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 811-10525
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Nuveen North Carolina Dividend Advantage Municipal Fund 2
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(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)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: May 31
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Date of reporting period: November 30, 2008
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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.
SEMI-ANNUAL REPORT | Nuveen Investments
November 30, 2008 | MUNICIPAL CLOSED-END FUNDS
[PHOTO OF: SMALL CHILD]
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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CHAIRMAN'S
LETTER TO SHAREHOLDERS
[PHOTO OF ROBERT P. BREMNER] | Robert P. Bremner | Chairman of the Board
Dear Shareholders,
I write this letter in a time of continued uncertainty about the current state
of the U.S. financial system and pessimism about the future of the global
economy. Many have observed that the conditions that led to the crisis have
built up over time and will complicate and extend the course of recovery. At the
same time, government officials in the U.S. and abroad have implemented a wide
range of programs to restore stability to the financial system and encourage
economic recovery. History teaches us that these efforts will moderate the
extent of the downturn and hasten the inevitable recovery, even though it is
hard to envision that outcome in the current environment.
As you will read in this report, the continuing financial and economic problems
are weighing heavily on asset values for equities and fixed income, and
unfortunately the performance of the Nuveen Funds has been similarly affected. I
hope that you will carefully review the Portfolio Manager's Comments, the Common
Share Dividend and Share Price Information and the Performance Overview sections
of this report. These comments highlight the manager's pursuit of investment
strategies that depend on thoroughly researched securities, diversified
portfolio holdings and well established investment disciplines to achieve your
Fund's investment goals. The Fund Board believes that a consistent focus on long
term investment goals provides the basis for successful investment over time and
we monitor your Fund with that objective in mind.
Nuveen continues to work on resolving the auction rate preferred shares
situation, but the unsettled conditions in the credit markets have slowed
progress. Nuveen is actively pursuing a number of solutions, all with the goal
of providing liquidity for preferred shareholders while preserving the potential
benefits of leverage for common shareholders. We appreciate the patience you
have shown as we have worked through the many issues involved. Please consult
the Nuveen website: www.Nuveen.com, for the most recent information.
On behalf of myself and the other members of your Fund's Board, we look forward
to continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Robert P. Bremner
----------------------------------
Robert P. Bremner
Chairman of the Nuveen Fund Board
January 20, 2009
Portfolio Manager's COMMENTS
NUVEEN INVESTMENTS MUNICIPAL CLOSED-END FUNDS | NPG, NZX, NKG, NNC,
| NRB, NNO, NII
Portfolio manager Daniel Close discusses key investment strategies and the
six-month performance of the Nuveen Georgia and North Carolina Funds. Dan, who
joined Nuveen in 2000, assumed portfolio management responsibility for these
seven Funds in 2007.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE GEORGIA AND NORTH CAROLINA FUNDS
DURING THE SIX-MONTH REPORTING PERIOD ENDED NOVEMBER 30, 2008?
During this period, stress in the financial and credit markets led to increased
price volatility for many securities, reduced liquidity and a general flight to
quality. We sought to capitalize on this environment by continuing to focus on
relative value, using a fundamental approach to find undervalued sectors and
individual credits with the potential to perform well over the long term.
As events unfolded, we were able to find attractive value opportunities in
various sectors of the municipal bond market. All three Georgia Funds added an
Atlanta tax increment financing (TIF) district issue and NPG also purchased a
water and sewer bond during this period. In the North Carolina Funds, we bought
a highly rated hospital issue for all four Funds, while NRB and NNO also added
water and sewer bonds. The majority of these additions to our portfolios were
purchased at the longer end of the yield curve, which we believed not only
offered more value during this period, but also had the potential to help extend
the Funds' durations(1) and enhance yields.
To generate cash for purchases, the three Georgia Funds reduced their exposure
to the health care sector by paring back our holding of a BBB rated hospital,
and NZX and NKG also reduced their positions in a charter school credit. In the
North Carolina Funds, we monitored the types of credits and bond structures that
were attractive to the retail market and took advantage of strong bids to sell
selected bonds, including pre-refunded(2) issues, into solid retail demand. In
addition, some of our new purchases were financed by reinvesting the proceeds
from matured bonds.
As a key dimension of risk management, we employed a disciplined approach to
duration positioning as an important component of our overall strategy. As part
of this approach, we used inverse floating rate securities(3) in all seven of
these Funds. Inverse floaters typically provide the dual benefit of bringing the
Funds' durations closer to our strategic target and enhancing their
income-generation capabilities. NZX, NNC and
Certain statements in this report are forward-looking statements. Discussions of
specific investments are for illustration only and are not intended as
recommendations of individual investments. The forward-looking statements and
other views expressed herein are those of the portfolio manager as of the date
of this report. Actual future results or occurrences may differ significantly
from those anticipated in any forward-looking statements and the views expressed
herein are subject to change at any time, due to numerous market and other
factors. The Funds disclaim any obligation to update publicly or revise any
forward-looking statements or views expressed herein.
(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.
(2) Pre-refundings, also known as advance 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.
(3) An inverse floating rate security, also known as an inverse floater, is a
financial instrument designed to pay long-term tax-exempt interest at a rate
that varies inversely with a short-term tax-exempt interest rate index. For the
Nuveen Funds, the index typically used is the Securities Industry and Financial
Markets (SIFM) Municipal Swap Index (previously referred to as the Bond Market
Association Index or BMA). Inverse floaters, including those inverse floating
rate securities in which the Funds invested during this reporting period, are
further defined within the Notes to Financial Statements and Glossary of Terms
Used in this Report sections of this shareholder report.
(4) Each Fund may invest in derivatives instruments such as forwards, futures,
option and swap transactions. For additional information on derivative
instruments in which each Fund was invested during and at the end of the
reporting period, please refer to the Portfolio of Investments, Financial
Statements and Notes to Financial Statements sections of this shareholder
report.
4
NNO also invested in certain types of derivative(4) instruments during this
period. The goal of this strategy was to help us manage common share net asset
value (NAV) volatility without having a negative impact on income streams or
common share dividends over the short term. As of November 30, 2008, we
continued to use inverse floaters in all of the Funds, while all derivatives
have been removed from the Funds.
HOW DID THE FUNDS PERFORM?
Individual results for these Nuveen Georgia and North Carolina Funds, as well as
relevant index and peer group information, are presented in the accompanying
table.
Average Annual Total Returns on Common Share Net Asset Value*
For periods ended 11/30/08
Six-Month 1-Year 5-Year 10-Year
Georgia Funds
NPG -13.08% -13.46% 0.92% 3.51%
NZX -11.42% -11.43% 1.61% N/A
NKG -14.73% -15.14% 0.53% N/A
North Carolina Funds
NNC -10.35% -10.39% 1.18% 3.76%
NRB -7.62% -6.93% 2.49% N/A
NNO -9.25% -8.90% 1.84% N/A
NII -8.65% -8.07% 2.24% N/A
Lipper Other States
Municipal Debt Funds
Average(5) -14.13% -14.38% 0.64% 3.22%
Barclays Capital
Municipal Bond Index(6) -4.98% -3.61% 2.59% 4.14%
S&P National Municipal
Bond Index(7) -5.48% -4.43% 2.55% N/A
For the six months ended November 30, 2008, the cumulative returns on common
share NAV for NPG, NZX, NNC, NRB, NNO and NII exceeded the average return for
the Lipper Other States Municipal Debt Funds Average, while NKG trailed the
Lipper average. All of the Funds underperformed the national Barclays Capital
Municipal Bond Index and Standard & Poor's National Municipal Bond Index.
Shareholders should note the Lipper Other States Municipal Debt Funds Average
and the Barclays Capital Municipal Bond Index include bonds from states not
covered in this report, which may make direct comparisons between the Funds and
these benchmarks less meaningful.
Key management factors that influenced the Funds' returns during this period
included duration and yield curve positioning, the use of derivatives, credit
exposure and sector allocations. In addition, the use of leverage was an
important factor
* Six-month returns are cumulative; returns for one-year, five-year, and
ten-year are 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.
(5) The Lipper Other States Municipal Debt Funds Average is calculated using the
returns of all closed-end funds in this category for each period as follows: six
months, 46; 1 year, 46; 5 years, 46; and 10 years, 18. The performance of the
Lipper Other States Municipal Debt Funds Average represents the overall average
of returns for funds from ten different states with a wide variety of municipal
market conditions. Fund and Lipper returns assume reinvestment of dividends.
(6) The Barclays Capital (formerly 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.
(7) The Standard & Poor's (S&P) National Municipal Bond Index is an unleveraged,
market value-weighted index designed to measure the performance of the
investment-grade U.S. municipal bond market.
5
affecting each Fund's performance. The impact of leverage is discussed in more
detail on page 7.
Over this period, we saw the yield curve steepen as interest rates at the short
end of the curve declined and longer rates rose. Given these changes in the
interest rate environment, bonds in the Barclays Capital Municipal Bond Index
with maturities of ten years or less generally outperformed the market as a
whole, with bonds maturing in two to four years benefiting the most. Because
they were less sensitive to interest rate changes, these shorter bonds generally
outperformed credits with longer maturities, with the biggest losses posted by
bonds with the longest maturities (twenty-two years and longer). In general,
these Funds had less exposure to the outperforming short end of the yield curve
compared with the index. In NNC, NRB, NNO and NZF the negative impact of being
underweighted in the short part of the curve was offset by an overweight in
bonds with intermediate maturities, which performed well, and a lower allocation
to the underperforming long end of the curve. Overall, duration and yield curve
positioning was a comparative positive for the performances of NZX, NNC, NRB and
NNO and a comparative negative in NPG, NKG and NII.
As mentioned earlier, NZX and NNO used derivative positions throughout this
period to synthetically extend duration and move it closer to our strategic
duration target. Despite the fact that longer duration municipal bonds generally
underperformed those with shorter durations, the use of these derivatives
actually had a positive impact on NNO and NZX's total return performance. This
positive impact was attributable to the fact that the derivative positions
provided exposure to taxable bond markets during a period when, in contrast to
historical trends, the taxable markets and the municipal market moved in
opposite directions. As municipal market performance lagged the gains in the
taxable markets, these derivatives performed well. The derivatives used in NNC
did not have a meaningful impact on performance.
At the same time, the inverse floaters used by all seven of these Funds
generally had a negative impact on performance. This resulted from the fact that
the inverse floaters effectively increased the Funds' exposure to longer
maturity bonds at a time when shorter maturities were in favor in the market.
Credit exposure was also an important factor in performance during these past
six months. Because risk-averse investors generally sought higher quality
investments as disruptions in the financial markets deepened, bonds with higher
credit quality typically performed very well. At the same time, as many
investors avoided high-yield securities, bonds rated BBB or below and non-rated
bonds generally posted poor returns. Insured bonds with underlying credits that
were rated BBB or non-rated, originally purchased because of the higher yields
they offered, were disproportionately
6
impacted (compared with bonds with underlying ratings of AA or A) if the insurer
backing the bond was downgraded.
During this period, pre-refunded bonds, which are backed by U.S. Treasury
securities, were one of the top performing segments of the market, due primarily
to their shorter effective maturities, higher credit quality and perceived
safety. Among the Georgia Funds, NZX had the largest allocation of pre-refunded
bonds as of November 30, 2008, while NRB and NII held the heaviest holdings of
these bonds among the North Carolina Funds. Additional sectors of the market
that generally contributed to the Funds' performances included general
obligation and other tax-backed bonds and water and sewer, electric utilities
and education credits. However, the Funds generally had lower weightings of
tax-backed bonds than the index, which lessened the relative positive
contribution from this sector.
In general, bonds that were lower rated, regardless of sector, continued to post
weak performance. Revenue bonds as a whole, and the industrial development
sector in particular, underperformed the general municipal market. Next to the
industrial development revenue sector, zero coupon bonds were among the worst
performing categories in the municipal market. The health care and housing
sectors also performed poorly.
IMPACT OF THE FUNDS' CAPITAL STRUCTURES AND LEVERAGE STRATEGIES ON PERFORMANCE
In addition to the factors previously discussed, one of the primary factors
impacting the six-month returns of these Funds relative to those of the
unleveraged Barclays Capital Municipal Bond Index and S&P National Municipal
Bond Index was the Funds' use of financial leverage. While leverage offers
opportunities to generate additional income and total returns for common
shareholders, the benefits provided by leveraging are influenced by the price
movements of the bonds in each Fund's portfolio. During this period, as yields
on longer-term bonds rose and their prices correspondingly fell, declining
valuations had a negative effect on performance that was magnified by the use of
leverage. In addition, at various points during the six-month period, the Funds'
borrowing costs were relatively high, negatively impacting their total returns.
RECENT MARKET DEVELOPMENTS
Beginning in October, the nation's financial institutions and financial
markets--including the municipal bond market--experienced significant turmoil.
Reductions in demand decreased valuations of municipal bonds across all credit
ratings, especially those with lower credit ratings, and this generally reduced
the Funds' common share net asset values. The municipal market is one in which
dealer firms make markets in bonds on a principal basis using their proprietary
capital, and during the recent market turmoil these firms' capital was severely
constrained. As a result, some firms were
7
unwilling to commit their capital to purchase and to serve as a dealer for
municipal bonds. This reduction in dealer involvement in the market was
accompanied by significant net selling pressure by investors, particularly with
respect to lowerrated municipal bonds, as institutional investors generally
removed money from the municipal bond market, at least in part because of their
need to reduce the leveraging of their municipal investments. This deleveraging
was in part driven by the overall reduction in the amount of financing available
for such leverage, the increased costs of such leverage financing, and the need
to reduce leverage levels that had recently increased due to the decline in
municipal bond prices.
Municipal bond prices were further negatively impacted by concerns that the need
for further deleveraging and a supply overhang (a large amount of new issues
that were postponed) would cause selling pressure to persist for a period of
time. In addition to falling prices, the following market conditions resulted in
greater price volatility of municipal bonds - wider credit spreads (i.e., lower
quality bonds fell in price more than higher quality bonds); significantly
reduced liquidity (i.e., the ability to sell bonds at a price close to their
carrying value), particularly for lower quality bonds; and a lack of price
transparency (i.e., the ability to accurately determine the price at which a
bond would likely trade). Reduced liquidity was most pronounced in mid-October,
although it improved considerably after that period.
RECENT DEVELOPMENTS REGARDING BOND INSURANCE COMPANIES
As mentioned earlier, another factor that had an impact on the performance of
these Funds was their position in bonds backed by municipal bond insurers that
experienced downgrades in their credit ratings. During the period covered by
this report, AMBAC, CIFG, FGIC, MBIA, RAAI and SYNCORA (formerly XLCA)
experienced one or more rating reductions by at least one or more rating
agencies while AGC and FSA received their first rating reductions by at least
one rating agency. At the time this report was prepared, at least one rating
agency has placed each of these insurers except AGC on "negative outlook" or
"negative credit watch," which may presage one or more rating reductions for
such insurer or insurers in the future. As concern increased about the balance
sheets of these insurers, prices on bonds insured by these companies -
especially those bonds with weaker underlying credits - declined, detracting
from the Funds' performance. By the end of this period, most insured bonds were
being valued according to their fundamentals as if they were uninsured. On the
whole, the holdings of all of our Funds continued to be well diversified not
only between insured and uninsured bonds, but also within the insured bond
category. It is important to note that municipal bonds historically have had a
very low rate of default.
8
RECENT DEVELOPMENTS IN THE AUCTION RATE PREFERRED SECURITIES MARKETS
Beginning in February 2008, more shares for sale were submitted in the regularly
scheduled auctions for the auction rate preferred shares issued by these Funds
than there were offers to buy. This meant that these auctions "failed to clear"
and that many or all auction rate preferred shareholders who wanted to sell
their shares in these auctions were unable to do so. This decline in liquidity
in auction rate preferred shares did not lower the credit quality of these
shares, and auction rate preferred shareholder unable to sell their shares
received distributions at the "maximum rate" applicable to failed auctions as
calculated in accordance with the pre-established terms of the auction rate
preferred shares. At the time this report was prepared, the Funds' managers
could not predict when future auctions might succeed in attracting sufficient
buyers for the shares offered, if ever. The Funds' managers are working
diligently to refund the auction preferred shares, and have made progress in
these efforts, (at least for certain funds) but at present there is no assurance
that these efforts will succeed. These developments have generally not affected
the portfolio management or investment policies of these Funds. However, one
implication of these auction failures for common shareholders is that the Funds'
cost of leverage will likely be higher, at least temporarily, than it otherwise
would have been had the auctions continued to be successful. As a result, the
Funds' future common share earnings may be lower than they otherwise would have
been.
On June 11, 2008, Nuveen announced the Fund Board's approval of plans to use
tender option bonds (TOBs), also known as floating rate securities, to refinance
a portion of the municipal Funds' outstanding auction rate preferred shares, for
which auctions have been failing for several months. This plan included an
initial phase of approximately $1 billion in forty-one Funds. As of November 30,
2008, none of the Funds included in this shareholder report had issued par
redemption notices for their auction rate preferred shares.
On August 7, 2008, four Nuveen municipal Funds (none of which are included in
this shareholder report) issued par redemption notices for all outstanding
shares of their auction rate preferred shares totaling $569.9 million. These
redemptions were achieved through the issuance of variable rate demand preferred
shares (VRDP) in conjunction with the proceeds from the creation of TOBs.
On January 8, 2009, subsequent to the reporting period, NKG noticed for
redemption $1.3 million outstanding auction rate preferred shares, at
liquidation value, using the proceeds from the issuance of TOBs and portfolio
sales.
For current, up-to-date information, please visit the Nuveen CEF Auction Rate
Preferred Resource Center at: http://www.nuveen.com/ResourceCenter/AuctionRate
Preferred.aspx.
9
Common Share
Dividend and Share Price
INFORMATION
During the six-month period ended November 30, 2008, there was one dividend
increase in each of these seven Funds.
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 common share 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 common share NAV. Each Fund will, over time,
pay all of its net investment income as dividends to shareholders. As of
November 30, 2008, all of the Funds in this report had positive UNII balances,
based upon our best estimate, for tax purposes and negative UNII balances for
financial statement purposes.
The Funds' Board of Trustees approved an open-market share repurchase program on
July 30, 2008, under which each Fund may repurchase up to 10% of its common
shares. As of November 30, 2008, the Funds had not repurchased any of their
outstanding common shares.
