENVIRONMENTS IN GEORGIA AND NORTH CAROLINA
DURING THIS PERIOD?
During this reporting period, Georgia's economy remained stable and relatively
well diversified, driven by growth in the government, business services, and
retail trade sectors. The Base Realignment and Closure Commission (BRAC)
recommendations for reshaping the Defense Department's force structure were
expected to create an additional 3,900 jobs in the state. However, Georgia's
higher exposure to the textile industry continued to make it more vulnerable to
job losses in that area, and the state also continued to lose jobs in the auto
manufacturing sector. As of May 2006, Georgia's unemployment rate was 4.9%, down
from 5.3% in May 2005. The state capital of Atlanta continued to rank among the
fastest growing metro areas in the nation, and population growth statewide
remained strong at 11% over the last five years. The $18.6 billion fiscal 2007
state budget represented an increase of 14% over fiscal 2006 and provided pay
raises for teachers, prison guards, and other state employees. An improving
state economy has helped tax revenues perform above budgeted projections, with
general fund tax revenues up 10% compared with a forecast of 6%. This additional
revenue was earmarked for rebuilding the state's surplus fund. As of May 2006,
Georgia's general obligation debt continued to be rated Aaa/AAA by Moody's and
Standard & Poor's; both rating agencies listed their outlooks for the state as
stable. For the 12 months ended May 31, 2006, municipal issuance in Georgia
totaled $8.8 billion, on par with the previous 12 months. During the first five
months of 2006, $2.4 billion of new municipal debt was issued in Georgia, down
5% from January-May 2005. According to Moody's, Georgia ranked 12th among the 50
states in terms of tax-supported debt.
North Carolina's economy was led by growth in government employment, financial
services, and technology, as the state continued to transition from declining
old-line industries such as textiles and furniture manufacturing. However,
manufacturing of all types continued to play an important role in the state
economy, accounting for 15% of jobs in North Carolina, compared with the
national average of 11%. In particular, tech nology manufacturing, one of the
state's leading exports, demonstrated strong
5
growth, although the sector remained vulnerable to overseas competition. In May
2006, North Carolina's unemployment rate stood at 4.6%, on par with the national
average and down from 5.2% in May 2005. Longer term, technology, banking, and
service industries are expected to continue to buoy the state's economy, and the
state's many universities should continue to attract business professionals and
venture capital. For fiscal 2006, state revenues were projected to come in $1.1
billion ahead of plan, and the $18.5 billion fiscal 2007 state budget included
additional deposits to the state's rainy day fund as well as a number of modest
tax cuts. In May 2006, Moody's reconfirmed its Aa1 rating with a positive
outlook for North Carolina general obligation debt, and S&P confirmed its AAA
rating with a stable outlook. During the 12 months ended May 31, 2006, $8.2
billion of municipal debt was issued in North Carolina, an 18% increase from the
previous 12 months. However, municipal supply in the state dropped 35% during
the first five months of 2006 compared with the same period in 2005, totaling
$2.1 billion. Debt levels, while still moderate, have increased substantially in
recent years, and according to Moody's, North Carolina's per capita debt was
higher than the national median.
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THIS REPORTING
PERIOD?
As interest rates rose and the yield curve flattened during this 12-month
period, we continued to emphasize careful management of the Funds' underlying
portfolios in line with our established targets. This included a disciplined
approach to duration1 management and yield curve positioning. In selecting new
additions for our portfolios, our purchase activity focused mainly on
attractively priced, premium coupon bonds in the intermediate and long
intermediate range of the curve, depending on the differing duration needs of
each individual Fund. We believed that bonds in this part of the curve generally
offered better value and reward opportunities more commensurate with their risk
levels. To help us maintain the Funds' durations within our preferred strategic
range, we were also selectively selling holdings with shorter durations,
including short-dated pre-refunded bonds. Selling these shorter bonds and
reinvesting further out on the yield curve also helped to improve the Funds'
overall call protection profile.
With yields rising during this period, we sold a few of our holdings that were
purchased when yields were lower and replace them with similar, newer credits
that yielded comparatively more. This process allowed us to maintain the Funds'
current portfolio characteristics while strengthening their income streams.
1 Duration is a measure of a bond's price sensitivity as interest rates
change, with longer duration bonds displaying more sensitivity to these
changes than bonds with shorter durations.
6
In looking for potential purchase candidates, we kept an opportunistic eye
toward all types of issuance that we believed could add value to the Funds'
portfolios. Overall, portfolio activity was relatively light, particularly
during the second half of this period. This was due in part to the decline in
municipal supply in these two states during the first five months of 2006,
especially in North Carolina. Since both Georgia and North Carolina are
high-quality states, much of the new supply was highly rated and/or insured, and
the majority of our new purchases were higher-rated credits. In the North
Carolina Funds, we took advantage of opportunities to purchase some longer-term
credits, including AAA/insured bonds issued by North Carolina Medical Care
Commission for Blue Ridge Healthcare System (maturity 2033) and AA rated bonds
issued by Charlotte-Mecklenburg Hospital Authority (maturity 2045). Both of
these healthcare issues were added to all four North Carolina Funds as part of
our duration management activities.
We also continued to emphasize maintaining the Funds' weightings of bonds rated
BBB or lower and non-rated bonds. However, tighter supply meant even fewer
interesting lower-rated credit opportunities than usual in these two state
markets. As a result, the Funds' allocations of lower quality bonds generally
remained stable over this period.
Over the past 12 months, our duration management strategies also included the
use of forward interest rate swaps, a type of derivative financial instrument,
in NZX, NKG, NRB, NNO and NII. As discussed in our last shareholder report, we
began using these swaps in late 2004 in an effort to reduce the interest rate
risk in these four Funds. These hedges were not an attempt to profit from
correctly predicting the timing and direction of interest rate movements.
Instead, our sole objective was to reduce the durations (and resulting pricing
sensitivity) of these Funds without having a negative impact on their income
streams or common share dividends over the short term. The hedging strategy was
effective in helping to reduce the net asset value (NAV) volatility of NZX, NNO,
and NII, and we removed the hedges from NZX in July and August 2005 and from NNO
and NII in February 2006. The hedge on NKG remained in place as of May 31, 2006.
During this reporting period, the hedges performed as expected.
7
HOW DID THE FUNDS PERFORM?
Individual results for these Nuveen Georgia and North Carolina Funds, as well as
relevant benchmark and peer group information, are presented in the accompanying
table.
TOTAL RETURNS ON NET ASSET VALUE*
For periods ended 5/31/06
1-YEAR 5-YEAR 10-YEAR
--------------------------------------------------------------------------------
GEORGIA FUNDS
--------------------------------------------------------------------------------
NPG 1.42% 6.69% 7.16%
--------------------------------------------------------------------------------
NZX 1.87% NA NA
--------------------------------------------------------------------------------
NKG 1.68% NA NA
--------------------------------------------------------------------------------
NORTH CAROLINA FUNDS
--------------------------------------------------------------------------------
NNC 0.87% 6.71% 7.21%
--------------------------------------------------------------------------------
NRB 1.93% 7.73% NA
--------------------------------------------------------------------------------
NNO 0.97% NA NA
--------------------------------------------------------------------------------
NII 1.41% NA NA
--------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index2 1.90% 5.27% 5.95%
--------------------------------------------------------------------------------
Lipper Other States
Municipal Debt Funds
Average3 1.74% 7.13% 6.92%
--------------------------------------------------------------------------------
* Annualized.
Past performance is not predictive of future results. Current performance may be
higher or lower than the data shown. Returns do not reflect the deduction of
taxes that shareholders may have to pay on Fund distributions or upon the sale
of Fund shares.
For additional information, see the individual Performance Overview for your
Fund in this report.
For the 12 months ended May 31, 2006, the total return on NAV for NRB and NZX
performed in line with the return on the Lehman Brothers Municipal Bond Index,
while NPG, NKG, NNC, NNO, and NII underperformed this benchmark. NRB and NZX
exceeded the average return for the Lipper Other States peer group, NKG
performed in line with the Lipper average, and the remaining four Funds trailed
this group average. Shareholders should note that the performance of the Lipper
Other States category represents the overall average of returns for funds from
10 different states with a wide variety of municipal market conditions, making
direct comparisons less meaningful.
One factor that affected the annual performance of these Funds, especially in
relation to that of the un-leveraged Lehman Brothers Municipal Bond Index, was
the use of financial leverage. Although leveraging provides opportunities for
additional income and total returns for common shareholders when interest rates
fall or remain consistently low, this
2 The Lehman Brothers Municipal Bond Index is an unleveraged, unmanaged
national index comprising a broad range of investment-grade municipal
bonds. Results for the Lehman index do not reflect any expenses.
3 The Lipper Other States Municipal Debt Funds category average is calculated
using the returns of all exchange-traded closed-end funds in this category
for each period as follows: 1 year, 46; 5 years, 27; and 10 years, 18. Fund
and Lipper returns assume reinvestment of dividends.
8
benefit is reduced when interest rates rise. With the increases in interest
rates during this period, the decline in value of the bonds in the underlying
portfolios of these Funds was exacerbated by the effects of leveraging. During
periods of low short-term rates, these Funds generally pay lower dividends to
their MuniPreferred shareholders, which can leave more earnings to support
common share dividends. Conversely, when short-term interest rates rise, as they
did during this reporting period, the Funds' borrowing costs also rise,
impacting the Funds' income streams and total returns. However, we remain
convinced that, over the long term, the use of financial leverage should work to
the benefit of the Funds. This is demonstrated by the five-year and ten-year
return performance--both absolute and relative--of NPG, NNC, and NRB.
Other factors influencing the Funds' returns during this period included yield
curve positioning and duration management, allocations to lower-rated credits,
sector weightings, and pre-refunding activity.
As the yield curve continued to flatten over the course of this period, yield
curve and duration positioning played important roles in the Funds'
performances. On the whole, bonds in the Lehman Brothers Municipal Bond Index
with maturities between 6 and 12 years were the most adversely impacted by
recent changes in the yield curve, and they underperformed longer bonds (those
with maturities of at least 22 years) by approximately 200 basis points. Yield
curve positioning or, more specifically, greater exposure to the longer parts of
the yield curve that performed well helped the performance of these Funds during
this period. However, NNO had a relatively heavier exposure to bonds in the
10-year to 15-year range of the curve, and this slight overweighting was a major
detractor from its performance.
With bonds rated BBB or lower and non-rated bonds generally outperforming other
credit quality sectors during this period, all of these Funds benefited from
their allocations of lower-quality credits. The performance of this sector was
largely the result of investor demand for the higher yields typically associated
with lower-quality bonds, which drove up their value and tightened credit
spreads. However, as noted earlier, the lack of lower-rated supply in these two
states led to these Funds having less than optimal exposures to lower quality
sectors, which hampered their performances to some degree. As of May 31, 2006,
the Georgia Funds had BBB and sub-investment grade weightings of 8% in NPG and
9% in NZX and NKG, while the North Carolina Funds' allocations of BBB and
non-rated bonds ranged from 3% in NNO and 5% in NII to 7% in NNC and 8% in NRB.
9
Housing bonds were also among some of the best performing credits in the Funds'
portfolios, as rising interest rates lessened the incidence and impact of
prepayments and bond calls. Both multifamily and single-family housing bonds
were positive contributors across all of these Funds.
During this period, we continued to see a number of advance refundings,4 which
benefit the Funds through price appreciation and enhanced credit quality. This
was more of a factor in the three Georgia Funds, which saw between 6% and 8% of
their portfolios pre-refunded, than in the North Carolina Funds, where only NRB
had an appreciable amount of advance refundings. As the yield curve flattened,
more lower coupon bonds were being pre-refunded, which meant that, in general,
the positive impact from refinancings was less than in the previous reporting
period.
While advance refundings generally enhanced performance for this 12-month
period, the rising interest rate environment--especially at the short end of the
yield curve--meant that the Funds' holdings of older, previously pre-refunded
bonds tended to under-perform the general municipal market, due primarily to the
shorter effective maturities of these bonds. This was especially true in NNC and
NNO, which had the largest allocations of pre-refunded bonds going into this
period.
HOW WERE THE FUNDS POSITIONED IN TERMS OF CREDIT QUALITY AND BOND CALLS AS OF
MAY 31, 2006?
We continued to believe that maintaining overall strong credit quality was an
important technique. As of May 31, 2006, all seven of these Funds continued to
offer excellent overall credit quality, with allocations of bonds rated AAA/U.S.
guaranteed and AA ranging from 78% in NNC to 82% in NPG, 83% in NRB, 85% in NZX,
87% in NNO, and 89% in NKG to 93% in NII.
As of May 31, 2006, potential call exposure for the period June 2006 through the
end of 2007 ranged from zero in NKG and 3% in NZX and NNO to 8% in NPG, 9% in
NNC, 11% in NII, and 12% in NRB. The number of actual bond calls in all of these
Funds depends largely on future market interest rates.
4 Advance refundings, also known as pre-refundings or refinancings, occur
when an issuer sells new bonds and uses the proceeds to fund principal and
interest payments of older existing bonds. This process often results in
lower borrowing costs for bond issuers.
10
Dividend and Share Price
INFORMATION
As previously noted, all of the Funds in this report use leverage to potentially
enhance opportunities for additional income for common shareholders. During
periods of rising short-term interest rates, as was the case during this
reporting period, the Funds' borrowing costs also rise, reducing the extent of
the benefits of leveraging. The Funds' income streams were also impacted as the
proceeds from older, higher-yielding bonds that matured or were called were
reinvested into bonds generally offering lower yields, especially in the older
Funds. These factors resulted in one monthly dividend reduction in NZX, NKG, and
NII and two in NPG, NNC, NRB, and NNO over the 12-month period ended May 31,
2006.
Due to capital gains generated by normal portfolio activity, common shareholders
of the following Funds received capital gains and net ordinary income
distributions at the end of December 2005, as follows:
LONG-TERM CAPITAL GAINS ORDINARY INCOME
(PER SHARE) (PER SHARE)
--------------------------------------------------------------------------------
NPG $0.0661 $0.0008
--------------------------------------------------------------------------------
NNC $0.1594 $0.0034
--------------------------------------------------------------------------------
NNO $0.0948 $0.0291
--------------------------------------------------------------------------------
These distributions, which represented an important part of the total returns of
these three Funds for this period, were generated by bond calls and sales of
appreciated securities. This had a slight negative impact on the earning power
per common share of these Funds and was a minor factor in the common share
dividend reductions noted above.
All of the Funds in this report seek to pay stable dividends at rates that
reflect each Fund's past results and projected future performance. During
certain periods, each Fund may pay dividends at a rate that may be more or less
than the amount of net investment income actually earned by the Fund during the
period. If a Fund has cumulatively earned more than it has paid in dividends, it
holds the excess in reserve as undistributed net investment income (UNII) as
part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in
excess of its earnings, the excess constitutes negative UNII that is likewise
reflected in the Fund's NAV. Each Fund will, over time, pay all of its net
investment income as dividends to shareholders. As of May 31, 2006, all of the
Funds in this report except NKG, NNO and NII had positive UNII balances for both
financial statement and tax purposes. NKG, NNO and NII had negative UNII
balances for financial statement purposes and positive UNIIbalances for tax
purposes.
11
At the end of the reporting period, the Funds' share prices were trading at
premiums or discounts to their NAVs as shown in the accompanying chart:
5/31/06 12-MONTH AVERAGE
PREMIUM/DISCOUNT PREMIUM/DISCOUNT
--------------------------------------------------------------------------------
NPG +4.19% +5.31%
--------------------------------------------------------------------------------
NZX +5.37% +7.75%
--------------------------------------------------------------------------------
NKG -6.95% -5.14%
--------------------------------------------------------------------------------
NNC +5.23% +7.24%
--------------------------------------------------------------------------------
NRB +19.03% +12.55%
--------------------------------------------------------------------------------
NNO +3.59% +4.74%
--------------------------------------------------------------------------------
NII +1.12% +0.04%
--------------------------------------------------------------------------------
12
Nuveen Georgia Premium Income Municipal Fund
NPG
Performance
OVERVIEW As of May 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 75%
AA 7%
A 10%
BBB 7%
BB or Lower 1%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Jun 0.069
Jul 0.069
Aug 0.069
Sep 0.066
Oct 0.066
Nov 0.066
Dec 0.0625
Jan 0.0625
Feb 0.0625
Mar 0.0625
Apr 0.0625
May 0.0625
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/01/05 16.94
16.99
17.28
17.14
16.91
16.93
16.95
16.95
16.74
16.78
16.75
16.74
16.9
16.9
16.85
16.85
16.85
16.95
16.77
16.8
16.69
16.75
16.81
16.84
16.8
16.45
16.54
16.54
16.54
16.93
16.88
16.63
16.62
16.86
16.86
16.86
16.86
16.79
16.75
16.75
16.42
16.47
16.47
16.47
16.6
16.56
16.5
16.8
16.32
16.3
16.23
16.26
16.25
15.94
16.05
16.09
15.96
16
15.95
15.74
15.77
15.76
15.65
15.74
15.78
15.66
15.95
16.01
16.3
15.95
15.95
16.03
16.22
16.22
16.31
16.12
15.88
15.7
15.6
15.59
15.44
15.33
15.14
15.36
15.36
15.43
15.5
15.5
15.58
15.8
15.59
15.8
15.56
15.77
15.7
15.63
15.63
16.05
16.01
16.01
15.9
15.88
15.88
15.79
15.8
15.8
15.85
16.05
16.1
16.1
16.1
15.8
15.33
15.37
15.46
15.45
15.3
15.23
15.23
15.1
14.8
14.63
14.5
14.55
14.45
14.45
14.8
14.8
14.84
14.99
15.06
14.9
14.6
14.53
14.68
14.61
14.65
14.4
14.3
14.2
14.04
13.96
13.88
14.1
14.03
14.06
14.06
14.15
14.12
14.12
14.12
14.15
14.14
14.14
14.49
14.64
14.86
14.72
14.94
14.98
14.85
14.79
14.95
14.82
15.01
14.96
14.75
14.67
14.67
14.52
14.85
14.77
14.9
15
15
15
15.24
15.24
15.07
15.2
15.15
14.96
15.2
15.2
15
15
15.07
15.3
15.3
15.39
15.4
15.32
15.62
15.3
15.3
15.4
15.35
15.35
15.33
15.45
15.48
15.48
15.4
15.8
15.6
15.35
15.25
15.21
15.4
15.8
15.75
15.75
16.08
16.25
16.55
16.55
16.7
16.45
16.17
15.85
15.71
15.45
15.25
15.16
15.2
15.1
15.08
15.18
15.18
14.96
15.25
15.4
15.4
15.45
15.58
15.55
15.45
15.65
15.81
16.1
16.07
15.4
15.4
15.42
15.4
15.41
15.29
15.45
15.33
15.15
15.09
15.09
14.97
15.14
5/31/06 15.16
FUND SNAPSHOT
------------------------------------
Common Share Price $15.16
------------------------------------
Common Share
Net Asset Value $14.55
------------------------------------
Premium/(Discount) to NAV 4.19%
------------------------------------
Market Yield 4.95%
------------------------------------
Taxable-Equivalent Yield1 7.33%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $55,318
------------------------------------
Average Effective Maturity
on Securities (Years) 17.19
------------------------------------
Leverage-Adjusted Duration 8.40
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/20/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -4.12% 1.42%
------------------------------------
5-Year 5.39% 6.69%
------------------------------------
10-Year 7.93% 7.16%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Health Care 21.5%
------------------------------------
Tax Obligation/Limited 19.1%
------------------------------------
Education and Civic
Organizations 12.8%
------------------------------------
Water and Sewer 9.7%
------------------------------------
U.S. Guaranteed 8.7%
------------------------------------
Tax Obligation/General 6.2%
------------------------------------
Utilities 6.0%
------------------------------------
Housing/Single Family 4.6%
------------------------------------
Other 11.4%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 32.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders capital gains and net ordinary income
distributions in December 2005 of $0.0669 per share.
13
Nuveen Georgia Dividend Advantage Municipal Fund
NZX
Performance
OVERVIEW As of May 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 77%
AA 8%
A 6%
BBB 7%
BB or Lower 2%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Jun 0.073
Jul 0.073
Aug 0.073
Sep 0.073
Oct 0.073
Nov 0.073
Dec 0.073
Jan 0.073
Feb 0.073
Mar 0.0695
Apr 0.0695
May 0.0695
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/01/05 16.21
16.3
16.3
16.5
16.5
16.41
16.65
16.5
16.37
16.19
16.17
16.16
16.15
16
15.99
16.06
16.06
16
16.01
16.05
16.17
16.9
16.9
16.45
16.35
16.4
16.34
16.34
16.34
16.37
16.37
16.31
16.35
16.32
16.35
16.7
16.7
16.95
16.8
17.25
17.22
17.1
17.1
16.92
17.02
17.11
16.94
16.6
16.55
16.5
16.67
16.95
16.57
16.4
16
16.07
16
16.29
16.39
16.32
16.32
16.52
16.52
16.45
16.45
16.55
16.42
16.75
16.74
16.6
16.9
16.9
16.9
16.9
16.92
16.34
16.34
16.34
16.71
16.71
16.66
16.42
16.19
16.19
16.42
16.41
16.8
16.72
16.66
16.73
16.73
16.6
16.64
16.7
16.52
16.44
16.58
16.49
16.5
16.6
16.6
16.6
16.6
16.6
16.66
16.7
16.6
16.46
16.46
16.46
16.5
16.41
16.14
16.29
16.35
16.09
16
15.99
16.15
16.2
16.3
16.3
16.19
16.14
16.14
16.14
16.24
16.24
16.3
16.39
16.28
16.42
16.52
16.65
16.9
16.45
16.08
16.05
15.92
15.8
15.66
15.69
15.28
15.32
15.32
15.4
15.23
15.59
15.65
15.65
15.65
15.9
15.85
15.76
15.61
15.7
15.7
15.56
15.91
15.91
16.25
16.74
16.01
15.96
15.78
15.72
15.6
15.4
15.54
16
16.45
15.84
16.08
16.09
16.09
16.7
16.71
17.21
17
17
16.42
15.9
15.95
15.78
16.06
15.95
15.75
15.81
15.6
15.66
15.66
15.66
15
15.1
15.55
15.5
15.6
15.42
15.35
15.12
15.09
15.09
15.06
15.8
15.81
15.5
15.39
15.94
15.82
15.2
15.4
15.38
15.47
15.28
15.56
15.51
15.95
15.22
15.9
15.4
15.04
14.82
14.58
14.64
14.64
14.64
14.85
14.93
15
15.34
15.4
15.7
15.7
16.05
16
15.75
15.75
15.75
16.05
16.05
16.2
16.06
15.85
16
16.15
16.15
16
16
15.85
15.9
15.9
15.85
15.9
15.9
5/31/06 15.5
FUND SNAPSHOT
------------------------------------
Common Share Price $15.50
------------------------------------
Common Share
Net Asset Value $14.71
------------------------------------
Premium/(Discount) to NAV 5.37%
------------------------------------
Market Yield 5.38%
------------------------------------
Taxable-Equivalent Yield1 7.97%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $28,912
------------------------------------
Average Effective Maturity
on Securities (Years) 14.60
------------------------------------
Leverage-Adjusted Duration 8.23
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 2.91% 1.87%
------------------------------------
Since
Inception 6.54% 6.57%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Health Care 19.1%
------------------------------------
Education and Civic
Organizations 15.9%
------------------------------------
Water and Sewer 12.5%
------------------------------------
U.S. Guaranteed 12.1%
------------------------------------
Tax Obligation/General 7.5%
------------------------------------
Utilities 7.2%
------------------------------------
Housing/Single Family 6.3%
------------------------------------
Housing/Multifamily 5.7%
------------------------------------
Other 13.7%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 32.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
14
Nuveen Georgia Dividend Advantage Municipal Fund 2
NKG
Performance
OVERVIEW As of May 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 81%
AA 8%
A 2%
BBB 7%
BB or Lower 2%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Jun 0.059
Jul 0.059
Aug 0.059
Sep 0.059
Oct 0.059
Nov 0.059
Dec 0.059
Jan 0.059
Feb 0.059
Mar 0.056
Apr 0.056
May 0.056
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/01/05 14.19
14.05
14.24
14.22
14.25
14.25
13.92
14.05
14.09
13.83
13.89
13.94
13.91
13.81
13.8
13.99
13.95
13.99
14.03
14.03
14.01
14.08
14.08
14.25
14.25
14.21
14.1
14.1
13.99
14.1
14.11
14.09
13.9
13.94
13.9
14
13.95
13.99
13.92
13.97
14.09
14.02
14.02
14.09
13.96
14.09
14
14
13.93
13.8
13.84
13.82
13.79
13.8
13.99
14.05
13.92
13.92
13.81
13.93
13.96
13.85
13.85
13.96
13.99
13.95
14.02
14.02
14.05
14.05
14.08
14.09
13.91
14.02
14
13.84
13.78
13.84
13.97
13.9
13.9
13.9
13.59
13.79
14.04
13.95
13.9
13.81
13.81
13.71
13.82
13.86
13.85
13.88
13.89
13.72
13.61
13.54
13.54
13.54
13.54
13.6
13.6
13.39
13.35
13.45
13.4
13.33
13.5
13.43
13.47
13.33
13.25
13.23
13.26
13.25
13.36
13.35
13.34
13.34
13.29
13.28
13.35
13.19
13.29
13.29
13.4
13.2
13.3
13.29
13.32
13.24
13.28
13.34
13.44
13.26
13.5
13.34
13.46
13.48
13.22
13.28
13.33
13.36
13.3
13.3
13.38
13.39
13.36
13.58
13.58
13.4
13.44
13.57
13.75
13.64
13.78
13.65
13.95
13.74
13.77
13.69
13.71
13.66
13.75
13.78
13.71
13.44
13.55
13.56
13.68
13.75
13.84
13.77
13.7
13.9
13.89
13.89
13.97
13.49
13.68
13.57
13.87
13.8
13.85
13.9
13.68
13.65
13.7
13.83
13.87
13.77
13.65
13.73
13.58
13.79
13.84
13.76
13.81
13.71
13.7
13.96
13.66
13.62
13.55
13.63
13.8
13.8
13.74
13.6
13.59
13.65
13.97
13.73
13.6
13.75
13.47
13.64
13.68
13.52
13.5
13.6
13.43
13.41
13.36
13.35
13.35
13.28
13.35
13.39
13.47
13.36
13.36
13.35
13.51
13.33
13.34
13.28
13.33
13.51
13.51
13.33
13.25
13.3
13.18
13.38
13.51
13.4
13.4
13.25
13.15
13.11
13.3
13.3
5/31/06 13.26
FUND SNAPSHOT
------------------------------------
Common Share Price $13.26
------------------------------------
Common Share
Net Asset Value $14.25
------------------------------------
Premium/(Discount) to NAV -6.95%
------------------------------------
Market Yield 5.07%
------------------------------------
Taxable-Equivalent Yield1 7.51%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $64,901
------------------------------------
Average Effective Maturity
on Securities (Years) 17.64
------------------------------------
Leverage-Adjusted Duration 8.15
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/02)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -1.61% 1.68%
------------------------------------
Since
Inception 2.05% 5.22%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 17.3%
------------------------------------
Water and Sewer 16.8%
------------------------------------
Health Care 16.5%
------------------------------------
Education and Civic
Organizations 10.9%
------------------------------------
Tax Obligation/General 8.4%
------------------------------------
U.S. Guaranteed 8.1%
------------------------------------
Utilities 5.5%
------------------------------------
Transportation 4.0%
------------------------------------
Other 12.5%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 32.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
15
Nuveen North Carolina Premium Income Municipal Fund
NNC
Performance
OVERVIEW As of May 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 45%
AA 33%
A 15%
BBB 6%
N/R 1%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Jun 0.068
Jul 0.068
Aug 0.068
Sep 0.068
Oct 0.068
Nov 0.068
Dec 0.0645
Jan 0.0645
Feb 0.0645
Mar 0.061
Apr 0.061
May 0.061
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/01/05 17.24
17.28
17.2
17.33
17.48
17.1
17.09
17.15
17.07
17.35
17.25
17.22
17.11
17
16.79
16.88
16.7
16.65
16.9
16.74
16.82
16.67
16.62
16.65
16.55
16.52
16.51
16.7
16.69
16.69
16.85
16.88
16.91
16.56
16.52
16.52
16.52
16.8
16.77
16.65
16.69
16.51
16.51
16.71
16.6
16.44
16.54
16.54
16.42
16.5
16.55
16.47
16.48
16.46
16.47
16.55
16.45
16.75
16.51
16.55
16.54
16.83
16.94
16.98
17.2
16.91
16.88
16.99
16.75
16.8
16.9
17
16.7
16.69
16.65
16.61
16.65
16.71
16.52
16.55
16.45
16.45
16
15.83
15.96
16.1
16.01
16.09
16.24
16.16
16.18
16.2
16.2
16.11
16
15.7
15.7
15.5
15.44
15.48
15.48
15.55
15.67
15.66
15.5
15.55
15.69
15.53
15.47
15.22
15.2
15.2
15.2
15.23
15.26
15.2
15.1
15.1
15.14
15
15.06
14.96
14.67
14.56
14.18
14.2
14.75
14.58
14.5
14.72
15.03
14.91
14.86
14.87
14.8
14.82
14.53
14.45
14.51
14.64
14.67
14.75
15.08
14.98
15.15
15.19
15.31
15.4
15.37
15.6
15.6
15.45
15.71
15.7
15.55
15.56
15.28
15.05
15.12
15.16
15.56
15.5
15.6
15.7
15.72
15.95
16
16.35
16.27
16.11
16.14
16.02
15.9
15.79
15.84
15.8
15.86
15.75
16.1
16.14
15.75
15.94
15.7
15.68
15.69
15.72
15.74
15.97
15.96
16.1
16.03
15.56
15.7
15.55
15.51
15.51
15.4
15.45
15.4
15.25
15.29
15.47
15.43
15.5
15.47
15.45
15.39
15.32
15.53
15.53
15.51
15.25
15.19
15.2
15.1
15.4
15.53
15.03
15.02
14.81
15.15
15.05
15
15.3
15.3
15.48
15.05
14.9
14.86
14.84
14.64
14.78
14.78
14.82
14.99
14.8
14.9
14.86
14.6
14.85
14.75
14.6
14.68
14.85
14.74
14.55
14.77
15.01
15.05
14.81
14.91
14.85
14.89
15
5/31/06 15.09
FUND SNAPSHOT
------------------------------------
Common Share Price $15.09
------------------------------------
Common Share
Net Asset Value $14.34
------------------------------------
Premium/(Discount) to NAV 5.23%
------------------------------------
Market Yield 4.85%
------------------------------------
Taxable-Equivalent Yield1 7.35%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $91,033
------------------------------------
Average Effective Maturity
on Securities (Years) 15.85
------------------------------------
Leverage-Adjusted Duration 7.98
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/20/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -6.84% 0.87%
------------------------------------
5-Year 6.02% 6.71%
------------------------------------
10-Year 7.46% 7.21%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Education and Civic
Organizations 19.7%
------------------------------------
Tax Obligation/Limited 19.1%
------------------------------------
Health Care 16.7%
------------------------------------
Utilities 8.8%
------------------------------------
U.S. Guaranteed 7.1%
------------------------------------
Tax Obligation/General 6.0%
------------------------------------
Housing/Single Family 5.6%
------------------------------------
Transportation 4.7%
------------------------------------
Other 12.3%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders capital gains and net ordinary income
distributions in December 2005 of $0.1628 per share.
16
Nuveen North Carolina Dividend Advantage Municipal Fund
NRB
Performance
OVERVIEW As of May 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 48%
AA 35%
A 9%
BBB 6%
N/R 2%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Jun 0.0765
Jul 0.0765
Aug 0.0765
Sep 0.0735
Oct 0.0735
Nov 0.0735
Dec 0.0735
Jan 0.0735
Feb 0.0735
Mar 0.07
Apr 0.07
May 0.07
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/01/05 17.25
17.27
17.15
17.04
17.04
17.05
17.19
17.2
17.25
17.4
17.17
17.05
17.05
17.1
17.3
17.24
17.45
17.33
17.3
17.32
17.3
17.21
17.46
17.85
17.41
17.8
17.61
17.4
17.46
17.59
17.4
17.56
17.41
17.35
17.39
17.8
17.75
17.28
17.35
17.37
17.37
17.46
17.46
17.38
17.6
17.6
17.61
17.68
17.75
17.75
17.7
17.49
17.49
17.49
17.37
17.57
17.59
17.63
17.5
17.7
17.89
17.75
17.86
18.34
18.34
17.9
17.83
17.83
17.83
17.78
17.46
17.5
17.5
17.72
17.96
17.94
17.83
17.63
17.38
17.38
17.08
17.08
16.85
16.54
16.52
16.35
16.36
16.25
16.5
16.54
16.6
16.6
16.44
16.4
16.26
15.74
15.65
15.84
16.09
16.2
16.2
16.3
16.06
16.33
16.2
16.05
15.92
16.07
15.9
16.05
16.35
16.15
16.06
16.25
16.3
16.38
16.38
16.1
16.25
16.2
16.32
16.4
16.4
16.5
16.45
16.45
16.6
16.96
16.9
16.66
16.5
16.1
15.81
15.98
16.3
16.02
16
16.2
16.29
16.24
16.24
16.52
16.43
16.05
16.04
16.28
16.11
16.44
16.56
17.04
17.04
17.14
17.02
17.47
17.47
17.75
17.75
17.75
17.75
17.45
17.2
16.85
17
16.98
16.98
16.99
16.86
16.98
17
16.71
16.82
16.82
16.8
16.71
16.71
16.6
16.31
16.45
16.48
16.48
16.51
16.6
16.6
16.65
16.65
16.65
16.71
17.1
17.05
17.4
17.42
17.45
17.55
17.6
17.55
17.53
17.53
17.32
17.75
17.5
17.21
17.21
17.21
17.21
17.9
17.65
17.9
17.67
17.92
17.6
17.55
17.4
17.25
17.55
17.48
17.6
17.6
17.32
17.85
17.85
17.7
17.02
17.3
16.85
16.85
17.3
17.27
17.27
17.27
17.07
16.96
16.73
16.73
16.96
16.9
16.9
16.9
16.73
17.25
17.25
17.25
17.18
17.18
16.98
16.99
17
16.99
17.2
16.97
17.14
17.14
17.3
17.45
17.27
5/31/06 17.7
FUND SNAPSHOT
------------------------------------
Common Share Price $17.70
------------------------------------
Common Share
Net Asset Value $14.87
------------------------------------
Premium/(Discount) to NAV 19.03%
------------------------------------
Market Yield 4.75%
------------------------------------
Taxable-Equivalent Yield1 7.20%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $33,537
------------------------------------
Average Effective Maturity
on Securities (Years) 15.27
------------------------------------
Leverage-Adjusted Duration 6.93
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 1/25/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 8.03% 1.93%
------------------------------------
5-Year 9.22% 7.73%
------------------------------------
Since
Inception 9.09% 6.89%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Education and Civic
Organizations 18.6%
------------------------------------
Tax Obligation/Limited 16.3%
------------------------------------
Utilities 15.1%
------------------------------------
Health Care 14.0%
------------------------------------
Water and Sewer 13.5%
------------------------------------
Housing/Multifamily 4.6%
------------------------------------
Tax Obligation/General 4.2%
------------------------------------
Transportation 4.2%
------------------------------------
Other 9.5%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
17
Nuveen North Carolina Dividend Advantage Municipal Fund 2
NNO
Performance
OVERVIEW As of May 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 60%
AA 27%
A 10%
BBB 2%
N/R 1%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Jun 0.072
Jul 0.072
Aug 0.072
Sep 0.0685
Oct 0.0685
Nov 0.0685
Dec 0.0685
Jan 0.0685
Feb 0.0685
Mar 0.065
Apr 0.065
May 0.065
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/01/05 16.1
16.2
16.2
16.28
16.31
16.25
16.25
16.25
16.28
16.29
16.34
16.3
16.3
16.25
16.4
16.4
16.6
16.6
16.6
16.2
16.38
16.25
16.13
16.37
16.49
16.4
16.33
16.52
16.6
16.65
16.6
16.43
16.29
16.3
16.16
16.24
16.3
16.33
16.45
16.78
16.93
17.15
17.15
17.16
17.03
16.95
17.01
16.9
16.88
16.88
16.74
16.67
16.41
16.3
16.45
16.5
16.44
16.4
16.6
16.48
16.42
16.34
16.4
16.5
16.65
16.5
16.52
16.63
16.66
16.73
16.55
16.55
16.7
16.73
16.74
16.71
16.69
16.69
16.6
16.43
16.25
16
15.67
15.35
15.4
15.41
15.48
15.49
15.5
15.61
15.59
15.52
15.59
15.6
15.52
15.44
15.48
15.37
15.34
15.75
15.66
15.59
15.6
15.65
15.6
15.61
15.61
15.5
15.39
15.5
15.45
15.35
15.41
15.41
15.41
15.55
15.75
15.5
15.76
15.75
15.74
15.76
15.59
15.59
15.55
15.43
15.45
15.45
15.5
15.34
15.26
15
14.77
14.84
15
15.04
15
14.9
14.96
14.92
15.15
15.18
15.02
14.96
15
15
15.08
15.07
15.45
15.6
15.6
15.39
15.6
15.7
15.69
15.8
15.8
15.84
15.7
15.8
15.86
15.8
15.8
15.96
15.94
16
15.98
16.1
16.1
16.1
16.13
16.18
16.13
15.85
16
15.55
15.45
15.5
15.75
15.7
15.75
15.75
15.94
15.97
15.9
15.56
15.7
15.7
15.7
16.1
15.85
15.95
15.4
15.4
15.65
15.55
15.65
15.62
15.68
15.75
15.95
16.19
16.19
16.25
16.05
16.1
16.09
16.09
16
15.9
15.8
15.54
15.55
15.8
15.45
15.55
15.55
15.85
15.81
15.6
15.6
15.5
15.54
15.35
15.35
15.2
15.1
15
15.07
15.05
15
15.07
15.07
15
15.01
15.19
15.2
15.34
15.4
15.51
15.45
15.44
15.29
15.43
15.34
15.15
15.05
15.12
15.24
15.14
15.4
15.36
15.25
15.3
5/31/06 15.28
FUND SNAPSHOT
------------------------------------
Common Share Price $15.28
------------------------------------
Common Share
Net Asset Value $14.75
------------------------------------
Premium/(Discount) to NAV 3.59%
------------------------------------
Market Yield 5.10%
------------------------------------
Taxable-Equivalent Yield1 7.73%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $55,251
------------------------------------
Average Effective Maturity
on Securities (Years) 14.84
------------------------------------
Leverage-Adjusted Duration 7.91
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/15/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -0.18% 0.97%
------------------------------------
Since
Inception 6.34% 6.74%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 21.7%
------------------------------------
Education and Civic
Organizations 17.9%
------------------------------------
Health Care 16.2%
------------------------------------
Transportation 11.4%
------------------------------------
Water and Sewer 9.3%
------------------------------------
Utilities 9.3%
------------------------------------
U.S. Guaranteed 6.1%
------------------------------------
Other 8.1%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders capital gains and net ordinary income
distributions in December 2005 of $0.1239 per share.
18
Nuveen North Carolina Dividend Advantage Municipal Fund 3
NII
Performance
OVERVIEW As of May 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 69%
AA 24%
A 2%
BBB 5%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Jun 0.061
Jul 0.061
Aug 0.061
Sep 0.061
Oct 0.061
Nov 0.061
Dec 0.061
Jan 0.061
Feb 0.061
Mar 0.058
Apr 0.058
May 0.058
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/01/05 15.32
15.3
15.3
15.44
15.35
15.09
15.09
15.03
15.03
14.8
14.76
14.61
14.78
14.98
14.86
14.77
14.8
14.96
14.93
14.96
14.96
14.97
15.1
15.09
14.96
14.9
14.8
15.2
15.15
14.97
14.92
14.92
14.92
14.81
14.77
14.8
14.66
14.75
14.89
15
15.1
14.9
14.9
14.95
15.14
14.97
15.2
14.73
14.68
14.69
14.9
14.9
14.81
14.83
14.76
14.53
14.65
14.56
14.63
14.76
14.83
14.72
14.98
15.35
15.25
14.89
15.15
15.15
15.13
15.15
14.91
14.93
14.93
15.3
15.06
14.92
14.54
14.68
14.64
14.92
14.77
14.77
14.78
14.62
14.75
14.77
14.88
14.92
14.95
15.19
15.16
15.01
15.06
14.89
14.89
14.43
14.57
14.3
14.12
14.13
14.53
14.53
14.58
14.85
14.78
14.8
14.81
14.61
14.56
14.75
14.72
14.73
14.62
14.69
14.7
14.54
14.5
14.5
14.35
14.29
14.35
14.2
14.02
13.98
14
14
13.94
14
13.95
13.78
13.74
13.64
13.63
13.68
13.75
13.75
13.62
13.47
13.61
13.49
13.65
13.64
13.67
13.7
13.7
13.75
13.73
13.75
13.73
13.75
13.75
13.75
14.07
14.01
14.12
14.24
14.17
14.2
14.3
14.4
14.33
14.51
14.55
14.54
14.44
14.43
14.36
14.33
14.48
14.35
14.16
14.3
14.25
14.25
14.05
14.17
14.24
14.49
14.51
14.52
14.54
14.5
14.48
14.53
14.21
14.38
14.39
14.56
14.6
14.82
14.66
14.5
14.32
14.32
14.5
14.38
14.38
14.33
14.3
14.4
14.25
14.44
14.3
14.5
14.51
14.5
14.5
14.3
14.49
14.41
14.55
14.31
14.59
14.65
14.4
14.7
14.68
14.56
14.65
14.65
14.3
14.1
14.14
14.09
14.05
14.08
13.97
14.11
13.97
13.95
13.75
13.9
13.9
14.15
14.23
14.48
14.2
14.75
14.65
14.75
14.7
14.43
14.22
14.25
14.17
14.2
14.2
14.26
14.26
14.49
14.43
14.24
14.28
14.32
5/31/06 14.42
FUND SNAPSHOT
------------------------------------
Common Share Price $14.42
------------------------------------
Common Share
Net Asset Value $14.26
------------------------------------
Premium/(Discount) to NAV 1.12%
------------------------------------
Market Yield 4.83%
------------------------------------
Taxable-Equivalent Yield1 7.32%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $56,049
------------------------------------
Average Effective Maturity
on Securities (Years) 15.99
------------------------------------
Leverage-Adjusted Duration 7.38
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/02)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -1.59% 1.41%
------------------------------------
Since
Inception 4.16% 5.26%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 19.8%
------------------------------------
Water and Sewer 16.8%
------------------------------------
Tax Obligation/General 12.4%
------------------------------------
Education and Civic
Organizations 10.7%
------------------------------------
Utilities 10.6%
------------------------------------
Health Care 8.6%
------------------------------------
U.S. Guaranteed 7.3%
------------------------------------
Transportation 6.1%
------------------------------------
Other 7.7%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
19
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
THE BOARD OF TRUSTEES AND SHAREHOLDERS
NUVEEN GEORGIA PREMIUM INCOME MUNICIPAL FUND
NUVEEN GEORGIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN GEORGIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN NORTH CAROLINA PREMIUM INCOME MUNICIPAL FUND
NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND 3
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Georgia Premium Income Municipal Fund,
Nuveen Georgia Dividend Advantage Municipal Fund, Nuveen Georgia Dividend
Advantage Municipal Fund 2, Nuveen North Carolina Premium Income Municipal Fund,
Nuveen North Carolina Dividend Advantage Municipal Fund, Nuveen North Carolina
Dividend Advantage Municipal Fund 2 and Nuveen North Carolina Dividend Advantage
Municipal Fund 3 (the Funds) as of May 31, 2006, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits 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 and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of May 31, 2006, by correspondence with the custodian and
brokers. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Georgia Premium Income Municipal Fund, Nuveen Georgia Dividend Advantage
Municipal Fund, Nuveen Georgia Dividend Advantage Municipal Fund 2, Nuveen North
Carolina Premium Income Municipal Fund, Nuveen North Carolina Dividend Advantage
Municipal Fund, Nuveen North Carolina Dividend Advantage Municipal Fund 2 and
Nuveen North Carolina Dividend Advantage Municipal Fund 3 at May 31, 2006, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and their financial
highlights for each of the periods indicated therein in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
CHICAGO, ILLINOIS
JULY 14, 2006
20
Nuveen Georgia Premium Income Municipal Fund (NPG)
Portfolio of
INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.6% (3.7% OF TOTAL INVESTMENTS)
$ 2,000 Cartersville Development Authority, Georgia, Water and 5/07 at 101.00 A+ $ 2,054,980
Wastewater Facilities Revenue Refunding Bonds, Anheuser
Busch Companies Inc., Series 1997, 6.125%, 5/01/27
(Alternative Minimum Tax)
1,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 1,020,550
Asset-Backed Refunding Bonds, Series 2002, 5.500%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
3,000 Total Consumer Staples 3,075,530
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 19.0% (12.8% OF TOTAL INVESTMENTS)
1,000 Athens-Clarke County Unified Government Development 12/12 at 100.00 AAA 1,055,900
Authority, Georgia, Educational Facilities Revenue Bonds,
UGAREF CCRC Building LLC Project, Series 2002,
5.000%, 12/15/16 - AMBAC Insured
Atlanta Urban Residential Finance Authority, Georgia, Dormitory
Facility Revenue Refunding Bonds, Morehouse College Project,
Series 1995:
1,210 5.750%, 12/01/20 - MBIA Insured 6/06 at 102.00 AAA 1,236,015
1,375 5.750%, 12/01/25 - MBIA Insured 6/06 at 102.00 AAA 1,404,508
1,550 Bulloch County Development Authority, Georgia, Student 8/14 at 100.00 Aaa 1,644,380
Housing and Athletic Facility Lease Revenue Bonds, Georgia
Southern University, Series 2004, 5.250%, 8/01/21 -
XLCA Insured
700 Carrollton Payroll Development Authority, Georgia, Student 9/14 at 100.00 Aaa 724,584
Housing Revenue Bonds, University of West Georgia,
Series 2004A, 5.000%, 9/01/21 - XLCA Insured
1,535 Fulton County Development Authority, Georgia, Revenue Bonds, 5/14 at 100.00 AAA 1,656,695
Georgia Tech Molecular Science Building, Series 2004,
5.250%, 5/01/15 - MBIA Insured
1,180 Savannah Economic Development Authority, Georgia, Revenue 7/15 at 100.00 AAA 1,223,990
Bonds, Armstrong Atlantic State University, Compass Point LLC
Project, Series 2005, 5.000%, 7/01/25 - XLCA Insured
1,500 Savannah Economic Development Authority, Georgia, Revenue 12/15 at 100.00 AAA 1,538,205
Bonds, Armstrong Center LLC, Series 2005A,
5.000%, 12/01/34 - XLCA Insured
------------------------------------------------------------------------------------------------------------------------------------
10,050 Total Education and Civic Organizations 10,484,277
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 31.9% (21.5% OF TOTAL INVESTMENTS)
2,300 Chatham County Hospital Authority, Savannah, Georgia, 7/11 at 101.00 A- 2,481,493
Hospital Revenue Improvement Bonds, Memorial Health
University Medical Center Inc., Series 2001A, 6.125%, 1/01/24
2,000 Clarke County Hospital Authority, Georgia, Hospital Revenue 1/12 at 101.00 AAA 2,055,540
Certificates, Athens Regional Medical Center, Series 2002,
5.125%, 1/01/32 - MBIA Insured
900 Coffee County Hospital Authority, Georgia, Revenue Bonds, 12/14 at 100.00 BBB+ 914,616
Coffee County Regional Medical Center, Series 2004,
5.250%, 12/01/22
3,000 Floyd County Hospital Authority, Georgia, Revenue Anticipation 7/12 at 101.00 Aaa 3,120,750
Certificates, Floyd Medical Center Project, Series 2002,
5.200%, 7/01/32 - MBIA Insured
1,090 Floyd County Hospital Authority, Georgia, Revenue Anticipation 7/13 at 101.00 Aaa 1,141,132
Certificates, Floyd Medical Center, Series 2003,
5.000%, 7/01/19 - MBIA Insured
1,750 Gainesville and Hall County Hospital Authority, Georgia, 5/11 at 100.00 A- 1,797,600
Revenue Anticipation Certificates, Northeast Georgia Health
Services Inc., Series 2001, 5.500%, 5/15/31
3,750 Gwinnett County Hospital Authority, Georgia, Revenue 2/12 at 102.00 AAA 3,963,188
Anticipation Certificates, Gwinnett Hospital System Inc.