As of November 30, 2008, the Funds' common share prices were trading at
discounts to their common share NAVs as shown in the accompanying chart:
11/30/08 Six-Month Average
Discount Premium/Discount
NPG -19.34% -13.16%
NZX -12.87% -12.08%
NKG -0.52% -7.23%
NNC -11.84% -7.13%
NRB -10.70% +3.60%
NNO -4.13% -7.44%
NII -11.68% -1.91%
10
NPG Performance OVERVIEW | Nuveen Georgia Premium Income Municipal Fund as of
November 30, 2008
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 38%
AA 36%
A 16%
BBB 8%
BB or Lower 1%
N/R 1%
[BAR CHART]
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Dec 0.05
Jan 0.05
Feb 0.05
Mar 0.05
Apr 0.05
May 0.05
Jun 0.05
Jul 0.05
Aug 0.05
Sep 0.0515
Oct 0.0515
Nov 0.0515
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
12/01/07 12.85
12.9
12.8
12.75
12.8
13.32
13.45
13.12
13.38
13.48
13.56
12.87
12.78
12.35
12.69
12.55
12.41
12.7
12.78
12.88
13.09
13
13
12.95
12.99
13.1
13.15
13.13
12.82
12.91
12.52
12.56
12.85
12.2
12.16
12.31
12.3
12.2
12.343
12.16
12.3
12.26
11.52
11.144
10.71
8.494
9.8
10.2
10.45
10.52
10.3
9.7
11/30/08 9.72
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 9.72
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.05
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -19.34%
--------------------------------------------------------------------------------
Market Yield 6.36%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 9.39%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 45,871
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.21
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 13.52
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/20/93)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) -24.06% -13.08%
--------------------------------------------------------------------------------
1-Year -19.60% -13.46%
--------------------------------------------------------------------------------
5-Year -4.78% 0.92%
--------------------------------------------------------------------------------
10-Year 0.17% 3.51%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 16.6%
--------------------------------------------------------------------------------
Water and Sewer 15.2%
--------------------------------------------------------------------------------
Tax Obligation/Limited 14.2%
--------------------------------------------------------------------------------
Health Care 13.5%
--------------------------------------------------------------------------------
Tax Obligation/General 12.1%
--------------------------------------------------------------------------------
Education and Civic Organizations 12.1%
--------------------------------------------------------------------------------
Utilities 7.5%
--------------------------------------------------------------------------------
Other 8.8%
--------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of November 30, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 32.3%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders a capital gains distribution in December 2007
of $0.0424 per share.
11
NZX Performance OVERVIEW | Nuveen Georgia Dividend Advantage Municipal Fund as
of November 30, 2008
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 10.90
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.51
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -12.87%
--------------------------------------------------------------------------------
Market Yield 6.06%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 8.95%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 24,632
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 12.92
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 11.33
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) -16.80% -11.42%
--------------------------------------------------------------------------------
1-Year -15.25% -11.43%
--------------------------------------------------------------------------------
5-Year -1.32% 1.61%
--------------------------------------------------------------------------------
Since Inception 0.92% 3.63%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 22.7%
--------------------------------------------------------------------------------
Education and Civic Organizations 15.0%
--------------------------------------------------------------------------------
Health Care 14.9%
--------------------------------------------------------------------------------
Water and Sewer 13.4%
--------------------------------------------------------------------------------
Housing/Single Family 8.3%
--------------------------------------------------------------------------------
Tax Obligation/General 7.9%
--------------------------------------------------------------------------------
Tax Obligation/Limited 5.7%
--------------------------------------------------------------------------------
Other 12.1%
--------------------------------------------------------------------------------
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 40%
AA 28%
A 20%
BBB 8%
BB or Lower 1%
N/R 3%
[BAR CHART]
2007-2008 Monthly Tax-Free Dividends Per Common Share
Dec 0.054
Jan 0.054
Feb 0.054
Mar 0.054
Apr 0.054
May 0.054
Jun 0.054
Jul 0.054
Aug 0.054
Sep 0.055
Oct 0.055
Nov 0.055
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
12/01/07 13.49
13.77
13.41
13.4799
13.6
14.16
14.14
13.95
13.97
14.03
14.02
13.64
13.95
13
13.25
13.22
13.13
13.31
13.61
13.31
13.39
13.47
13.427
13.58
13.55
13.52
13.47
13.5
13.35
13.15
13.08
13.05
12.85
12.71
12.64
12.77
12.99
12.65
12.86
12.7499
12.8
12.74
12.16
11.2
10.77
9.59
10.8999
10.72
10.8999
10.9
10.14
10.17
11/30/08 10.8999
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of November 30, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 32.3%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
12
NKG Performance OVERVIEW | Nuveen Georgia Dividend Advantage Municipal Fund 2 as
of November 30, 2008
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 32%
AA 31%
A 18%
BBB 16%
N/R 3%
[BAR CHART]
2007-2008 Monthly Tax-Free Dividends Per Common Share
Dec 0.0545
Jan 0.0545
Feb 0.0545
Mar 0.0515
Apr 0.0515
May 0.0515
Jun 0.0515
Jul 0.0515
Aug 0.0515
Sep 0.053
Oct 0.053
Nov 0.053
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
12/01/07 13.1
13.11
12.95
12.76
12.8
13.49
14.22
13.29
13.52
13.68
13.72
13.8
13.6
13.15
13.1
13.02
13.18
12.935
13.19
13.13
13.13
13.02
12.95
13.05
13.05
13.18
13.18
13.15
12.98
12.77
13
12.65
12.85
12.76
12.77
12.87
12.7401
12.41
12.82
12.85
12.49
12.37
11.721
11
10.8
9
10.15
11.25
11.7
11.37
11.2116
11.19
11/30/08 11.52
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 11.52
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 11.58
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -0.52%
--------------------------------------------------------------------------------
Market Yield 5.52%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 8.15%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 52,747
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.08
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 14.21
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/02)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) -10.29% -14.73%
--------------------------------------------------------------------------------
1-Year -7.91% -15.14%
--------------------------------------------------------------------------------
5-Year 1.70% 0.53%
--------------------------------------------------------------------------------
Since Inception 0.86% 1.52%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Water and Sewer 21.2%
--------------------------------------------------------------------------------
Health Care 14.9%
--------------------------------------------------------------------------------
Tax Obligation/General 13.6%
--------------------------------------------------------------------------------
Tax Obligation/Limited 13.6%
--------------------------------------------------------------------------------
U.S. Guaranteed 10.4%
--------------------------------------------------------------------------------
Education and Civic Organizations 9.5%
--------------------------------------------------------------------------------
Transportation 4.3%
--------------------------------------------------------------------------------
Other 12.5%
--------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of November 30, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 32.3%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
13
NNC Performance OVERVIEW | Nuveen North Carolina Premium Income Municipal Fund
as of November 30, 2008
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 10.80
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.25
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -11.84%
--------------------------------------------------------------------------------
Market Yield 5.61%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 8.45%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 77,780
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 14.58
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 12.37
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/20/93)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) -16.75% -10.35%
--------------------------------------------------------------------------------
1-Year -10.26% -10.39%
--------------------------------------------------------------------------------
5-Year -3.41% 1.18%
--------------------------------------------------------------------------------
10-Year 0.89% 3.76%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 25.6%
--------------------------------------------------------------------------------
Education and Civic Organizations 15.0%
--------------------------------------------------------------------------------
Health Care 13.6%
--------------------------------------------------------------------------------
U.S. Guaranteed 9.9%
--------------------------------------------------------------------------------
Utilities 9.0%
--------------------------------------------------------------------------------
Tax Obligation/General 7.0%
--------------------------------------------------------------------------------
Water and Sewer 5.9%
--------------------------------------------------------------------------------
Other 14.0%
--------------------------------------------------------------------------------
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 30%
AA 43%
A 18%
BBB 7%
N/R 2%
[BAR CHART]
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Dec 0.049
Jan 0.049
Feb 0.049
Mar 0.049
Apr 0.049
May 0.049
Jun 0.049
Jul 0.049
Aug 0.049
Sep 0.0505
Oct 0.0505
Nov 0.0505
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
12/01/07 12.7
12.81
12.75
12.57
12.55
13.14
13.282
13.3399
13.25
13.48
13.63
12.9
12.84
12.75
12.87
12.7499
12.79
12.9401
12.86
12.85
12.98
13.2
13.05
13.25
12.99
13.03
13.3
13.22
12.93
12.6499
12.52
13.02
12.82
12.86
12.69
12.92
12.75
12.61
12.76
13.24
12.96
12.8
12.62
12.01
11.3
9.87
10.53
11.78
11.4
11.81
12
10.6
11/30/08 10.8
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of November 30, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 33.6%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders a capital gains distribution in December 2007
of $0.0358 per share.
14
NRB Performance OVERVIEW | Nuveen North Carolina Dividend Advantage Municipal
Fund as of November 30, 2008
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 44%
AA 28%
A 17%
BBB 8%
N/R 3%
[BAR CHART]
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Dec 0.057
Jan 0.057
Feb 0.057
Mar 0.057
Apr 0.057
May 0.057
Jun 0.057
Jul 0.057
Aug 0.057
Sep 0.058
Oct 0.058
Nov 0.058
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
12/01/07 14.1001
13.67
13.8
13.54
13.62
14.65
14.9
14.8
14.63
14.2699
14.5799
14.5
13.8
13.22
14.04
14.55
14.3
14.35
14.23
14.65
14.4
14.4
14.56
15.07
14.7
14.72
15.28
15.44
14.68
14.39
14.3
14.2
14.05
14.2
14.46
14.8
15.13
15.16
15.27
15.28
15.4
14.6
15.02
14.6
14.15
11.352
12.8
14.79
14.23
14.05
13.39
12.23
11/30/08 11.68
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 11.68
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 13.08
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -10.70%
--------------------------------------------------------------------------------
Market Yield 5.96%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 8.98%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 29,628
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 13.45
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 12.64
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 1/25/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) -21.63% -7.62%
--------------------------------------------------------------------------------
1-Year -12.77% -6.93%
--------------------------------------------------------------------------------
5-Year -1.40% 2.49%
--------------------------------------------------------------------------------
Since Inception 2.27% 4.66%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Water and Sewer 25.1%
--------------------------------------------------------------------------------
Tax Obligation/Limited 15.8%
--------------------------------------------------------------------------------
Utilities 13.5%
--------------------------------------------------------------------------------
U.S. Guaranteed 11.2%
--------------------------------------------------------------------------------
Health Care 10.4%
--------------------------------------------------------------------------------
Education and Civic Organizations 9.8%
--------------------------------------------------------------------------------
Tax Obligation/General 6.0%
--------------------------------------------------------------------------------
Other 8.2%
--------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of November 30, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 33.6%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders a capital gains distribution in December 2007
of $0.0338 per share.
15
NNO Performance OVERVIEW | Nuveen North Carolina Dividend Advantage Municipal
Fund 2 as of November 30, 2008
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 12.30
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.83
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -4.13%
--------------------------------------------------------------------------------
Market Yield 5.27%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 7.94%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 48,120
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 12.42
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 11.44
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/15/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) -7.69% -9.25%
--------------------------------------------------------------------------------
1-Year -2.57% -8.90%
--------------------------------------------------------------------------------
5-Year 0.58% 1.84%
--------------------------------------------------------------------------------
Since Inception 2.70% 4.03%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 22.8%
--------------------------------------------------------------------------------
Health Care 15.1%
--------------------------------------------------------------------------------
Water and Sewer 14.7%
--------------------------------------------------------------------------------
U.S. Guaranteed 10.1%
--------------------------------------------------------------------------------
Transportation 10.0%
--------------------------------------------------------------------------------
Education and Civic Organizations 9.5%
--------------------------------------------------------------------------------
Utilities 8.9%
--------------------------------------------------------------------------------
Other 8.9%
--------------------------------------------------------------------------------
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 37%
AA 36%
A 20%
BBB 4%
N/R 3%
[BAR CHART]
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Dec 0.0515
Jan 0.0515
Feb 0.0515
Mar 0.0515
Apr 0.0515
May 0.0515
Jun 0.0515
Jul 0.0515
Aug 0.0515
Sep 0.054
Oct 0.054
Nov 0.054
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
12/01/07 13.31
13.36
13
13
13.17
13.8
13.83
13.696
13.75
13.72
13.72
13.36
13.45
13.1
13.4
13.2
13.39
13.51
13.55
13.4
13.42
13.55
13.45
13.6
13.35
13.53
13.66
13.86
13.25
13.12
12.77
13.1
13.16
13.057
12.7
13.05
13.2199
13.29
13.05
13.21
13.5
13.48
13.45
13.03
13
9.8
10.61
12.12
11.9
12.5852
12.07
11.6199
11/30/08 12.3
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of November 30, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 33.6%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders a capital gains distribution in December 2007
of $0.0638 per share.
16
NII Performance OVERVIEW | Nuveen North Carolina Dividend Advantage Municipal
Fund 3 as of November 30, 2008
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S
Guaranteed 43%
AA 38%
A 10%
BBB 7%
N/R 2%
[BAR CHART]
2007-2008 Monthly Tax-Free Dividends Per Common Share
Dec 0.0545
Jan 0.0545
Feb 0.0545
Mar 0.0545
Apr 0.0545
May 0.0545
Jun 0.0545
Jul 0.0545
Aug 0.0545
Sep 0.0555
Oct 0.0555
Nov 0.0555
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
12/01/07 13.38
13.37
13.47
13.2
13.3799
14.23
13.94
13.96
13.5
13.61
14.05
13.2901
13.36
13.16
13.62
13.568
13.3
13.46
13.55
13.59
13.65
13.8501
13.94
13.95
13.76
14
14.124
14.27
14
13.92
13.25
13.27
14.1
13.6
13.98
13.75
13.82
13.6
13.7
13.84
13.79
13.624
13.61
13.44
13
9.3
10.75
11.91
12.78
13
12.02
10.75
11/30/08 11.12
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 11.12
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.59
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -11.68%
--------------------------------------------------------------------------------
Market Yield 5.99%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 9.02%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 49,507
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 13.66
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 12.96
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/02)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) -19.22% -8.65%
--------------------------------------------------------------------------------
1-Year -11.56% -8.07%
--------------------------------------------------------------------------------
5-Year -0.53% 2.24%
--------------------------------------------------------------------------------
Since Inception 0.13% 2.96%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 22.1%
--------------------------------------------------------------------------------
Water and Sewer 21.3%
--------------------------------------------------------------------------------
Tax Obligation/General 13.5%
--------------------------------------------------------------------------------
U.S. Guaranteed 12.4%
--------------------------------------------------------------------------------
Utilities 10.3%
--------------------------------------------------------------------------------
Health Care 6.7%
--------------------------------------------------------------------------------
Transportation 5.8%
--------------------------------------------------------------------------------
Other 7.9%
--------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of November 30, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 33.6%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
17
NPG | Nuveen Georgia Premium Income Municipal Fund
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.5% (1.0% OF TOTAL INVESTMENTS)
$ 1,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 712,660
Asset-Backed Refunding Bonds, Series 2002, 5.500%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 19.1% (12.1% OF TOTAL
INVESTMENTS)
1,000 Athens-Clarke County Unified Government Development Authority, 12/12 at 100.00 A 1,016,110
Georgia, Educational Facilities Revenue Bonds, UGAREF CCRC
Building LLC Project, Series 2002, 5.000%, 12/15/16 - AMBAC
Insured
2,000 Atlanta Development Authority, Georgia, Educational Facilities 7/17 at 100.00 A1 1,606,900
Revenue Bonds, Science Park LLC Project, Series 2007,
5.000%, 7/01/39
1,550 Bulloch County Development Authority, Georgia, Student Housing 8/14 at 100.00 A1 1,486,032
and Athletic Facility Lease Revenue Bonds, Georgia Southern
University, Series 2004, 5.250%, 8/01/21 - SYNCORA GTY
Insured
700 Carrollton Payroll Development Authority, Georgia, Student 9/14 at 100.00 A1 654,913
Housing Revenue Bonds, University of West Georgia, Series
2004A, 5.000%, 9/01/21 - SYNCORA GTY Insured
1,535 Fulton County Development Authority, Georgia, Revenue Bonds, 5/14 at 100.00 AA 1,657,739
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 A2 1,069,694
Bonds, Armstrong Atlantic State University, Compass Point
LLC Project, Series 2005, 5.000%, 7/01/25 - SYNCORA GTY
Insured
1,500 Savannah Economic Development Authority, Georgia, Revenue 12/15 at 100.00 A3 1,274,115
Bonds, Armstrong Center LLC, Series2005A, 5.000%, 12/01/34
- SYNCORA GTY Insured
------------------------------------------------------------------------------------------------------------------------------------
9,465 Total Education and Civic Organizations 8,765,503
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 21.4% (13.5% OF TOTAL INVESTMENTS)
800 Chatham County Hospital Authority, Savannah, Georgia, Hospital 7/11 at 101.00 BBB 598,432
Revenue Improvement Bonds, Memorial Health University
Medical Center Inc., Series 2001A, 6.125%, 1/01/24
500 Clark County Hospital Authority, Georgia, Hospital Revenue 1/17 at 100.00 AA 435,505
Bonds, Athens Regional Medical Center, Series 2007, 5.000%,
1/01/27 - MBIA Insured
2,000 Clarke County Hospital Authority, Georgia, Hospital Revenue 1/12 at 101.00 AA 1,687,040
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 688,383
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 Aa3 2,343,540
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 Aa3 999,388
Certificates, Floyd Medical Center, Series 2003, 5.000%,
7/01/19 - MBIA Insured
1,060 Henry County Hospital Authority, Georgia, Revenue 7/14 at 101.00 Aa2 994,630
Certificates, Henry Medical Center, Series2004, 5.000%,
7/01/20 - MBIA Insured
900 Houston County Hospital Authority, Georgia, Revenue Bonds, 10/17 at 100.00 A2 667,737
Houston Healthcare Project, Series2007, 5.250%, 10/01/35
1,000 Savannah Hospital Authority, Georgia, Revenue Bonds, St. 1/14 at 100.00 A3 822,830
Joseph's/Candler Health System, Series 2003, 5.250%,
7/01/23 - RAAI Insured
750 Valdosta and Lowndes County Hospital Authority, Georgia, 10/17 at 100.00 A+ 569,070
Revenue Certificates, South Georgia Medical Center, Series
2007, 5.000%, 10/01/33
------------------------------------------------------------------------------------------------------------------------------------
12,000 Total Health Care 9,806,555
------------------------------------------------------------------------------------------------------------------------------------
18
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.8% (1.2% OF TOTAL INVESTMENTS)
$ 1,000 Cobb County Development Authority, Georgia, Student Housing 7/17 at 100.00 Baa1 $ 842,230
Revenue Bonds, KSU Village II Real Estate Foundation LLC
Project, Series 2007A, 5.250%, 7/15/38 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.8% (1.1% OF TOTAL INVESTMENTS)
900 Georgia Housing and Finance Authority, Single Family Mortgage 12/11 at 100.00 AAA 819,792
Bonds, Series 2002B-2, 5.350%,12/01/22 (Alternative Minimum
Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.1% (0.7% OF TOTAL INVESTMENTS)
500 Savannah Economic Development Authority, Georgia, Revenue Bonds, 7/12 at 100.00 AA 488,415
GTREP Project, Series 2002, 5.000%, 7/01/22 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 2.7% (1.7% OF TOTAL INVESTMENTS)
750 Effingham County Industrial Development Authority, Georgia, 6/11 at 101.00 B2 530,100
Pollution Control Revenue Refunding Bonds, Georgia-Pacific
Project, Series 2001, 6.500%, 6/01/31
1,000 Richmond County Development Authority, Georgia, Environmental 2/11 at 101.00 BBB 700,660
Improvement Revenue Bonds, International Paper Company,
Series 2001A, 6.250%, 2/01/25 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,750 Total Materials 1,230,760
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 19.1% (12.1% OF TOTAL INVESTMENTS)
540 Cherokee County Resource Recovery Development Authority, 7/17 at 100.00 AA 424,910
Georgia, Solid Waste Disposal Revenue Bonds, Ball Ground
Recycling LLC Project, Series 2007A, 5.000%, 7/01/37 - AMBAC
Insured(Alternative Minimum Tax)
2,215 Decatur, Georgia, General Obligation Bonds, Series 2007, 5.000%, 1/17 at 100.00 AAA 2,148,616
1/01/31 - FSA Insured
100 Georgia State, General Obligation Bonds, Series 2007, 5.000%, 8/17 at 100.00 AAA 101,186
8/01/24
1,000 Georgia, General Obligation Bonds, Series 2002D, 5.000%, 8/01/16 8/12 at 100.00 AAA 1,055,110
1,000 Georgia, General Obligation Bonds, Series 2005B, 5.000%, 7/01/15 No Opt. Call AAA 1,101,810
610 Gwinnett County School District, Georgia, General Obligation 2/18 at 100.00 AAA 532,634
Bonds, Series 2008, Trust 2868, 11.766%, 2/01/36 (IF)
2,500 Paulding County School District, Georgia, General Obligation 2/17 at 100.00 AA+ 2,296,225
Bonds, Series 2007, 5.000%, 2/01/33
800 Puerto Rico, General Obligation Bonds, Series 2004A, 5.250%, 7/14 at 100.00 BBB- 698,800
7/01/22
500 Wayne County Hospital Authority, Georgia, Hospital Revenue 3/16 at 100.00 N/R 419,615
Bonds, Series 2006, 5.000%,3/01/23 - SYNCORA GTY Insured
------------------------------------------------------------------------------------------------------------------------------------
9,265 Total Tax Obligation/General 8,778,906
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 22.5% (14.2% OF TOTAL INVESTMENTS)
420 Atlanta, Georgia, Tax Allocation Bonds Atlanta Station Project, 12/17 at 100.00 AAA 391,448
Series 2007, 5.000%,12/01/23 - AGC Insured
300 Atlanta, Georgia, Tax Allocation Bonds, Eastside Project, Series No Opt. Call N/R 265,542
2005A, 5.625%, 1/01/16(Alternative Minimum Tax)
2,000 Cobb-Marietta Coliseum and Exhibit Hall Authority, Cobb County, 1/14 at 100.00 AAA 2,007,940
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 AA 3,420,547
Revenue Refunding Bonds, Series 1993, 5.625%,
10/01/26 - MBIA Insured
2,600 Macon-Bibb County Urban Development Authority, Georgia, Revenue 8/12 at 101.00 AA 2,773,342
Refunding Bonds, Public Facilities Projects, Series 2002A,
5.375%, 8/01/17
1,000 Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax No Opt. Call Aa3 1,116,850
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- 350,240
Revenue Bonds, Series 2005B, 5.000%, 7/01/41
------------------------------------------------------------------------------------------------------------------------------------
10,295 Total Tax Obligation/Limited 10,325,909
------------------------------------------------------------------------------------------------------------------------------------
19
NPG | Nuveen Georgia Premium Income Municipal Fund (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.8% (3.1% OF TOTAL INVESTMENTS)
$ 2,290 Atlanta, Georgia, Airport General Revenue Bonds, Series 2004G,
5.000%, 1/01/26 - FSA Insured 1/15 at 100.00 AAA $ 2,213,285
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 26.3% (16.6% OF TOTAL INVESTMENTS) (4)
735 Coweta County Development Authority, Georgia, Revenue Bonds, 1/13 at 100.00 N/R (4) 810,573
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 Bonds, 6/11 at 102.00 Aa3 (4) 3,460,453
Series 2001, 5.250%, 6/01/26(Pre-refunded 6/01/11)
500 DeKalb County, Georgia, Water and Sewerage Revenue Bonds, Series 10/10 at 101.00 AAA 534,950
2000, 5.125%, 10/01/31 (Pre-refunded 10/01/10) - MBIA Insured
1,000 Fairburn, Georgia, Combined Utility Revenue Bonds, Series 2000, 10/10 at 101.00 A- (4) 1,080,600
5.750%, 10/01/20(Pre-refunded 10/01/10)
1,750 Gainesville and Hall County Hospital Authority, Georgia, Revenue 5/11 at 100.00 A- (4) 1,880,323
Anticipation Certificates, Northeast Georgia Health
Services Inc., Series 2001, 5.500%, 5/15/31
(Pre-refunded 5/15/11)
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) 85,416
10 6.400%, 1/01/09 (ETM) No Opt. Call A+ (4) 10,049
25 Georgia Municipal Electric Authority, Senior Lien General Power 1/17 at 100.00 A+ (4) 27,694
Revenue Bonds, Series 1993Z, 5.500%, 1/01/20 (Pre-refunded
1/01/17) - FGIC Insured
3,750 Gwinnett County Hospital Authority, Georgia, Revenue 2/12 at 102.00 Aaa 4,154,246
Anticipation Certificates, Gwinnett
Hospital System Inc. Project, Series 1997B, 5.300%, 9/01/27
(Pre-refunded 2/14/12) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
11,020 Total U.S. Guaranteed 12,044,304
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 11.9% (7.5% OF TOTAL INVESTMENTS)
1,000 Georgia Municipal Electric Authority, General Power Revenue 1/17 at 100.00 AA 902,430
Bonds, Project 1, Series 2007A, 5.000%, 1/01/25 - MBIA Insured
1,655 Georgia Municipal Electric Authority, Project One Special No Opt. Call A+ 1,661,140
Obligation Bonds, Fifth Crossover Series 1998Y, 6.400%,
1/01/09
975 Georgia Municipal Electric Authority, Senior Lien General Power No Opt. Call A+ 978,968
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 AA 977,420
Subordinated Lien Revenue Bonds, Series2003A, 5.000%, 1/01/22
- MBIA Insured
1,200 Virgin Islands Water and Power Authority, Electric System 7/17 at 100.00 BBB- 954,144
Revenue Bonds, Series 2007B, 5.000%, 7/01/31
------------------------------------------------------------------------------------------------------------------------------------
5,830 Total Utilities 5,474,102
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 24.0% (15.2% 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 1,151,855
500 5.000%, 11/01/37 - FSA Insured 11/14 at 100.00 AAA 429,280
2,490 Cherokee County Water and Sewerage Authority, Georgia, Revenue 8/18 at 100.00 AAA 2,261,792
Bonds, Series 2001, 5.000%,8/01/35 - FSA Insured
335 Coweta County Water and Sewer Authority, Georgia, Revenue Bonds, 6/11 at 102.00 Aa3 335,131
Series 2001, 5.250%, 6/01/26
Coweta County Water and Sewer Authority, Georgia, Revenue Bonds,
Series 2007:
500 5.000%, 6/01/32 6/18 at 100.00 Aa3 461,665
150 5.000%, 6/01/37 6/18 at 100.00 Aa3 135,483
890 Douglasville-Douglas County Water and Sewer Authority, Georgia, 6/17 at 100.00 AA 796,968
Water and Sewer Revenue Bonds, Series 2007, 5.000%, 6/01/37 -
MBIA Insured
750 Forsyth County Water and Sewerage Authority, Georgia, Revenue 4/17 at 100.00 AAA 677,535
Bonds, Series 2007, 5.000%,4/01/37 - FSA Insured
20
PRINCIPAL OPTIONAL CALL
AMOUNT(000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,950 Fulton County, Georgia, Water and Sewerage Revenue Bonds, 1/14 at 100.00 AA $ 1,905,969
Series 2004, 5.000%, 1/01/22 - FGIC Insured
1,000 Midgeville, Georgia, Water and Sewerage Revenue Refunding No Opt. Call AAA 1,089,390
Bonds, Series 1996, 6.000%,12/01/21 - FSA Insured
1,000 Unified Government of Athens-Clarke County, Georgia, Water and 1/19 at 100.00 AA- 944,630
Sewerage Revenue Bonds, Series2008, 5.500%, 1/01/38
890 Walton County Water and Sewerage Authority, Georgia, Revenue 2/18 at 100.00 Aa3 803,003
Bonds, The Oconee-Hard Creek Resevoir Project, Series 2008,
5.000%, 2/01/38 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
11,680 Total Water and Sewer 10,992,701
------------------------------------------------------------------------------------------------------------------------------------
$ 76,995 Total Investments (cost $78,037,457) - 158.0% 72,495,122
==============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.6% 1,176,248
----------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (60.6)% (5) (27,800,000)
----------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 45,871,370
==================================================================================================================
(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: 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: Using the higher of Standard & Poor's Group ("Standard & Poor's")
or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be below investment
grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and SYNCORA as of
November 30, 2008. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 38.3%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
21
NZX | Nuveen Georgia Dividend Advantage Municipal Fund
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 23.8% (15.0% OF TOTAL
INVESTMENTS)
$ 1,000 Athens Housing Authority, Georgia, Student Housing Lease Revenue 12/12 at 100.00 Aa2 $ 1,010,960
Bonds, UGAREF East Campus Housing LLC Project, Series 2002,
5.250%, 12/01/21 - AMBAC Insured
1,000 Atlanta Development Authority, Georgia, Educational Facilities 7/17 at 100.00 A1 803,450
Revenue Bonds, Science Park LLC Project, Series 2007, 5.000%,
7/01/39
1,475 Bulloch County Development Authority, Georgia, Student Housing 8/14 at 100.00 A1 1,436,739
and Athletic Facility Lease Revenue Bonds, Georgia Southern
University, Series 2004, 5.250%, 8/01/20 - SYNCORA GTY Insured
1,620 Bulloch County Development Authority, Georgia, Student Housing 8/12 at 100.00 A1 1,623,110
Lease Revenue Bonds, Georgia Southern University, Series
2002, 5.000%, 8/01/20 - AMBAC Insured
1,000 Fulton County Development Authority, Georgia, Revenue Bonds, 4/12 at 100.00 A 992,000
Georgia Tech Athletic Association, Series 2001, 5.000%,
10/01/20 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,095 Total Education and Civic Organizations 5,866,259
------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 1.7% (1.0% OF TOTAL INVESTMENTS)
650 Virgin Islands Public Finance Authority, Revenue Bonds, Refinery 1/15 at 100.00 BBB 410,612
Project Hovensa LLC, Series2007, 4.700%, 7/01/22 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 23.8% (14.9% OF TOTAL INVESTMENTS)
150 Baldwin County Hospital Authority, Georgia, Revenue Bonds, 12/09 at 100.00 BB+ 137,336
Oconee Regional Medical Center, Series 1997, 5.250%, 12/01/12
190 Baldwin County Hospital Authority, Georgia, Revenue Bonds, 12/08 at 102.00 BB+ 128,611
Oconee Regional Medical Center, Series 1998, 5.375%, 12/01/28
415 Chatham County Hospital Authority, Savannah, Georgia, Hospital 7/11 at 101.00 BBB 310,437
Revenue Improvement Bonds, Memorial Health University Medical
Center Inc., Series 2001A, 6.125%, 1/01/24
500 Clark County Hospital Authority, Georgia, Hospital Revenue 1/17 at 100.00 AA 435,505
Bonds, Athens Regional Medical Center, Series 2007, 5.000%,
1/01/27 - MBIA Insured
1,000 Clarke County Hospital Authority, Georgia, Hospital Revenue 1/12 at 101.00 AA 991,510
Certificates, Athens Regional Medical Center, Series 2002,
5.375%, 1/01/19 - MBIA Insured
500 Coffee County Hospital Authority, Georgia, Revenue Bonds, Coffee 12/14 at 100.00 BBB 382,435
County Regional Medical Center, Series 2004, 5.250%, 12/01/22
500 Henry County Hospital Authority, Georgia, Revenue Certificates, 7/14 at 101.00 Aa2 469,165
Henry Medical Center, Series2004, 5.000%, 7/01/20 - MBIA
Insured
500 Houston County Hospital Authority, Georgia, Revenue Bonds, 10/17 at 100.00 A2 370,965
Houston Healthcare Project, Series2007, 5.250%, 10/01/35
500 Savannah Hospital Authority, Georgia, Revenue Bonds, St. 1/14 at 100.00 A3 411,415
Joseph's/Candler Health System, Series 2003, 5.250%, 7/01/23
- RAAI Insured
2,000 Valdosta and Lowndes County Hospital Authority, Georgia, Revenue 10/12 at 101.00 A+ 1,655,679
Certificates, South Georgia Medical Center, Series 2002,
5.250%, 10/01/27 - AMBAC Insured
750 Valdosta and Lowndes County Hospital Authority, Georgia, Revenue 10/17 at 100.00 A+ 569,070
Certificates, South Georgia Medical Center, Series 2007,
5.000%, 10/01/33
------------------------------------------------------------------------------------------------------------------------------------
7,005 Total Health Care 5,862,128
------------------------------------------------------------------------------------------------------------------------------------
22
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.2% (0.7% OF TOTAL INVESTMENTS)
$ 350 Cobb County Development Authority, Georgia, Student Housing 7/17 at 100.00 Baa1 $ 294,781
Revenue Bonds, KSU Village II Real Estate Foundation LLC
Project, Series 2007A, 5.250%, 7/15/38 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 13.2% (8.3% OF TOTAL INVESTMENTS)
650 Georgia Housing and Finance Authority, Single Family Mortgage 12/11 at 100.00 AAA 592,072
Bonds, Series 2002B-2, 5.350%, 12/01/22
(Alternative Minimum Tax)
1,000 Georgia Housing and Finance Authority, Single Family Mortgage 12/15 at 100.00 AAA 735,200
Bonds, Series 2006C-2, 4.500%, 12/01/27
(Alternative Minimum Tax)
2,000 Georgia Housing and Finance Authority, Single Family Mortgage 12/11 at 100.00 AAA 1,921,259
Resolution 1 Bonds, Series 2002A-2, 5.450%, 12/01/22
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
3,650 Total Housing/Single Family 3,248,531
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 6.3% (4.0% OF TOTAL INVESTMENTS)
1,000 Cartersville Development Authority, Georgia, Waste and 2/12 at 100.00 BBB+ 798,020
Wastewater Facilities Revenue Refunding Bonds, Anheuser Busch
Cos. Inc. Project, Series 2002, 5.950%, 2/01/32
(Alternative Minimum Tax)
750 Savannah Economic Development Authority, Georgia, Revenue Bonds, 7/12 at 100.00 AA 759,548
GTREP Project, Series 2002, 5.000%, 7/01/19 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
1,750 Total Industrials 1,557,568
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.2% (1.3% OF TOTAL INVESTMENTS)
500 Fulton County Residential Care Facilities Authority, Georgia, 7/17 at 100.00 N/R 290,315
Revenue Bonds, Elderly Care, Lenbrook Square Project,
Series 2006A, 5.125%, 7/01/42
250 Medical Center Hospital Authority, Georgia, Revenue Bonds, No Opt. Call N/R 238,460
Spring Harbor at Green Island, Series 2007, 5.000%, 7/01/11
------------------------------------------------------------------------------------------------------------------------------------
750 Total Long-Term Care 528,775
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.7% (1.1% OF TOTAL INVESTMENTS)
20 Richmond County Development Authority, Georgia, Environmental 11/13 at 100.00 BBB 12,689
Improvement Revenue Bonds, International Paper Company,
Series 2003A, 5.750%, 11/01/27 (Alternative Minimum Tax)
600 Richmond County Development Authority, Georgia, Environmental 2/12 at 101.00 BBB 408,510
Improvement Revenue Refunding Bonds, International Paper
Company, Series 2002A, 6.000%, 2/01/25
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
620 Total Materials 421,199
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 12.6% (7.9% OF TOTAL INVESTMENTS)
360 Cherokee County Resource Recovery Development Authority, 7/17 at 100.00 AA 283,273
Georgia, Solid Waste Disposal Revenue Bonds, Ball Ground
Recycling LLC Project, Series 2007A, 5.000%, 7/01/37 - AMBAC
Insured (Alternative Minimum Tax)
200 Decatur, Georgia, General Obligation Bonds, Series 2007, 5.000%, 1/17 at 100.00 AAA 194,006
1/01/31 - FSA Insured
700 Georgia State, General Obligation Bonds, Series 2007, 5.000%, 8/17 at 100.00 AAA 708,302
8/01/24
500 Georgia, General Obligation Bonds, Series 2005B, 5.000%, 7/01/15 No Opt. Call AAA 550,905
340 Gwinnett County School District, Georgia, General Obligation 2/18 at 100.00 AAA 296,878
Bonds, Series 2008, Trust 2868, 11.766%, 2/01/36 (IF)
600 Paulding County School District, Georgia, General Obligation 2/17 at 100.00 AA+ 551,094
Bonds, Series 2007, 5.000%, 2/01/33
595 Puerto Rico, General Obligation Bonds, Series 2004A, 5.250%, 7/14 at 100.00 BBB- 519,733
7/01/22
------------------------------------------------------------------------------------------------------------------------------------
3,295 Total Tax Obligation/General 3,104,191
------------------------------------------------------------------------------------------------------------------------------------
23
NZX | Nuveen Georgia Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 9.1% (5.7% OF TOTAL INVESTMENTS)
$ 40 Atlanta, Georgia, Tax Allocation Bonds Atlanta Station Project, 12/17 at 100.00 AAA $ 37,281
Series 2007, 5.000%, 12/01/23 - AGC Insured
150 Atlanta, Georgia, Tax Allocation Bonds, Eastside Project, No Opt. Call N/R 132,771
Series 2005A, 5.625%, 1/01/16 (Alternative Minimum Tax)
Atlanta, Georgia, Tax Allocation Bonds, Eastside Project,
Series 2005B:
250 5.400%, 1/01/20 7/15 at 100.00 N/R 203,485
75 5.600%, 1/01/30 7/15 at 100.00 N/R 52,842
250 Atlanta, Georgia, Tax Allocation Bonds, Princeton Lakes 1/16 at 100.00 N/R 172,128
Project, Series 2006, 5.500%, 1/01/31
1,525 Macon-Bibb County Urban Development Authority, Georgia, Revenue 8/12 at 101.00 AA 1,638,581
Refunding Bonds, Public Facilities Projects, Series 2002A,
5.000%, 8/01/14
------------------------------------------------------------------------------------------------------------------------------------
2,290 Total Tax Obligation/Limited 2,237,088
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.1% (2.6% OF TOTAL INVESTMENTS)
1,000 Atlanta, Georgia, Airport General Revenue Refunding Bonds, 1/10 at 101.00 AA 1,021,110
Series 2000A, 5.400%, 1/01/15 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 36.1% (22.7% OF TOTAL INVESTMENTS) (4)
565 Augusta, Georgia, Water and Sewerage Revenue Bonds, Series 10/12 at 100.00 AAA 616,737
2002, 5.000%, 10/01/16 (Pre-refunded 10/01/12) - FSA Insured
1,500 Coweta County Development Authority, Georgia, Revenue Bonds, 1/13 at 100.00 N/R (4) 1,654,229
Newnan Water and Sewer, and Light Commission Project, Series
2002, 5.250%, 1/01/18 (Pre-refunded 1/01/13) - FGIC Insured
1,250 Gainesville and Hall County Hospital Authority, Georgia, 5/11 at 100.00 A- (4) 1,343,088
Revenue Anticipation Certificates, Northeast Georgia Health
Services Inc., Series 2001, 5.500%, 5/15/31 (Pre-refunded
5/15/11)
730 Georgia, General Obligation Bonds, Series 2002D, 5.000%, 8/12 at 100.00 AAA 795,072
8/01/18 (Pre-refunded 8/01/12) Hospital System Inc.