Project, Series 1997B, 5.300%, 9/01/27 - MBIA Insured
1,060 Henry County Hospital Authority, Georgia, Revenue Certificates, 7/14 at 101.00 Aaa 1,111,389
Henry Medical Center, Series 2004, 5.000%, 7/01/20 -
MBIA Insured
1,000 Savannah Hospital Authority, Georgia, Revenue Bonds, 1/14 at 100.00 AA 1,043,130
St. Joseph's/Candler Health System, Series 2003,
5.250%, 7/01/23 - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
16,850 Total Health Care 17,628,838
------------------------------------------------------------------------------------------------------------------------------------
21
Nuveen Georgia Premium Income Municipal Fund (NPG) (continued)
Portfolio of INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 2.7% (1.9% OF TOTAL INVESTMENTS)
$ 1,500 Marietta Housing Authority, Georgia, GNMA Collateralized 10/06 at 102.00 AA $ 1,525,140
Multifamily Housing Revenue Bonds, Country Oaks
Apartments, Series 1996, 6.150%, 10/20/26 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 6.9% (4.6% OF TOTAL INVESTMENTS)
900 Georgia Housing and Finance Authority, Single Family Mortgage 12/11 at 100.00 AAA 927,054
Bonds, Series 2002B-2, 5.350%, 12/01/22 (Alternative
Minimum Tax)
2,735 Georgia Housing and Finance Authority, Single Family 12/10 at 100.00 AAA 2,884,331
Mortgage Resolution 1 Bonds, Series 2001A-2,
5.700%, 12/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
3,635 Total Housing/Single Family 3,811,385
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.8% (0.6% OF TOTAL INVESTMENTS)
500 Savannah Economic Development Authority, Georgia, Revenue 7/12 at 100.00 AAA 519,030
Bonds, GTREP Project, Series 2002, 5.000%, 7/01/22 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 3.2% (2.3% OF TOTAL INVESTMENTS)
750 Effingham County Industrial Development Authority, 6/11 at 101.00 B2 787,110
Georgia, Pollution Control Revenue Refunding Bonds,
Georgia-Pacific Project, Series 2001, 6.500%, 6/01/31
1,000 Richmond County Development Authority, Georgia, 2/11 at 101.00 BBB 1,064,680
Environmental Improvement Revenue Bonds, International
Paper Company, Series 2001A, 6.250%, 2/01/25 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,750 Total Materials 1,851,790
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 9.2% (6.2% OF TOTAL INVESTMENTS)
2,500 Georgia, General Obligation Bonds, Series 2002D, 5.000%, 8/01/16 8/12 at 100.00 AAA 2,649,600
1,000 Georgia, General Obligation Bonds, Series 2005B, 5.000%, 7/01/15 No Opt. Call AAA 1,076,690
800 Puerto Rico, General Obligation and Public Improvement Bonds, 7/14 at 100.00 BBB 829,272
Series 2004A, 5.250%, 7/01/22
500 Wayne County Hospital Authority, Georgia, Hospital Revenue 3/16 at 100.00 Aaa 517,125
Bonds, Series 2006, 5.000%, 3/01/23 - XLCA Insured
------------------------------------------------------------------------------------------------------------------------------------
4,800 Total Tax Obligation/General 5,072,687
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 28.4% (19.1% OF TOTAL INVESTMENTS)
5,000 Atlanta and Fulton County Recreation Authority, Georgia, 12/15 at 100.00 AAA 5,173,948
Guaranteed Revenue Bonds, Park Improvement, Series 2005A,
5.000%, 12/01/30 - MBIA Insured
2,000 Cobb-Marietta Coliseum and Exhibit Hall Authority, Cobb 1/14 at 100.00 AAA 2,087,740
County, Georgia, Revenue Bonds, Performing Arts Center,
Series 2004, 5.000%, 1/01/22
3,475 Cobb-Marietta Coliseum and Exhibit Hall Authority, Georgia, 10/19 at 100.00 AAA 3,959,380
Revenue Refunding Bonds, Series 1993, 5.625%, 10/01/26 -
MBIA Insured
2,600 Macon-Bibb County Urban Development Authority, Georgia, 8/12 at 101.00 AA 2,802,488
Revenue Refunding Bonds, Public Facilities Projects,
Series 2002A, 5.375%, 8/01/17
1,000 Metropolitan Atlanta Rapid Transit Authority, Georgia, No Opt. Call AAA 1,163,940
Sales Tax Revenue Refunding Bonds, Series 1992P,
6.250%, 7/01/20 - AMBAC Insured
500 Puerto Rico Infrastructure Financing Authority, Special Tax 7/15 at 100.00 BBB+ 498,335
Revenue Bonds, Series 2005B, 5.000%, 7/01/41
------------------------------------------------------------------------------------------------------------------------------------
14,575 Total Tax Obligation/Limited 15,685,831
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.3% (2.9% OF TOTAL INVESTMENTS)
2,290 Atlanta, Georgia, Airport General Revenue Bonds, 1/15 at 100.00 AAA 2,368,226
Series 2004G, 5.000%, 1/01/26 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 13.0% (8.7% OF TOTAL INVESTMENTS) (4)
885 Coweta County Development Authority, Georgia, Revenue 1/13 at 100.00 Aaa 957,216
Bonds, Newnan Water and Sewer, and Light Commission
Project, Series 2002, 5.250%, 1/01/18 (Pre-refunded 1/01/13) -
FGIC Insured
3,165 Coweta County Water and Sewer Authority, Georgia, Revenue 6/11 at 102.00 Aaa 3,427,347
Bonds, Series 2001, 5.250%, 6/01/26 (Pre-refunded 6/01/11)
2,500 DeKalb County, Georgia, Water and Sewerage Revenue Bonds, 10/10 at 101.00 AA (4) 2,665,225
Series 2000, 5.125%, 10/01/31 (Pre-refunded 10/01/10)
22
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
Georgia Municipal Electric Authority, Project One Special
Obligation Bonds, Fifth Crossover Series 1998Y:
$ 85 6.400%, 1/01/09 (ETM) No Opt. Call A+ (4) $ 90,677
10 6.400%, 1/01/09 (ETM) No Opt. Call A+ (4) 10,668
25 Georgia Municipal Electric Authority, Senior Lien General 1/17 at 100.00 AAA 27,787
Power Revenue Bonds, Series 1993Z, 5.500%, 1/01/20
(Pre-refunded 1/01/17) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,670 Total U.S. Guaranteed 7,178,920
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 8.9% (6.0% OF TOTAL INVESTMENTS)
1,000 Fairburn, Georgia, Combined Utility Revenue Bonds, 10/10 at 101.00 BBB 1,044,040
Series 2000, 5.750%, 10/01/20
1,655 Georgia Municipal Electric Authority, Project One Special No Opt. Call A+ 1,758,520
Obligation Bonds, Fifth Crossover Series 1998Y,
6.400%, 1/01/09
975 Georgia Municipal Electric Authority, Senior Lien General No Opt. Call AAA 1,067,108
Power Revenue Bonds, Series 1993Z, 5.500%, 1/01/20 -
FGIC Insured
1,000 Municipal Electric Authority of Georgia, Project One 1/13 at 100.00 AAA 1,032,900
Subordinated Lien Revenue Bonds, Series 2003A,
5.000%, 1/01/22 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
4,630 Total Utilities 4,902,568
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 14.4% (9.7% OF TOTAL INVESTMENTS)
Atlanta, Georgia, Water and Wastewater Revenue Bonds,
Series 2004:
1,225 5.000%, 11/01/24 - FSA Insured 11/14 at 100.00 AAA 1,272,261
500 5.000%, 11/01/37 - FSA Insured 11/14 at 100.00 AAA 511,530
Augusta, Georgia, Water and Sewerage Revenue Bonds,
Series 2002:
500 5.000%, 10/01/16 - FSA Insured 10/12 at 100.00 AAA 527,330
1,990 5.000%, 10/01/17 - FSA Insured 10/12 at 100.00 AAA 2,091,729
335 Coweta County Water and Sewer Authority, Georgia, Revenue 6/11 at 102.00 Aaa 352,655
Bonds, Series 2001, 5.250%, 6/01/26
1,950 Fulton County, Georgia, Water and Sewerage Revenue Bonds, 1/14 at 100.00 AAA 2,031,705
Series 2004, 5.000%, 1/01/22 - FGIC Insured
1,000 Midgeville, Georgia, Water and Sewerage Revenue Refunding No Opt. Call AAA 1,170,020
Bonds, Series 1996, 6.000%, 12/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
7,500 Total Water and Sewer 7,957,230
------------------------------------------------------------------------------------------------------------------------------------
$ 77,750 Total Investments (cost $79,126,443) - 148.3% 82,061,452
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.0% 1,056,791
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.3)% (27,800,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 55,318,243
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) 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.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(ETM) Escrowed to maturity.
See accompanying notes to financial statements.
23
Nuveen Georgia Dividend Advantage Municipal Fund (NZX)
Portfolio of
INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 2.3% (1.6% OF TOTAL INVESTMENTS)
$ 750 DeKalb County Development Authority, Georgia, Pollution 12/12 at 101.00 B1 $ 670,695
Control Revenue Refunding Bonds, General Motors
Corporation Projects, Series 2002, 6.000%, 3/15/21
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.7% (2.5% OF TOTAL INVESTMENTS)
1,000 Cartersville Development Authority, Georgia, Waste and 2/12 at 100.00 A+ 1,075,630
Wastewater Facilities Revenue Refunding Bonds, Anheuser
Busch Cos. Inc. Project, Series 2002, 5.950%, 2/01/32
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 23.8% (15.9% OF TOTAL INVESTMENTS)
1,000 Athens Housing Authority, Georgia, Student Housing Lease 12/12 at 100.00 Aaa 1,050,190
Revenue Bonds, UGAREF East Campus Housing LLC Project,
Series 2002, 5.250%, 12/01/21 - AMBAC Insured
1,475 Bulloch County Development Authority, Georgia, Student 8/14 at 100.00 Aaa 1,565,860
Housing and Athletic Facility Lease Revenue Bonds, Georgia
Southern University, Series 2004, 5.250%, 8/01/20 - XLCA Insured
1,620 Bulloch County Development Authority, Georgia, Student 8/12 at 100.00 Aaa 1,689,044
Housing Lease Revenue Bonds, Georgia Southern University,
Series 2002, 5.000%, 8/01/20 - AMBAC Insured
500 Carrollton Payroll Development Authority, Georgia, Student 9/14 at 100.00 Aaa 517,560
Housing Revenue Bonds, University of West Georgia,
Series 2004A, 5.000%, 9/01/21 - XLCA Insured
1,485 Fulton County Development Authority, Georgia, Revenue 4/12 at 100.00 AAA 1,548,707
Bonds, Georgia Tech Athletic Association, Series 2001,
5.000%, 10/01/20 - AMBAC Insured
500 Savannah Economic Development Authority, Georgia, Revenue 12/15 at 100.00 AAA 512,735
Bonds, Armstrong Center LLC, Series 2005A,
5.000%, 12/01/34 - XLCA Insured
------------------------------------------------------------------------------------------------------------------------------------
6,580 Total Education and Civic Organizations 6,884,096
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 28.5% (19.1% OF TOTAL INVESTMENTS)
210 Chatham County Hospital Authority, Savannah, Georgia, 7/11 at 101.00 A- 226,571
Hospital Revenue Improvement Bonds, Memorial Health
University Medical Center Inc., Series 2001A, 6.125%, 1/01/24
1,000 Clarke County Hospital Authority, Georgia, Hospital Revenue 1/12 at 101.00 AAA 1,060,190
Certificates, Athens Regional Medical Center, Series 2002,
5.375%, 1/01/19 - MBIA Insured
500 Coffee County Hospital Authority, Georgia, Revenue Bonds, 12/14 at 100.00 BBB+ 508,120
Coffee County Regional Medical Center, Series 2004,
5.250%, 12/01/22
1,250 Gainesville and Hall County Hospital Authority, Georgia, 5/11 at 100.00 A- 1,284,000
Revenue Anticipation Certificates, Northeast Georgia Health
Services Inc., Series 2001, 5.500%, 5/15/31
1,900 Gwinnett County Hospital Authority, Georgia, Revenue 2/12 at 102.00 AAA 2,008,015
Anticipation Certificates, Gwinnett Hospital System Inc.
Project, Series 1997B, 5.300%, 9/01/27 - MBIA Insured
500 Henry County Hospital Authority, Georgia, Revenue Certificates, 7/14 at 101.00 Aaa 524,240
Henry Medical Center, Series 2004, 5.000%, 7/01/20 -
MBIA Insured
500 Savannah Hospital Authority, Georgia, Revenue Bonds, 1/14 at 100.00 AA 521,565
St. Joseph's/Candler Health System, Series 2003,
5.250%, 7/01/23 - RAAI Insured
2,000 Valdosta and Lowndes County Hospital Authority, Georgia, 10/12 at 101.00 AAA 2,104,160
Revenue Certificates, South Georgia Medical Center,
Series 2002, 5.250%, 10/01/27 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
7,860 Total Health Care 8,236,861
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 8.6% (5.7% OF TOTAL INVESTMENTS)
990 DeKalb County Housing Authority, Georgia, GNMA 8/11 at 103.00 Aaa 1,026,264
Collateralized Multifamily Housing Revenue Bonds,
Castaways Apartments, Series 2001A, 5.400%, 2/20/29
1,400 Savannah Housing Authority, Georgia, FNMA Multifamily 8/16 at 100.00 Aaa 1,452,234
Housing Revenue Refunding Bonds, Chatham Gardens,
Series 2001, 5.625%, 8/01/31 (Mandatory put 2/01/19)
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,390 Total Housing/Multifamily 2,478,498
------------------------------------------------------------------------------------------------------------------------------------
24
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 9.5% (6.3% OF TOTAL INVESTMENTS)
$ 650 Georgia Housing and Finance Authority, Single Family Mortgage 12/11 at 100.00 AAA $ 669,539
Bonds, Series 2002B-2, 5.350%, 12/01/22 (Alternative
Minimum Tax)
2,000 Georgia Housing and Finance Authority, Single Family Mortgage 12/11 at 100.00 AAA 2,066,780
Resolution 1 Bonds, Series 2002A-2, 5.450%, 12/01/22
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,650 Total Housing/Single Family 2,736,319
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.7% (1.8% OF TOTAL INVESTMENTS)
750 Savannah Economic Development Authority, Georgia, Revenue 7/12 at 100.00 AAA 784,755
Bonds, GTREP Project, Series 2002, 5.000%, 7/01/19 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 2.1% (1.6% OF TOTAL INVESTMENTS)
600 Richmond County Development Authority, Georgia, 2/12 at 101.00 BBB 637,896
Environmental Improvement Revenue Refunding Bonds,
International Paper Company, Series 2002A, 6.000%, 2/01/25
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 11.3% (7.5% OF TOTAL INVESTMENTS)
2,000 Georgia, General Obligation Bonds, Series 2002D, 5.000%, 8/01/18 8/12 at 100.00 AAA 2,105,440
500 Georgia, General Obligation Bonds, Series 2005B, 5.000%, 7/01/15 No Opt. Call AAA 538,345
595 Puerto Rico, General Obligation and Public Improvement Bonds, 7/14 at 100.00 BBB 616,771
Series 2004A, 5.250%, 7/01/22
------------------------------------------------------------------------------------------------------------------------------------
3,095 Total Tax Obligation/General 3,260,556
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 5.6% (3.8% OF TOTAL INVESTMENTS)
1,525 Macon-Bibb County Urban Development Authority, Georgia, 8/12 at 101.00 AA 1,621,273
Revenue Refunding Bonds, Public Facilities Projects,
Series 2002A, 5.000%, 8/01/14
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.7% (2.4% OF TOTAL INVESTMENTS)
1,000 Atlanta, Georgia, Airport General Revenue Refunding Bonds, 1/10 at 101.00 AAA 1,057,010
Series 2000A, 5.400%, 1/01/15 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 18.1% (12.1% OF TOTAL INVESTMENTS) (4)
1,100 Atlanta Development Authority, Georgia, Revenue Bonds, 1/12 at 100.00 AAA 1,171,819
Yamacraw Design Center Project, Series 2001A,
5.125%, 1/01/27 (Pre-refunded 1/01/12) - MBIA Insured
1,500 Coweta County Development Authority, Georgia, Revenue 1/13 at 100.00 Aaa 1,622,400
Bonds, Newnan Water and Sewer, and Light Commission
Project, Series 2002, 5.250%, 1/01/18 (Pre-refunded 1/01/13) -
FGIC Insured
1,250 Private Colleges and Universities Authority, Georgia, Revenue 10/11 at 102.00 Baa2 (4) 1,386,088
Bonds, Mercer University, Series 2001, 5.750%, 10/01/31
(Pre-refunded 10/01/11)
1,000 Rockdale County Water and Sewerage Authority, Georgia, 1/10 at 101.00 AAA 1,066,030
Revenue Bonds, Series 1999A, 5.375%, 7/01/29 (Pre-refunded
1/01/10) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
4,850 Total U.S. Guaranteed 5,246,337
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 10.8% (7.2% OF TOTAL INVESTMENTS)
1,250 Municipal Electric Authority of Georgia, Combustion Turbine 11/07 at 100.00 AAA 1,328,525
Revenue Bonds, Series 2002A, 5.250%, 11/01/20 -
MBIA Insured
500 Municipal Electric Authority of Georgia, Combustion Turbine 11/13 at 100.00 AAA 537,030
Revenue Bonds, Series 2003A, 5.250%, 11/01/15 -
MBIA Insured
1,200 Summerville, Georgia, Combined Public Utility System Revenue 1/12 at 101.00 Baa3 1,253,664
Refunding and Improvement Bonds, Series 2002,
5.750%, 1/01/26
------------------------------------------------------------------------------------------------------------------------------------
2,950 Total Utilities 3,119,219
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 18.7% (12.5% OF TOTAL INVESTMENTS)
1,200 Atlanta, Georgia, Water and Wastewater Revenue Bonds, 11/14 at 100.00 AAA 1,246,296
Series 2004, 5.000%, 11/01/24 - FSA Insured
2,065 Augusta, Georgia, Water and Sewerage Revenue Bonds, 10/12 at 100.00 AAA 2,177,872
Series 2002, 5.000%, 10/01/16 - FSA Insured
25
Nuveen Georgia Dividend Advantage Municipal Fund (NZX) (continued)
Portfolio of INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 500 Fulton County, Georgia, Water and Sewerage Revenue Bonds, 1/14 at 100.00 AAA $ 520,950
Series 2004, 5.000%, 1/01/22 - FGIC Insured
1,395 Macon Water Authority, Georgia, Water and Sewer Revenue 10/11 at 101.00 AA- 1,448,010
Bonds, Series 2001B, 5.000%, 10/01/21
------------------------------------------------------------------------------------------------------------------------------------
5,160 Total Water and Sewer 5,393,128
------------------------------------------------------------------------------------------------------------------------------------
$ 41,160 Total Investments (cost $41,919,117) - 149.4% 43,202,273
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.5% 709,924
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.9)% (15,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 28,912,197
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) 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.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
See accompanying notes to financial statements.
26
Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG)
Portfolio of
INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 2.4% (1.6% OF TOTAL INVESTMENTS)
$ 1,750 DeKalb County Development Authority, Georgia, Pollution 12/12 at 101.00 B1 $ 1,564,955
Control Revenue Refunding Bonds, General Motors
Corporation Projects, Series 2002, 6.000%, 3/15/21
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.1% (2.1% OF TOTAL INVESTMENTS)
2,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 2,041,100
Asset-Backed Refunding Bonds, Series 2002, 5.500%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 16.3% (10.9% OF TOTAL INVESTMENTS)
Athens Housing Authority, Georgia, Student Housing Lease Revenue
Bonds, UGAREF East Campus Housing LLC Project, Series 2002:
3,500 5.000%, 12/01/27 - AMBAC Insured 12/12 at 100.00 Aaa 3,588,760
2,500 5.000%, 12/01/33 - AMBAC Insured 12/12 at 100.00 Aaa 2,547,900
1,225 Athens-Clarke County Unified Government Development 12/12 at 100.00 AAA 1,287,365
Authority, Georgia, Educational Facilities Revenue Bonds,
UGAREF CCRC Building LLC Project, Series 2002,
5.000%, 12/15/18 - AMBAC Insured
2,000 Fulton County Development Authority, Georgia, Revenue Bonds, 11/13 at 100.00 AAA 2,075,680
Georgia Tech - Klaus Parking and Family Housing, Series 2003,
5.000%, 11/01/23 - MBIA Insured
1,050 Fulton County Development Authority, Georgia, Revenue Bonds, 2/12 at 100.00 AAA 1,071,462
TUFF Morehouse Project, Series 2002A, 5.000%, 2/01/34 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
10,275 Total Education and Civic Organizations 10,571,167
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 24.6% (16.5% OF TOTAL INVESTMENTS)
Baldwin County Hospital Authority, Georgia, Revenue Bonds,
Oconee Regional Medical Center, Series 1998:
40 5.250%, 12/01/22 12/08 at 102.00 BB+ 37,647
165 5.375%, 12/01/28 12/08 at 102.00 BB+ 153,897
1,000 Chatham County Hospital Authority, Savannah, Georgia, 1/14 at 100.00 A- 1,038,720
Hospital Revenue Bonds, Memorial Health University Medical
Center Inc., Series 2004A, 5.375%, 1/01/26
1,000 Coffee County Hospital Authority, Georgia, Revenue Bonds, 12/14 at 100.00 BBB+ 1,016,240
Coffee County Regional Medical Center, Series 2004,
5.250%, 12/01/22
Floyd County Hospital Authority, Georgia, Revenue Anticipation
Certificates, Floyd Medical Center Project, Series 2002:
1,480 5.000%, 7/01/22 - MBIA Insured 7/12 at 101.00 Aaa 1,533,428
1,000 5.200%, 7/01/32 - MBIA Insured 7/12 at 101.00 Aaa 1,040,250
1,305 Gainesville and Hall County Hospital Authority, Georgia, 5/11 at 100.00 A- 1,340,496
Revenue Anticipation Certificates, Northeast Georgia Health
Services Inc., Series 2001, 5.500%, 5/15/31
Newnan Hospital Authority, Georgia, Revenue Anticipation
Certificates, Newnan Hospital Inc., Series 2002:
2,260 5.500%, 1/01/19 - MBIA Insured 1/13 at 100.00 Aaa 2,417,319
3,020 5.500%, 1/01/20 - MBIA Insured 1/13 at 100.00 Aaa 3,230,222
2,000 Savannah Hospital Authority, Georgia, Revenue Bonds, 1/14 at 100.00 AA 2,086,260
St. Joseph's/Candler Health System, Series 2003,
5.250%, 7/01/23 - RAAI Insured
1,945 Tift County Hospital Authority, Georgia, Revenue Anticipation 12/12 at 101.00 Aaa 2,052,189
Bonds, Tift Regional Medical Center, Series 2002,
5.250%, 12/01/19 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
15,215 Total Health Care 15,946,668
------------------------------------------------------------------------------------------------------------------------------------
27
Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG) (continued)
Portfolio of INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.6% (3.1% OF TOTAL INVESTMENTS)
Savannah Economic Development Authority, Georgia, GNMA
Collateralized Multifamily Housing Revenue Bonds, Snap I-II-III
Apartments, Series 2002A:
$ 500 5.150%, 11/20/22 (Alternative Minimum Tax) 11/12 at 102.00 AAA $ 511,530
980 5.200%, 11/20/27 (Alternative Minimum Tax) 11/12 at 102.00 AAA 997,513
1,465 5.250%, 11/20/32 (Alternative Minimum Tax) 11/12 at 102.00 AAA 1,488,499
------------------------------------------------------------------------------------------------------------------------------------
2,945 Total Housing/Multifamily 2,997,542
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.7% (3.1% OF TOTAL INVESTMENTS)
1,700 Georgia Housing and Finance Authority, Single Family Mortgage 12/12 at 100.00 AAA 1,740,103
Bonds, Series 2002C-2, 5.100%, 12/01/22 (Alternative
Minimum Tax)
1,265 Georgia Housing and Finance Authority, Single Family Mortgage 6/11 at 100.00 AAA 1,286,252
Resolution 1 Bonds, Series 2001B-2, 5.400%, 12/01/31
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,965 Total Housing/Single Family 3,026,355
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.6% (1.1% OF TOTAL INVESTMENTS)
1,000 Cobb County Development Authority, Georgia, Solid Waste 4/16 at 101.00 BBB 991,180
Disposal Revenue Bonds, Georgia Waste Management
Project, Series 2004A, 5.000%, 4/01/33 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 2.1% (1.5% OF TOTAL INVESTMENTS)
1,000 Richmond County Development Authority, Georgia, Environmental 2/11 at 101.00 BBB 1,064,680
Improvement Revenue Bonds, International Paper Company,
Series 2001A, 6.250%, 2/01/25 (Alternative Minimum Tax)
250 Richmond County Development Authority, Georgia, 2/12 at 101.00 BBB 265,790
Environmental Improvement Revenue Refunding Bonds,
International Paper Company, Series 2002A, 6.000%, 2/01/25
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,250 Total Materials 1,330,470
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 12.6% (8.4% OF TOTAL INVESTMENTS)
1,000 Cherokee County School System, Georgia, General Obligation 8/13 at 100.00 AAA 1,059,230
Bonds, Series 2003, 5.000%, 8/01/16 - MBIA Insured
1,000 Forsyth County, Georgia, General Obligation Bonds, Series 2004, 3/14 at 101.00 AA 1,072,750
5.250%, 3/01/19
750 Georgia, General Obligation Bonds, Series 1998D, 5.250%, 10/01/15 No Opt. Call AAA 822,690
1,000 Georgia, General Obligation Bonds, Series 2005B, 5.000%, 7/01/15 No Opt. Call AAA 1,076,690
Oconee County, Georgia, General Obligation Bonds, Recreation
Project, Series 2003:
1,410 5.500%, 1/01/23 - AMBAC Insured 1/13 at 101.00 Aaa 1,530,569
1,470 5.250%, 1/01/26 - AMBAC Insured 1/13 at 101.00 Aaa 1,566,844
1,000 Wayne County Hospital Authority, Georgia, Hospital Revenue 3/16 at 100.00 Aaa 1,034,250
Bonds, Series 2006, 5.000%, 3/01/23 - XLCA Insured
------------------------------------------------------------------------------------------------------------------------------------
7,630 Total Tax Obligation/General 8,163,023
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 25.8% (17.3% OF TOTAL INVESTMENTS)
1,405 Clayton County Development Authority, Georgia, Revenue 7/12 at 100.00 AAA 1,487,291
Bonds, TUFF Archives LLC Project, Series 2001A,
5.250%, 7/01/21 - MBIA Insured
750 Georgia Municipal Association Inc., Certificates of 6/12 at 101.00 AAA 784,890
Participation, Atlanta Court Project, Series 2002,
5.125%, 12/01/21 - AMBAC Insured
2,500 Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales No Opt. Call AAA 2,909,850
Tax Revenue Refunding Bonds, Series 1992P, 6.250%, 7/01/20 -
AMBAC Insured
500 Puerto Rico Infrastructure Financing Authority, Special Tax 7/15 at 100.00 BBB+ 498,335
Revenue Bonds, Series 2005B, 5.000%, 7/01/41
Puerto Rico Municipal Finance Agency, Series 2002A:
800 5.250%, 8/01/21 - FSA Insured 8/12 at 100.00 AAA 850,528
2,500 5.000%, 8/01/27 - FSA Insured 8/12 at 100.00 AAA 2,567,875
5,000 Puerto Rico Public Buildings Authority, Guaranteed Government No Opt. Call AAA 5,461,797
Facilities Revenue Refunding Bonds, Series 2002F,
5.250%, 7/01/21 - CIFG Insured
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,000 Puerto Rico, Highway Revenue Bonds, Highway and 7/16 at 100.00 AAA $ 2,198,920
Transportation Authority, Series 1996Y, 5.500%, 7/01/36 -
FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
15,455 Total Tax Obligation/Limited 16,759,486
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.9% (4.0% OF TOTAL INVESTMENTS)
3,650 Atlanta, Georgia, Airport General Revenue Refunding Bonds, 1/10 at 101.00 AAA 3,852,612
Series 2000A, 5.500%, 1/01/21 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 12.0% (8.1% OF TOTAL INVESTMENTS) (4)
DeKalb County, Georgia, Water and Sewerage Revenue Bonds,
Series 2000:
2,500 5.125%, 10/01/31 (Pre-refunded 10/01/10) 10/10 at 101.00 AA (4) 2,665,225
2,500 5.375%, 10/01/35 (Pre-refunded 10/01/10) 10/10 at 101.00 AA (4) 2,690,050
1,000 Private Colleges and Universities Authority, Georgia, Revenue 9/11 at 100.00 AA (4) 1,067,960
Bonds, Emory University, Series 2001A, 5.125%, 9/01/33
(Pre-refunded 9/01/11)
1,250 Private Colleges and Universities Authority, Georgia, Revenue 10/11 at 102.00 Baa2 (4) 1,386,088
Bonds, Mercer University, Series 2001, 5.750%, 10/01/31
(Pre-refunded 10/01/11)
------------------------------------------------------------------------------------------------------------------------------------
7,250 Total U.S. Guaranteed 7,809,323
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 8.2% (5.5% OF TOTAL INVESTMENTS)
1,000 Elberton, Georgia, Combined Utility System Revenue Refunding 1/12 at 100.00 Aaa 1,037,200
and Improvement Bonds, Series 2001, 5.000%, 1/01/22 -
AMBAC Insured
1,300 Fairburn, Georgia, Combined Utility Revenue Bonds, 10/10 at 101.00 BBB 1,357,252
Series 2000, 5.750%, 10/01/20
1,000 Municipal Electric Authority of Georgia, Project One Subordinated 1/13 at 100.00 AAA 1,032,900
Lien Revenue Bonds, Series 2003A, 5.000%, 1/01/22 -
MBIA Insured
1,775 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/12 at 101.00 AAA 1,918,722
Series 2002II, 5.375%, 7/01/19 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
5,075 Total Utilities 5,346,074
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 25.1% (16.8% OF TOTAL INVESTMENTS)
Atlanta, Georgia, Water and Wastewater Revenue Bonds,
Series 2004:
500 5.250%, 11/01/15 - FSA Insured 11/14 at 100.00 AAA 539,160
1,700 5.000%, 11/01/37 - FSA Insured 11/14 at 100.00 AAA 1,739,202
Augusta, Georgia, Water and Sewerage Revenue Bonds,
Series 2002:
1,000 5.250%, 10/01/22 - FSA Insured 10/12 at 100.00 AAA 1,060,650
3,500 5.000%, 10/01/27 - FSA Insured 10/12 at 100.00 AAA 3,602,095
1,000 Douglasville-Douglas County Water and Sewer Authority, 12/15 at 100.00 AAA 1,031,670
Georgia, Water and Sewer Revenue Bonds, Series 2005,
5.000%, 6/01/29 - MBIA Insured
4,000 Forsyth County Water and Sewerage Authority, Georgia, 4/13 at 100.00 AA 4,103,280
Revenue Bonds, Series 2002, 5.000%, 4/01/32
950 Fulton County, Georgia, Water and Sewerage Revenue Bonds, 7/08 at 101.00 AAA 980,799
Series 1998, 5.000%, 1/01/16 - FGIC Insured
3,100 Harris County, Georgia, Water System Revenue Bonds, 12/12 at 100.00 Aaa 3,220,311
Series 2002, 5.000%, 12/01/22 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
15,750 Total Water and Sewer 16,277,167
------------------------------------------------------------------------------------------------------------------------------------
$ 92,210 Total Investments (cost $95,071,247) - 149.0% 96,677,122
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.8% 1,224,308
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.8)% (33,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 64,901,430
====================================================================================================================
29
Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG) (continued)
Portfolio of INVESTMENTS May 31, 2006
FORWARD SWAPS OUTSTANDING AT MAY 31, 2006:
FIXED RATE FLOATING RATE
PAID FIXED RATE RECEIVED FLOATING RATE UNREALIZED
NOTIONAL BY THE FUND PAYMENT BY THE FUND PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT (ANNUALIZED) FREQUENCY BASED ON FREQUENCY DATE (5) DATE (DEPRECIATION)
----------------------------------------------------------------------------------------------------------------------------
Goldman Sachs $1,400,000 4.013% Quarterly BMA Quarterly 9/14/06 9/14/2026 $ 66,680
Merrill Lynch 2,800,000 4.021 Quarterly BMA Quarterly 9/21/06 9/21/2026 131,037
----------------------------------------------------------------------------------------------------------------------------
$197,717
----------------------------------------------------------------------------------------------------------------------------
BMA - The daily arithmetic average of the weekly BMA (Bond Market
Association) Municipal Swap Index.