Project, Series 1997B, 5.300%, 9/01/27 (Pre-refunded
2/14/12) -
1,900 Gwinnett County Hospital Authority, Georgia, Revenue 2/12 at 102.00 Aaa 2,104,819
Anticipation Certificates, Gwinnett MBIA Insured
1,200 Private Colleges and Universities Authority, Georgia, Revenue 10/11 at 102.00 Baa2 (4) 1,338,360
Bonds, Mercer University, Series2001, 5.750%, 10/01/31
(Pre-refunded 10/01/11)
1,000 Rockdale County Water and Sewerage Authority, Georgia, Revenue 1/10 at 101.00 AA (4) 1,049,330
Bonds, Series 1999A, 5.375%, 7/01/29 (Pre-refunded 1/01/10)
- MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
8,145 Total U.S. Guaranteed 8,901,635
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.2% (1.4% OF TOTAL INVESTMENTS)
500 Municipal Electric Authority of Georgia, Combustion Turbine 11/13 at 100.00 AA 532,800
Revenue Bonds, Series 2003A, 5.250%, 11/01/15 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 21.3% (13.4% OF TOTAL INVESTMENTS)
1,200 Atlanta, Georgia, Water and Wastewater Revenue Bonds, Series 11/14 at 100.00 AAA 1,128,348
2004, 5.000%, 11/01/24 - FSA Insured
625 Cherokee County Water and Sewerage Authority, Georgia, Revenue 8/18 at 100.00 AAA 567,719
Bonds, Series 2001, 5.000%, 8/01/35 - FSA Insured
350 Coweta County Water and Sewer Authority, Georgia, Revenue 6/18 at 100.00 Aa3 316,127
Bonds, Series 2007, 5.000%, 6/01/37
890 Douglasville-Douglas County Water and Sewer Authority, Georgia, 6/17 at 100.00 AA 796,968
Water and Sewer Revenue Bonds, Series 2007, 5.000%, 6/01/37
- MBIA Insured
375 Forsyth County Water and Sewerage Authority, Georgia, Revenue 4/17 at 100.00 AAA 338,768
Bonds, Series 2007, 5.000%, 4/01/37 - FSA Insured
24
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 AA $ 488,710
Series 2004, 5.000%, 1/01/22 - FGIC Insured
1,395 Macon Water Authority, Georgia, Water and Sewer Revenue Bonds, 10/11 at 101.00 AA 1,403,133
Series 2001B, 5.000%, 10/01/21
230 Walton County Water and Sewerage Authority, Georgia, Revenue 2/18 at 100.00 Aa3 207,518
Bonds, The Oconee-Hard Creek Resevoir Project, Series 2008,
5.000%, 2/01/38 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
5,565 Total Water and Sewer 5,247,291
------------------------------------------------------------------------------------------------------------------------------------
$ 41,665 Total Investments (cost $42,178,053) - 159.3% 39,233,968
==============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.6% 398,226
------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (60.9)% (5) (15,000,000)
------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 24,632,194
==================================================================================================================
(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: 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: Using the higher of Standard & Poor's Group ("Standard & Poor's")
or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be below investment
grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and SYNCORA as of
November 30, 2008. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 38.2%.
N/R Not rated.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
25
NKG | Nuveen Georgia Dividend Advantage Municipal Fund 2
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.7% (1.7% OF TOTAL INVESTMENTS)
$ 2,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,425,320
Asset-Backed Refunding Bonds, Series 2002, 5.500%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.3% (9.5% OF TOTAL
INVESTMENTS)
2,500 Athens Housing Authority, Georgia, Student Housing Lease 12/12 at 100.00 Aa2 2,274,450
Revenue Bonds, UGAREF East Campus Housing LLC Project,
Series 2002, 5.000%, 12/01/33 - AMBAC Insured
1,225 Athens-Clarke County Unified Government Development Authority, 12/12 at 100.00 A 1,236,123
Georgia, Educational Facilities Revenue Bonds, UGAREF CCRC
Building LLC Project, Series 2002, 5.000%, 12/15/18 - AMBAC
Insured
2,000 Atlanta Development Authority, Georgia, Educational Facilities 7/17 at 100.00 A1 1,606,900
Revenue Bonds, Science Park LLC Project, Series 2007,
5.000%, 7/01/39
2,000 Fulton County Development Authority, Georgia, Revenue Bonds, 11/13 at 100.00 AA 1,940,580
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 A 898,685
TUFF Morehouse Project, Series 2002A, 5.000%, 2/01/34 -
AMBAC Insured
200 Gainesville Redevelopment Authority, Georgia, Educational 3/17 at 100.00 N/R 104,044
Facilities Revenue Bonds, Riverside Military Academy
Project, Series 2007, 5.125%, 3/01/37
------------------------------------------------------------------------------------------------------------------------------------
8,975 Total Education and Civic Organizations 8,060,782
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 23.8% (14.9% OF TOTAL INVESTMENTS)
150 Baldwin County Hospital Authority, Georgia, Revenue Bonds, 12/09 at 100.00 BB+ 137,336
Oconee Regional Medical Center, Series 1997, 5.250%,
12/01/12
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+ 29,484
315 5.375%, 12/01/28 12/08 at 102.00 BB+ 213,224
1,000 Chatham County Hospital Authority, Savannah, Georgia, Hospital 1/14 at 100.00 BBB 660,480
Revenue Bonds, Memorial Health University Medical Center
Inc., Series 2004A, 5.375%, 1/01/26
Coffee County Hospital Authority, Georgia, Revenue Bonds,
Coffee County Regional Medical Center, Series 2004:
165 5.000%, 12/01/19 12/14 at 100.00 BBB 133,226
1,000 5.250%, 12/01/22 12/14 at 100.00 BBB 764,870
1,000 Floyd County Hospital Authority, Georgia, Revenue Anticipation 7/12 at 101.00 Aa3 781,180
Certificates, Floyd Medical Center Project, Series 2002,
5.200%, 7/01/32 - MBIA Insured
1,100 Houston County Hospital Authority, Georgia, Revenue Bonds, 10/17 at 100.00 A2 816,123
Houston Healthcare Project, Series 2007, 5.250%, 10/01/35
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 A2 2,181,036
3,020 5.500%, 1/01/20 - MBIA Insured 1/13 at 100.00 A2 2,830,193
2,000 Savannah Hospital Authority, Georgia, Revenue Bonds, St. 1/14 at 100.00 A3 1,645,660
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 A2 1,810,153
Bonds, Tift Regional Medical Center, Series 2002, 5.250%,
12/01/19 - AMBAC Insured
26
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 750 Valdosta and Lowndes County Hospital Authority, Georgia, 10/17 at 100.00 A+ $ 569,070
Revenue Certificates, South Georgia Medical Center, Series
2007, 5.000%, 10/01/33
------------------------------------------------------------------------------------------------------------------------------------
14,745 Total Health Care 12,572,035
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.7% (2.9% OF TOTAL INVESTMENTS)
25 Cobb County Development Authority, Georgia, Student Housing 7/17 at 100.00 Baa1 21,056
Revenue Bonds, KSU Village II Real Estate Foundation LLC
Project, Series 2007A, 5.250%, 7/15/38 - AMBAC Insured
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 446,860
980 5.200%, 11/20/27 (Alternative Minimum Tax) 11/12 at 102.00 AAA 826,179
1,465 5.250%, 11/20/32 (Alternative Minimum Tax) 11/12 at 102.00 AAA 1,184,980
------------------------------------------------------------------------------------------------------------------------------------
2,970 Total Housing/Multifamily 2,479,075
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.0% (0.6% OF TOTAL INVESTMENTS)
170 Georgia Housing and Finance Authority, Single Family Mortgage 12/15 at 100.00 AAA 119,425
Bonds, Series 2006C-2, 4.550%, 12/01/31 (Alternative
Minimum Tax)
390 Georgia Housing and Finance Authority, Single Family Mortgage 6/11 at 100.00 AAA 384,992
Resolution 1 Bonds, Series 2001B-2, 5.400%, 12/01/31
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
560 Total Housing/Single Family 504,417
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.5% (1.5% OF TOTAL INVESTMENTS)
2,190 Cobb County Development Authority, Georgia, Solid Waste 4/16 at 101.00 BBB 1,302,612
Disposal Revenue Bonds, Georgia Waste Management Project,
Series 2004A, 5.000%, 4/01/33 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.6% (1.0% OF TOTAL INVESTMENTS)
1,000 Fulton County Residential Care Facilities Authority, Georgia, 7/17 at 100.00 N/R 580,630
Revenue Bonds, Elderly Care, Lenbrook Square Project,
Series 2006A, 5.125%, 7/01/42
250 Medical Center Hospital Authority, Georgia, Revenue Bonds, No Opt. Call N/R 238,460
Spring Harbor at Green Island, Series 2007, 5.000%, 7/01/11
------------------------------------------------------------------------------------------------------------------------------------
1,250 Total Long-Term Care 819,090
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 2.3% (1.4% OF TOTAL INVESTMENTS)
1,000 Richmond County Development Authority, Georgia, Environmental 2/11 at 101.00 BBB 700,660
Improvement Revenue Bonds, International Paper Company,
Series 2001A, 6.250%, 2/01/25 (Alternative Minimum Tax)
250 Richmond County Development Authority, Georgia, Environmental 2/12 at 101.00 BBB 170,213
Improvement Revenue Refunding Bonds, International Paper
Company, Series 2002A, 6.000%, 2/01/25 (Alternative Minimum
Tax)
370 Savannah Economic Development Authority, Georgia, Pollution No Opt. Call Baa3 321,127
Control Revenue Bonds, Union Camp Corporation, Series 1995,
6.150%, 3/01/17
------------------------------------------------------------------------------------------------------------------------------------
1,620 Total Materials 1,192,000
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 21.7% (13.6% OF TOTAL INVESTMENTS)
600 Cherokee County Resource Recovery Development Authority, 7/17 at 100.00 AA 472,122
Georgia, Solid Waste Disposal Revenue Bonds, Ball Ground
Recycling LLC Project, Series 2007A, 5.000%, 7/01/37 -
AMBAC Insured (Alternative Minimum Tax)
900 Decatur, Georgia, General Obligation Bonds, Series 2007, 1/17 at 100.00 AAA 873,027
5.000%, 1/01/31 - FSA Insured
1,000 Forsyth County, Georgia, General Obligation Bonds, Series 3/14 at 101.00 AA+ 1,046,550
2004, 5.250%, 3/01/19
1,700 Georgia State, General Obligation Bonds, Series 2007, 5.000%, 8/17 at 100.00 AAA 1,720,162
8/01/24
750 Georgia, General Obligation Bonds, Series 1998D, 5.250%, No Opt. Call AAA 838,148
10/01/15
1,000 Georgia, General Obligation Bonds, Series 2005B, 5.000%, No Opt. Call AAA 1,101,810
7/01/15
705 Gwinnett County School District, Georgia, General Obligation 2/18 at 100.00 AAA 615,585
Bonds, Series 2008, Trust 2868, 11.766%, 2/01/36 (IF)
27
NKG | Nuveen Georgia Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
Oconee County, Georgia, General Obligation Bonds, Recreation
Project, Series 2003:
$ 1,410 5.500%, 1/01/23 - AMBAC Insured 1/13 at 101.00 Aa3 $ 1,436,198
1,470 5.250%, 1/01/26 - AMBAC Insured 1/13 at 101.00 Aa3 1,426,370
1,200 Paulding County School District, Georgia, General Obligation 2/17 at 100.00 AA+ 1,102,188
Bonds, Series 2007, 5.000%, 2/01/33
1,000 Wayne County Hospital Authority, Georgia, Hospital Revenue 3/16 at 100.00 N/R 839,230
Bonds, Series 2006, 5.000%, 3/01/23 - SYNCORA GTY Insured
------------------------------------------------------------------------------------------------------------------------------------
11,735 Total Tax Obligation/General 11,471,390
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 21.7% (13.6% OF TOTAL INVESTMENTS)
120 Atlanta, Georgia, Tax Allocation Bonds Atlanta Station Project, 12/17 at 100.00 AAA 111,842
Series 2007, 5.000%, 12/01/23 - AGC Insured
150 Atlanta, Georgia, Tax Allocation Bonds, Eastside Project, No Opt. Call N/R 132,771
Series 2005A, 5.625%, 1/01/16 (Alternative Minimum Tax)
Atlanta, Georgia, Tax Allocation Bonds, Eastside Project,
Series 2005B:
250 5.400%, 1/01/20 7/15 at 100.00 N/R 203,485
350 5.600%, 1/01/30 7/15 at 100.00 N/R 246,596
395 Atlanta, Georgia, Tax Allocation Bonds, Princeton Lakes 1/16 at 100.00 N/R 271,961
Project, Series 2006, 5.500%, 1/01/31
750 Georgia Municipal Association Inc., Certificates of 6/12 at 101.00 A 698,753
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 Aa3 2,792,125
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- 350,240
Revenue Bonds, Series 2005B, 5.000%, 7/01/41
2,500 Puerto Rico Municipal Finance Agency, Series 2002A, 5.000%, 8/12 at 100.00 AAA 2,205,900
8/01/27 - FSA Insured
5,000 Puerto Rico Public Buildings Authority, Guaranteed Government No Opt. Call BBB- 4,442,196
Facilities Revenue Refunding Bonds, Series 2002F, 5.250%,
7/01/21 - CIFG Insured
------------------------------------------------------------------------------------------------------------------------------------
12,515 Total Tax Obligation/Limited 11,455,869
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.9% (4.3% OF TOTAL INVESTMENTS)
3,650 Atlanta, Georgia, Airport General Revenue Refunding Bonds, 1/10 at 101.00 AA 3,653,906
Series 2000A, 5.500%, 1/01/21 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 16.7% (10.4% OF TOTAL INVESTMENTS) (4)
1,000 Augusta, Georgia, Water and Sewerage Revenue Bonds, Series 10/12 at 100.00 AAA 1,100,680
2002, 5.250%, 10/01/22 (Pre-refunded 10/01/12) - FSA Insured
1,000 Cherokee County School System, Georgia, General Obligation 8/13 at 100.00 AA+ (4) 1,102,420
Bonds, Series 2003, 5.000%, 8/01/16 (Pre-refunded 8/01/13) -
MBIA Insured
DeKalb County, Georgia, Water and Sewerage Revenue Bonds,
Series 2000:
1,000 5.125%, 10/01/31 (Pre-refunded 10/01/10) - MBIA Insured 10/10 at 101.00 AAA 1,069,900
1,400 5.375%, 10/01/35 (Pre-refunded 10/01/10) 10/10 at 101.00 AAA 1,504,174
1,300 Fairburn, Georgia, Combined Utility Revenue Bonds, Series 2000, 10/10 at 101.00 A- (4) 1,404,780
5.750%, 10/01/20 (Pre-refunded 10/01/10)
1,305 Gainesville and Hall County Hospital Authority, Georgia, 5/11 at 100.00 A- (4) 1,402,183
Revenue Anticipation Certificates, Northeast Georgia Health
Services Inc., Series 2001, 5.500%, 5/15/31 (Pre-refunded
5/15/11)
1,100 Private Colleges and Universities Authority, Georgia, Revenue 10/11 at 102.00 Baa2 (4) 1,226,830
Bonds, Mercer University, Series 2001, 5.750%, 10/01/31
(Pre-refunded 10/01/11)
------------------------------------------------------------------------------------------------------------------------------------
8,105 Total U.S. Guaranteed 8,810,967
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 5.4% (3.4% OF TOTAL INVESTMENTS)
1,000 Elberton, Georgia, Combined Utility System Revenue Refunding 1/12 at 100.00 A3 995,210
and Improvement Bonds, Series 2001, 5.000%, 1/01/22 - AMBAC
Insured
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 1,000 Georgia Municipal Electric Authority, General Power Revenue 1/17 at 100.00 AA $ 902,430
Bonds, Project 1, Series 2007A, 5.000%, 1/01/25 - MBIA
Insured
1,000 Municipal Electric Authority of Georgia, Project One 1/13 at 100.00 AA 977,420
Subordinated Lien Revenue Bonds, Series 2003A, 5.000%,
1/01/22 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
3,000 Total Utilities 2,875,060
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 34.0% (21.2% 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 530,390
1,700 5.000%, 11/01/37 - FSA Insured 11/14 at 100.00 AAA 1,459,552
3,500 Augusta, Georgia, Water and Sewerage Revenue Bonds, Series 10/12 at 100.00 AAA 3,253,355
2002, 5.000%, 10/01/27 - FSA Insured
1,990 Cherokee County Water and Sewerage Authority, Georgia, Revenue 8/18 at 100.00 AAA 1,807,617
Bonds, Series 2001, 5.000%, 8/01/35 - FSA Insured
Coweta County Water and Sewer Authority, Georgia, Revenue
Bonds, Series 2007:
500 5.000%, 6/01/32 6/18 at 100.00 Aa3 461,665
500 5.000%, 6/01/37 6/18 at 100.00 Aa3 451,610
1,000 Douglasville-Douglas County Water and Sewer Authority, Georgia, 12/15 at 100.00 AA 935,460
Water and Sewer Revenue Bonds, Series 2005, 5.000%, 6/01/29
- MBIA Insured
445 Douglasville-Douglas County Water and Sewer Authority, Georgia, 6/17 at 100.00 AA 398,484
Water and Sewer Revenue Bonds, Series 2007, 5.000%, 6/01/37
- MBIA Insured
4,000 Forsyth County Water and Sewerage Authority, Georgia, Revenue 4/13 at 100.00 AA+ 3,753,560
Bonds, Series 2002, 5.000%, 4/01/32
375 Forsyth County Water and Sewerage Authority, Georgia, Revenue 4/17 at 100.00 AAA 338,768
Bonds, Series 2007, 5.000%, 4/01/37 - FSA Insured
950 Fulton County, Georgia, Water and Sewerage Revenue Bonds, 1/09 at 101.00 AA 961,258
Series 1998, 5.000%, 1/01/16 - FGIC Insured
3,100 Harris County, Georgia, Water System Revenue Bonds, Series 12/12 at 100.00 Baa1 2,967,475
2002, 5.000%, 12/01/22 - AMBAC Insured
685 Walton County Water and Sewerage Authority, Georgia, Revenue 2/18 at 100.00 Aa3 618,041
Bonds, The Oconee-Hard Creek Resevoir Project, Series 2008,
5.000%, 2/01/38 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
19,245 Total Water and Sewer 17,937,235
------------------------------------------------------------------------------------------------------------------------------------
$ 92,560 Total Investments (cost $94,459,130) - 160.3% 84,559,758
===============---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.3% 1,186,793
------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (62.6)% (5) (33,000,000)
------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 52,746,551
==================================================================================================================
(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: 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: Using the higher of Standard & Poor's Group ("Standard & Poor's")
or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be below investment
grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and SYNCORA as of
November 30, 2008. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 39.0%.
N/R Not rated.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
29
NNC | Nuveen North Carolina Premium Income Municipal Fund
| Portfolio of INVESTMENTS
November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 24.1% (15.0% OF TOTAL
INVESTMENTS)
$ 2,500 North Carolina Capital Facilities Financing Agency, Revenue 10/15 at 100.00 AA+ $ 2,339,550
Bonds, Duke University, Series 2005A, 5.000%, 10/01/41
970 North Carolina Capital Facilities Financing Agency, Revenue 4/13 at 100.00 N/R 868,334
Bonds, Johnson and Wales University, Series 2003A, 5.250%,
4/01/23 - SYNCORA GTY Insured
2,285 North Carolina State University at Raleigh, General Revenue 10/13 at 100.00 AA 2,415,474
Bonds, Series 2003A, 5.000%, 10/01/15
1,530 University of North Carolina System, Pooled Revenue Bonds, No Opt. Call AA 1,616,629
Series 2005A, 5.000%, 4/01/15 - AMBAC Insured
580 University of North Carolina System, Pooled Revenue Refunding 10/12 at 100.00 AA 581,850
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 AA 1,275,531
1,505 5.000%, 6/01/24 - FGIC Insured 6/16 at 100.00 AA 1,326,025
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+ 2,447,854
2,725 5.000%, 12/01/21 12/13 at 100.00 AA+ 2,735,764
1,500 5.000%, 12/01/23 12/13 at 100.00 AA+ 1,495,290
1,675 University of North Carolina, Wilmington, General Revenue 1/12 at 101.00 A2 1,620,630
Bonds, Series 2002A, 5.000%, 1/01/23 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
19,080 Total Education and Civic Organizations 18,722,931
------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 1.4% (0.9% OF TOTAL INVESTMENTS)
1,500 Virgin Islands Public Finance Authority, Revenue Bonds, 1/14 at 100.00 BBB 1,117,410
Refinery Project - Hovensa LLC, Series 2003, 6.125%,
7/01/22 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 21.8% (13.6% OF TOTAL INVESTMENTS)
1,145 Albemarle Hospital Authority, North Carolina, Health Care 10/17 at 100.00 N/R 851,353
Facilities Revenue Bonds, Series 2007, 5.250%, 10/01/27
1,000 Johnston Memorial Hospital Authority, North Carolina, Mortgage 4/18 at 100.00 AAA 860,550
Revenue Bonds, Johnston
Memorial Hospital Project, Series 2008, 5.250%, 10/01/36 - FSA
Insured
2,000 North Carolina Medical Care Commission, Healthcare Facilities 11/13 at 100.00 Aa3 1,923,840
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 BBB+ 1,806,160
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 970,210
550 5.500%, 1/01/20 1/12 at 100.00 A 521,312
1,750 5.375%, 1/01/32 1/12 at 100.00 A 1,425,725
3,000 North Carolina Medical Care Commission, Hospital Revenue 6/12 at 101.00 A 2,345,760
Bonds, Southeastern Regional Medical Center, Series 2002,
5.375%, 6/01/32
1,500 North Carolina Medical Care Commission, Hospital Revenue 11/17 at 100.00 A- 1,111,230
Bonds, Wilson Medical Center, Series 2007, 5.000%, 11/01/27
30
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 1,645 North Carolina Medical Care Commission, Revenue Bonds, Blue 1/15 at 100.00 AA $ 1,229,934
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 A 545,010
500 5.250%, 7/01/22 - AMBAC Insured 7/14 at 100.00 A 439,395
300 Northern Hospital District of Surry County, North Carolina, 4/18 at 100.00 BBB 246,570
Health Care Facilities Revenue Bonds, Series 2008, 6.250%,
10/01/38
685 Onslow County Hospital Authority, North Carolina, FHA Insured 10/16 at 100.00 AA 486,042
Mortgage Revenue Bonds, Onslow Memorial Hospital Project,
Series 2006, 5.000%, 4/01/31 - MBIA Insured
2,800 The Charlotte-Mecklenberg Hospital Authority (North Carolina), 1/18 at 100.00 AA- 2,193,296
Doing Business as Carolinas HealthCare System, Health
Care Refunding Revenue Bonds, Series 2008A, 5.000%, 1/15/47
------------------------------------------------------------------------------------------------------------------------------------
20,475 Total Health Care 16,956,387
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.6% (2.9% OF TOTAL INVESTMENTS)
1,000 Asheville Housing Authority, North Carolina, 5/09 at 101.00 A- 842,310
GNMA-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 Housing 7/13 at 105.00 AAA 1,838,320
Revenue Bonds, Little Rock Apartments, Series 2003, 5.375%,
1/01/36 (Alternative Minimum Tax)
1,000 North Carolina Capital Facilities Financing Agency, Housing 6/13 at 100.00 A 904,030
Revenue Bonds, Elizabeth City State University, Series
2003A, 5.000%, 6/01/28 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
4,290 Total Housing/Multifamily 3,584,660
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 7.7% (4.8% OF TOTAL INVESTMENTS)
1,065 North Carolina Housing Finance Agency, Home Ownership Revenue 7/10 at 100.00 AA 883,354
Bonds, 1998 Trust Agreement, Series 10A, 5.400%, 7/01/32 -
AMBAC Insured (Alternative Minimum Tax)
2,665 North Carolina Housing Finance Agency, Home Ownership Revenue 7/09 at 100.00 AA 2,491,002
Bonds, 1998 Trust Agreement, Series 6A, 6.200%, 1/01/29
(Alternative Minimum Tax)
1,000 North Carolina Housing Finance Agency, Home Ownership Revenue 1/17 at 100.00 AA 729,860
Bonds, Series 2007-29A, 4.800%, 7/01/33 (Alternative Minimum
Tax)
835 North Carolina Housing Finance Agency, Home Ownership Revenue 7/16 at 100.00 AA 602,494
Bonds, Series 25-A, 4.900%, 7/01/37 (Alternative Minimum Tax)
1,265 North Carolina Housing Finance Agency, Single Family Revenue 3/09 at 100.00 AA 1,289,452
Bonds, Series 1996HH, 6.300%, 3/01/26 (Alternative Minimum
Tax)
------------------------------------------------------------------------------------------------------------------------------------
6,830 Total Housing/Single Family 5,996,162
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.3% (0.2% OF TOTAL INVESTMENTS)
375 North Carolina Medical Care Commission, Revenue Bonds, Pines at 1/16 at 100.00 N/R 266,816
Davidson, Series 2006A, 5.000%, 1/01/36
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.0% (0.6% OF TOTAL INVESTMENTS)
1,425 Gaston County Industrial Facilities and Pollution Control 8/15 at 100.00 N/R 778,378
Financing Authority, North Carolina, National Gypsum Company
Project Exempt Facilities Revenue Bonds, Series 2005, 5.750%,
8/01/35 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 11.3% (7.0% OF TOTAL INVESTMENTS)
1,890 Craven County, North Carolina, General Obligation Bonds, Series 5/12 at 101.00 A1 1,870,968
2002, 5.000%, 5/01/21 - AMBAC Insured
4,285 Durham County, North Carolina, General Obligation Bonds, Series 4/12 at 100.00 AAA 4,497,319
2002B, 5.000%, 4/01/16
1,820 Durham, North Carolina, General Obligation Bonds, Series 2007, 4/17 at 100.00 AAA 1,877,494
5.000%, 4/01/21
500 North Carolina, General Obligation Bonds, Series 2004A, 5.000%, 3/14 at 100.00 AAA 508,440
3/01/22
------------------------------------------------------------------------------------------------------------------------------------
8,495 Total Tax Obligation/General 8,754,221
------------------------------------------------------------------------------------------------------------------------------------
31
NNC | Nuveen North Carolina Premium Income Municipal Fund (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 40.9% (25.6% OF TOTAL INVESTMENTS)
$ 1,330 Cabarrus County, North Carolina, Certificates of 2/13 at 100.00 AA $ 1,368,770
Participation, Series 2002, 5.250%, 2/01/17
1,800 Catawba County, North Carolina, Certificates of Participation, 6/14 at 100.00 Aa3 1,791,990
Series 2004, 5.250%, 6/01/21 - MBIA Insured
1,700 Charlotte, North Carolina, Certificates of Participation, 6/13 at 100.00 AA+ 1,708,415
Governmental Facilities Projects, Series 2003G, 5.375%,
6/01/26
950 Charlotte, North Carolina, Certificates of Participation, 6/18 at 100.00 AA+ 870,951
Transit Projects Phase 2, Series 2008A, 5.000%, 6/01/33
1,500 Charlotte, North Carolina, Certificates of Participation, 6/13 at 100.00 AA+ 1,375,185
Transit Projects, Series 2003A, 5.000%, 6/01/33
Charlotte, North Carolina, Storm Water Fee Revenue Bonds,
Series 2002:
1,050 5.250%, 6/01/20 6/12 at 101.00 AAA 1,080,513
1,750 5.000%, 6/01/25 6/12 at 101.00 AAA 1,738,328
1,400 Craven County, North Carolina, Certificates of Participation, 6/17 at 100.00 AA 1,278,354
Series 2007, 5.000%, 6/01/27 - MBIA Insured
1,000 Davidson County, North Carolina, Certificates of No Opt. Call A1 1,046,850
Participation, Series 2004, 5.250%, 6/01/14 - AMBAC 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 1,791,918
500 5.250%, 4/01/20 - FSA Insured 4/14 at 100.00 AAA 512,230
1,000 5.250%, 4/01/22 - FSA Insured 4/14 at 100.00 AAA 1,011,290
2,600 North Carolina Infrastructure Finance Corporation,
Certificates of Participation, Capital Improvements, Series 2/15 at 100.00 AA+ 2,668,120
2005A, 5.000%, 2/01/19
1,500 North Carolina Infrastructure Finance Corporation,
Certificates of Participation, Correctional Facilities, 2/14 at 100.00 AA+ 1,489,215
Series 2004A, 5.000%, 2/01/23
1,500 North Carolina, Certificates of Participation, Repair and 6/14 at 100.00 AA+ 1,512,555
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+ 1,142,407
1,000 5.250%, 6/01/23 6/13 at 100.00 AA+ 1,003,410
2,000 Puerto Rico Highway and Transportation Authority, Grant 3/14 at 100.00 AA 1,716,540
Anticipation Revenue Bonds, Series 2004, 5.000%, 9/15/21 -
MBIA Insured
1,000 Puerto Rico Public Buildings Authority, Guaranteed Government No Opt. Call BBB- 972,560
Facilities Revenue Bonds, Series 2003H, 5.250%, 7/01/15 -
FGIC Insured
285 Raleigh, North Carolina, Certificates of Participation, Series 2/17 at 100.00 AA+ 274,438
2007, 5.000%, 2/01/27
1,000 Randolph County, North Carolina, Certificates of 6/14 at 102.00 AAA 1,010,910
Participation, Series 2004, 5.000%, 6/01/20 - FSA Insured
1,000 Rutherford County, North Carolina, Certificates of 12/17 at 100.00 AAA 942,620
Participation, Series 2007, 5.000%, 12/01/27 - FSA Insured
1,950 Sampson County, North Carolina, Certificates of Participation, 6/17 at 100.00 AAA 1,742,208
Series 2006, 5.000%, 6/01/34 - FSA Insured (UB)
1,200 Wilmington, North Carolina, Certificates of Participation, 6/18 at 100.00 AA 1,128,156
Series 2008A, 5.000%, 6/01/29
700 Wilson County, North Carolina, Certificates of Participation, 4/17 at 100.00 AA 627,676
School Facilities Project, Series 2007, 5.000%, 4/01/25 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
32,560 Total Tax Obligation/Limited 31,805,609
------------------------------------------------------------------------------------------------------------------------------------
32
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 7.3% (4.6% OF TOTAL INVESTMENTS)
Charlotte, North Carolina, Airport Revenue Bonds, Series 2004A:
$ 600 5.250%, 7/01/24 - MBIA Insured 7/14 at 100.00 AA $ 604,302
2,710 5.000%, 7/01/29 - MBIA Insured 7/14 at 100.00 AA 2,314,882
500 Piedmont Triad Airport Authority, North Carolina, Airport 7/15 at 100.00 A2 475,260
Revenue Bonds, Series 2005A, 5.000%, 7/01/20 - SYNCORA GTY
Insured
2,250 Raleigh Durham Airport Authority, North Carolina, Airport 5/11 at 101.00 Aa3 2,279,475
Revenue Bonds, Series 2001A, 5.250%, 11/01/16 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,060 Total Transportation 5,673,919
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 15.8% (9.9% OF TOTAL INVESTMENTS) (4)
750 Johnston County Finance Corporation, North Carolina, 8/09 at 101.00 AAA 778,545
Installment Payment Revenue Bonds, School and Museum
Projects, Series 1999, 5.250%, 8/01/21 (Pre-refunded
8/01/09) - FSA Insured
1,530 North Carolina Medical Care Commission, Health System Revenue 10/11 at 101.00 AA (4) 1,673,759
Bonds, Mission St. Joseph's Health System, Series 2001,
5.250%, 10/01/31 (Pre-refunded 10/01/11)
735 North Carolina Medical Care Commission, Revenue Bonds, 11/14 at 100.00 AA (4) 816,431
Northeast Medical Center, Series 2004, 5.000%, 11/01/24
(Pre-refunded 11/01/14)
810 North Carolina Municipal Power Agency 1, Catawba Electric No Opt. Call AAA 852,841
Revenue Bonds, Series 1980, 10.500%, 1/01/10 (ETM)
4,260 North Carolina Municipal Power Agency 1, Catawba Electric No Opt. Call AAA 4,465,843
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 1,077,090
5.100%, 9/01/16 (Pre-refunded 9/01/10)
420 University of North Carolina System, Pooled Revenue Refunding 10/12 at 100.00 Baa1 (4) 464,197
Bonds, Series 2002A, 5.375%, 4/01/22 (Pre-refunded
10/01/12) - AMBAC Insured
2,000 Winston-Salem, North Carolina, Water and Sewerage System 6/12 at 100.00 AAA 2,171,920
Revenue Bonds, Series 2002A, 5.000%, 6/01/18 (Pre-refunded
6/01/12)
------------------------------------------------------------------------------------------------------------------------------------
11,505 Total U.S. Guaranteed 12,300,626
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 14.4% (9.0% OF TOTAL INVESTMENTS)
3,000 North Carolina Eastern Municipal Power Agency, Power System 1/13 at 100.00 BBB+ 3,078,720
Revenue Bonds, Series 2003F, 5.500%, 1/01/15
1,000 North Carolina Eastern Municipal Power Agency, Power System 1/16 at 100.00 A 960,540
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 A2 4,077,760
Revenue Bonds, Series 1999B, 6.500%, 1/01/20
2,000 North Carolina Municipal Power Agency 1, Catawba Electric 1/13 at 100.00 A 2,062,940
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 A2 1,002,470
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
11,000 Total Utilities 11,182,430
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 9.5% (5.9% OF TOTAL INVESTMENTS)
1,605 Broad River Water Authority, North Carolina, Water System 6/15 at 100.00 Baa2 1,477,852
Revenue Bonds, Series 2005, 5.000%, 6/01/20 - SYNCORA GTY
Insured
500 Brunswick County, North Carolina, Enterprise System Revenue 4/18 at 100.00 AAA 464,395
Bonds, Series 2008A, 5.000%, 4/01/31 - FSA Insured
50 Charlotte, North Carolina, Water and Sewerage System Revenue 6/11 at 101.00 AAA 50,199
Bonds, Series 2001, 5.125%, 6/01/26
33
NNC | Nuveen North Carolina Premium Income Municipal Fund (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,295 Greensboro, North Carolina, Combined Enterprise System 6/15 at 100.00 AAA $ 1,294,987
Revenue Bonds, Series 2005A, 5.000%, 6/01/26
500 Onslow County, North Carolina, Combined Enterprise System 6/14 at 100.00 A 463,900
Revenue Bonds, Series 2004B, 5.000%, 6/01/23 - SYNCORA GTY
Insured
3,865 Winston-Salem, North Carolina, Water and Sewer System Revenue 6/17 at 100.00 AAA 3,630,781
Bonds, Series 2007A, 5.000%, 6/01/37 (UB)
------------------------------------------------------------------------------------------------------------------------------------
7,815 Total Water and Sewer 7,382,114
------------------------------------------------------------------------------------------------------------------------------------
$ 131,410 Total Investments (cost $134,248,091) - 160.1% 124,521,663
===============---------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (4.6)% (3,545,000)
------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.7% 3,602,941
------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (60.2)% (5) (46,800,000)
------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 77,779,604
==================================================================================================================
(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: 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: Using the higher of Standard & Poor's Group ("Standard & Poor's")
or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be below investment
grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and SYNCORA as of
November 30, 2008. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 37.6%.
N/R Not rated.
(ETM) Escrowed to maturity.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
See accompanying notes to financial statements.