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) 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.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(5) Effective date represents the date on which both the
Fund and counterparty commence interest payment
accruals on each forward swap contract.
See accompanying notes to financial statements.
30
Nuveen North Carolina Premium Income Municipal Fund (NNC)
Portfolio of
INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 29.1% (19.7% OF TOTAL INVESTMENTS)
$ 1,000 North Carolina Capital Facilities Financing Agency, Housing 6/13 at 100.00 AAA $ 1,028,830
Revenue Bonds, Elizabeth City State University, Series 2003A,
5.000%, 6/01/28 - AMBAC Insured
970 North Carolina Capital Facilities Financing Agency, Revenue 4/13 at 100.00 AAA 1,020,780
Bonds, Johnson and Wales University, Series 2003A,
5.250%, 4/01/23 - XLCA Insured
5,875 North Carolina Education Assistance Authority, Subordinate 7/06 at 102.00 A 5,999,311
Lien Guaranteed Student Loan Revenue Bonds, Series 1996C,
6.350%, 7/01/16 (Alternative Minimum Tax)
3,285 North Carolina State University at Raleigh, General Revenue 10/13 at 100.00 AA 3,481,542
Bonds, Series 2003A, 5.000%, 10/01/15
1,530 University of North Carolina System, Pooled Revenue Bonds, No Opt. Call AAA 1,635,188
Series 2005A, 5.000%, 4/01/15 - AMBAC Insured
1,000 University of North Carolina System, Pooled Revenue Refunding 10/12 at 100.00 AAA 1,075,620
Bonds, Series 2002A, 5.375%, 4/01/22 - AMBAC Insured
University of North Carolina Wilmington, Certificates of
Participation, Student Housing Project Revenue Bonds,
Series 2006:
1,430 5.000%, 6/01/23 - FGIC Insured 6/16 at 100.00 AAA 1,491,161
1,505 5.000%, 6/01/24 - FGIC Insured 6/16 at 100.00 AAA 1,565,682
500 5.000%, 6/01/37 - FGIC Insured 6/16 at 100.00 AAA 511,660
University of North Carolina, Chapel Hill, System Net Revenue
Bonds, Series 2003:
2,380 5.000%, 12/01/19 12/13 at 100.00 AA+ 2,510,805
2,725 5.000%, 12/01/21 12/13 at 100.00 AA+ 2,842,638
1,500 5.000%, 12/01/23 12/13 at 100.00 AA+ 1,564,365
1,675 University of North Carolina, Wilmington, General Revenue 1/12 at 101.00 Aaa 1,744,177
Bonds, Series 2002A, 5.000%, 1/01/23 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
25,375 Total Education and Civic Organizations 26,471,759
------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 1.8% (1.2% OF TOTAL INVESTMENTS)
1,500 Virgin Islands Public Finance Authority, Revenue Bonds, 1/14 at 100.00 BBB 1,647,495
Refinery Project - Hovensa LLC, Series 2003, 6.125%, 7/01/22
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 24.5% (16.7% OF TOTAL INVESTMENTS)
250 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA 252,515
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2005A, 5.000%, 1/15/45
5,000 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA 5,165,400
Revenue Bonds, Mission St. Joseph's Health System,
Series 2001, 5.250%, 10/01/31
2,000 North Carolina Medical Care Commission, Healthcare Facilities 11/13 at 100.00 AA- 2,070,040
Revenue Bonds, Novant Health Obligated Group, Series 2003A,
5.000%, 11/01/19
2,000 North Carolina Medical Care Commission, Healthcare Facilities 10/09 at 101.00 A- 2,113,200
Revenue Bonds, Stanly Memorial Hospital, Series 1999,
6.375%, 10/01/29
North Carolina Medical Care Commission, Healthcare Facilities
Revenue Bonds, Union Regional Medical Center, Series 2002A:
1,000 5.500%, 1/01/19 1/12 at 100.00 A 1,044,080
550 5.500%, 1/01/20 1/12 at 100.00 A 573,144
1,750 5.375%, 1/01/32 1/12 at 100.00 A 1,787,958
1,615 North Carolina Medical Care Commission, Hospital Revenue 10/08 at 101.00 AA 1,615,533
Bonds, FirstHealth of the Carolinas Inc., Series 1998,
4.750%, 10/01/26
3,000 North Carolina Medical Care Commission, Hospital Revenue 6/12 at 101.00 A 3,079,110
Bonds, Southeastern Regional Medical Center, Series 2002,
5.375%, 6/01/32
31
Nuveen North Carolina Premium Income Municipal Fund (NNC) (continued)
Portfolio of INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 2,645 North Carolina Medical Care Commission, Revenue Bonds, 1/15 at 100.00 AAA $ 2,713,558
Blue Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 -
FGIC Insured
North Carolina Medical Care Commission, Revenue Bonds,
Cleveland County Healthcare System, Series 2004A:
600 5.250%, 7/01/20 - AMBAC Insured 7/14 at 100.00 AAA 637,710
500 5.250%, 7/01/22 - AMBAC Insured 7/14 at 100.00 AAA 530,025
735 North Carolina Medical Care Commission, Revenue Bonds, 11/14 at 100.00 AA 755,301
Northeast Medical Center, Series 2004, 5.000%, 11/01/24
------------------------------------------------------------------------------------------------------------------------------------
21,645 Total Health Care 22,337,574
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.4% (3.0% OF TOTAL INVESTMENTS)
1,000 Asheville Housing Authority, North Carolina, GNMA- 11/07 at 102.00 AA 1,018,490
Collateralized Multifamily Housing Revenue Bonds,
Woodridge Apartments, Series 1997, 5.800%, 11/20/39
(Alternative Minimum Tax)
2,290 Mecklenburg County, North Carolina, FNMA Multifamily 7/13 at 105.00 AAA 2,366,028
Housing Revenue Bonds, Little Rock Apartments, Series 2003,
5.375%, 1/01/36 (Alternative Minimum Tax)
North Carolina Housing Finance Agency, FHA-Insured Multifamily
Revenue Bonds, Series 1993:
230 5.800%, 7/01/14 7/06 at 100.00 Aa2 230,251
435 5.900%, 7/01/26 7/06 at 100.00 Aa2 435,344
------------------------------------------------------------------------------------------------------------------------------------
3,955 Total Housing/Multifamily 4,050,113
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 8.2% (5.6% OF TOTAL INVESTMENTS)
1,105 North Carolina Housing Finance Agency, Home Ownership 7/10 at 100.00 AAA 1,122,437
Revenue Bonds, 1998 Trust Agreement, Series 10A,
5.400%, 7/01/32 - AMBAC Insured (Alternative Minimum Tax)
4,350 North Carolina Housing Finance Agency, Home Ownership 7/09 at 100.00 AA 4,557,930
Revenue Bonds, 1998 Trust Agreement, Series 6A,
6.200%, 1/01/29 (Alternative Minimum Tax)
1,745 North Carolina Housing Finance Agency, Single Family Revenue 9/06 at 102.00 AA 1,775,049
Bonds, Series 1996HH, 6.300%, 3/01/26 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
7,200 Total Housing/Single Family 7,455,416
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.5% (1.1% OF TOTAL INVESTMENTS)
1,400 North Carolina Capital Facilities Financing Agency, Exempt 8/14 at 100.00 BBB 1,395,310
Facilities Revenue Bonds, Waste Management Inc.,
Series 2001, 3.750%, 8/01/14 (Mandatory put 8/01/07)
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.3% (0.2% OF TOTAL INVESTMENTS)
250 North Carolina Medical Care Commission, Revenue Bonds, 9/15 at 100.00 N/R 251,290
United Church Homes and Services, Series 2005A,
5.250%, 9/01/21
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 3.9% (2.6% OF TOTAL INVESTMENTS)
1,425 Gaston County Industrial Facilities and Pollution Control 8/15 at 100.00 N/R 1,493,457
Financing Authority, North Carolina, National Gypsum
Company Project Exempt Facilities Revenue Bonds,
Series 2005, 5.750%, 8/01/35 (Alternative Minimum Tax)
2,000 Haywood County Industrial Facilities and Pollution Control 9/06 at 102.00 Baa3 2,042,160
Financing Authority, North Carolina, Pollution Control
Revenue Refunding Bonds, Champion International
Corporation, Series 1995, 6.000%, 3/01/20
------------------------------------------------------------------------------------------------------------------------------------
3,425 Total Materials 3,535,617
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 8.9% (6.0% OF TOTAL INVESTMENTS)
1,890 Craven County, North Carolina, General Obligation Bonds, 5/12 at 101.00 AAA 1,969,059
Series 2002, 5.000%, 5/01/21 - AMBAC Insured
4,285 Durham County, North Carolina, General Obligation Bonds, 4/12 at 100.00 AAA 4,522,389
Series 2002B, 5.000%, 4/01/16
1,000 Johnston County, North Carolina, General Obligation Bonds, 6/11 at 102.00 AAA 1,056,600
Series 2001, 5.000%, 6/01/16 - FGIC Insured
500 North Carolina, General Obligation Bonds, Series 2004A, 3/14 at 100.00 AAA 524,340
5.000%, 3/01/22
------------------------------------------------------------------------------------------------------------------------------------
7,675 Total Tax Obligation/General 8,072,388
------------------------------------------------------------------------------------------------------------------------------------
32
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 28.1% (19.1% OF TOTAL INVESTMENTS)
$ 1,330 Cabarrus County, North Carolina, Certificates of Participation, 2/13 at 100.00 AA- $ 1,402,325
Series 2002, 5.250%, 2/01/17
1,800 Catawba County, North Carolina, Certificates of Participation, 6/14 at 100.00 Aaa 1,910,340
Series 2004, 5.250%, 6/01/21 - MBIA Insured
1,700 Charlotte, North Carolina, Certificates of Participation, 6/13 at 100.00 AA+ 1,797,886
Governmental Facilities Projects, Series 2003G,
5.375%, 6/01/26
Charlotte, North Carolina, Storm Water Fee Revenue Bonds,
Series 2002:
1,050 5.250%, 6/01/20 6/12 at 101.00 AA+ 1,124,666
1,750 5.000%, 6/01/25 6/12 at 101.00 AA+ 1,810,970
1,000 Davidson County, North Carolina, Certificates of Participation, No Opt. Call AAA 1,079,040
Series 2004, 5.250%, 6/01/14 - AMBAC Insured
750 Johnston County Finance Corporation, North Carolina, 8/09 at 101.00 AAA 784,200
Installment Payment Revenue Bonds, School and Museum
Projects, Series 1999, 5.250%, 8/01/21 - FSA Insured
Lee County, North Carolina, Certificates of Participation,
Public Schools and Community College, Series 2004:
1,715 5.250%, 4/01/18 - FSA Insured 4/14 at 100.00 AAA 1,822,874
500 5.250%, 4/01/20 - FSA Insured 4/14 at 100.00 AAA 529,740
1,000 5.250%, 4/01/22 - FSA Insured 4/14 at 100.00 AAA 1,058,800
North Carolina Infrastructure Finance Corporation, Certificates
of Participation, Correctional Facilities, Series 2004A:
2,500 5.000%, 2/01/19 2/14 at 100.00 AA+ 2,602,350
1,500 5.000%, 2/01/23 2/14 at 100.00 AA+ 1,552,515
1,500 North Carolina, Certificates of Participation, Repair and 6/14 at 100.00 AA+ 1,555,020
Renovation Project, Series 2004B, 5.000%, 6/01/20
North Carolina, Certificates of Participation, Series 2003:
1,130 5.250%, 6/01/21 6/13 at 100.00 AA+ 1,187,325
1,000 5.250%, 6/01/23 6/13 at 100.00 AA+ 1,048,890
1,105 Orange County, North Carolina, Certificates of Participation, 4/16 at 100.00 AAA 1,164,162
Public Improvement Project, Series 2006A, 5.000%, 4/01/19 -
AMBAC Insured
2,000 Puerto Rico Highway and Transportation Authority, Grant 3/14 at 100.00 AAA 2,091,040
Anticipation Revenue Bonds, Series 2004, 5.000%, 9/15/21 -
MBIA Insured
1,000 Randolph County, North Carolina, Certificates of Participation, 6/14 at 102.00 AAA 1,048,530
Series 2004, 5.000%, 6/01/20 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
24,330 Total Tax Obligation/Limited 25,570,673
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.9% (4.7% OF TOTAL INVESTMENTS)
Charlotte, North Carolina, Airport Revenue Bonds, Series 2004A:
600 5.250%, 7/01/24 - MBIA Insured 7/14 at 100.00 AAA 635,820
2,710 5.000%, 7/01/29 - MBIA Insured 7/14 at 100.00 AAA 2,781,463
500 Piedmont Triad Airport Authority, North Carolina, Airport 7/15 at 100.00 AAA 522,435
Revenue Bonds, Series 2005A, 5.000%, 7/01/20 -
XLCA Insured
2,250 Raleigh Durham Airport Authority, North Carolina, Airport 5/11 at 101.00 Aaa 2,379,420
Revenue Bonds, Series 2001A, 5.250%, 11/01/16 -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,060 Total Transportation 6,319,138
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 10.5% (7.1% OF TOTAL INVESTMENTS) (4)
2,000 Charlotte, North Carolina, Storm Water Fee Revenue Bonds, 6/10 at 101.00 AA+ (4) 2,185,440
Series 2000, 6.000%, 6/01/25 (Pre-refunded 6/01/10)
1,485 North Carolina Municipal Power Agency 1, Catawba Electric No Opt. Call AAA 1,683,455
Revenue Bonds, Series 1980, 10.500%, 1/01/10 (ETM)
4,260 North Carolina Municipal Power Agency 1, Catawba Electric No Opt. Call AAA 4,609,448
Revenue Bonds, Series 1986, 5.000%, 1/01/20 (ETM)
1,000 North Carolina, General Obligation Bonds, Series 2000A, 9/10 at 102.00 AAA 1,071,570
5.100%, 9/01/16 (Pre-refunded 9/01/10)
------------------------------------------------------------------------------------------------------------------------------------
8,745 Total U.S. Guaranteed 9,549,913
------------------------------------------------------------------------------------------------------------------------------------
33
Nuveen North Carolina Premium Income Municipal Fund (NNC) (continued)
Portfolio of INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 13.0% (8.8% OF TOTAL INVESTMENTS)
$ 3,000 North Carolina Eastern Municipal Power Agency, Power 1/13 at 100.00 BBB $ 3,194,670
System Revenue Bonds, Series 2003F, 5.500%, 1/01/15
1,000 North Carolina Eastern Municipal Power Agency, Power 1/16 at 100.00 AAA 1,070,280
System Revenue Bonds, Series 2005, 5.250%, 1/01/20 -
AMBAC Insured
4,000 North Carolina Municipal Power Agency 1, Catawba Electric 1/10 at 101.00 A3 4,342,280
Revenue Bonds, Series 1999B, 6.500%, 1/01/20
2,000 North Carolina Municipal Power Agency 1, Catawba Electric 1/13 at 100.00 AAA 2,138,600
Revenue Bonds, Series 2003A, 5.250%, 1/01/15 -
AMBAC Insured
1,000 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A3 1,050,170
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
11,000 Total Utilities 11,796,000
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 6.2% (4.2% OF TOTAL INVESTMENTS)
1,605 Broad River Water Authority, North Carolina, Water System 6/15 at 100.00 Aaa 1,676,535
Revenue Bonds, Series 2005, 5.000%, 6/01/20 - XLCA Insured
1,295 Greensboro, North Carolina, Combined Enterprise System 6/15 at 100.00 AA+ 1,343,938
Revenue Bonds, Series 2005A, 5.000%, 6/01/26
500 Onslow County, North Carolina, Combined Enterprise System 6/14 at 100.00 AAA 518,510
Revenue Bonds, Series 2004B, 5.000%, 6/01/23 -
XLCA Insured
2,000 Winston-Salem, North Carolina, Water and Sewerage System 6/12 at 100.00 AAA 2,095,420
Revenue Bonds, Series 2002A, 5.000%, 6/01/18
------------------------------------------------------------------------------------------------------------------------------------
5,400 Total Water and Sewer 5,634,403
------------------------------------------------------------------------------------------------------------------------------------
$ 127,960 Total Investments (cost $130,910,602) - 147.3% 134,087,089
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.1% 3,745,946
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.4)% (46,800,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 91,033,035
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) 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.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
N/R Not rated.
(ETM) Escrowed to maturity.
See accompanying notes to financial statements.
34
Nuveen North Carolina Dividend Advantage Municipal Fund (NRB)
Portfolio of
INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 27.6% (18.6% OF TOTAL INVESTMENTS)
$ 2,000 North Carolina Capital Facilities Financing Agency, Revenue 10/11 at 100.00 AA+ $ 2,067,080
Bonds, Duke University, Series 2001A, 5.125%, 10/01/26
500 North Carolina Capital Facilities Financing Agency, Revenue 9/11 at 101.00 Baa2 514,810
Bonds, High Point University, Series 2001, 5.125%, 9/01/18
2,450 University of North Carolina System, Pooled Revenue Refunding 10/12 at 100.00 AAA 2,633,137
Bonds, Series 2002A, 5.375%, 4/01/17 - AMBAC Insured
250 University of North Carolina Wilmington, Certificates of 6/16 at 100.00 AAA 255,830
Participation, Student Housing Project Revenue Bonds,
Series 2006, 5.000%, 6/01/37 - FGIC Insured
1,750 University of North Carolina, Chapel Hill, System Net 6/11 at 100.00 AA+ 1,811,355
Revenue Bonds, Series 2001A, 5.000%, 12/01/25
1,845 University of North Carolina, Chapel Hill, System Net Revenue No Opt. Call AA+ 1,959,408
Bonds, Series 2002B, 5.000%, 12/01/11
------------------------------------------------------------------------------------------------------------------------------------
8,795 Total Education and Civic Organizations 9,241,620
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 20.8% (14.0% OF TOTAL INVESTMENTS)
100 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA 101,006
Healthcare System Revenue Bonds, DBA Carolinas
Healthcare System, Series 2005A, 5.000%, 1/15/45
1,000 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA 1,033,080
Revenue Bonds, Mission St. Joseph's Health System,
Series 2001, 5.250%, 10/01/31
1,110 North Carolina Medical Care Commission, Healthcare Facilities 1/12 at 100.00 A 1,154,267
Revenue Bonds, Union Regional Medical Center, Series 2002A,
5.250%, 1/01/15
2,500 North Carolina Medical Care Commission, Healthcare Revenue 5/07 at 100.00 AA- 2,516,550
Bonds, Carolina Medicorp, Series 1996, 5.250%, 5/01/26
1,500 North Carolina Medical Care Commission, Hospital Revenue 6/12 at 101.00 A 1,543,050
Bonds, Southeastern Regional Medical Center, Series 2002,
5.250%, 6/01/22
300 North Carolina Medical Care Commission, Revenue Bonds, 1/15 at 100.00 AAA 307,776
Blue Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 -
FGIC Insured
300 North Carolina Medical Care Commission, Revenue Bonds, 11/14 at 100.00 AA 308,286
Northeast Medical Center, Series 2004, 5.000%, 11/01/24
------------------------------------------------------------------------------------------------------------------------------------
6,810 Total Health Care 6,964,015
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.8% (4.6% OF TOTAL INVESTMENTS)
2,230 Durham Housing Authority, North Carolina, FNMA Guaranteed 6/11 at 100.00 AAA 2,283,364
Multifamily Housing Revenue Bonds, Naples Terrace
Apartments, Series 2001A, 5.700%, 6/01/33 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.8% (3.2% OF TOTAL INVESTMENTS)
440 North Carolina Housing Finance Agency, Home Ownership 7/10 at 100.00 AAA 446,943
Revenue Bonds, 1998 Trust Agreement, Series 10A,
5.400%, 7/01/32 - AMBAC Insured (Alternative Minimum Tax)
1,125 North Carolina Housing Finance Agency, Home Ownership 7/09 at 100.00 AA 1,165,275
Revenue Bonds, 1998 Trust Agreement, Series 5A,
5.625%, 7/01/30 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,565 Total Housing/Single Family 1,612,218
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.5% (1.0% OF TOTAL INVESTMENTS)
500 North Carolina Capital Facilities Financing Agency, Exempt 8/14 at 100.00 BBB 498,325
Facilities Revenue Bonds, Waste Management Inc.,
Series 2001, 3.750%, 8/01/14 (Mandatory put 8/01/07)
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
35
Nuveen North Carolina Dividend Advantage Municipal Fund (NRB) (continued)
Portfolio of INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.7% (0.5% OF TOTAL INVESTMENTS)
$ 250 North Carolina Medical Care Commission, Revenue Bonds, 9/15 at 100.00 N/R $ 251,290
United Church Homes and Services, Series 2005A,
5.250%, 9/01/21
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 3.9% (2.7% OF TOTAL INVESTMENTS)
750 Columbus County Industrial Facilities and Pollution Control 4/07 at 102.00 BBB 773,153
Financing Authority, North Carolina, Environmental
Improvement Revenue Bonds, International Paper Company
Project, Series 1997A, 6.150%, 4/01/21 (Alternative
Minimum Tax)
515 Gaston County Industrial Facilities and Pollution Control 8/15 at 100.00 N/R 539,741
Financing Authority, North Carolina, National Gypsum
Company Project Exempt Facilities Revenue Bonds,
Series 2005, 5.750%, 8/01/35 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,265 Total Materials 1,312,894
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 6.3% (4.2% OF TOTAL INVESTMENTS)
North Carolina, General Obligation Bonds, Series 2004A:
1,000 5.000%, 3/01/18 3/14 at 100.00 AAA 1,056,800
1,000 5.000%, 3/01/22 3/14 at 100.00 AAA 1,048,680
------------------------------------------------------------------------------------------------------------------------------------
2,000 Total Tax Obligation/General 2,105,480
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 24.3% (16.3% OF TOTAL INVESTMENTS)
1,330 Cabarrus County, North Carolina, Certificates of Participation, 2/13 at 100.00 AA- 1,409,361
Series 2002, 5.250%, 2/01/15
1,400 Charlotte, North Carolina, Certificates of Participation, 6/13 at 100.00 AA+ 1,480,612
Governmental Facilities Projects, Series 2003G,
5.375%, 6/01/26
1,870 Dare County, North Carolina, Certificates of Participation, 12/12 at 100.00 AAA 2,001,742
Series 2002, 5.250%, 6/01/15 - AMBAC Insured
1,250 Davidson County, North Carolina, Certificates of Participation, 6/14 at 100.00 AAA 1,324,025
Series 2004, 5.250%, 6/01/21 - AMBAC Insured
1,390 Durham, North Carolina, Certificates of Participation, 6/15 at 100.00 AA+ 1,434,730
Series 2005B, 5.000%, 6/01/25
470 Raleigh, North Carolina, Certificates of Participation, 6/14 at 100.00 AA+ 487,240
Downtown Improvement Project, Series 2004B,
5.000%, 6/01/20
------------------------------------------------------------------------------------------------------------------------------------
7,710 Total Tax Obligation/Limited 8,137,710
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.2% (4.2% OF TOTAL INVESTMENTS)
450 Piedmont Triad Airport Authority, North Carolina, Airport 7/15 at 100.00 AAA 470,191
Revenue Bonds, Series 2005A, 5.000%, 7/01/20 -
XLCA Insured
1,530 Raleigh Durham Airport Authority, North Carolina, Airport 5/11 at 101.00 Aaa 1,619,199
Revenue Bonds, Series 2001A, 5.250%, 11/01/18 -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
1,980 Total Transportation 2,089,390
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 3.2% (2.1% OF TOTAL INVESTMENTS) (4)
1,000 Broad River Water Authority, North Carolina, Water System 6/10 at 101.00 Aaa 1,070,080
Revenue Bonds, Series 2000, 5.375%, 6/01/26 (Pre-refunded
6/01/10) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 22.4% (15.1% OF TOTAL INVESTMENTS)
Greenville, North Carolina, Combined Enterprise System
Revenue Bonds, Series 2001:
1,000 5.250%, 9/01/20 - FSA Insured 9/11 at 101.00 AAA 1,062,080
500 5.250%, 9/01/21 - FSA Insured 9/11 at 101.00 AAA 528,760
500 North Carolina Eastern Municipal Power Agency, Power System 1/16 at 100.00 AAA 535,140
Revenue Bonds, Series 2005, 5.250%, 1/01/20 -
AMBAC Insured
2,500 North Carolina Eastern Municipal Power Agency, Power System 7/06 at 100.00 AAA 2,503,350
Revenue Refunding Bonds, Series 1993B, 5.500%, 1/01/17 -
FGIC Insured
1,000 North Carolina Eastern Municipal Power Agency, Power System 1/09 at 102.00 BBB 1,055,650
Revenue Refunding Bonds, Series 1999B, 5.650%, 1/01/16
250 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/15 at 100.00 AAA 261,600
Series 2005RR, 5.000%, 7/01/24 - FGIC Insured
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 1,500 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A3 $ 1,575,255
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
7,250 Total Utilities 7,521,835
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 20.0% (13.5% OF TOTAL INVESTMENTS)
2,250 Charlotte, North Carolina, Water and Sewerage System 6/11 at 101.00 AAA 2,347,132
Revenue Bonds, Series 2001, 5.125%, 6/01/26
Greensboro, North Carolina, Combined Enterprise System
Revenue Bonds, Series 2001A:
500 5.125%, 6/01/20 6/11 at 101.00 AA+ 527,015
500 5.125%, 6/01/21 6/11 at 101.00 AA+ 524,875
500 Greensboro, North Carolina, Combined Enterprise System 6/15 at 100.00 AA+ 519,650
Revenue Bonds, Series 2005A, 5.000%, 6/01/25
400 Onslow County, North Carolina, Combined Enterprise System 6/14 at 100.00 AAA 414,808
Revenue Bonds, Series 2004B, 5.000%, 6/01/23 -
XLCA Insured
2,275 Winston-Salem, North Carolina, Water and Sewerage System 6/12 at 100.00 AAA 2,386,020
Revenue Bonds, Series 2002A, 5.000%, 6/01/17
------------------------------------------------------------------------------------------------------------------------------------
6,425 Total Water and Sewer 6,719,500
------------------------------------------------------------------------------------------------------------------------------------
$ 47,780 Total Investments (cost $48,373,867) - 148.5% 49,807,721
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.2% 728,969
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.7)% (17,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 33,536,690
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) 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.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
N/R Not rated.
See accompanying notes to financial statements.
37
Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO)
Portfolio of
INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 26.6% (17.9% OF TOTAL INVESTMENTS)
Appalachian State University, North Carolina, Housing and
Student Center System Revenue Refunding Bonds, Series 2001:
$ 600 5.125%, 7/15/24 - MBIA Insured 1/11 at 101.00 Aaa $ 629,040
200 5.125%, 7/15/27 - MBIA Insured 1/11 at 101.00 Aaa 206,830
Appalachian State University, North Carolina, Housing and
Student Center System Revenue Refunding Bonds, Series 2002:
1,040 5.000%, 7/15/14 - MBIA Insured 7/12 at 100.00 Aaa 1,099,634
1,000 5.000%, 7/15/15 - MBIA Insured 7/12 at 100.00 Aaa 1,045,660
North Carolina Capital Facilities Financing Agency, Revenue
Bonds, Duke University, Series 2001A:
3,750 5.125%, 10/01/26 10/11 at 100.00 AA+ 3,875,773
2,000 5.125%, 10/01/41 10/11 at 100.00 AA+ 2,043,340
500 University of North Carolina System, Pooled Revenue Bonds, 4/14 at 100.00 Aaa 519,835
Series 2004C, 5.000%, 4/01/24 - AMBAC Insured
1,000 University of North Carolina System, Pooled Revenue Bonds, 4/15 at 100.00 AAA 1,046,820
Series 2005A, 5.000%, 4/01/22 - AMBAC Insured
1,100 University of North Carolina System, Pooled Revenue Refunding 10/12 at 100.00 AAA 1,182,225
Bonds, Series 2002A, 5.375%, 4/01/19 - AMBAC Insured
University of North Carolina Wilmington, Certificates of
Participation, Student Housing Project Revenue Bonds,
Series 2006:
500 5.000%, 6/01/21 - FGIC Insured 6/16 at 100.00 AAA 522,210
250 5.000%, 6/01/37 - FGIC Insured 6/16 at 100.00 AAA 255,830
1,500 University of North Carolina, Chapel Hill, System Net Revenue No Opt. Call AA+ 1,593,015
Bonds, Series 2002B, 5.000%, 12/01/11
250 University of North Carolina, Charlotte, Certificates of 3/15 at 100.00 AAA 261,058
Participation, Student Housing Project, Series 2005,
5.000%, 3/01/21 - AMBAC Insured
400 University of North Carolina, Greensboro, General Revenue 4/11 at 101.00 AAA 427,728
Refunding Bonds, Series 2002B, 5.375%, 4/01/17 -
FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
14,090 Total Education and Civic Organizations 14,708,998
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 24.2% (16.2% OF TOTAL INVESTMENTS)
2,130 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA 2,161,141
Healthcare System Revenue Bonds, Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31
200 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA 202,012
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2005A, 5.000%, 1/15/45
1,000 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA 1,033,080
Revenue Bonds, Mission St. Joseph's Health System,
Series 2001, 5.250%, 10/01/31
2,000 North Carolina Medical Care Commission, Healthcare Facilities 11/13 at 100.00 AA- 2,064,940
Revenue Bonds, Novant Health Obligated Group,
Series 2003A, 5.000%, 11/01/20
1,005 North Carolina Medical Care Commission, Healthcare Facilities 1/12 at 100.00 A 1,052,667
Revenue Bonds, Union Regional Medical Center, Series 2002A,
5.250%, 1/01/13
North Carolina Medical Care Commission, Hospital Revenue
Bonds, Southeastern Regional Medical Center, Series 2002:
1,000 5.500%, 6/01/15 6/12 at 101.00 A 1,063,420
2,000 5.250%, 6/01/22 6/12 at 101.00 A 2,057,400
2,000 North Carolina Medical Care Commission, Revenue Bonds, 1/15 at 100.00 AAA 2,051,840
Blue Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 -
FGIC Insured
38
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
North Carolina Medical Care Commission, Revenue Bonds,
Cleveland County Healthcare System, Series 2004A:
$ 595 5.250%, 7/01/20 - AMBAC Insured 7/14 at 100.00 AAA $ 632,396
500 5.250%, 7/01/22 - AMBAC Insured 7/14 at 100.00 AAA 530,025
500 North Carolina Medical Care Commission, Revenue Bonds, 11/14 at 100.00 AA 513,810
Northeast Medical Center, Series 2004, 5.000%, 11/01/24
------------------------------------------------------------------------------------------------------------------------------------
12,930 Total Health Care 13,362,731
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.9% (2.6% OF TOTAL INVESTMENTS)
375 North Carolina Housing Finance Agency, Home Ownership 7/10 at 100.00 AAA 380,918
Revenue Bonds, 1998 Trust Agreement, Series 10A,
5.400%, 7/01/32 - AMBAC Insured (Alternative
Minimum Tax)
North Carolina Housing Finance Agency, Home Ownership
Revenue Bonds, Series 13A:
875 4.700%, 7/01/12 (Alternative Minimum Tax) 7/11 at 100.00 AA 888,720
880 4.850%, 7/01/13 (Alternative Minimum Tax) 7/11 at 100.00 AA 895,743
------------------------------------------------------------------------------------------------------------------------------------
2,130 Total Housing/Single Family 2,165,381
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.4% (1.0% OF TOTAL INVESTMENTS)
800 North Carolina Capital Facilities Financing Agency, Exempt 8/14 at 100.00 BBB 797,320
Facilities Revenue Bonds, Waste Management Inc.,
Series 2001, 3.750%, 8/01/14 (Mandatory put 8/01/07)
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.5% (0.3% OF TOTAL INVESTMENTS)
250 North Carolina Medical Care Commission, Revenue Bonds, 9/15 at 100.00 N/R 251,290
United Church Homes and Services, Series 2005A,
5.250%, 9/01/21
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 3.8% (2.6% OF TOTAL INVESTMENTS)
865 Gaston County Industrial Facilities and Pollution Control 8/15 at 100.00 N/R 906,555
Financing Authority, North Carolina, National Gypsum
Company Project Exempt Facilities Revenue Bonds,
Series 2005, 5.750%, 8/01/35 (Alternative Minimum Tax)
1,100 Northampton County Industrial Facilities and Pollution 2/11 at 101.00 BBB 1,168,497
Control Financing Authority, North Carolina, Environmental
Improvement Revenue Bonds, International Paper Company,
Series 2001A, 6.200%, 2/01/25 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,965 Total Materials 2,075,052
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 2.4% (1.6% OF TOTAL INVESTMENTS)
250 Durham County, North Carolina, General Obligation Bonds, 5/10 at 102.00 AAA 270,730
Series 2000, 5.600%, 5/01/15
1,000 North Carolina, General Obligation Bonds, Series 2004A, 3/14 at 100.00 AAA 1,048,680
5.000%, 3/01/22
------------------------------------------------------------------------------------------------------------------------------------
1,250 Total Tax Obligation/General 1,319,410
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 32.3% (21.7% OF TOTAL INVESTMENTS)
30 Cabarrus County, North Carolina, Certificates of Participation, 2/13 at 100.00 AA- 31,704
Series 2002, 5.250%, 2/01/16
1,750 Charlotte, North Carolina, Certificates of Participation, 6/13 at 100.00 AA+ 1,787,293
Governmental Facilities Projects, Series 2003G, 5.000%, 6/01/28
Charlotte, North Carolina, Storm Water Fee Revenue Bonds,
Series 2002:
1,850 5.250%, 6/01/18 6/12 at 101.00 AA+ 1,976,244
400 5.250%, 6/01/19 6/12 at 101.00 AA+ 427,296
1,325 Dare County, North Carolina, Certificates of Participation, 12/12 at 100.00 AAA 1,413,907
Series 2002, 5.250%, 6/01/17 - AMBAC Insured
Hartnett County, North Carolina, Certificates of Participation,
Series 2002:
1,000 5.250%, 12/01/15 - FSA Insured 12/12 at 101.00 AAA 1,067,060
2,025 5.375%, 12/01/16 - FSA Insured 12/12 at 101.00 AAA 2,194,533
715 Lee County, North Carolina, Certificates of Participation, 4/14 at 100.00 AAA 757,528
Public Schools and Community College, Series 2004,
5.250%, 4/01/20 - FSA Insured
1,380 Pasquotank County, North Carolina, Certificates of Participation, 6/14 at 100.00 AAA 1,426,396
Series 2004, 5.000%, 6/01/25 - MBIA Insured
39
Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO) (continued)
Portfolio of INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,070 Pitt County, North Carolina, Certificates of Participation, 4/14 at 100.00 AAA $ 2,123,137
School Facilities Project, Series 2004B, 5.000%, 4/01/29 -
AMBAC Insured
1,270 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 1,412,812
Revenue Bonds, Series 2005C, 5.500%, 7/01/16 -
AMBAC Insured
Raleigh, North Carolina, Certificates of Participation, Downtown
Improvement Project, Series 2004B:
805 5.000%, 6/01/20 6/14 at 100.00 AA+ 834,527
1,310 5.000%, 6/01/21 6/14 at 100.00 AA+ 1,355,378
1,000 Randolph County, North Carolina, Certificates of Participation, 6/14 at 102.00 AAA 1,048,530
Series 2004, 5.000%, 6/01/20 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
16,930 Total Tax Obligation/Limited 17,856,345
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 17.0% (11.4% OF TOTAL INVESTMENTS)
2,035 Charlotte, North Carolina, Airport Revenue Bonds, 7/14 at 100.00 AAA 2,081,764
Series 2004A, 5.000%, 7/01/34 - MBIA Insured
590 Piedmont Triad Airport Authority, North Carolina, Airport 7/15 at 100.00 AAA 616,473
Revenue Bonds, Series 2005A, 5.000%, 7/01/20 -
XLCA Insured
Raleigh Durham Airport Authority, North Carolina, Airport
Revenue Bonds, Series 2001A:
1,000 5.250%, 11/01/15 - FGIC Insured 5/11 at 101.00 Aaa 1,059,670
2,320 5.250%, 11/01/16 - FGIC Insured 5/11 at 101.00 Aaa 2,453,446
2,230 5.250%, 11/01/17 - FGIC Insured 5/11 at 101.00 Aaa 2,360,009
University of North Carolina, Charlotte, Parking System
Revenue Bonds, Series 2002:
270 5.000%, 1/01/20 - MBIA Insured 1/12 at 101.00 Aaa 281,200
500 5.125%, 1/01/27 - MBIA Insured 1/12 at 101.00 Aaa 519,610
------------------------------------------------------------------------------------------------------------------------------------
8,945 Total Transportation 9,372,172
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 9.0% (6.1% OF TOTAL INVESTMENTS) (4)
1,465 Orange Water and Sewerage Authority, North Carolina, 7/11 at 101.00 AA+ (4) 1,560,767
Water and Sewerage System Revenue Bonds, Series 2001,
5.000%, 7/01/20 (Pre-refunded 7/01/11)
3,200 Wake County, North Carolina, General Obligation School Bonds, 2/10 at 101.50 AAA 3,429,568
Series 2000, 5.400%, 2/01/13 (Pre-refunded 2/01/10)
------------------------------------------------------------------------------------------------------------------------------------
4,665 Total U.S. Guaranteed 4,990,335
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 13.9% (9.3% OF TOTAL INVESTMENTS)
500 North Carolina Eastern Municipal Power Agency, Power 1/16 at 100.00 AAA 535,140
System Revenue Bonds, Series 2005, 5.250%, 1/01/20 -
AMBAC Insured
2,500 North Carolina Eastern Municipal Power Agency, Power 7/06 at 100.00 AAA 2,503,350
System Revenue Refunding Bonds, Series 1993B,
5.500%, 1/01/17 - FGIC Insured
1,500 North Carolina Municipal Power Agency 1, Catawba Electric 1/10 at 101.00 A3 1,628,355
Revenue Bonds, Series 1999B, 6.500%, 1/01/20
250 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/15 at 100.00 AAA 261,600
Series 2005RR, 5.000%, 7/01/24 - FGIC Insured
2,600 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A3 2,730,442
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
7,350 Total Utilities 7,658,887
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.9% (9.3% OF TOTAL INVESTMENTS)
2,520 Charlotte, North Carolina, Water and Sewerage System No Opt. Call AAA 2,732,764
Revenue Bonds, Series 2002A, 5.250%, 7/01/13
1,000 Durham County, North Carolina, Enterprise System Revenue 6/13 at 100.00 AAA 1,037,280
Bonds, Series 2002, 5.000%, 6/01/23 - MBIA Insured
Raleigh, North Carolina, Combined Enterprise System Revenue
Bonds, Series 2004:
1,000 5.000%, 3/01/21 3/14 at 100.00 AAA 1,046,660
1,750 5.000%, 3/01/22 3/14 at 100.00 AAA 1,828,138
40
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,000 Wilmington, North Carolina, Water and Sewer Revenue Bonds, 6/15 at 100.00 AAA $ 1,043,820
Series 2005, 5.000%, 6/01/25 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
7,270 Total Water and Sewer 7,688,662
------------------------------------------------------------------------------------------------------------------------------------
$ 78,575 Total Investments (cost $80,141,720) - 148.9% 82,246,583
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.8% 1,004,901
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.7)% (28,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 55,251,484
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) 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.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
N/R Not rated.
See accompanying notes to financial statements.
41
Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII)
Portfolio of
INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.6% (2.4% OF TOTAL INVESTMENTS)
$ 2,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 2,041,100
Asset-Backed Refunding Bonds, Series 2002, 5.500%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.9% (10.7% OF TOTAL INVESTMENTS)
North Carolina Capital Facilities Financing Agency, Revenue
Bonds, Duke University, Series 2001A:
1,750 5.125%, 10/01/26 10/11 at 100.00 AA+ 1,808,695
500 5.125%, 10/01/41 10/11 at 100.00 AA+ 510,835
3,000 North Carolina Capital Facilities Financing Agency, Revenue 10/12 at 100.00 AA+ 3,075,540
Bonds, Duke University, Series 2002A, 5.125%, 7/01/42
500 University of North Carolina System, Pooled Revenue Bonds, 4/14 at 100.00 Aaa 519,835
Series 2004C, 5.000%, 4/01/24 - AMBAC Insured
1,900 University of North Carolina System, Pooled Revenue Refunding 10/12 at 100.00 AAA 1,959,660
Bonds, Series 2002A, 5.000%, 4/01/27 - AMBAC Insured
University of North Carolina Wilmington, Certificates of
Participation, Student Housing Project Revenue Bonds,
Series 2006:
500 5.000%, 6/01/21 - FGIC Insured 6/16 at 100.00 AAA 522,210
500 5.000%, 6/01/37 - FGIC Insured 6/16 at 100.00 AAA 511,660
------------------------------------------------------------------------------------------------------------------------------------
8,650 Total Education and Civic Organizations 8,908,435
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 12.7% (8.6% OF TOTAL INVESTMENTS)
750 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA 760,965
Healthcare System Revenue Bonds, Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31
2,000 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/07 at 102.00 AA 2,045,380
Healthcare System Revenue Bonds, DBA Carolina Healthcare
System, Series 1997A, 5.125%, 1/15/22
200 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA 202,012
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2005A, 5.000%, 1/15/45
1,000 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA 1,033,080
Revenue Bonds, Mission St. Joseph's Health System,
Series 2001, 5.250%, 10/01/31
2,000 North Carolina Medical Care Commission, Healthcare 11/13 at 100.00 AA- 2,074,140
Facilities Revenue Bonds, Novant Health Obligated Group,
Series 2003A, 5.000%, 11/01/18
500 North Carolina Medical Care Commission, Revenue Bonds, 1/15 at 100.00 AAA 512,960
Blue Ridge Healthcare System, Series 2005,
5.000%, 1/01/33 - FGIC Insured
500 North Carolina Medical Care Commission, Revenue Bonds, 11/14 at 100.00 AA 513,810
Northeast Medical Center, Series 2004, 5.000%, 11/01/24
------------------------------------------------------------------------------------------------------------------------------------
6,950 Total Health Care 7,142,347
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.9% (1.2% OF TOTAL INVESTMENTS)
1,000 Mecklenburg County, North Carolina, FNMA Multifamily 7/13 at 105.00 AAA 1,032,230
Housing Revenue Bonds, Little Rock Apartments, Series 2003,
5.150%, 1/01/22 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.2% (1.4% OF TOTAL INVESTMENTS)
1,135 North Carolina Housing Finance Agency, Home Ownership 7/09 at 100.00 AA 1,175,633
Revenue Bonds, 1998 Trust Agreement, Series 5A,
5.625%, 7/01/30 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.5% (1.0% OF TOTAL INVESTMENTS)
800 North Carolina Capital Facilities Financing Agency, Exempt 8/14 at 100.00 BBB 797,320
Facilities Revenue Bonds, Waste Management Inc.,
Series 2001, 3.750%, 8/01/14 (Mandatory put 8/01/07)
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
42
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 2.5% (1.7% OF TOTAL INVESTMENTS)
$ 1,400 Haywood County Industrial Facilities and Pollution Control 6/06 at 102.00 BBB $ 1,418,522
Financing Authority, North Carolina, Environmental
Improvement Revenue Bonds, Champion International
Corporation, Series 1995A, 5.750%, 12/01/25 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 18.4% (12.4% OF TOTAL INVESTMENTS)
3,900 Cary, North Carolina, General Obligation Water and Sewer 3/11 at 102.00 AAA 4,087,395
Bonds, Series 2001, 5.000%, 3/01/20
Lincoln County, North Carolina, General Obligation Bonds,
Series 2002A:
850 5.000%, 6/01/19 - FGIC Insured 6/12 at 101.00 AAA 893,664
900 5.000%, 6/01/20 - FGIC Insured 6/12 at 101.00 AAA 944,892
1,050 5.000%, 6/01/21 - FGIC Insured 6/12 at 101.00 AAA 1,094,090
500 North Carolina, General Obligation Bonds, Series 2004A, 3/14 at 100.00 AAA 524,340
5.000%, 3/01/22
2,000 Puerto Rico, General Obligation and Public Improvement No Opt. Call AAA 2,361,720
Refunding Bonds, Series 1997, 6.500%, 7/01/15 -
MBIA Insured
400 Raleigh, North Carolina, General Obligation Bonds, Series 2002, 6/12 at 100.00 AAA 418,068
5.000%, 6/01/21
------------------------------------------------------------------------------------------------------------------------------------
9,600 Total Tax Obligation/General 10,324,169
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 29.4% (19.8% OF TOTAL INVESTMENTS)
1,550 Cary, North Carolina, Certificates of Participation, Public 12/12 at 100.00 AA+ 1,625,470
Improvement Projects, Series 2002A, 5.000%, 12/01/17
1,800 Catawba County, North Carolina, Certificates of Participation, 6/14 at 100.00 Aaa 1,910,340
Series 2004, 5.250%, 6/01/22 - MBIA Insured
1,500 Centennial Authority, North Carolina, Hotel Tax Revenue Bonds, 9/07 at 102.00 AAA 1,550,790
Arena Project, Series 1997, 5.125%, 9/01/19 - FSA Insured
2,750 Charlotte, North Carolina, Certificates of Participation, 6/13 at 100.00 AA+ 2,795,458
Governmental Facilities Projects, Series 2003G,
5.000%, 6/01/33
3,000 Dare County, North Carolina, Certificates of Participation, 12/12 at 100.00 AAA 3,090,540
Series 2002, 5.000%, 6/01/23 - AMBAC Insured
500 Lee County, North Carolina, Certificates of Participation, 4/14 at 100.00 AAA 529,740
Public Schools and Community College, Series 2004,
5.250%, 4/01/20 - FSA Insured
1,000 North Carolina, Certificates of Participation, Repair and 6/14 at 100.00 AA+ 1,036,680
Renovation Project, Series 2004B, 5.000%, 6/01/20
2,000 Rutherford County, North Carolina, Certificates of Participation, 9/12 at 101.00 AAA 2,078,700
Series 2002, 5.000%, 9/01/21 - AMBAC Insured
1,785 Union County, North Carolina, Certificates of Participation, 6/13 at 101.00 AAA 1,870,341
Series 2003, 5.000%, 6/01/20 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
15,885 Total Tax Obligation/Limited 16,488,059
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 9.1% (6.1% OF TOTAL INVESTMENTS)
Raleigh Durham Airport Authority, North Carolina, Airport
Revenue Bonds, Series 2001A:
1,780 5.250%, 11/01/15 - FGIC Insured 5/11 at 101.00 Aaa 1,886,213
3,100 5.000%, 11/01/20 - FGIC Insured 5/11 at 101.00 Aaa 3,233,579
------------------------------------------------------------------------------------------------------------------------------------
4,880 Total Transportation 5,119,792
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 10.9% (7.3% OF TOTAL INVESTMENTS) (4)
500 Broad River Water Authority, North Carolina, Water System 6/10 at 101.00 Aaa 535,040
Revenue Bonds, Series 2000, 5.375%, 6/01/26 (Pre-refunded
6/01/10) - MBIA Insured
50 Cumberland County, North Carolina, Hospital Facility Revenue 10/09 at 101.00 A- (4) 52,761
Bonds, Cumberland County Hospital System Inc., Cape Fear
Valley Health System, Series 1999, 5.250%, 10/01/29
(Pre-refunded 10/01/09)
Forsyth County, North Carolina, Certificates of Participation,
Public Facilities and Equipment Project, Series 2002:
1,325 5.125%, 1/01/16 (Pre-refunded 1/01/13) 1/13 at 101.00 AA+ (4) 1,430,682
770 5.250%, 1/01/19 (Pre-refunded 1/01/13) 1/13 at 101.00 AA+ (4) 836,959
1,235 5.250%, 1/01/23 (Pre-refunded 1/01/13) 1/13 at 101.00 AA+ (4) 1,342,396
43
Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NII) (continued)
Portfolio of INVESTMENTS May 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 800 Mecklenburg County, North Carolina, General Obligation Public 4/10 at 101.50 AAA $ 847,976
Improvement Bonds, Series 2000D, 5.000%, 4/01/13
(Pre-refunded 4/01/10)
1,000 North Carolina, General Obligation Bonds, Series 2000A, 9/10 at 102.00 AAA 1,071,570
5.100%, 9/01/16 (Pre-refunded 9/01/10)
------------------------------------------------------------------------------------------------------------------------------------
5,680 Total U.S. Guaranteed 6,117,384
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 15.8% (10.6% OF TOTAL INVESTMENTS)
500 North Carolina Eastern Municipal Power Agency, Power 1/16 at 100.00 AAA 535,140
System Revenue Bonds, Series 2005, 5.250%, 1/01/20 -
AMBAC Insured
4,000 North Carolina Eastern Municipal Power Agency, Power System 7/06 at 100.00 AAA 4,005,360
Revenue Refunding Bonds, Series 1993B, 5.500%, 1/01/17 -
FGIC Insured
2,665 North Carolina Municipal Power Agency 1, Catawba Electric 1/13 at 100.00 AAA 2,849,685
Revenue Bonds, Series 2003A, 5.250%, 1/01/15 -
AMBAC Insured
1,400 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A3 1,470,238
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
8,565 Total Utilities 8,860,423
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 25.0% (16.8% OF TOTAL INVESTMENTS)
Charlotte, North Carolina, Water and Sewerage System Revenue
Bonds, Series 2001:
750 5.125%, 6/01/26 6/11 at 101.00 AAA 782,377
1,780 5.125%, 6/01/26 - FGIC Insured 6/11 at 101.00 AAA 1,856,843
Durham County, North Carolina, Enterprise System Revenue
Bonds, Series 2002:
680 5.000%, 6/01/16 - MBIA Insured 6/13 at 100.00 AAA 719,841
710 5.000%, 6/01/17 - MBIA Insured 6/13 at 100.00 AAA 746,033
300 5.000%, 6/01/18 - MBIA Insured 6/13 at 100.00 AAA 314,835
2,500 Kannapolis, North Carolina, Water and Sewerage System 2/12 at 101.00 AAA 2,597,325
Revenue Bonds, Series 2001B, 5.250%, 2/01/26 - FSA Insured
(Alternative Minimum Tax)
500 Onslow County, North Carolina, Combined Enterprise System 6/14 at 100.00 AAA 518,510
Revenue Bonds, Series 2004B, 5.000%, 6/01/23 -
XLCA Insured
1,000 Orange Water and Sewerage Authority, North Carolina, Water 7/11 at 101.00 AA+ 1,026,050
and Sewerage System Revenue Bonds, Series 2001,
5.000%, 7/01/26
Winston-Salem, North Carolina, Water and Sewerage System
Revenue Bonds, Series 2002A:
500 5.000%, 6/01/17 6/12 at 100.00 AAA 524,400
4,715 5.000%, 6/01/19 6/12 at 100.00 AAA 4,932,547
------------------------------------------------------------------------------------------------------------------------------------
13,435 Total Water and Sewer 14,018,761
------------------------------------------------------------------------------------------------------------------------------------
$ 79,980 Total Investments (cost $81,833,454) - 148.9% 83,444,175
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.1% 605,236
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.0)% (28,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 56,049,411
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) 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.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
See accompanying notes to financial statements.