34
NRB | Nuveen North Carolina Dividend Advantage Municipal Fund
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 17.3% (9.8% OF TOTAL
INVESTMENTS)
$ 380 North Carolina Capital Facilities Financing Agency, Revenue 10/11 at 100.00 AA+ $ 371,503
Bonds, Duke University, Series 2001A, 5.125%, 10/01/26
500 North Carolina Capital Facilities Financing Agency, Revenue 9/11 at 101.00 Baa2 432,695
Bonds, High Point University, Series 2001, 5.125%, 9/01/18
1,430 University of North Carolina System, Pooled Revenue Refunding 10/12 at 100.00 AA 1,512,339
Bonds, Series 2002A, 5.375%, 4/01/17 - AMBAC Insured
1,750 University of North Carolina, Chapel Hill, System Net Revenue 6/11 at 100.00 AA+ 1,724,379
Bonds, Series 2001A, 5.000%, 12/01/25 - MBIA Insured
1,000 University of North Carolina, Chapel Hill, System Net Revenue No Opt. Call AA+ 1,075,020
Bonds, Series 2002B, 5.000%, 12/01/11
------------------------------------------------------------------------------------------------------------------------------------
5,060 Total Education and Civic Organizations 5,115,936
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 18.3% (10.4% OF TOTAL INVESTMENTS)
555 Albemarle Hospital Authority, North Carolina, Health Care 10/17 at 100.00 N/R 376,790
Facilities Revenue Bonds, Series 2007, 5.250%, 10/01/38
250 Johnston Memorial Hospital Authority, North Carolina, 4/18 at 100.00 AAA 215,138
Mortgage Revenue Bonds, Johnston Memorial Hospital
Project, Series 2008, 5.250%, 10/01/36 - FSA Insured
1,110 North Carolina Medical Care Commission, Healthcare Facilities 1/12 at 100.00 A 1,107,947
Revenue Bonds, Union Regional Medical Center, Series
2002A, 5.250%, 1/01/15
980 North Carolina Medical Care Commission, Healthcare Revenue 5/09 at 100.00 Aa3 895,740
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 1,303,215
Bonds, Southeastern Regional Medical Center, Series 2002,
5.250%, 6/01/22
500 North Carolina Medical Care Commission, Hospital Revenue 11/17 at 100.00 A- 421,260
Bonds, Wilson Medical Center, Series
2007, 5.000%, 11/01/20
250 North Carolina Medical Care Commission, Revenue Bonds, Blue 1/15 at 100.00 AA 186,920
Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 -
FGIC Insured
150 Northern Hospital District of Surry County, North Carolina, 4/18 at 100.00 BBB 123,285
Health Care Facilities Revenue Bonds, Series 2008, 6.250%,
10/01/38
1,000 The Charlotte-Mecklenberg Hospital Authority (North 1/18 at 100.00 AA- 783,320
Carolina), Doing Business as Carolinas HealthCare System,
Health Care Refunding Revenue Bonds, Series 2008A, 5.000%,
1/15/47
------------------------------------------------------------------------------------------------------------------------------------
6,295 Total Health Care 5,413,615
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 5.0% (2.9% OF TOTAL INVESTMENTS)
425 North Carolina Housing Finance Agency, Home Ownership Revenue 7/10 at 100.00 AA 352,512
Bonds, 1998 Trust Agreement, Series 10A, 5.400%, 7/01/32 -
AMBAC Insured (Alternative Minimum Tax)
725 North Carolina Housing Finance Agency, Home Ownership Revenue 7/09 at 100.00 AA 721,999
Bonds, 1998 Trust Agreement, Series 5A, 5.625%, 7/01/30
(Alternative Minimum Tax)
250 North Carolina Housing Finance Agency, Home Ownership Revenue 1/17 at 100.00 AA 182,465
Bonds, Series 2007-29A, 4.800%, 7/01/33 (Alternative
Minimum Tax)
330 North Carolina Housing Finance Agency, Home Ownership Revenue 7/16 at 100.00 AA 238,112
Bonds, Series 25-A, 4.900%, 7/01/37 (Alternative Minimum
Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,730 Total Housing/Single Family 1,495,088
------------------------------------------------------------------------------------------------------------------------------------
35
NRB | Nuveen North Carolina Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT(000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.3% (1.3% OF TOTAL INVESTMENTS)
$ 300 North Carolina Medical Care Commission, Health Care 10/16 at 100.00 N/R $ 234,408
Facilities Revenue Bonds, Presbyterian Homes, Series
2006B, 5.200%, 10/01/21
200 North Carolina Medical Care Commission, Healthcare 10/16 at 100.00 N/R 141,782
Facilities Revenue Bonds, Presbyterian Homes, Series
2006, 5.400%, 10/01/27
150 North Carolina Medical Care Commission, Revenue Bonds, Pines 1/16 at 100.00 N/R 106,727
at Davidson, Series 2006A, 5.000%, 1/01/36
250 North Carolina Medical Care Commission, Revenue Bonds, 9/15 at 100.00 N/R 190,813
United Church Homes and Services, Series 2005A, 5.250%,
9/01/21
------------------------------------------------------------------------------------------------------------------------------------
900 Total Long-Term Care 673,730
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 0.9% (0.5% OF TOTAL INVESTMENTS)
515 Gaston County Industrial Facilities and Pollution Control 8/15 at 100.00 N/R 281,308
Financing Authority, North Carolina, National Gypsum
Company Project Exempt Facilities Revenue Bonds, Series
2005, 5.750%, 8/01/35 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 10.4% (6.0% OF TOTAL INVESTMENTS)
1,000 Durham, North Carolina, General Obligation Bonds, Series 4/17 at 100.00 AAA 1,031,590
2007, 5.000%, 4/01/21
North Carolina, General Obligation Bonds, Series 2004A:
1,000 5.000%, 3/01/18 3/14 at 100.00 AAA 1,051,150
1,000 5.000%, 3/01/22 3/14 at 100.00 AAA 1,016,880
------------------------------------------------------------------------------------------------------------------------------------
3,000 Total Tax Obligation/General 3,099,620
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 27.7% (15.8% OF TOTAL INVESTMENTS)
1,400 Charlotte, North Carolina, Certificates of Participation, 6/13 at 100.00 AA+ 1,406,930
Governmental Facilities Projects, Series 2003G, 5.375%,
6/01/26
305 Charlotte, North Carolina, Certificates of Participation, 6/18 at 100.00 AA+ 279,621
Transit Projects Phase 2, Series 2008A, 5.000%, 6/01/33
160 Craven County, North Carolina, Certificates of 6/17 at 100.00 AA 151,461
Participation, Series 2007, 5.000%, 6/01/23 - MBIA Insured
1,870 Dare County, North Carolina, Certificates of Participation, 12/12 at 100.00 A1 1,976,047
Series 2002, 5.250%, 6/01/15 - AMBAC Insured
1,250 Davidson County, North Carolina, Certificates of 6/14 at 100.00 A1 1,204,600
Participation, Series 2004, 5.250%, 6/01/21 - AMBAC
Insured
1,390 Durham, North Carolina, Certificates of Participation, 6/15 at 100.00 AA+ 1,329,757
Series 2005B, 5.000%, 6/01/25
470 Raleigh, North Carolina, Certificates of Participation, 6/14 at 100.00 AA+ 475,748
Downtown Improvement Project, Series 2004B, 5.000%,
6/01/20
170 Raleigh, North Carolina, Certificates of Participation, 2/17 at 100.00 AA+ 163,700
Series 2007, 5.000%, 2/01/27
150 Rutherford County, North Carolina, Certificates of 12/17 at 100.00 AAA 141,393
Participation, Series 2007, 5.000%, 12/01/27 - FSA Insured
700 Sampson County, North Carolina, Certificates of 6/17 at 100.00 AAA 625,408
Participation, Series 2006, 5.000%, 6/01/34 - FSA Insured
(UB)
250 Wilmington, North Carolina, Certificates of Participation, 6/18 at 100.00 AA 235,033
Series 2008A, 5.000%, 6/01/29
250 Wilson County, North Carolina, Certificates of 4/17 at 100.00 AA 224,170
Participation, School Facilities Project, Series 2007,
5.000%, 4/01/25 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
8,365 Total Tax Obligation/Limited 8,213,868
------------------------------------------------------------------------------------------------------------------------------------
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.2% (3.5% OF TOTAL INVESTMENTS)
$ 300 Piedmont Triad Airport Authority, North Carolina, Airport 7/15 at 100.00 A2 $ 285,156
Revenue Bonds, Series 2005A, 5.000%, 7/01/20 - SYNCORA
GTY Insured
1,530 Raleigh Durham Airport Authority, North Carolina, Airport 5/11 at 101.00 Aa3 1,553,868
Revenue Bonds, Series 2001A, 5.250%, 11/01/18 - FGIC
Insured
------------------------------------------------------------------------------------------------------------------------------------
1,830 Total Transportation 1,839,024
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 19.6% (11.2% OF TOTAL INVESTMENTS) (4)
1,000 Broad River Water Authority, North Carolina, Water System 6/10 at 101.00 Baa1 (4) 1,061,070
Revenue Bonds, Series 2000, 5.375%, 6/01/26 (Pre-refunded
6/01/10) - MBIA Insured
100 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA- (4) 110,648
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded
1/15/15)
500 Greensboro, North Carolina, Combined Enterprise System 6/11 at 101.00 AAA 541,575
Revenue Bonds, Series 2001A, 5.125%, 6/01/21
(Pre-refunded 6/01/11)
1,620 North Carolina Capital Facilities Financing Agency, Revenue 10/11 at 100.00 AAA 1,752,823
Bonds, Duke University, Series 2001A, 5.125%, 10/01/26
(Pre-refunded 10/01/11)
800 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA (4) 875,168
Revenue Bonds, Mission St. Joseph's Health System, Series
2001, 5.250%, 10/01/31 (Pre-refunded 10/01/11)
300 North Carolina Medical Care Commission, Revenue Bonds, 11/14 at 100.00 AA (4) 333,237
Northeast Medical Center, Series 2004, 5.000%, 11/01/24
(Pre-refunded 11/01/14)
1,020 University of North Carolina System, Pooled Revenue 10/12 at 100.00 Baa1 (4) 1,127,335
Refunding Bonds, Series 2002A, 5.375%, 4/01/17
(Pre-refunded 10/01/12) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
5,340 Total U.S. Guaranteed 5,801,856
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 23.7% (13.5% 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 1,016,950
500 5.250%, 9/01/21 - FSA Insured 9/11 at 101.00 AAA 501,310
500 North Carolina Eastern Municipal Power Agency, Power System 1/16 at 100.00 A 480,270
Revenue Bonds, Series 2005, 5.250%, 1/01/20 - AMBAC
Insured
2,500 North Carolina Eastern Municipal Power Agency, Power System 1/09 at 100.00 Baa1 2,500,524
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+ 1,013,600
Revenue Refunding Bonds, Series 1999B, 5.650%, 1/01/16
1,500 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A2 1,503,705
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
7,000 Total Utilities 7,016,359
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 44.1% (25.1% OF TOTAL INVESTMENTS)
100 Brunswick County, North Carolina, Enterprise System Revenue 4/18 at 100.00 AAA 92,879
Bonds, Series 2008A, 5.000%, 4/01/31 - FSA Insured
505 Cape Fear Public Utility Authority, North Carolina, Water & 8/18 at 100.00 AA 463,908
Sewer System Revenue Bonds, Series 2008, 5.000%, 8/01/35
2,250 Charlotte, North Carolina, Water and Sewerage System Revenue 6/11 at 101.00 AAA 2,258,932
Bonds, Series 2001, 5.125%, 6/01/26
1,000 Charlotte, North Carolina, Water and Sewerage System Revenue 7/18 at 100.00 AAA 942,590
Bonds, Series 2008, 5.000%, 7/01/38
500 Greensboro, North Carolina, Combined Enterprise System 6/15 at 100.00 AAA 501,650
Revenue Bonds, Series 2005A, 5.000%, 6/01/25
37
NRB | Nuveen North Carolina Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 400 Onslow County, North Carolina, Combined Enterprise System
Revenue Bonds, Series 2004B, 5.000%, 6/01/23 - SYNCORA 6/14 at 100.00 A $ 371,120
GTY Insured
Raleigh, North Carolina, Combined Enterprise System Revenue
Bonds, Series 2006A:
4,440 5.000%, 3/01/31 (UB) 3/16 at 100.00 AAA 4,289,351
3,000 5.000%, 3/01/36 (UB) 3/16 at 100.00 AAA 2,829,600
5 Raleigh, North Carolina, Combined Enterprise System Revenue 3/16 at 100.00 AAA 4,148
Bonds, Series 2006A, Residuals Series II-R-645-2,
12.261%, 3/01/36 (IF)
1,385 Winston-Salem, North Carolina, Water and Sewer System 6/17 at 100.00 AAA 1,301,069
Revenue Bonds, Series 2007A, 5.000%, 6/01/37 (UB)
------------------------------------------------------------------------------------------------------------------------------------
13,585 Total Water and Sewer 13,055,247
------------------------------------------------------------------------------------------------------------------------------------
$ 53,620 Total Investments (cost $54,415,511) - 175.5% 52,005,651
==============----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (21.0)% (6,235,000)
------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.9% 857,465
------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (57.4)% (5) (17,000,000)
------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 29,628,116
==================================================================================================================
(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: 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: Using the higher of Standard & Poor's Group ("Standard & Poor's")
or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be below investment
grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and SYNCORA as of
November 30, 2008. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total Investments
is 32.7%.
N/R Not rated.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
See accompanying notes to financial statements.
38
NNO | Nuveen North Carolina Dividend Advantage Municipal Fund 2
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.7% (9.5% OF TOTAL
INVESTMENTS)
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 A1 $ 1,088,516
1,000 5.000%, 7/15/15 - MBIA Insured 7/12 at 100.00 A1 1,044,300
North Carolina Capital Facilities Financing Agency, Revenue
Bonds, Duke University, Series 2001A:
715 5.125%, 10/01/26 10/11 at 100.00 AA+ 699,013
380 5.125%, 10/01/41 10/11 at 100.00 AA+ 361,186
1,000 University of North Carolina System, Pooled Revenue Bonds, 4/15 at 100.00 AA 990,340
Series 2005A, 5.000%, 4/01/22 - AMBAC Insured
635 University of North Carolina System, Pooled Revenue 10/12 at 100.00 AA 648,297
Refunding Bonds, Series 2002A, 5.375%, 4/01/19 - AMBAC
Insured
500 University of North Carolina Wilmington, Certificates of 6/16 at 100.00 AA 458,340
Participation, Student Housing Project Revenue Bonds,
Series 2006, 5.000%, 6/01/21 - FGIC Insured
1,500 University of North Carolina, Chapel Hill, System Net No Opt. Call AA+ 1,612,530
Revenue Bonds, Series 2002B, 5.000%, 12/01/11
250 University of North Carolina, Charlotte, Certificates of 3/15 at 100.00 AA 245,468
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 420,824
Refunding Bonds, Series 2002B, 5.375%, 4/01/17 - FSA
Insured
------------------------------------------------------------------------------------------------------------------------------------
7,420 Total Education and Civic Organizations 7,568,814
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 25.1% (15.1% OF TOTAL INVESTMENTS)
945 Albemarle Hospital Authority, North Carolina, Health Care 10/17 at 100.00 N/R 641,561
Facilities Revenue Bonds, Series 2007, 5.250%, 10/01/38
1,640 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA- 1,395,017
Healthcare System Revenue Bonds, Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31
500 Johnston Memorial Hospital Authority, North Carolina, 4/18 at 100.00 AAA 430,275
Mortgage Revenue Bonds, Johnston
Memorial Hospital Project, Series 2008, 5.250%, 10/01/36 -
FSA Insured
2,000 North Carolina Medical Care Commission, Healthcare 11/13 at 100.00 Aa3 1,881,280
Facilities Revenue Bonds, Novant Health Obligated Group,
Series 2003A, 5.000%, 11/01/20
1,005 North Carolina Medical Care Commission, Healthcare 1/12 at 100.00 A 1,014,216
Facilities 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 992,880
2,100 5.250%, 6/01/22 6/12 at 101.00 A 1,824,501
925 North Carolina Medical Care Commission, Hospital Revenue 11/17 at 100.00 A- 685,259
Bonds, Wilson Medical Center, Series 2007, 5.000%,
11/01/27
1,250 North Carolina Medical Care Commission, Revenue Bonds, Blue 1/15 at 100.00 AA 934,600
Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 -
FGIC Insured
39
NNO | Nuveen North Carolina Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
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 A $ 540,468
500 5.250%, 7/01/22 - AMBAC Insured 7/14 at 100.00 A 439,395
150 Northern Hospital District of Surry County, North Carolina, 4/18 at 100.00 BBB 123,285
Health Care Facilities Revenue Bonds, Series 2008,
6.250%, 10/01/38
1,500 The Charlotte-Mecklenberg Hospital Authority (North 1/18 at 100.00 AA- 1,174,980
Carolina), Doing Business as Carolinas HealthCare
System, Health Care Refunding Revenue Bonds, Series
2008A, 5.000%, 1/15/47
------------------------------------------------------------------------------------------------------------------------------------
14,110 Total Health Care 12,077,717
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.5% (2.7% OF TOTAL INVESTMENTS)
365 North Carolina Housing Finance Agency, Home Ownership 7/10 at 100.00 AA 302,746
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:
735 4.700%, 7/01/12 (Alternative Minimum Tax) 7/11 at 100.00 AA 739,836
740 4.850%, 7/01/13 (Alternative Minimum Tax) 7/11 at 100.00 AA 740,844
510 North Carolina Housing Finance Agency, Home Ownership 7/16 at 100.00 AA 367,991
Revenue Bonds, Series 25-A, 4.900%, 7/01/37 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,350 Total Housing/Single Family 2,151,417
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.0% (1.2% OF TOTAL INVESTMENTS)
600 North Carolina Medical Care Commission, Health Care 10/16 at 100.00 N/R 468,816
Facilities Revenue Bonds, Presbyterian Homes, Series
2006B, 5.200%, 10/01/21
250 North Carolina Medical Care Commission, Healthcare 10/16 at 100.00 N/R 177,228
Facilities Revenue Bonds, Presbyterian Homes, Series
2006, 5.400%, 10/01/27
185 North Carolina Medical Care Commission, Revenue Bonds, 1/16 at 100.00 N/R 131,629
Pines at Davidson, Series 2006A, 5.000%, 1/01/36
250 North Carolina Medical Care Commission, Revenue Bonds, 9/15 at 100.00 N/R 190,813
United Church Homes and Services, Series 2005A, 5.250%,
9/01/21
------------------------------------------------------------------------------------------------------------------------------------
1,285 Total Long-Term Care 968,486
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 2.6% (1.5% OF TOTAL INVESTMENTS)
865 Gaston County Industrial Facilities and Pollution Control 8/15 at 100.00 N/R 472,489
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 766,370
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 1,238,859
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 5.8% (3.5% OF TOTAL INVESTMENTS)
250 Durham County, North Carolina, General Obligation Bonds, 5/10 at 102.00 AAA 264,978
Series 2000, 5.600%, 5/01/15
1,475 Durham, North Carolina, General Obligation Bonds, Series 4/17 at 100.00 AAA 1,511,801
2007, 5.000%, 4/01/22
1,000 North Carolina, General Obligation Bonds, Series 2004A, 3/14 at 100.00 AAA 1,016,880
5.000%, 3/01/22
------------------------------------------------------------------------------------------------------------------------------------
2,725 Total Tax Obligation/General 2,793,659
------------------------------------------------------------------------------------------------------------------------------------
40
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 38.0% (22.8% OF TOTAL INVESTMENTS)
$ 30 Cabarrus County, North Carolina, Certificates of 2/13 at 100.00 AA $ 31,113
Participation, Series 2002, 5.250%, 2/01/16
1,750 Charlotte, North Carolina, Certificates of Participation, 6/13 at 100.00 AA+ 1,668,223
Governmental Facilities Projects, Series 2003G, 5.000%,
6/01/28
575 Charlotte, North Carolina, Certificates of Participation, 6/18 at 100.00 AA+ 527,154
Transit Projects Phase 2, Series 2008A, 5.000%, 6/01/33
1,850 Charlotte, North Carolina, Storm Water Fee Revenue Bonds, 6/12 at 101.00 AAA 1,937,801
Series 2002, 5.250%, 6/01/18
800 Craven County, North Carolina, Certificates of 6/17 at 100.00 AA 730,488
Participation, Series 2007, 5.000%, 6/01/27 - MBIA 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 1,061,500
2,025 5.375%, 12/01/16 - FSA Insured 12/12 at 101.00 AAA 2,154,519
715 Lee County, North Carolina, Certificates of Participation, 4/14 at 100.00 AAA 732,489
Public Schools and Community College, Series 2004,
5.250%, 4/01/20 - FSA Insured
1,380 Pasquotank County, North Carolina, Certificates of 6/14 at 100.00 AA 1,209,722
Participation, Series 2004, 5.000%, 6/01/25 - MBIA Insured
2,070 Pitt County, North Carolina, Certificates of Participation, 4/14 at 100.00 A1 1,780,614
School Facilities Project, Series 2004B, 5.000%, 4/01/29
- AMBAC Insured
1,270 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call A 1,235,418