44
Statement of
ASSETS AND LIABILITIES May 31, 2006
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $79,126,443, $41,919,117
and $95,071,247, respectively) $82,061,452 $43,202,273 $96,677,122
Receivables:
Interest 1,426,955 677,262 1,614,507
Investments sold -- 271,075 --
Unrealized appreciation on forward swaps -- -- 197,717
Other assets 2,835 4,379 4,565
------------------------------------------------------------------------------------------------------------------------------------
Total assets 83,491,242 44,154,989 98,493,911
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 295,015 214,181 268,635
Payable for investments purchased -- -- 271,075
Accrued expenses:
Management fees 45,020 12,597 26,439
Other 20,172 13,220 21,325
Preferred share dividends payable 12,792 2,794 5,007
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 372,999 242,792 592,481
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 27,800,000 15,000,000 33,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $55,318,243 $28,912,197 $64,901,430
====================================================================================================================================
Common shares outstanding 3,802,996 1,965,145 4,553,660
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.55 $ 14.71 $ 14.25
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 38,030 $ 19,651 $ 45,537
Paid-in surplus 52,337,145 27,835,415 64,257,862
Undistributed (Over-distribution of) net investment income 74,721 108,622 (232,770)
Accumulated net realized gain (loss) from investments
and derivative transactions (66,662) (334,647) (972,791)
Net unrealized appreciation (depreciation) of investments
and derivative transactions 2,935,009 1,283,156 1,803,592
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $55,318,243 $28,912,197 $64,901,430
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
45
Statement of
ASSETS AND LIABILITIES May 31, 2006 (continued)
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $130,910,602, $48,373,867,
$80,141,720 and $81,833,454, respectively) $134,087,089 $49,807,721 $82,246,583 $83,444,175
Receivables:
Interest 2,498,855 918,850 1,378,766 1,419,907
Investments sold 5,671,808 -- 524,698 524,698
Unrealized appreciation on forward swaps -- -- -- --
Other assets 8,466 7,694 6,173 4,512
------------------------------------------------------------------------------------------------------------------------------------
Total assets 142,266,218 50,734,265 84,156,220 85,393,292
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 1,231,826 164,884 326,451 758,689
Payable for investments purchased 3,068,584 -- 525,022 525,022
Accrued expenses:
Management fees 74,528 16,659 23,916 22,710
Other 37,466 14,808 25,252 22,855
Preferred share dividends payable 20,779 1,224 4,095 14,605
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,433,183 197,575 904,736 1,343,881
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 46,800,000 17,000,000 28,000,000 28,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 91,033,035 $33,536,690 $55,251,484 $56,049,411
====================================================================================================================================
Common shares outstanding 6,348,475 2,255,999 3,745,682 3,929,765
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.34 $ 14.87 $ 14.75 $ 14.26
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 63,485 $ 22,560 $ 37,457 $ 39,298
Paid-in surplus 87,779,665 31,979,890 53,135,174 55,451,782
Undistributed (Over-distribution of) net investment income 34,949 113,085 (87,058) (137,873)
Accumulated net realized gain (loss) from investments
and derivative transactions (21,551) (12,699) 61,048 (914,517)
Net unrealized appreciation (depreciation) of investments
and derivative transactions 3,176,487 1,433,854 2,104,863 1,610,721
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 91,033,035 $33,536,690 $55,251,484 $56,049,411
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
46
Statement of
OPERATIONS Year Ended May 31, 2006
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 4,007,893 $2,095,358 $ 4,513,185
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 537,920 283,743 631,240
Preferred shares - auction fees 69,579 37,543 82,626
Preferred shares - dividend disbursing agent fees 10,000 10,000 10,000
Shareholders' servicing agent fees and expenses 6,268 489 905
Custodian's fees and expenses 23,843 14,440 32,955
Trustees' fees and expenses 1,824 952 2,111
Professional fees 12,279 10,783 13,086
Shareholders' reports - printing and mailing expenses 15,676 9,151 15,185
Stock exchange listing fees 243 167 387
Investor relations expense 11,270 7,688 12,298
Other expenses 12,520 10,813 13,303
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 701,422 385,769 814,096
Custodian fee credit (13,471) (2,722) (6,084)
Expense reimbursement -- (133,098) (315,844)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 687,951 249,949 492,168
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 3,319,942 1,845,409 4,021,017
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from investments 463,246 15,105 (56,044)
Net realized gain (loss) from forward swaps -- (19,734) (13,236)
Change in net unrealized appreciation (depreciation) of investments (2,358,498) (994,754) (2,417,797)
Change in net unrealized appreciation (depreciation) of forward swaps -- 67,410 436,491
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (1,895,252) (931,973) (2,050,586)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (645,442) (368,644) (859,541)
From accumulated net realized gains (29,168) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Preferred shareholders (674,610) (368,644) (859,541)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $ 750,080 $ 544,792 $ 1,110,890
====================================================================================================================================
See accompanying notes to financial statements.
47
Statement of
OPERATIONS Year Ended May 31, 2006 (continued)
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 6,753,731 $ 2,418,420 $ 3,884,162 $ 3,885,435
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 894,501 327,085 541,184 543,710
Preferred shares - auction fees 117,134 42,549 70,107 70,080
Preferred shares - dividend disbursing agent fees 10,000 10,000 10,000 10,000
Shareholders' servicing agent fees and expenses 12,475 462 928 898
Custodian's fees and expenses 50,928 19,065 27,278 24,518
Trustees' fees and expenses 2,975 1,126 1,948 1,772
Professional fees 14,013 10,957 12,065 12,440
Shareholders' reports - printing and mailing expenses 25,317 10,405 14,586 16,460
Stock exchange listing fees 10,197 192 318 334
Investor relations expense 17,293 7,773 11,111 11,322
Other expenses 15,166 10,775 12,482 12,104
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,169,999 440,389 702,007 703,638
Custodian fee credit (10,799) (7,154) (9,681) (5,216)
Expense reimbursement -- (145,085) (253,859) (272,048)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,159,200 288,150 438,467 426,374
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 5,594,531 2,130,270 3,445,695 3,459,061
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from investments 406,707 95,322 144,400 11,352
Net realized gain (loss) from forward swaps -- -- (83,226) (165,393)
Change in net unrealized appreciation (depreciation) of investments (4,033,853) (1,195,026) (2,445,879) (2,071,239)
Change in net unrealized appreciation (depreciation) of forward swaps -- -- 172,011 258,425
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (3,627,146) (1,099,704) (2,212,694) (1,966,855)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (1,024,654) (384,276) (652,732) (695,922)
From accumulated net realized gains (136,337) -- (46,077) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Preferred shareholders (1,160,991) (384,276) (698,809) (695,922)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $ 806,394 $ 646,290 $ 534,192 $ 796,284
====================================================================================================================================
See accompanying notes to financial statements.
48
Statement of
CHANGES IN NET ASSETS
GEORGIA GEORGIA GEORGIA
PREMIUM INCOME (NPG) DIVIDEND ADVANTAGE (NZX) DIVIDEND ADVANTAGE 2 (NKG)
---------------------------- ----------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
5/31/06 5/31/05 5/31/06 5/31/05 5/31/06 5/31/05
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,319,942 $ 3,487,265 $ 1,845,409 $ 1,888,117 $ 4,021,017 $ 3,981,875
Net realized gain (loss) from
investments 463,246 334,583 15,105 55,245 (56,044) 63,329
Net realized gain (loss) from
forward swaps -- -- (19,734) (333,601) (13,236) (811,165)
Change in net unrealized
appreciation (depreciation)
of investments (2,358,498) 2,888,311 (994,754) 2,011,284 (2,417,797) 5,230,264
Change in net unrealized appreciation
(depreciation) of forward
swaps -- -- 67,410 (67,410) 436,491 (238,774)
Distributions to
Preferred Shareholders:
From net investment income (645,442) (347,395) (368,644) (200,088) (859,541) (496,382)
From accumulated net realized gains (29,168) -- -- (976) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 750,080 6,362,764 544,792 3,352,571 1,110,890 7,729,147
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (2,967,320) (3,420,792) (1,699,327) (1,717,243) (3,183,008) (3,565,514)
From accumulated net realized gains (251,264) -- -- (16,271) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (3,218,584) (3,420,792) (1,699,327) (1,733,514) (3,183,008) (3,565,514)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common Shares:
Offering costs adjustments -- -- -- -- -- --
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 99,552 138,628 59,258 26,856 -- --
Preferred shares offering
costs adjustments -- -- -- 13,620 -- 100
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 99,552 138,628 59,258 40,476 -- 100
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common shares (2,368,952) 3,080,600 (1,095,277) 1,659,533 (2,072,118) 4,163,733
Net assets applicable to Common
shares at the beginning of year 57,687,195 54,606,595 30,007,474 28,347,941 66,973,548 62,809,815
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $55,318,243 $57,687,195 $28,912,197 $30,007,474 $64,901,430 $66,973,548
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ 74,721 $ 371,927 $ 108,622 $ 331,184 $ (232,770) $ (211,238)
====================================================================================================================================
See accompanying notes to financial statements.
49
Statement of
CHANGES IN NET ASSETS (continued)
NORTH CAROLINA NORTH CAROLINA
PREMIUM INCOME (NNC) DIVIDEND ADVANTAGE (NRB)
----------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
5/31/06 5/31/05 5/31/06 5/31/05
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 5,594,531 $ 5,780,153 $ 2,130,270 $ 2,179,263
Net realized gain (loss) from
investments 406,707 1,595,461 95,322 117,198
Net realized gain (loss) from
forward swaps -- -- -- (105,324)
Change in net unrealized appreciation
(depreciation) of investments (4,033,853) 2,755,786 (1,195,026) 1,727,315
Change in net unrealized appreciation
(depreciation) of forward
swaps -- -- -- --
Distributions to Preferred Shareholders:
From net investment income (1,024,654) (680,330) (384,276) (201,792)
From accumulated net realized gains (136,337) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 806,394 9,451,070 646,290 3,716,660
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (4,996,624) (5,600,573) (1,984,988) (2,066,665)
From accumulated net realized gains (1,010,708) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (6,007,332) (5,600,573) (1,984,988) (2,066,665)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common Shares:
Offering costs adjustments -- -- -- --
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 226,109 216,479 55,870 59,033
Preferred shares offering costs adjustments -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 226,109 216,479 55,870 59,033
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (4,974,829) 4,066,976 (1,282,828) 1,709,028
Net assets applicable to Common
shares at the beginning of year 96,007,864 91,940,888 34,819,518 33,110,490
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $91,033,035 $96,007,864 $33,536,690 $34,819,518
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ 34,949 $ 461,694 $ 113,085 $ 352,079
====================================================================================================================================
See accompanying notes to financial statements.
50
NORTH CAROLINA NORTH CAROLINA
DIVIDEND ADVANTAGE 2 (NNO) DIVIDEND ADVANTAGE 3 (NII)
----------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
5/31/06 5/31/05 5/31/06 5/31/05
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,445,695 $ 3,499,776 $ 3,459,061 $ 3,483,952
Net realized gain (loss) from
investments 144,400 748,290 11,352 39,251
Net realized gain (loss) from
forward swaps (83,226) 20,984 (165,393) (444,372)
Change in net unrealized appreciation
(depreciation) of investments (2,445,879) 2,568,886 (2,071,239) 4,217,563
Change in net unrealized appreciation
(depreciation) of forward
swaps 172,011 (172,011) 258,425 (258,425)
Distributions to Preferred Shareholders:
From net investment income (652,732) (384,082) (695,922) (419,248)
From accumulated net realized gains (46,077) (18,106) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 534,192 6,263,737 796,284 6,618,721
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (3,076,672) (3,229,318) (2,840,173) (3,119,389)
From accumulated net realized gains (463,738) (260,889) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable
to Common shares from distributions
to Common shareholders (3,540,410) (3,490,207) (2,840,173) (3,119,389)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common Shares:
Offering costs adjustments 6,568 -- -- --
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 89,225 70,466 58,742 53,721
Preferred shares offering costs adjustments 6,694 -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 102,487 70,466 58,742 53,721
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (2,903,731) 2,843,996 (1,985,147) 3,553,053
Net assets applicable to Common
shares at the beginning of year 58,155,215 55,311,219 58,034,558 54,481,505
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $55,251,484 $58,155,215 $56,049,411 $58,034,558
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ (87,058) $ 182,568 $ (137,873) $ (60,839)
====================================================================================================================================
See accompanying notes to financial statements.
51
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The funds (the "Funds") covered in this report and their corresponding Common
share stock exchange symbols are Nuveen Georgia Premium Income Municipal Fund
(NPG), Nuveen Georgia Dividend Advantage Municipal Fund (NZX), Nuveen Georgia
Dividend Advantage Municipal Fund 2 (NKG), Nuveen North Carolina Premium Income
Municipal Fund (NNC), Nuveen North Carolina Dividend Advantage Municipal Fund
(NRB), Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO) and
Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII). Common shares
of Georgia Premium Income (NPG), Georgia Dividend Advantage (NZX), Georgia
Dividend Advantage 2 (NKG), North Carolina Dividend Advantage (NRB), North
Carolina Dividend Advantage 2 (NNO) and North Carolina Dividend Advantage 3
(NII) are traded on the American Stock Exchange while Common shares of North
Carolina Premium Income (NNC) are traded on the New York Stock Exchange. The
Funds are registered under the Investment Company Act of 1940, as amended, as
closed-end management investment companies.
Each Fund seeks to provide current income exempt from both regular federal and
designated state income taxes by investing primarily in a diversified portfolio
of municipal obligations issued by state and local government authorities within
a single state or certain U.S. territories.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with U.S.
generally accepted accounting principles.
Investment Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When market price
quotes are not readily available (which is usually the case for municipal
securities), the pricing service establishes fair value based on yields or
prices of municipal bonds of comparable quality, type of issue, coupon, maturity
and rating, indications of value from securities dealers, evaluations of
anticipated cash flows or collateral and general market conditions. Prices of
forward swap contracts are also provided by an independent pricing service
approved by each Fund's Board of Trustees. If the pricing service is unable to
supply a price for a municipal bond or forward swap contract, each Fund may use
a market price or fair market value quote provided by a major broker/dealer in
such investments. If it is determined that the market price or fair market value
for an investment is unavailable or inappropriate, the Board of Trustees of the
Funds, or its designee, may establish a fair value for the investment. Temporary
investments in securities that have variable rate and demand features qualifying
them as 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 transactions are determined on the specific identification method.
Investments purchased on a when-issued or delayed delivery basis may have
extended settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have 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 May 31, 2006, there were
no such outstanding purchase commitments in any of the Funds.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all net investment income and net capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. Furthermore,
each Fund intends to satisfy conditions which will enable interest from
municipal securities, which is exempt from regular federal and designated state
income taxes, to retain such tax-exempt status when distributed to shareholders
of the Funds. All monthly tax-exempt income dividends paid during the fiscal
year ended May 31, 2006, have been designated Exempt Interest Dividends. Net
realized capital gains and ordinary income distributions paid by the Funds are
subject to federal taxation.
52
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared monthly. Net
realized capital gains and/or market discount from investment transactions, if
any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from U.S.
generally accepted accounting principles.
Preferred Shares
The Funds have issued and outstanding Preferred shares, $25,000 stated value per
share, as a means of effecting financial leverage. Each Fund's Preferred shares
are issued in one Series. The dividend rate paid by the Funds on each Series is
determined every seven days, pursuant to a dutch auction process overseen by the
auction agent, and is payable at the end of each rate period. The number of
Preferred shares outstanding for each Fund is as follows:
NORTH NORTH NORTH NORTH
GEORGIA GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPG) (NZX) (NKG) (NNC) (NRB) (NNO) (NII)
----------------------------------------------------------------------------------------------------------------
Number of shares:
Series M -- 600 -- -- -- -- --
Series T -- -- -- -- 680 -- --
Series W -- -- -- -- -- -- 1,120
Series TH 1,112 -- -- 1,872 -- -- --
Series F -- -- 1,320 -- -- 1,120 --
================================================================================================================
Forward Swap Transactions
The Funds are authorized to invest in certain derivative financial instruments.
The Funds' use of forward interest rate swap transactions is intended to
mitigate the negative impact that an increase in long-term interest rates could
have on Common share net asset value. Forward interest rate swap transactions
involve each Fund's agreement with the counterparty to pay, in the future, a
fixed rate payment in exchange for the counterparty paying the Fund a variable
rate payment, the accruals for which would begin at a specified date in the
future (the "effective date"). The amount of the payment obligation is based on
the notional amount of the forward swap contract and would increase or decrease
in value based primarily on the extent to which long-term interest rates for
bonds having a maturity of the swaps' termination date were to increase or
decrease. The Funds may close out a contract prior to the effective date, at
which point a realized gain or loss would be recognized. When a forward swap is
terminated, it ordinarily does not involve the delivery of securities or other
underlying assets or principal, but rather is settled in cash on a net basis.
Each Fund intends, but is not obligated to, terminate its forward swaps before
the effective date. Accordingly, the risk of loss with respect to the swap
counterparty on such transactions is limited to the credit risk associated with
a counterparty failing to honor its commitment to pay any realized gain to the
Fund upon termination. To minimize such credit risk, all counterparties are
required to pledge collateral daily (based on the daily valuation of each swap)
on behalf of each Fund with a value approximately equal to the amount of any
unrealized gain above a pre-determined threshold. Reciprocally, when any of the
Funds have an unrealized loss on a swap contract, the Funds have instructed the
custodian to pledge assets of the Funds as collateral with a value approximately
equal to the amount of the unrealized loss above a pre-determined threshold.
Collateral pledges are monitored and subsequently adjusted if and when the swap
valuations fluctuate, either up or down, by at least the pre-determined
threshold amount.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Indemnifications
Under the Funds' organizational documents, their Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Funds. In addition, in the normal course of business, the Funds
enter into contracts that provide general indemnifications to other parties. The
Funds' maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Funds that have not yet
occurred. However, the Funds have not had prior claims or losses pursuant to
these contracts and expect the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
53
Notes to
FINANCIAL STATEMENTS (continued)
2. FUND SHARES
Transactions in Common shares were as follows:
GEORGIA GEORGIA DIVIDEND GEORGIA DIVIDEND
PREMIUM INCOME (NPG) ADVANTAGE (NZX) ADVANTAGE 2 (NKG)
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
5/31/06 5/31/05 5/31/06 5/31/05 5/31/06 5/31/05
-----------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions 6,229 8,727 3,662 1,724 -- --
=======================================================================================================================
NORTH CAROLINA NORTH CAROLINA
PREMIUM INCOME (NNC) DIVIDEND ADVANTAGE (NRB)
----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
5/31/06 5/31/05 5/31/06 5/31/05
-----------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions 14,230 13,171 3,276 3,678
=======================================================================================================================
NORTH CAROLINA NORTH CAROLINA
DIVIDEND DIVIDEND
ADVANTAGE 2 (NNO) ADVANTAGE 3 (NII)
----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
5/31/06 5/31/05 5/31/06 5/31/05
-----------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions 5,637 4,454 3,940 3,600
=======================================================================================================================
54
3. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the fiscal year ended May 31, 2006, were as
follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Purchases $12,799,242 $2,138,490 $8,053,259
Sales and maturities 12,406,088 1,985,340 6,967,048
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Purchases $21,893,012 $2,202,572 $7,961,580 $2,353,966
Sales and maturities 24,326,302 1,897,817 7,139,994 1,564,364
=========================================================================================================
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, timing differences
in recognizing taxable market discount and timing differences in recognizing
certain gains and losses on investment transactions.