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+ 814,845
1,310 5.000%, 6/01/21 6/14 at 100.00 AA+ 1,315,934
115 Raleigh, North Carolina, Certificates of Participation, 2/17 at 100.00 AA+ 110,738
Series 2007, 5.000%, 2/01/27
1,000 Randolph County, North Carolina, Certificates of 6/14 at 102.00 AAA 1,010,910
Participation, Series 2004, 5.000%, 6/01/20 - FSA Insured
100 Rutherford County, North Carolina, Certificates of 12/17 at 100.00 AAA 94,262
Participation, Series 2007, 5.000%, 12/01/27 - FSA Insured
1,150 Sampson County, North Carolina, Certificates of
Participation, Series 2006, 5.000%, 6/01/34 - FSA Insured 6/17 at 100.00 AAA 1,027,456
(UB)
500 Wilmington, North Carolina, Certificates of Participation, 6/18 at 100.00 AA 470,065
Series 2008A, 5.000%, 6/01/29
400 Wilson County, North Carolina, Certificates of 4/17 at 100.00 AA 358,672
Participation, School Facilities Project, Series 2007,
5.000%, 4/01/25 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
18,845 Total Tax Obligation/Limited 18,271,923
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 16.6% (10.0% OF TOTAL INVESTMENTS)
2,035 Charlotte, North Carolina, Airport Revenue Bonds, Series 7/14 at 100.00 AA 1,676,311
2004A, 5.000%, 7/01/34 - MBIA Insured
435 Piedmont Triad Airport Authority, North Carolina, Airport 7/15 at 100.00 A2 413,476
Revenue Bonds, Series 2005A, 5.000%, 7/01/20 - SYNCORA
GTY 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 Aa3 1,020,660
2,320 5.250%, 11/01/16 - FGIC Insured 5/11 at 101.00 Aa3 2,350,392
2,230 5.250%, 11/01/17 - FGIC Insured 5/11 at 101.00 Aa3 2,243,157
270 University of North Carolina, Charlotte, Parking System 1/12 at 101.00 A2 271,374
Revenue Bonds, Series 2002, 5.000%, 1/01/20 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
8,290 Total Transportation 7,975,370
------------------------------------------------------------------------------------------------------------------------------------
41
NNO | Nuveen North Carolina Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 16.8% (10.1% OF TOTAL INVESTMENTS) (4)
$ 490 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 Aa3 (4) $ 524,197
Healthcare System Revenue Bonds, Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31 (Pre-refunded
1/15/11)
200 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA- (4) 221,296
Healthcare System Revenue Bonds, DBA Carolinas
Healthcare System, Series 2005A, 5.000%, 1/15/45
(Pre-refunded 1/15/15)
500 North Carolina Capital Facilities Financing Agency, 10/11 at 100.00 AAA 540,995
Revenue Bonds, Duke University, Series 2001A, 5.125%,
10/01/26 (Pre-refunded 10/01/11)
370 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA (4) 404,765
Revenue Bonds, Mission St. Joseph's Health System,
Series 2001, 5.250%, 10/01/31 (Pre-refunded 10/01/11)
500 North Carolina Medical Care Commission, Revenue Bonds, 11/14 at 100.00 AA (4) 555,395
Northeast Medical Center, Series 2004, 5.000%, 11/01/24
(Pre-refunded 11/01/14)
Raleigh, North Carolina, Combined Enterprise System
Revenue Bonds, Series 2004:
1,000 5.000%, 3/01/21 (Pre-refunded 3/01/14) 3/14 at 100.00 AAA 1,102,100
1,250 5.000%, 3/01/22 (Pre-refunded 3/01/14) 3/14 at 100.00 AAA 1,377,625
3,200 Wake County, North Carolina, General Obligation School 2/10 at 101.50 AAA 3,386,333
Bonds, Series 2000, 5.400%, 2/01/13 (Pre-refunded
2/01/10)
------------------------------------------------------------------------------------------------------------------------------------
7,510 Total U.S. Guaranteed 8,112,706
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 14.8% (8.9% OF TOTAL INVESTMENTS)
500 North Carolina Eastern Municipal Power Agency, Power 1/16 at 100.00 A 480,270
System Revenue Bonds, Series 2005, 5.250%, 1/01/20 -
AMBAC Insured
2,500 North Carolina Eastern Municipal Power Agency, Power 1/09 at 100.00 Baa1 2,500,525
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 A2 1,529,160
Revenue Bonds, Series 1999B, 6.500%, 1/01/20
2,600 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A2 2,606,422
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
7,100 Total Utilities 7,116,377
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 24.4% (14.7% OF TOTAL INVESTMENTS)
500 Brunswick County, North Carolina, Enterprise System 4/18 at 100.00 AAA 464,395
Revenue Bonds, Series 2008A, 5.000%, 4/01/31 - FSA
Insured
500 Cape Fear Public Utility Authority, North Carolina, Water 8/18 at 100.00 AA 459,315
& Sewer System Revenue Bonds, Series 2008, 5.000%, 8/01/35
2,520 Charlotte, North Carolina, Water and Sewerage System No Opt. Call AAA 2,768,270
Revenue Bonds, Series 2002A, 5.250%,7/01/13
1,000 Durham County, North Carolina, Enterprise System Revenue 6/13 at 100.00 AA 970,880
Bonds, Series 2002, 5.000%, 6/01/23 - MBIA Insured
Raleigh, North Carolina, Combined Enterprise System
Revenue Bonds, Series 2006A:
3,095 5.000%, 3/01/31 (UB) 3/16 at 100.00 AAA 2,989,987
975 5.000%, 3/01/36 (UB) 3/16 at 100.00 AAA 919,620
40 Raleigh, North Carolina, Combined Enterprise System 3/16 at 100.00 AAA 35,928
Revenue Bonds, Series 2006A, Residuals Series
II-R-645-1, 11.964%, 3/01/31 (IF)
42
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 $ 999,990
Series 2005, 5.000%, 6/01/25 - FSA Insured
2,275 Winston-Salem, North Carolina, Water and Sewer System 6/17 at 100.00 AAA 2,137,135
Revenue Bonds, Series 2007A, 5.000%, 6/01/37 (UB)
------------------------------------------------------------------------------------------------------------------------------------
11,905 Total Water and Sewer 11,745,520
------------------------------------------------------------------------------------------------------------------------------------
$ 83,505 Total Investments (cost $85,065,521) - 166.3% 80,020,848
==============----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (10.0)% (4,805,000)
------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.9% 904,328
------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (58.2)% (5) (28,000,000)
------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 48,120,176
==================================================================================================================
(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: 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: Using the higher of Standard & Poor's Group ("Standard & Poor's")
or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be below investment
grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and SYNCORA as of
November 30, 2008. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total Investments
is 35.0%.
N/R Not rated.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
See accompanying notes to financial statements.
43
NII | Nuveen North Carolina Dividend Advantage Municipal Fund 3
| Portfolio of INVESTMENTS
November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.9% (1.7% OF TOTAL INVESTMENTS)
$ 2,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,425,320
Asset-Backed Refunding Bonds, Series 2002, 5.500%,
5/15/39
----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 4.2% (2.5% OF TOTAL
INVESTMENTS)
North Carolina Capital Facilities Financing Agency, Revenue
Bonds, Duke University, Series 2001A:
330 5.125%, 10/01/26 10/11 at 100.00 AA+ 322,621
95 5.125%, 10/01/41 10/11 at 100.00 AA+ 90,297
1,290 University of North Carolina System, Pooled Revenue 10/12 at 100.00 AA 1,194,901
Refunding Bonds, Series 2002A, 5.000%, 4/01/27 - AMBAC
Insured
500 University of North Carolina Wilmington, Certificates of 6/16 at 100.00 AA 458,340
Participation, Student Housing Project Revenue Bonds,
Series 2006, 5.000%, 6/01/21 - FGIC Insured
----------------------------------------------------------------------------------------------------------------------------------
2,215 Total Education and Civic Organizations 2,066,159
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 11.5% (6.7% OF TOTAL INVESTMENTS)
695 Albemarle Hospital Authority, North Carolina, Health Care 10/17 at 100.00 N/R 516,761
Facilities Revenue Bonds, Series 2007, 5.250%, 10/01/27
580 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA- 493,360
Healthcare System Revenue Bonds, Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31
500 Johnston Memorial Hospital Authority, North Carolina, 4/18 at 100.00 AAA 430,275
Mortgage Revenue Bonds, Johnston Memorial Hospital
Project, Series 2008, 5.250%, 10/01/36 - FSA Insured
2,000 North Carolina Medical Care Commission, Healthcare 11/13 at 100.00 Aa3 1,973,020
Facilities Revenue Bonds, Novant Health Obligated Group,
Series 2003A, 5.000%, 11/01/18
1,000 North Carolina Medical Care Commission, Hospital Revenue 11/17 at 100.00 A- 740,820
Bonds, Wilson Medical Center, Series 2007, 5.000%, 11/01/27
300 North Carolina Medical Care Commission, Revenue Bonds, Blue 1/15 at 100.00 AA 224,304
Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 -
FGIC Insured
150 Northern Hospital District of Surry County, North Carolina, 4/18 at 100.00 BBB 123,285
Health Care Facilities Revenue Bonds, Series 2008,
6.250%, 10/01/38
1,500 The Charlotte-Mecklenberg Hospital Authority (North 1/18 at 100.00 AA- 1,174,979
Carolina), Doing Business as Carolinas HealthCare
System, Health Care Refunding Revenue Bonds, Series
2008A, 5.000%, 1/15/47
----------------------------------------------------------------------------------------------------------------------------------
6,725 Total Health Care 5,676,804
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.8% (1.1% OF TOTAL INVESTMENTS)
1,000 Mecklenburg County, North Carolina, FNMA Multifamily 7/13 at 105.00 AAA 893,920
Housing Revenue Bonds, Little Rock Apartments, Series
2003, 5.150%, 1/01/22 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
44
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.9% (1.7% OF TOTAL INVESTMENTS)
$ 725 North Carolina Housing Finance Agency, Home Ownership 7/09 at 100.00 AA $ 721,999
Revenue Bonds, 1998 Trust Agreement, Series 5A, 5.625%,
7/01/30 (Alternative Minimum Tax)
500 North Carolina Housing Finance Agency, Home Ownership 1/17 at 100.00 AA 364,930
Revenue Bonds, Series 2007-29A, 4.800%, 7/01/33
(Alternative Minimum Tax)
510 North Carolina Housing Finance Agency, Home Ownership 7/16 at 100.00 AA 367,990
Revenue Bonds, Series 25-A, 4.900%, 7/01/37 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,735 Total Housing/Single Family 1,454,919
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.6% (0.9% OF TOTAL INVESTMENTS)
600 North Carolina Medical Care Commission, Health Care 10/16 at 100.00 N/R 468,816
Facilities Revenue Bonds, Presbyterian Homes, Series
2006B, 5.200%, 10/01/21
250 North Carolina Medical Care Commission, Healthcare 10/16 at 100.00 N/R 177,228
Facilities Revenue Bonds, Presbyterian Homes, Series
2006, 5.400%, 10/01/27
190 North Carolina Medical Care Commission, Revenue Bonds, 1/16 at 100.00 N/R 135,187
Pines at Davidson, Series 2006A, 5.000%, 1/01/36
------------------------------------------------------------------------------------------------------------------------------------
1,040 Total Long-Term Care 781,231
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 22.9% (13.5% OF TOTAL INVESTMENTS)
3,900 Cary, North Carolina, General Obligation Water and Sewer 3/11 at 102.00 AAA 4,022,538
Bonds, Series 2001, 5.000%, 3/01/20
1,500 Durham, North Carolina, General Obligation Bonds, Series 4/17 at 100.00 AAA 1,537,425
2007, 5.000%, 4/01/22
Lincoln County, North Carolina, General Obligation Bonds,
Series 2002A:
850 5.000%, 6/01/19 - FGIC Insured 6/12 at 101.00 AA 857,157
900 5.000%, 6/01/20 - FGIC Insured 6/12 at 101.00 AA 901,431
1,050 5.000%, 6/01/21 - FGIC Insured 6/12 at 101.00 AA 1,044,204
500 North Carolina, General Obligation Bonds, Series 2004A, 3/14 at 100.00 AAA 508,440
5.000%, 3/01/22
2,000 Puerto Rico, General Obligation and Public Improvement No Opt. Call AA 2,072,880
Refunding Bonds, Series 1997, 6.500%, 7/01/15 - MBIA
Insured
400 Raleigh, North Carolina, General Obligation Bonds, Series 6/12 at 100.00 AAA 405,812
2002, 5.000%, 6/01/21
------------------------------------------------------------------------------------------------------------------------------------
11,100 Total Tax Obligation/General 11,349,887
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 37.6% (22.1% OF TOTAL INVESTMENTS)
1,800 Catawba County, North Carolina, Certificates of 6/14 at 100.00 Aa3 1,772,640
Participation, Series 2004, 5.250%, 6/01/22 - MBIA
Insured
1,500 Centennial Authority, North Carolina, Hotel Tax Revenue 3/09 at 101.00 AAA 1,503,915
Bonds, 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+ 2,521,173
Governmental Facilities Projects, Series 2003G, 5.000%,
6/01/33
575 Charlotte, North Carolina, Certificates of Participation, 6/18 at 100.00 AA+ 527,155
Transit Projects Phase 2, Series 2008A, 5.000%, 6/01/33
800 Craven County, North Carolina, Certificates of 6/17 at 100.00 AA 730,488
Participation, Series 2007, 5.000%, 6/01/27 - MBIA
Insured
3,000 Dare County, North Carolina, Certificates of Participation, 12/12 at 100.00 A1 2,900,820
Series 2002, 5.000%, 6/01/23 - AMBAC Insured
500 Lee County, North Carolina, Certificates of Participation, 4/14 at 100.00 AAA 512,230
Public Schools and Community College, Series 2004,
5.250%, 4/01/20 - FSA Insured
45
NII | Nuveen North Carolina Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,000 North Carolina, Certificates of Participation, Repair and 6/14 at 100.00 AA+ $ 1,008,370
Renovation Project, Series 2004B, 5.000%, 6/01/20
565 Raleigh, North Carolina, Certificates of Participation, 2/17 at 100.00 AA+ 544,061
Series 2007, 5.000%, 2/01/27
2,000 Rutherford County, North Carolina, Certificates of 9/12 at 101.00 Aa3 1,970,200
Participation, Series 2002, 5.000%, 9/01/21 - AMBAC
Insured
1,000 Rutherford County, North Carolina, Certificates of 12/17 at 100.00 AAA 942,620
Participation, Series 2007, 5.000%, 12/01/27 - FSA
Insured
1,200 Sampson County, North Carolina, Certificates of 6/17 at 100.00 AAA 1,072,128
Participation, Series 2006, 5.000%, 6/01/34 - FSA
Insured (UB)
1,785 Union County, North Carolina, Certificates of 6/13 at 101.00 AA- 1,798,798
Participation, Series 2003, 5.000%, 6/01/20 - AMBAC
Insured
500 Wilmington, North Carolina, Certificates of Participation, 6/18 at 100.00 AA 470,065
Series 2008A, 5.000%, 6/01/29
400 Wilson County, North Carolina, Certificates of 4/17 at 100.00 AA 358,671
Participation, School Facilities Project, Series 2007,
5.000%, 4/01/25 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
19,375 Total Tax Obligation/Limited 18,633,334
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 9.9% (5.8% 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 Aa3 1,816,775
3,100 5.000%, 11/01/20 - FGIC Insured 5/11 at 101.00 Aa3 3,075,169
------------------------------------------------------------------------------------------------------------------------------------
4,880 Total Transportation 4,891,944
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.1% (12.4% OF TOTAL INVESTMENTS) (4)
500 Broad River Water Authority, North Carolina, Water System 6/10 at 101.00 Baa1 (4) 530,535
Revenue Bonds, Series 2000, 5.375%, 6/01/26
(Pre-refunded 6/01/10) - MBIA Insured
170 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 Aa3 (4) 181,865
Healthcare System Revenue Bonds, Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31 (Pre-refunded 1/15/11)
200 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA- (4) 221,296
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15)
50 Cumberland County, North Carolina, Hospital Facility 10/09 at 101.00 A3 (4) 52,157
Revenue 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) 1,466,775
770 5.250%, 1/01/19 (Pre-refunded 1/01/13) 1/13 at 101.00 AA+ (4) 856,102
North Carolina Capital Facilities Financing Agency, Revenue
Bonds, Duke University, Series 2001A:
1,420 5.125%, 10/01/26 (Pre-refunded 10/01/11) 10/11 at 100.00 AAA 1,536,426
405 5.125%, 10/01/41 (Pre-refunded 10/01/11) 10/11 at 100.00 AAA 438,206
1,600 North Carolina Capital Facilities Financing Agency, Revenue 10/12 at 100.00 AAA 1,751,952
Bonds, Duke University, Series 2002A, 5.125%, 7/01/42
(Pre-refunded 10/01/12)
500 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA (4) 546,980
Revenue Bonds, Mission St. Joseph's Health System,
Series 2001, 5.250%, 10/01/31 (Pre-refunded 10/01/11)
500 North Carolina Medical Care Commission, Revenue Bonds, 11/14 at 100.00 AA (4) 555,395
Northeast Medical Center, Series 2004, 5.000%, 11/01/24
(Pre-refunded 11/01/14)
46
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 610 University of North Carolina System, Pooled Revenue 10/12 at 100.00 Baa1 (4) $ 665,857
Refunding Bonds, Series 2002A, 5.000%, 4/01/27
(Pre-refunded 10/01/12) - AMBAC Insured
1,500 Winston-Salem, North Carolina, Water and Sewerage System 6/12 at 100.00 AAA 1,628,939
Revenue Bonds, Series 2002A, 5.000%, 6/01/19
(Pre-refunded 6/01/12)
------------------------------------------------------------------------------------------------------------------------------------
9,550 Total U.S. Guaranteed 10,432,485
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 17.4% (10.3% OF TOTAL INVESTMENTS)
500 North Carolina Eastern Municipal Power Agency, Power System 1/16 at 100.00 A 480,270
Revenue Bonds, Series 2005, 5.250%, 1/01/20 - AMBAC
Insured
4,000 North Carolina Eastern Municipal Power Agency, Power System 1/09 at 100.00 Baa1 4,000,840
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 A 2,748,868
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 A2 1,403,458
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
8,565 Total Utilities 8,633,436
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 36.2% (21.3% OF TOTAL INVESTMENTS)
2,000 Brunswick County, North Carolina, Enterprise System Revenue 4/18 at 100.00 AAA 1,857,580
Bonds, Series 2008A, 5.000%, 4/01/31 - FSA Insured
Charlotte, North Carolina, Water and Sewerage System Revenue
Bonds, Series 2001:
750 5.125%, 6/01/26 6/11 at 101.00 AAA 752,978
1,780 5.125%, 6/01/26 - FGIC Insured 6/11 at 101.00 Aa1 1,690,217
300 Durham County, North Carolina, Enterprise System Revenue 6/13 at 100.00 AA 306,795
Bonds, Series 2002, 5.000%, 6/01/18 - MBIA Insured
2,500 Kannapolis, North Carolina, Water and Sewerage System 2/12 at 101.00 AAA 2,035,249
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 A 463,899
Revenue Bonds, Series 2004B, 5.000%, 6/01/23 - SYNCORA
GTY Insured
1,000 Orange Water and Sewerage Authority, North Carolina, Water 7/11 at 101.00 AA+ 981,599
and Sewerage System Revenue Bonds, Series 2001, 5.000%,
7/01/26 - MBIA Insured Raleigh, North Carolina, Combined
Enterprise System Revenue Bonds, Series 2006A:
4,950 5.000%, 3/01/31 (UB) 3/16 at 100.00 AAA 4,782,047
3,000 5.000%, 3/01/36 (UB) 3/16 at 100.00 AAA 2,829,600
5 Raleigh, North Carolina, Combined Enterprise System Revenue 3/16 at 100.00 AAA 4,148
Bonds, Series 2006A, Residuals Series II-R-645-2,
12.261%, 3/01/36 (IF)
2,375 Winston-Salem, North Carolina, Water and Sewer System 6/17 at 100.00 AAA 2,231,075
Revenue Bonds, Series 2007A, 5.000%, 6/01/37 (UB)
------------------------------------------------------------------------------------------------------------------------------------
19,160 Total Water and Sewer 17,935,187
------------------------------------------------------------------------------------------------------------------------------------
$ 87,345 Total Investments (cost $89,231,176) - 170.0% 84,174,626
===============---------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (15.1)% (7,480,000)
------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.7% 812,324
------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (56.6)% (5) (28,000,000)
------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 49,506,950
==================================================================================================================
47
NII | Nuveen North Carolina Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of INVESTMENTS November 30, 2008 (Unaudited)
(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: 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: Using the higher of Standard & Poor's Group ("Standard & Poor's")
or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be below investment
grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and SYNCORA as of
November 30, 2008. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total Investments
is 33.3%.