At May 31, 2006, the cost of investments was as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Cost of investments $79,118,925 $42,000,756 $95,253,869
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Cost of investments $130,902,380 $48,377,305 $80,135,885 $81,887,920
=========================================================================================================
55
Notes to
FINANCIAL STATEMENTS (continued)
Gross unrealized appreciation and gross unrealized depreciation of investments
at May 31, 2006, were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $3,116,220 $1,405,661 $2,039,063
Depreciation (173,693) (204,144) (615,810)
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments $2,942,527 $1,201,517 $1,423,253
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $3,483,680 $1,472,629 $2,205,545 $1,697,731
Depreciation (298,971) (42,213) (94,847) (141,476)
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments $3,184,709 $1,430,416 $2,110,698 $1,556,255
=========================================================================================================
The tax components of undistributed net investment income and net realized gains
at May 31, 2006, were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $317,681 $247,991 $26,687
Undistributed net ordinary income ** -- -- --
Undistributed net long-term capital gains 215 -- --
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $434,758 $270,616 $154,672 $104,660
Undistributed net ordinary income ** -- -- -- --
Undistributed net long-term capital gains -- -- 61,048 --
=========================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on May 1, 2006, paid on June 1, 2006.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
56
The tax character of distributions paid during the tax years ended May 31, 2006
and May 31, 2005, was designated for purposes of the dividends paid deduction as
follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
2006 (NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $3,641,791 $2,072,610 $4,067,314
Distributions from net ordinary income ** 3,242 -- --
Distributions from net long-term capital gains *** 280,565 -- --
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2006 (NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $6,057,580 $2,388,973 $3,738,500 $3,554,484
Distributions from net ordinary income ** 24,591 -- 123,149 --
Distributions from net long-term capital gains *** 1,146,601 -- 400,823 --
=========================================================================================================
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
2005 (NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $3,753,153 $1,919,401 $4,087,495
Distributions from net ordinary income ** 19,521 -- --
Distributions from net long-term capital gains -- 17,247 --
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2005 (NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $6,287,760 $2,264,563 $3,616,451 $3,544,530
Distributions from net ordinary income ** -- -- -- --
Distributions from net long-term capital gains -- -- 278,995 --
=========================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
*** The Funds 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 Funds related to net capital gain to zero for
the tax year ended May 31, 2006.
At May 31, 2006, the following Funds had unused capital loss carryforwards
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, the carryforwards will expire as follows:
NORTH NORTH
GEORGIA GEORGIA CAROLINA CAROLINA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND
ADVANTAGE ADVANTAGE 2 ADVANTAGE ADVANTAGE 3
(NZX) (NKG) (NRB) (NII)
---------------------------------------------------------------------------------------------------------
Expiration year:
2012 $ -- $138,103 $ -- $339,128
2013 52,813 177,608 7,645 36,008
2014 113,539 287,093 -- 474,910
---------------------------------------------------------------------------------------------------------
Total $166,352 $602,804 $7,645 $850,046
=========================================================================================================
57
Notes to
FINANCIAL STATEMENTS (continued)
The following Funds elected to defer net realized losses from investments
incurred from November 1, 2005 through May 31, 2006 ("post-October losses") in
accordance with Federal income tax regulations. The post-October losses were
treated as having arisen on the first day of the following tax year:
NORTH NORTH
GEORGIA GEORGIA GEORGIA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND PREMIUM DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 INCOME ADVANTAGE 3
(NPG) (NZX) (NKG) (NNC) (NII)
---------------------------------------------------------------------------------------------------------
$66,877 $86,710 $186,814 $21,552 $10,007
=========================================================================================================
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Each fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by Nuveen
Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen
Investments, Inc. ("Nuveen"), and a specific fund-level component, based only on
the amount of assets within each individual fund. This pricing structure enables
Nuveen fund shareholders to benefit from growth in the assets within each
individual fund as well as from growth in the amount of complex-wide assets
managed by the Adviser.
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets (including net assets attributable to Preferred shares)
of each Fund as follows:
AVERAGE DAILY NET ASSETS GEORGIA PREMIUM INCOME (NPG)
(INCLUDING NET ASSETS NORTH CAROLINA PREMIUM INCOME (NNC)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For the next $3 billion .3875
For net assets over $5 billion .3750
================================================================================
GEORGIA DIVIDEND ADVANTAGE (NZX)
GEORGIA DIVIDEND ADVANTAGE 2 (NKG)
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
AVERAGE DAILY NET ASSETS NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
(INCLUDING NET ASSETS NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For net assets over $2 billion .3750
================================================================================
58
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 May 31, 2006, the complex-level fee rate was .1886%.
COMPLEX-LEVEL ASSETS(1) COMPLEX-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion (2) .1400
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds
in the U.S.
(2) With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level
fee rate for such complex-wide Managed Assets shall be .1400% until such
time as a different rate or rates is determined.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of their Trustees who are affiliated with the
Adviser or to their Officers, all of whom receive remuneration for their
services to the Funds 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.
59
Notes to
FINANCIAL STATEMENTS (continued)
For the first ten years of Georgia Dividend Advantage's (NZX) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Georgia Dividend Advantage (NZX) for any
portion of its fees and expenses beyond September 30, 2011.
For the first eight years of Georgia Dividend Advantage 2's (NKG) and North
Carolina Dividend Advantage 3's (NII) operations, the Adviser has agreed to
reimburse the Funds, as a percentage of average daily net assets (including net
assets attributable to Preferred shares), for fees and expenses in the amounts
and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2002* .32% 2007 .32%
2003 .32 2008 .24
2004 .32 2009 .16
2005 .32 2010 .08
2006 .32
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Georgia Dividend Advantage 2 (NKG) and
North Carolina Dividend Advantage 3 (NII) for any portion of its fees and
expenses beyond September 30, 2010.
For the first ten years of North Carolina Dividend Advantage's (NRB) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
JANUARY 31, JANUARY 31,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse North Carolina Dividend Advantage (NRB)
for any portion of its fees and expenses beyond January 31, 2011.
60
For the first ten years of North Carolina Dividend Advantage 2's (NNO)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets (including net assets attributable to Preferred
shares), for fees and expenses in the amounts and for the time periods set forth
below:
YEAR ENDING YEAR ENDING
NOVEMBER 30, NOVEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse North Carolina Dividend Advantage 2
(NNO) for any portion of its fees and expenses beyond November 30, 2011.
6. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on July 3, 2006, to shareholders of record on
June 15, 2006, as follows:
NORTH NORTH NORTH NORTH
GEORGIA GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPG) (NZX) (NKG) (NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Dividend per share $.0585 $.0660 $.0515 $.0575 $.0665 $.0615 $.0545
=========================================================================================================
61
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- ---------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
=================================================================================================================================
GEORGIA PREMIUM
INCOME (NPG)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 $15.19 $ .87 $ (.48) $(.17) $(.01) $ .21 $(.78) $(.07) $(.85)
2005 14.42 .92 .84 (.09) -- 1.67 (.90) -- (.90)
2004 15.36 .97 (.96) (.05) -- (.04) (.90) -- (.90)
2003 14.31 .96 1.02 (.07) -- 1.91 (.86) -- (.86)
2002 14.15 1.02 .11 (.12) -- 1.01 (.85) -- (.85)
GEORGIA DIVIDEND
ADVANTAGE (NZX)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 15.30 .94 (.47) (.19) -- .28 (.87) -- (.87)
2005 14.47 .96 .85 (.10) -- 1.71 (.88) (.01) (.89)
2004 15.62 .97 (1.18) (.06) -- (.27) (.87) (.01) (.88)
2003 14.00 .96 1.65 (.06) (.02) 2.53 (.81) (.13) (.94)
2002(a) 14.33 .58 (.19) (.06) -- .33 (.47) -- (.47)
GEORGIA DIVIDEND
ADVANTAGE 2 (NKG)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 14.71 .88 (.45) (.19) -- .24 (.70) -- (.70)
2005 13.79 .87 .94 (.11) -- 1.70 (.78) -- (.78)
2004 15.01 .88 (1.23) (.05) -- (.40) (.80) (.02) (.82)
2003(b) 14.33 .47 .92 (.04) -- 1.35 (.47) -- (.47)
=================================================================================================================================
Total Returns
---------------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
=========================================================================================
GEORGIA PREMIUM
INCOME (NPG)
-----------------------------------------------------------------------------------------
Year Ended 5/31:
2006 $ -- $14.55 $15.16 (4.12)% 1.42%
2005 -- 15.19 16.70 15.46 11.88
2004 -- 14.42 15.30 (4.56) (.23)
2003 -- 15.36 16.95 12.92 13.78
2002 -- 14.31 15.83 8.98 7.32
GEORGIA DIVIDEND
ADVANTAGE (NZX)
-----------------------------------------------------------------------------------------
Year Ended 5/31:
2006 -- 14.71 15.50 2.91 1.87
2005 .01 15.30 15.89 20.74 12.10
2004 -- 14.47 13.95 (5.15) (1.73)
2003 .03 15.62 15.59 12.56 18.82
2002(a) (.19) 14.00 14.74 1.42 1.02
GEORGIA DIVIDEND
ADVANTAGE 2 (NKG)
-----------------------------------------------------------------------------------------
Year Ended 5/31:
2006 -- 14.25 13.26 (1.61) 1.68
2005 -- 14.71 14.18 13.61 12.61
2004 -- 13.79 13.20 (6.57) (2.67)
2003(b) (.20) 15.01 14.98 3.16 8.22
=========================================================================================
Ratios/Supplemental Data
--------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
----------------------------- ------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
======================================================================================================================
GEORGIA PREMIUM
INCOME (NPG)
----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 $55,318 1.25% 5.87% 1.22% 5.90% 15%
2005 57,687 1.25 6.15 1.23 6.17 18
2004 54,607 1.23 6.54 1.22 6.55 12
2003 58,050 1.29 6.53 1.26 6.55 22
2002 53,909 1.37 7.12 1.35 7.13 37
GEORGIA DIVIDEND
ADVANTAGE (NZX)
----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 28,912 1.31 5.82 .85 6.28 5
2005 30,007 1.27 5.93 .80 6.39 12
2004 28,348 1.27 6.03 .81 6.49 5
2003 30,576 1.31 6.00 .83 6.49 48
2002(a) 27,381 1.37* 5.70* .92* 6.16* 60
GEORGIA DIVIDEND
ADVANTAGE 2 (NKG)
----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 64,901 1.24 5.63 .75 6.12 7
2005 66,974 1.23 5.58 .74 6.07 5
2004 62,810 1.22 5.63 .73 6.12 12
2003(b) 68,325 1.16* 4.36* .69* 4.84* 17
======================================================================================================================
Preferred Shares at End of Period
-------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=========================================================================
GEORGIA PREMIUM
INCOME (NPG)
-------------------------------------------------------------------------
Year Ended 5/31:
2006 $27,800 $25,000 $74,747
2005 27,800 25,000 76,877
2004 27,800 25,000 74,107
2003 27,800 25,000 77,203
2002 27,800 25,000 73,480
GEORGIA DIVIDEND
ADVANTAGE (NZX)
-------------------------------------------------------------------------
Year Ended 5/31:
2006 15,000 25,000 73,187
2005 15,000 25,000 75,012
2004 15,000 25,000 72,247
2003 15,000 25,000 75,961
2002(a) 15,000 25,000 70,636
GEORGIA DIVIDEND
ADVANTAGE 2 (NKG)
-------------------------------------------------------------------------
Year Ended 5/31:
2006 33,000 25,000 74,168
2005 33,000 25,000 75,738
2004 33,000 25,000 72,583
2003(b) 33,000 25,000 76,761
=========================================================================
* Annualized.
** Total Investment Return on Market Value is the combination of changes in
the market price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. Total Return on Common Share Net
Asset Value is the combination of changes in Common Share net asset value,
reinvested dividend income at net asset value and reinvested capital gains
distributions at net asset value, if any. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the period September 25, 2001 (commencement of operations) through May
31, 2002.
(b) For the period September 25, 2002 (commencement of operations) through May
31, 2003.
See accompanying notes to financial statements.
62-63 spread
FINANCIAL HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- ---------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
=================================================================================================================================
NORTH CAROLINA PREMIUM
INCOME (NNC)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 $15.16 $ .88 $ (.57) $(.16) $(.02) $ .13 $(.79) $(.16) $(.95)
2005 14.55 .91 .70 (.11) -- 1.50 (.89) -- (.89)
2004 15.50 .95 (.95) (.06) -- (.06) (.89) -- (.89)
2003 14.18 .98 1.27 (.07) -- 2.18 (.86) -- (.86)
2002 13.94 1.02 .15 (.13) -- 1.04 (.80) -- (.80)
NORTH CAROLINA DIVIDEND
ADVANTAGE (NRB)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 15.46 .94 (.48) (.17) -- .29 (.88) -- (.88)
2005 14.72 .97 .78 (.09) -- 1.66 (.92) -- (.92)
2004 15.87 .98 (1.10) (.05) -- (.17) (.91) (.07) (.98)
2003 14.39 1.00 1.54 (.06) (.02) 2.46 (.86) (.13) (.99)
2002 13.90 1.06 .38 (.13) -- 1.31 (.82) -- (.82)
NORTH CAROLINA DIVIDEND
ADVANTAGE 2 (NNO)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 15.55 .92 (.60) (.17) (.01) .14 (.82) (.12) (.94)
2005 14.81 .94 .83 (.10) -- 1.67 (.86) (.07) (.93)
2004 15.98 .94 (1.17) (.06) -- (.29) (.85) (.03) (.88)
2003 14.30 .94 1.78 (.07) (.02) 2.63 (.82) (.13) (.95)
2002(a) 14.33 .38 .11 (.04) -- .45 (.34) -- (.34)
NORTH CAROLINA DIVIDEND
ADVANTAGE 3 (NII)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 14.78 .88 (.50) (.18) -- .20 (.72) -- (.72)
2005 13.89 .89 .91 (.11) -- 1.69 (.80) -- (.80)
2004 14.96 .90 (1.09) (.07) -- (.26) (.80) (.01) (.81)
2003(b) 14.33 .49 .87 (.05) -- 1.31 (.47) -- (.47)
=================================================================================================================================
Total Returns
---------------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
==============================================================================================
NORTH CAROLINA PREMIUM
INCOME (NNC)
----------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 $ -- $14.34 $15.09 (6.84)% .87%
2005 -- 15.16 17.20 17.79 10.52
2004 -- 14.55 15.40 (4.08) (.40)
2003 -- 15.50 16.95 10.27 15.80
2002 -- 14.18 16.21 15.44 7.62
NORTH CAROLINA DIVIDEND
ADVANTAGE (NRB)
----------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 -- 14.87 17.70 8.03 1.93
2005 -- 15.46 17.25 21.19 11.53
2004 -- 14.72 15.05 (2.76) (1.08)
2003 .01 15.87 16.45 13.52 17.75
2002 -- 14.39 15.44 7.54 9.58
NORTH CAROLINA DIVIDEND
ADVANTAGE 2 (NNO)
----------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 -- 14.75 15.28 (.18) .97
2005 -- 15.55 16.25 16.46 11.56
2004 -- 14.81 14.80 (1.94) (1.83)
2003 -- 15.98 15.97 14.10 18.98
2002(a) (.14) 14.30 14.90 1.64 2.22
NORTH CAROLINA DIVIDEND
ADVANTAGE 3 (NII)
----------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 -- 14.26 14.42 (1.59) 1.41
2005 -- 14.78 15.40 18.78 12.39
2004 -- 13.89 13.68 (4.93) (1.75)
2003(b) (.21) 14.96 15.20 4.56 7.86
==============================================================================================
Ratios/Supplemental Data
--------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
----------------------------- ------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
============================================================================================================================
NORTH CAROLINA PREMIUM
INCOME (NNC)
----------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 $91,033 1.25% 5.98% 1.24% 5.99% 16%
2005 96,008 1.23 6.09 1.22 6.10 19
2004 91,941 1.23 6.35 1.22 6.36 20
2003 97,785 1.27 6.60 1.25 6.62 16
2002 89,286 1.33 7.17 1.32 7.18 22
NORTH CAROLINA DIVIDEND
ADVANTAGE (NRB)
----------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 33,537 1.29 5.79 .84 6.24 4
2005 34,820 1.27 5.90 .81 6.35 11
2004 33,110 1.24 5.96 .78 6.42 15
2003 35,591 1.30 6.16 .83 6.62 39
2002 32,148 1.44 6.86 .90 7.40 37
NORTH CAROLINA DIVIDEND
ADVANTAGE 2 (NNO)
----------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 55,251 1.24 5.62 .77 6.09 9
2005 58,155 1.23 5.64 .77 6.10 26
2004 55,311 1.22 5.71 .77 6.16 13
2003 59,642 1.24 5.80 .76 6.27 22
2002(a) 53,383 1.19* 4.70* .74* 5.15* 43
NORTH CAROLINA DIVIDEND
ADVANTAGE 3 (NII)
----------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2006 56,049 1.23 5.58 .75 6.07 2
2005 58,035 1.24 5.65 .76 6.14 8
2004 54,482 1.22 5.75 .73 6.23 14
2003(b) 58,653 1.18* 4.61* .71* 5.08* 3
============================================================================================================================
Preferred Shares at End of Period
-------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=============================================================================
NORTH CAROLINA PREMIUM
INCOME (NNC)
-----------------------------------------------------------------------------
Year Ended 5/31:
2006 $46,800 $25,000 $73,629
2005 46,800 25,000 76,286
2004 46,800 25,000 74,114
2003 46,800 25,000 77,236
2002 46,800 25,000 72,695
NORTH CAROLINA DIVIDEND
ADVANTAGE (NRB)
-----------------------------------------------------------------------------
Year Ended 5/31:
2006 17,000 25,000 74,319
2005 17,000 25,000 76,205
2004 17,000 25,000 73,692
2003 17,000 25,000 77,340
2002 17,000 25,000 72,277
NORTH CAROLINA DIVIDEND
ADVANTAGE 2 (NNO)
-----------------------------------------------------------------------------
Year Ended 5/31:
2006 28,000 25,000 74,332
2005 28,000 25,000 76,924
2004 28,000 25,000 74,385
2003 28,000 25,000 78,252
2002(a) 28,000 25,000 72,664
NORTH CAROLINA DIVIDEND
ADVANTAGE 3 (NII)
-----------------------------------------------------------------------------
Year Ended 5/31:
2006 28,000 25,000 75,044
2005 28,000 25,000 76,817
2004 28,000 25,000 73,644
2003(b) 28,000 25,000 77,369
=============================================================================
* Annualized.
** Total Investment Return on Market Value is the combination of changes in
the market price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. Total Return on Common Share Net
Asset Value is the combination of changes in Common Share net asset value,
reinvested dividend income at net asset value and reinvested capital gains
distributions at net asset value, if any. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the period November 15, 2001 (commencement of operations) through May
31, 2002.
(b) For the period September 25, 2002 (commencement of operations) through May
31, 2003.
See accompanying notes to financial statements.
64-65 spread
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 nine. 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.
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER
------------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Timothy R. Schwertfeger(1) Chairman of 1994 Chairman (since 1996) and Director of Nuveen Investments, 166
3/28/49 the Board Inc., Nuveen Investments, LLC, Nuveen Advisory Corp. and
333 W. Wacker Drive and Board Nuveen Institutional Advisory Corp.(3); Director (since 1996)
Chicago, IL 60606 Member of Institutional Capital Corporation; Chairman and Director
(since 1997) of Nuveen Asset Management; Chairman and
Director of Rittenhouse Asset Management, Inc. (since 1999);
Chairman of Nuveen Investments Advisers Inc. (since 2002).
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Robert P. Bremner Lead Independent 1997 Private Investor and Management Consultant. 166
8/22/40 Board member
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown Board member 1993 Retired (since 1989) as Senior Vice President of The 166
7/29/34 Northern Trust Company; Director (since 2002) Community
333 W. Wacker Drive Advisory Board for Highland Park and Highwood, United
Chicago, IL 60606 Way of the North Shore.
------------------------------------------------------------------------------------------------------------------------------------
Jack B. Evans Board member 1999 President, The Hall-Perrine Foundation, a private philanthropic 166
10/22/48 corporation (since 1996); Director and Vice Chairman, United
333 W. Wacker Drive Fire Group, a publicly held company; Adjunct Faculty Member,
Chicago, IL 60606 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, University of Iowa (since 166
3/6/48 June 2006); formerly, Dean and Distinguished Professor of Finance,
333 W. Wacker Drive School of Business at the University of Connecticut (2003-2006);
Chicago, IL 60606 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 Retired (since 2004) as Chairman, JPMorgan Fleming Asset 164
10/28/42 Management, President and CEO, Banc One Investment
333 W. Wacker Drive Advisors Corporation, and President, One Group Mutual
Chicago, IL 60606 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.
66
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS THE FUNDS 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 Partners Ltd., a real estate 166
9/24/44 investment company; formerly, Senior Partner and Chief
333 W. Wacker Drive Operating Officer (retired, 2004) of Miller-Valentine
Chicago, IL 60606 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 Dorothy Donnelley 166
12/29/47 Foundation (since 1994); prior thereto, Executive Director,
333 W. Wacker Drive Great Lakes Protection Fund (from 1990 to 1994).
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Eugene S. Sunshine Board member 2005 Senior Vice President for Business and Finance, 166
1/22/50 Northwestern University (since 1997); Director (since 2003),
333 W. Wacker Drive Chicago Board Options Exchange; Director (since 2003),
Chicago, IL 60606 National Mentor Holdings, a privately-held, national provider
of home and community-based services; 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.
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUND:
------------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary and 166
9/9/56 Administrative Associate General Counsel, formerly, Vice President and
333 W. Wacker Drive Officer Assistant General Counsel, of Nuveen Investments, LLC;
Chicago, IL 60606 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. and Symphony Asset Management LLC (since 2003);
Chartered Financial Analyst.
67
Board Members
AND OFFICERS (CONTINUED)
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Julia L. Antonatos Vice President 2004 Managing Director (since 2005), formerly Vice President 166
9/22/63 (since 2002); formerly, Assistant Vice President (since 2000)
333 W. Wacker Drive of Nuveen Investments, LLC; Chartered Financial Analyst.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant Vice 166
2/3/66 and Assistant President (since 2000) of Nuveen Investments, LLC.
333 W. Wacker Drive Secretary
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Peter H. D'Arrigo Vice President 1999 Vice President and Treasurer of Nuveen Investments, LLC 166
11/28/67 and of Nuveen Investments, Inc. (since 1999); Vice President
333 W. Wacker Drive and Treasurer of Nuveen Asset Management (since 2002)
Chicago, IL 60606 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. and Symphony Asset
Management LLC (since 2003); 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 Investment Operations, Nuveen 166
8/24/61 Investments, LLC (since January 2005); formerly, Director,
333 W. Wacker Drive Business Manager, Deutsche Asset Management (2003-2004),
Chicago, IL 60606 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).
------------------------------------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President 1998 Vice President (since 2002), Assistant Secretary and 166
9/24/64 and Secretary Assistant General Counsel (since 1998) formerly, Assistant
333 W. Wacker Drive Vice President (since 1998) of Nuveen Investments, LLC;
Chicago, IL 60606 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), formerly, Vice President of 166
10/24/45 Nuveen Investments, LLC, Managing Director (2004) formerly,
333 W. Wacker Drive Vice President (1998-2004) of Nuveen Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional Advisory Corp.(3); Managing Director
(since 2005) of Nuveen Asset Management.
------------------------------------------------------------------------------------------------------------------------------------
William M. Fitzgerald Vice President 1995 Managing Director (since 2002), formerly, Vice President of 166
3/2/64 Nuveen Investments; Managing Director (1997-2004) of
333 W. Wacker Drive Nuveen Advisory Corp. and Nuveen Institutional Advisory
Chicago, IL 60606 Corp.(3); Managing Director (since 2001) of Nuveen Asset
Management; Vice President (since 2002) of Nuveen
Investments Advisers Inc.; Chartered Financial Analyst.
68
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller (since 1998) 166
5/31/54 and Controller of Nuveen Investments, LLC; formerly, Vice President and
333 W. Wacker Drive Funds Controller (1998-2004) of Nuveen Investments, Inc.;
Chicago, IL 60606 Certified Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
James D. Grassi Vice President 2004 Vice President and Deputy Director of Compliance (since 2004) 166
4/13/56 and Chief of Nuveen Investments, LLC, Nuveen Investments Advisers Inc.,
333 W. Wacker Drive Compliance Nuveen Asset Management and Rittenhouse Asset Management,
Chicago, IL 60606 Officer Inc.; previously, Vice President and Deputy Director of Compliance
(2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory
Corp.(3); formerly, Senior Attorney (1994-2004), The Northern
Trust Company.
------------------------------------------------------------------------------------------------------------------------------------
David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, 166
3/22/63 LLC; Certified Public Accountant.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Tina M. Lazar Vice President 2002 Vice President of Nuveen Investments, LLC (since 1999). 166
8/27/61
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant General 166
7/27/51 and Assistant Counsel of Nuveen Investments, LLC; formerly, Vice President
333 W. Wacker Drive Secretary and Assistant Secretary of Nuveen Advisory Corp. and Nuveen
Chicago, IL 60606 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) and Symphony Asset
Management LLC (since 2003).
(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 an indefinite 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.
69
ANNUAL INVESTMENT
MANAGEMENT AGREEMENT
APPROVAL PROCESS
The Board of Trustees is responsible for overseeing the performance of the
investment adviser to the Funds and determining whether to continue the advisory
arrangements. At a meeting held on May 23-25, 2006 (the "May Meeting"), the
Board of Trustees of the Funds, including the independent Trustees, unanimously
approved the continuance of the Investment Management Agreement between each
Fund and NAM (the "Fund Adviser").
THE APPROVAL PROCESS
During the course of the year, the Board received a wide variety of materials
relating the services provided by the Fund Adviser and the performance of the
Fund. To assist the Board in its evaluation of the advisory contract with the
Fund Adviser at the May Meeting, the independent Trustees received extensive
materials in advance of their meeting which outlined, among other things:
o the nature, extent and quality of services provided by the Fund
Adviser;
o the organization and business operations of the Fund Adviser,
including the responsibilities of various departments and key
personnel;
o the Fund's past performance, the Fund's performance compared to funds
of similar investment objectives compiled by an independent third
party and to customized benchmarks;
o the profitability of the Fund Adviser and certain industry
profitability analyses for unaffiliated advisers;
o the expenses of the Fund Adviser in providing the various services;
o the advisory fees (gross and net management fees) and total expense
ratios of the Fund, including comparisons of such fees and expenses
with those of comparable, unaffiliated funds based on information and
data provided by Lipper (the "Peer Universe") as well as compared to a
subset of funds within the Peer Universe (the "Peer Group") to the
respective Fund (as applicable);
o the advisory fees the Fund Adviser assesses to other types of
investment products or clients;
o the soft dollar practices of the Fund Adviser, if any;
o from independent legal counsel, a legal memorandum describing, among
other things, the duties of the Trustees under the Investment Company
Act of 1940 (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 May Meeting, the Fund Adviser made a presentation to and responded to
questions from the Board. After the presentations 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 renewal of the advisory contracts. It is with this background that
the Trustees considered the advisory contract with the Fund Adviser. The
independent Trustees, in consultation with independent counsel, reviewed the
factors set out in judicial decisions and SEC directives relating to the renewal
of advisory contracts. As outlined in more detail below, the Trustees considered
all factors they believed relevant with respect to each Fund, including the
following: (a) the nature, extent and quality of the services to be provided by
the Fund Adviser; (b) the investment performance of the Fund and the Fund
Adviser; (c) the costs of the services to be provided and profits to be realized
by the Fund Adviser and its affiliates from the relationship with the Fund; (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 reviewing the Fund Adviser, the Trustees considered the nature, extent and
quality of the Fund Adviser's services. The Trustees reviewed materials
outlining, among other things, the Fund Adviser's organization and business; the
types of services that the Fund Adviser or its affiliates provide and are
expected to provide to the Funds; the performance record of the applicable Fund
(as described in further detail below) and any initiatives and enhancements
Nuveen has taken for its municipal fund product line. In connection with their
continued service as Trustees, the Trustees also have a good understanding of
each Fund Adviser's organization, operations and personnel. In this regard, the
Trustees are familiar with and have evaluated the professional experience,
qualifications and credentials of the Fund Adviser's personnel. The Trustees
further reviewed materials describing, among other things, the teams and per-
70
sonnel involved in the investment, research, risk-management and operational
processes involved in managing municipal funds and their respective functions.
Given the Trustees' experience with the Funds and Fund Adviser, the Trustees
recognized the demonstrated history of care and depth of experience of the
respective personnel in managing these Funds. In this regard, the Trustees
considered the continued quality of the Fund Adviser's investment process in
making portfolio management decisions as well as additional refinements and
improvements adopted to the portfolio management processes noted below. With
respect to the services provided to municipal funds, including the Funds, the
Trustees noted that the Fund Adviser continues to make refinements to its
portfolio management process including, among other things, the increased use of
derivatives to enhance management of risk, additional analytical software for
research staff and improved municipal pricing processes.
In addition to advisory services, the independent Trustees considered the
quality of any administrative or non-advisory services provided. The Fund
Adviser provides the Funds with such administrative and other services
(exclusive of, and in addition to, any such services provided by others for the
Funds) and officers and other personnel as are necessary for the operations of
the respective Fund. In connection with the review of the Investment Management
Agreement, the Trustees considered the extent and quality of these other
services which include, among other things, providing: product management (e.g.,
product positioning, performance benchmarking, risk management); fund
administration (e.g., daily net asset value pricing and reconciliation, tax
reporting, fulfilling regulatory filing requirements); oversight of third party
service providers; administration of board relations (e.g., organizing board
meetings and preparing related materials); compliance (e.g., monitoring
compliance with investment policies and guidelines and regulatory requirements);
and legal support (e.g., helping prepare and file registration statements,
amendments thereto, proxy statements and responding to regulatory requests
and/or inquiries). As the Funds operate in a highly regulated industry and given
the importance of compliance, the Trustees considered, in particular, the
additions of experienced personnel to the compliance teams and the enhancements
to technology and related systems to support the compliance activities for the
Funds (including a new reporting system for quarterly portfolio holdings).
In addition to the foregoing, the Trustees also noted the additional services
that the Fund Adviser or its affiliates provide to closed-end funds, including,
in particular, secondary market support activities. The Trustees recognized
Nuveen's continued commitment to supporting the secondary market for the common
shares of its closed-end funds through a variety of initiatives designed to
raise investor and analyst awareness and understanding of closed-end funds.
These efforts include providing advertising and other media relations programs,
continued contact with analysts, maintaining and enhancing its website for
closed-end funds, and targeted advisor communication programs. With respect to
funds that utilize leverage through the issuance of preferred shares, the
Trustees noted Nuveen's continued support for the preferred shares by
maintaining, among other things, an in-house preferred trading desk; designating
a product manager whose responsibilities include creating and disseminating
product information and managing relations in connection with the preferred
share auction; and maintaining systems necessary to test compliance with rating
agency requirements.
Based on their review, the Trustees found that, overall, the nature, extent and
quality of services provided (and expected to be provided) to the respective
Funds under the Investment Management Agreement were of a high level and were
satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE FUND AND FUND ADVISERS
The Board considered the investment performance for each Fund, including the
Fund's historic performance as well as its performance compared to funds with
similar investment objectives identified by an independent third party (the
"Performance Peer Group") and portfolio level performance against customized
benchmarks, as described below. In evaluating the performance information, in
certain instances, the Trustees noted that the closest Performance Peer Group
for a Fund still may not adequately reflect such Fund's investment objectives,
strategies and portfolio duration, thereby limiting the usefulness of the
comparisons of such Fund's performance with that of the Performance Peer Group.
With respect to state specific municipal funds, the Trustees recognized that
certain state municipal funds do not have a corresponding state specific
Performance Peer Group in which case their performance is measured against a
more general municipal category for various states. The closed-end state
municipal funds that do not have corresponding state-specific Performance Peer
Groups are from Arizona, Connecticut, Georgia, Maryland, Massachusetts,
Missouri, North Carolina, Ohio, Texas, and Virginia. Further, due to a lack of
state-specific unleveraged categories, certain unleveraged state municipal funds
are included in their leveraged state category (such as the California Select
Tax-Free Fund, California Municipal Value Fund, New York Select Tax Free Fund
and New York Municipal Value Fund).
In reviewing performance, the Trustees reviewed performance information
including, among other things, total return information compared with the Fund's
Performance Peer Group for the one-, three- and five-year periods (as
applicable) ending December 31, 2005. The Trustees also reviewed the Fund's
portfolio level performance (which does not reflect fund level fees and
expenses) compared to customized portfolio-level benchmarks for the one- and
three-year periods ending December 31, 2005 (as applicable). This analysis is
designed to assess the efficacy of investment decisions against appropriate
measures of risk and total return, within specific market segments. This
information supplements the Fund performance information provided to the Board
at each of their quarterly meetings. Based on their review, the Trustees
determined that the respective Fund's absolute and relative investment
performance over time had been satisfactory.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
In evaluating the management fees and expenses of a Fund, the Board
reviewed, among other things, the Fund's advisory fees (net and gross
management fees) and total expense ratios (before and after expense
reimbursements and/or waivers) in absolute terms as well as
comparisons to the gross management fees (before waivers), net
management fees (after waivers) and total expense ratios (before and
after waivers) of comparable funds in the Peer Universe and the Peer
Group. The Trustees reviewed data regarding the construction of Peer
Groups as well as the methods of measurement for the fee and expense
analysis and the performance analysis. In certain cases, due to the
small number of peers in the Peer Universe, the Peer Universe and Peer
Group
71
ANNUAL INVESTMENT MANAGEMENT
AGREEMENT APPROVAL PROCESS (continued)
may be the same. Further, the Trustees recognized that in certain
cases the closest Peer Universe and/or Peer Group did not adequately
reflect the Fund's investment objectives and strategies limiting the
usefulness of comparisons. In reviewing comparisons, the Trustees also
considered the size of the Peer Universe and/or Peer Group, the
composition of the Peer Group (including differences in the use of
leverage and insurance) as well as differing levels of fee waivers
and/or expense reimbursements. In this regard, the Trustees considered
the fund-level and complex-wide breakpoint schedules (described in
further detail below) and any fee waivers and reimbursements provided
by Nuveen (applicable, in particular, for certain Funds launched since
1999). Based on their review of the fee and expense information
provided, the Trustees determined that each Fund's net total expense
ratio was within an acceptable range compared to peers.
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
The Trustees further reviewed data comparing the advisory fees of the
Fund Adviser with fees the Fund Adviser charges to other clients,
including municipal managed accounts. In general, the fees charged for
separate accounts are somewhat lower than the fees assessed to the
Funds. The Trustees recognized that the differences in fees are
attributable to a variety of factors, including the differences in
services provided, product distribution, portfolio investment
policies, investor profiles, account sizes and regulatory
requirements. The Trustees noted, in particular, that the range of
services provided to the Funds is more extensive than that provided to
managed separate accounts. As described in further detail above, such
additional services include, but are not limited to, providing:
product management, fund administration, oversight of third party
service providers, administration of board relations, and legal
support. Funds further operate in a highly regulated industry
requiring extensive compliance functions compared to the other
investment products. In addition to the costs of the additional
services, administrative costs may also be greater for the Funds as
the average account size for separate accounts are notably larger than
the retail accounts of the Funds. Given the differences in the product
structures, particularly the extensive services provided to closed-end
municipal funds, the Trustees believe such facts justify the different
levels of fees.
3. PROFITABILITY OF FUND ADVISERS
In conjunction with its review of fees, the Trustees also considered
the profitability of Nuveen Investments for advisory activities (which
incorporated Nuveen's wholly-owned affiliated sub-advisers). The
Trustees reviewed data comparing Nuveen's profitability with other
fund sponsors prepared by three independent third party service
providers as well as comparisons of the revenues, expenses and profits
margins of various unaffiliated management firms with similar amounts
of assets under management prepared by Nuveen. The Trustees further
reviewed the 2005 Annual Report for Nuveen Investments. In considering
profitability, the Trustees recognized the inherent limitations in
determining profitability as well as the difficulties in comparing the
profitability of other unaffiliated advisers. Profitability may be
affected by numerous factors, including the methodology for allocating
expenses, the advisor's business mix, the types of funds managed, the
adviser's capital structure and cost of capital. Further, individual
fund or product line profitability of other sponsors is generally not
publicly available. Accordingly, the profitability information that is
publicly available from various investment advisory or management
firms may not be representative of the industry.
Notwithstanding the foregoing, in reviewing profitability, the Trustees reviewed
Nuveen's methodology and assumptions for allocating expenses across product
lines to determine profitability. In this regard, the methods of allocation used
appeared reasonable. The Trustees also, to the extent available, compared
Nuveen's profitability margins (including pre- and post-marketing profit
margins) with the profitability of various unaffiliated management firms. The
Trustees noted that Nuveen's profitability is enhanced due to its efficient
internal business model. The Trustees also recognized that while a number of
factors affect profitability, Nuveen's profitability may change as fee waivers
and/or expense reimbursement commitments of Nuveen to various funds in the
Nuveen complex expire. To keep apprised of profitability and developments that
may affect profitability, the Trustees have requested profitability analysis be
provided periodically during the year. Based on their review, the Trustees were
satisfied that the respective Fund Adviser's level of profitability from its
relationship with each Fund was reasonable in light of the services provided.
In evaluating the reasonableness of the compensation, the Trustees also
considered any other revenues paid to a Fund Adviser as well as any indirect
benefits (such as soft dollar arrangements, if any) the Fund Adviser and its
affiliates are expected to receive that are directly attributable to their
management of the Funds, if any. See Section E below for additional information.
Based on their review of the overall fee arrangements of the applicable Fund,
the Trustees determined that the advisory fees and expenses of the respective
Fund were reasonable.
72
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Trustees recognized the potential
benefits resulting from the costs of a fund being spread over a larger asset
base as a fund grows. To help ensure the shareholders share in these benefits,
the Trustees have reviewed and considered the breakpoints in the advisory fee
schedules that reduce advisory fees as the applicable Fund's assets grow. In
addition to advisory fee breakpoints as assets in a respective Fund rise, after
lengthy discussions with management, the Board also approved a complex-wide fee
arrangement that was introduced on August 1, 2004. Pursuant to the complex-wide
fee arrangement, the fees of the funds in the Nuveen complex, including the
Funds, 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 noted
that 2005 was the first full year to reflect the fee reductions from the complex
wide fee arrangement. 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 schedule 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 the Fund Adviser or its affiliates may receive as a result of its
relationship with each Fund. In this regard, the Trustees considered revenues
received by affiliates of the Fund Adviser for serving as agent at Nuveen's
preferred trading desk and for serving as a co-manager in the initial public
offering of new closed-end exchange traded funds.
In addition to the above, the Trustees considered whether the Fund Adviser
received any benefits from soft dollar arrangements. With respect to NAM, the
Trustees noted that 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; however, the Fund Adviser may from time
to time receive and have access to research generally provided to institutional
clients.
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 Agreements were
fair and reasonable, that the Fund Adviser's fees are reasonable in light of the
services provided to each Fund, and that the renewal of the Investment
Management Agreements should be approved.
73
Reinvest Automatically
EASILY AND CONVENIENTLY
Sidebar text: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN EXCHANGE-TRADED CLOSED-END FUNDS
DIVIDEND REINVESTMENT PLAN
Your Nuveen Exchange-Traded 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 tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
the shares may increase before purchases are completed, the average purchase
price per share may exceed the market price at the time of valuation, resulting
in the acquisition of fewer shares than if the dividend or distribution had been
paid in shares issued by the Fund. A pro rata portion of any applicable
brokerage commissions on open market purchases will be paid by Plan
participants. These commissions usually will be lower than those charged on
individual transactions.
FLEXIBLE
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
74
Other Useful
INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
Each Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
12-month period ended June 30, 2006, and (iii) a description of the policies and
procedures that the Funds used to determine how to vote proxies relating to
portfolio securities are available without charge, upon request, by calling
Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at
www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
References Section at 450 Fifth Street NW, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
Each 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.
Each 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.
AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a
Fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period over
which a bond's principal and interest will be paid, and consequently is a
measure of the sensitivity of a bond's or bond Fund's value to changes when
market interest rates change. Generally, the longer a bond's or Fund's duration,
the more the price of the bond or Fund will change as interest rates change.
Leverage-adjusted duration takes into account the leveraging process for a Fund
and therefore is longer than the duration of the Fund's portfolio of bonds.
MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's
current annualized dividend divided by its current market price.
NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any MuniPreferred shares
issued in order to leverage the Fund) from its total assets and then dividing
the remainder by the number of shares outstanding. Fund NAVs are calculated at
the end of each business day.
TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to
equal, on an after-tax basis, the yield of a municipal bond investment.
BOARD OF TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Eugene S. Sunshine
FUND MANAGER
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust Company
Boston, MA
TRANSFER AGENT AND SHAREHOLDER SERVICES
State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, IL
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the period covered by this report. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
75
Photo of: 2 women looking at a photo album.
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 more than $145 billion in assets, Nuveen Investments offers access to a
number of different asset classes and investing solutions through a variety of
products. Nuveen Investments markets its capabilities under four distinct
brands: Nuveen, a leader in fixed-income investments; NWQ, a leader in
value-style equities; Rittenhouse, a leader in growth-style equities; and
Symphony, a leading institutional manager of market-neutral alternative
investment portfolios.
FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest.
Be sure to obtain a prospectus, where applicable. Investors should consider the
investment objective and policies, risk considerations, charges and expenses of
the Fund carefully before investing. The prospectus contains this and other
information relevant to an investment in the Fund. For a prospectus, please
contact your securities representative or Nuveen Investments, 333 W. Wacker Dr.,
Chicago, IL 60606. Please read the prospectus carefully before you invest or
send money.
o Share prices
o Fund details
Learn more o Daily financial news
about Nuveen Funds at o Investor education
WWW.NUVEEN.COM/CEF o Interactive planning tools
Logo: NUVEEN Investments
EAN-C-0506D
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 Georgia Dividend Advantage Municipal Fund 2
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP the Audit Committee approved in advance all
audit services and non-audit services that Ernst & Young LLP 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
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)
----------------------------------------------------------------------------------------------------------------------------------
May 31, 2006 $ 8,495 $ 0 $ 504 $ 2,850
----------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
----------------------------------------------------------------------------------------------------------------------------------
May 31, 2005 $ 7,991 $ 0 $ 581 $ 2,650
----------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
----------------------------------------------------------------------------------------------------------------------------------
(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 Ernst & Young LLP 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 Ernst & Young LLP 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.
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
------------------------------------------------------------------------------------------------------------------
May 31, 2006 $ 0 $ 2,200 $ 0
------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------
May 31, 2005 $ 0 $ 2,200 $ 0
------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------
(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 Ernst & Young LLP serves as independent
registered public accounting firm, these fees amounted to $275,000 in 2006 and
$282,575 in 2005.
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. The Audit
Committee is required to pre-approve non-audit services that Ernst & Young LLP
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 Ernst & Young LLP about
any non-audit services that Ernst & Young LLP rendered during the Fund's last
fiscal year to the Adviser and any Affiliated Fund Service Provider. The
Committee considered this information in evaluating Ernst & Young LLP's
independence.
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
----------------------------------------------------------------------------------------------------------------------------------
May 31, 2006 $ 3,354 $ 2,200 $ 0 $ 5,554
May 31, 2005 $ 3,231 $ 2,200 $ 0 $ 5,431
"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 municipal bonds and cash
management securities. On rare occasions the registrant may acquire, directly or
through a special purpose vehicle, equity securities of a municipal bond issuer
whose bonds the registrant already owns when such bonds have deteriorated or are
expected shortly to deteriorate significantly in credit quality. The purpose of
acquiring equity securities generally will be to acquire control of the
municipal bond issuer and to seek to prevent the credit deterioration or
facilitate the liquidation or other workout of the distressed issuer's credit
problem. In the course of exercising control of a distressed municipal issuer,
NAM may pursue the registrant's interests in a variety of ways, which may entail
negotiating and executing consents, agreements and other arrangements, and
otherwise influencing the management of the issuer. NAM does not consider such
activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but
nevertheless provides reports to the registrant's Board of Trustees on its
control activities on a quarterly basis.
In the rare event that a municipal 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.
THE PORTFOLIO MANAGER
The following individual has primary responsibility for the day-to-day
implementation of the registrant's investment strategies:
NAME FUND
Cathryn Steeves Nuveen Georgia Dividend Advantage Municipal Fund 2
Other Accounts Managed. In addition to managing the registrant, the portfolio
manager is also primarily responsible for the day-to-day portfolio management of
the following accounts:
TYPE OF ACCOUNT NUMBER OF
PORTFOLIO MANAGER MANAGED ACCOUNTS ASSETS*
-------------------------------------------------------------------------------------
Cathryn Steeves Registered Investment Company 67 $13.234 billion
Other Pooled Investment Vehicles 0 $0
Other Accounts 0 $0
* Assets are as of May 31, 2006. None of the assets in these accounts are
subject to an advisory fee based on performance.
Compensation. Portfolio manager compensation consists of three basic
elements--base salary, cash bonus and long-term incentive compensation. The
compensation strategy is to annually compare overall compensation, including
these three elements, to the market in order to create a compensation structure
that is competitive and consistent with similar financial services companies. As
discussed below, several factors are considered in determining each portfolio
manager's total compensation. In any year these factors may include, among
others, the effectiveness of the investment strategies recommended by the
portfolio manager's investment team, the investment performance of the accounts
managed by the portfolio manager, and the overall performance of Nuveen
Investments, Inc. (the parent company of NAM). Although investment performance
is a factor in determining the portfolio manager's compensation, it is not
necessarily a decisive factor. The portfolio manager's performance is evaluated
in part by comparing manager's performance against a specified investment
benchmark. This fund-specific benchmark is a customized subset (limited to bonds
in each Fund's specific state and with certain maturity parameters) of the
S&P/Investortools Municipal Bond index, an index comprised of bonds held by
managed municipal bond fund customers of Standard & Poor's Securities Pricing,
Inc. that are priced daily and whose fund holdings aggregate at least $2
million. As of May 31, 2006, the S&P/Investortools Municipal Bond index was
comprised of 46.875 securities with an aggregate current market value of $868
billion.
Base salary. Portfolio managers are paid a base salary that is set at a level
determined by NAM in accordance with its overall compensation strategy discussed
above. NAM is not under any current contractual obligation to increase a
portfolio manager's base salary.
Cash bonus. Portfolio managers are also eligible to receive an annual cash
bonus. The level of this bonus is based upon evaluations and determinations made
by each portfolio manager's supervisors, along with reviews submitted by his
peers. These reviews and evaluations often take into account a number of
factors, including the effectiveness of the investment strategies recommended to
the NAM's investment team, the performance of the accounts for which he/she
serves as portfolio manager relative to any benchmarks established for those
accounts, his/her effectiveness in communicating investment performance to
stockholders and their representatives, and his/her contribution to the NAM
investment process and to the execution of investment strategies. The cash bonus
component is also impacted by the overall performance of Nuveen Investments,
Inc. in achieving its business objectives.
Long-term incentive compensation. Portfolio managers are eligible to receive
bonus compensation in the form of equity-based awards issued in securities
issued by Nuveen Investments, Inc. The amount of such compensation is dependent
upon the same factors articulated for cash bonus awards but also factors in his
long-term potential with the firm.
Material Conflicts of Interest. The portfolio manager's simultaneous management
of the registrant and the other accounts noted above may present actual or
apparent conflicts of interest with respect to the allocation and aggregation of
securities orders placed on behalf of the Registrant and the other account. NAM,
however, believes that such potential conflicts are mitigated by the fact that
the NAM has adopted several policies that address 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 securities 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.
Beneficial Ownership of Securities. As of the May 31, 2006, the portfolio
manager beneficially owned the following dollar range of equity securities
issued by the Registrant and other Nuveen Funds managed by NAM's municipal
investment team.
------------------------------------------------------------------------------------------------------------------------
DOLLAR RANGE OF
DOLLAR EQUITY
RANGE OF SECURITIES
EQUITY BENEFICIALLY
SECURITIES OWNED IN
BENEFICIALLY THE REMAINDER
OWNED IN OF NUVEEN
FUND FUNDS MANAGED
BY NAM'S
MUNICIPAL
INVESTMENT
NAME OF PORTFOLIO MANAGER FUND TEAM
------------------------------------------------------------------------------------------------------------------------
Cathryn Steeves Nuveen Georgia Dividend Advantage Municipal Fund 2 $0 $10,001-$50,000
------------------------------------------------------------------------------------------------------------------------
PORTFOLIO MANAGER BIO:
Cathryn Steeves, PhD is currently a portfolio manager for 68 state-specific
municipal bond funds. She joined Nuveen in 1996 and worked as a senior analyst
in the healthcare sector. Cathryn has an undergraduate degree from Wake Forest
University, an MA, MPhil and a PhD from Columbia University.
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.
During this reporting period, the registrant's Board of Trustees implemented a
change to the procedures by which shareholders may recommend nominees to the
registrant's board of trustees by amending the registrant's by-laws to include a
provision specifying the date by which shareholder nominations for election as
trustee at a subsequent meeting must be submitted to the registrant.
Shareholders must deliver or mail notice to the registrant not less than
forty-five days nor more than sixty days prior to the first anniversary date of
the date on which the registrant first mailed its proxy materials for the prior
year's annual meeting; provided, however, if and only if the annual meeting is
not scheduled to be held within a period that commences thirty days before the
first anniversary date of the annual meeting for the preceding year and ends
thirty days after such anniversary date (an annual meeting date outside such
period being referred to as an "Other Annual Meeting Date" hereafter), the
shareholder notice must be given no later than the close of business on the date
forty-five days prior to such Other Annual Meeting Date or the tenth business
day following the date such Other Annual Meeting Date is first publicly
announced or disclosed. The shareholder's notice must be in writing and set
forth the name, age, date of birth, business address, residence address and
nationality of the person(s) being nominated and the class or series, number of
all shares of the registrant owned of record or beneficially be each such
person(s), any other information regarding such person required by Item 401 of
Regulation S-K or Item 22 of Rule 14a-101 (Schedule 14A) under the Securities
Exchange Act of 1934, as amended, any other information regarding the person(s)
to be nominated that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitation of proxies for
election of trustees, and whether such shareholder believes any nominee is or
will be an "interested person" (as that term is defined in the Investment
Company Act of 1940, as amended) of the registrant or sufficient information to
enable the registrant to make that determination and the written and signed
consent of the person(s) to be nominated.
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 Georgia Dividend Advantage Municipal Fund 2
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By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: August 8, 2006
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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: August 8, 2006
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By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: August 8, 2006
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* Print the name and title of each signing officer under his or her signature.