N/R Not rated.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
See accompanying notes to financial statements.
48
| Statement of
| ASSETS & LIABILITIES
November 30, 2008 (Unaudited)
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $78,037,457,
$42,178,053 and $94,459,130, respectively) $ 72,495,122 $ 39,233,968 $ 84,559,758
Cash 4,536 -- --
Receivables:
Interest 1,412,265 722,309 1,570,564
Investments sold 353,438 188,500 400,563
Other assets 8,187 517 689
---------------------------------------------------------------------------------------------------------
Total assets 74,273,548 40,145,294 86,531,574
---------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft -- 183,453 75,438
Floating rate obligations -- -- --
Payables:
Investments purchased 351,645 187,544 398,531
Common share dividends 180,481 103,429 234,206
Preferred share dividends 3,651 3,965 9,927
Accrued expenses:
Management fees 39,861 16,414 34,991
Other 26,540 18,295 31,930
---------------------------------------------------------------------------------------------------------
Total liabilities 602,178 513,100 785,023
---------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 27,800,000 15,000,000 33,000,000
---------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 45,871,370 $ 24,632,194 $ 52,746,551
=========================================================================================================
Common shares outstanding 3,805,652 1,969,350 4,554,375
=========================================================================================================
Net asset value per Common share outstanding (net
assets applicable to Common shares, divided by
Common shares outstanding) $ 12.05 $ 12.51 $ 11.58
=========================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
---------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 38,057 $ 19,694 $ 45,544
Paid-in surplus 52,378,183 27,902,247 64,267,727
Undistributed (Over-distribution of) net
investment income (101,036) (90,100) (193,072)
Accumulated net realized gain (loss) from
investments and derivative transactions (901,499) (255,562) (1,474,276)
Net unrealized appreciation (depreciation) of
investments and derivative transactions (5,542,335) (2,944,085) (9,899,372)
---------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 45,871,370 $ 24,632,194 $ 52,746,551
=========================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited
=========================================================================================================
See accompanying notes to financial statements.
49
| Statement of
| ASSETS & LIABILITIES (continued)
November 30, 2008 (Unaudited)
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
$134,248,091, $54,415,511,
$85,065,521 and $89,231,176,
respectively) $ 124,521,663 $ 52,005,651 $ 80,020,848 $ 84,174,626
Cash -- 126,100 -- --
Receivables:
Interest 2,450,241 895,823 1,440,837 1,413,572
Investments sold 1,649,902 -- -- --
Other assets 9,028 3,057 1,526 681
---------------------------------------------------------------------------------------------------------
Total assets 128,630,834 53,030,631 81,463,211 85,588,879
---------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 91,401 -- 275,723 317,961
Floating rate obligations 3,545,000 6,235,000 4,805,000 7,480,000
Payables:
Investments purchased -- -- -- --
Common share dividends 292,526 126,009 196,504 214,352
Preferred share dividends 6,145 3,686 8,422 6,076
Accrued expenses:
Management fees 67,129 19,289 28,394 31,410
Other 49,029 18,531 28,992 32,130
---------------------------------------------------------------------------------------------------------
Total liabilities 4,051,230 6,402,515 5,343,035 8,081,929
---------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation
value 46,800,000 17,000,000 28,000,000 28,000,000
---------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares $ 77,779,604 $ 29,628,116 $ 48,120,176 $ 49,506,950
=========================================================================================================
Common shares outstanding 6,351,838 2,265,345 3,749,642 3,933,190
=========================================================================================================
(Net asset value per Common share
outstanding net assets applicable
to Common shares, divided by
Common shares outstanding) $ 12.25 $ 13.08 $ 12.83 $ 12.59
=========================================================================================================
NET ASSETS APPLICABLE TO COMMON
SHARES CONSIST OF:
---------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per
share $ 63,518 $ 22,653 $ 37,496 $ 39,332
Paid-in surplus 87,829,648 32,124,934 53,194,711 55,500,016
Undistributed (Over-distribution of)
net investment income (144,532) (67,004) (78,397) (188,349)
Accumulated net realized gain (loss)
from investments and derivative
transactions (242,602) (42,607) 11,039 (787,499)
Net unrealized appreciation
(depreciation) of investments and
derivative transactions (9,726,428) (2,409,860) (5,044,673) (5,056,550)
---------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares $ 77,779,604 $ 29,628,116 $ 48,120,176 $ 49,506,950
=========================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited Unlimited
=========================================================================================================
See accompanying notes to financial statements.
50
| Statement of
| OPERATIONS
Six Months Ended November 30, 2008 (Unaudited)
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 1,993,031 $ 1,071,779 $ 2,345,162
---------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 252,195 134,762 296,101
Preferred shares - auction fees 34,812 18,784 41,324
Preferred shares - dividend disbursing agent fees 5,000 5,000 5,000
Shareholders' servicing agent fees and expenses 2,069 251 295
Interest expense on floating rate obligations 30,122 16,282 35,006
Custodian's fees and expenses 7,918 8,977 11,779
Trustees' fees and expenses 836 411 990
Professional fees 6,659 5,844 7,481
Shareholders' reports - printing and mailing expenses 10,366 6,341 10,515
Stock exchange listing fees 269 139 322
Investor relations expense 5,408 2,857 5,995
Other expenses 6,915 7,426 8,075
---------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 362,569 207,074 422,883
Custodian fee credit (3,984) (237) (734)
Expense reimbursement -- (38,726) (99,311)
---------------------------------------------------------------------------------------------------------
Net expenses 358,585 168,111 322,838
---------------------------------------------------------------------------------------------------------
Net investment income 1,634,446 903,668 2,022,324
---------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (829,687) (417,109) (881,907)
Forward swaps -- 153,554 --
Futures -- 53,752 --
Change in net unrealized appreciation (depreciation) of:
Investments (7,278,265) (3,503,008) (9,766,343)
Forward swaps -- (139,708) --
Futures -- -- --
---------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (8,107,952) (3,852,519) (10,648,250)
---------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (506,909) (272,985) (601,317)
---------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (506,909) (272,985) (601,317)
---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to
Common shares from operations $ (6,980,415) $ (3,221,836) $ (9,227,243)
=========================================================================================================
See accompanying notes to financial statements.
51
| Statement of
| OPERATIONS (continued)
Six Months Ended November 30, 2008 (Unaudited)
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 3,284,384 $ 1,312,697 $ 2,030,378 $ 2,101,998
---------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 420,155 155,485 256,114 259,360
Preferred shares - auction fees 58,604 21,288 35,062 35,062
Preferred shares - dividend
disbursing agent fees 5,000 5,000 5,000 5,000
Shareholders' servicing agent fees
and expenses 3,881 229 331 368
Interest expense on floating rate
obligations 47,785 79,774 62,425 96,306
Custodian's fees and expenses 16,514 8,062 11,762 12,734
Trustees' fees and expenses 1,476 519 878 922
Professional fees 8,289 6,110 7,172 7,202
Shareholders' reports - printing and
mailing expenses 17,521 7,333 10,474 11,697
Stock exchange listing fees 4,610 160 265 278
Investor relations expense 9,218 3,390 5,487 5,691
Other expenses 7,561 7,572 7,963 7,875
---------------------------------------------------------------------------------------------------------
Total expenses before custodian fee
credit and expense reimbursement 600,614 294,922 402,933 442,495
Custodian fee credit (210) (2,017) (1,736) (158)
Expense reimbursement -- (36,392) (79,926) (86,804)
---------------------------------------------------------------------------------------------------------
Net expenses 600,404 256,513 321,271 355,533
---------------------------------------------------------------------------------------------------------
Net investment income 2,683,980 1,056,184 1,709,107 1,746,465
---------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments 18,649 52,774 44,016 109,318
Forward swaps -- -- -- --
Futures 115,239 -- 117,502 --
Change in net unrealized appreciation (depreciation) of:
Investments (11,120,670) (3,288,249) (6,298,548) (6,107,054)
Forward swaps -- -- -- --
Futures 5,056 -- 5,332 --
---------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) (10,981,726) (3,235,475) (6,131,698) (5,997,736)
---------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED
SHAREHOLDERS
From net investment income (853,356) (306,150) (510,209) (510,402)
---------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Preferred shareholders (853,356) (306,150) (510,209) (510,402)
---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common
shares from operations $ (9,151,102) $ (2,485,441) $ (4,932,800) $ (4,761,673)
=========================================================================================================
See accompanying notes to financial statements.
52
| Statement of
| CHANGES in NET ASSETS (Unaudited)
GEORGIA GEORGIA
PREMIUM INCOME (NPG) DIVIDEND ADVANTAGE (NZX)
-------------------------------- ---------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
11/30/08 5/31/08 11/30/08 5/31/08
--------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 1,634,446 $ 3,214,441 $ 903,668 $ 1,781,307
Net realized gain (loss) from:
Investments (829,687) 107,414 (417,109) 193,600
Forward swaps -- 23,130 153,554 26,220
Futures -- -- 53,752 --
Change in net unrealized appreciation
(depreciation) of:
Investments (7,278,265) (1,242,529) (3,503,008) (709,956)
Forward swaps -- -- (139,708) 169,293
Futures -- -- -- --
Distributions to Preferred Shareholders:
From net investment income (506,909) (916,555) (272,985) (512,754)
From accumulated net realized gains -- (55,745) -- --
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
operations (6,980,415) 1,130,156 (3,221,836) 947,710
--------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,158,821) (2,317,641) (643,977) (1,293,795)
From accumulated net realized gains -- (161,360) -- --
--------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to Common
shareholders (1,158,821) (2,479,001) (643,977) (1,293,795)
--------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued to
shareholders due to reinvestment of
distributions -- -- -- 12,932
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from capital
share transactions -- -- -- 12,932
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (8,139,236) (1,348,845) (3,865,813) (333,153)
Net assets applicable to Common shares at
the beginning of period 54,010,606 55,359,451 28,498,007 28,831,160
--------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at
the end of period $ 45,871,370 $ 54,010,606 $ 24,632,194 $ 28,498,007
====================================================================================================================
Undistributed (Over-distribution of)net
investment income at the end of period $ (101,036) $ (69,752) $ (90,100) $ (76,806)
====================================================================================================================
GEORGIA
DIVIDEND ADVANTAGE 2 (NKG)
--------------------------------
SIX MONTHS YEAR
ENDED ENDED
11/30/08 5/31/08
--------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,022,324 $ 4,014,670
Net realized gain (loss) from:
Investments (881,907) 63,300
Forward swaps -- --
Futures -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (9,766,343) (2,367,070)
Forward swaps -- --
Futures -- --
Distributions to Preferred Shareholders:
From net investment income (601,317) (1,165,015)
From accumulated net realized gains -- --
--------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
operations (9,227,243) 545,885
--------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,427,797) (2,923,728)
From accumulated net realized gains -- --
--------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to Common
shareholders (1,427,797) (2,923,728)
--------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued to
shareholders due to reinvestment of
distributions -- 9,872
--------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from capital
share transactions -- 9,872
--------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (10,655,040) (2,367,971)
Net assets applicable to Common shares at
the beginning of period 63,401,591 65,769,562
--------------------------------------------------------------------------------------
Net assets applicable to Common shares at
the end of period $ 52,746,551 $ 63,401,591
======================================================================================
Undistributed (Over-distribution of)net
investment income at the end of period $ (193,072) $ (186,282)
======================================================================================
See accompanying notes to financial statements.
53
| Statement of
| CHANGES in NET ASSETS (continued) (Unaudited)
NORTH CAROLINA NORTH CAROLINA
PREMIUM INCOME (NNC) DIVIDEND ADVANTAGE (NRB)
------------------------------- ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
11/30/08 5/31/08 11/30/08 5/31/08
----------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,683,980 $ 5,350,912 $ 1,056,184 $ 2,103,835
Net realized gain (loss) from:
Investments 18,649 (291,586) 52,774 (66,369)
Forward swaps -- -- -- (24,224)
Futures 115,239 (13,472) -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (11,120,670) (1,880,556) (3,288,249) (402,449)
Forward swaps -- -- -- 17,297
Futures 5,056 (5,056) -- --
Distributions to Preferred Shareholders:
From net investment income (853,356) (1,480,115) (306,150) (541,052)
From accumulated net realized gains -- (82,405) -- (22,406)
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares from operations (9,151,102) 1,597,722 (2,485,441) 1,064,632
----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,896,024) (3,734,882) (781,271) (1,567,958)
From accumulated net realized gains -- (227,396) -- (76,483)
----------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to Common
shareholders (1,896,024) (3,962,278) (781,271) (1,644,441)
----------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued to
shareholders due to reinvestment of
distributions -- -- 27,287 38,805
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares from capital share
transactions -- -- 27,287 38,805
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares (11,047,126) (2,364,556) (3,239,425) (541,004)
Net assets applicable to Common shares at the
beginning of period 88,826,730 91,191,286 32,867,541 33,408,545
----------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end
of period $ 77,779,604 $ 88,826,730 $ 29,628,116 $ 32,867,541
======================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of period $ (144,532) $ (79,132) $ (67,004) $ (35,767)
======================================================================================================================
See accompanying notes to financial statements.
54
NORTH CAROLINA NORTH CAROLINA
DIVIDEND ADVANTAGE 2 (NNO) DIVIDEND ADVANTAGE 3 (NII)
----------------------------- -------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
11/30/08 5/31/08 11/30/08 5/31/08
--------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 1,709,107 $ 3,401,693 $ 1,746,465 $ 3,466,161
Net realized gain (loss) from:
Investments 44,016 (69,239) 109,318 (212,152)
Forward swaps -- -- -- --
Futures 117,502 (12,248) -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (6,298,548) (822,034) (6,107,054) (750,196)
Forward swaps -- -- -- --
Futures 5,332 (5,332) -- --
Distributions to Preferred Shareholders:
From net investment income (510,209) (922,943) (510,402) (907,982)
From accumulated net realized gains -- (79,654) -- --
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares from operations (4,932,800) 1,490,243 (4,761,673) 1,595,831
--------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,186,762) (2,369,741) (1,297,816) (2,571,479)
From accumulated net realized gains -- (239,227) -- --
--------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to Common
shareholders (1,186,762) (2,608,968) (1,297,816) (2,571,479)
--------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued to
shareholders due to reinvestment of
distributions -- 9,816 11,874 18,864
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares from capital share
transactions -- 9,816 11,874 18,864
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares (6,119,562) (1,108,909) (6,047,615) (956,784)
Net assets applicable to Common shares at the
beginning of period 54,239,738 55,348,647 55,554,565 56,511,349
--------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the
end of period $ 48,120,176 $ 54,239,738 $ 49,506,950 $ 55,554,565
===================================================================================================================
Undistributed (Over-distribution of)net
investment income at the end of period $ (78,397) $ (90,533) $ (188,349) $ (126,596)
===================================================================================================================
See accompanying notes to financial statements.
55
| Statement of
| CASH FLOWS Six Months Ended November 30, 2008 (Unaudited)
NORTH NORTH
CAROLINA CAROLINA
DIVIDEND DIVIDEND
ADVANTAGE ADVANTAGE 3
(NRB) (NII)
---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS $ (2,485,441) $ (4,761,673)
Adjustments to reconcile the net increase (decrease) in net assets
applicable to Common shares from operations to net cash provided by
(used in) operating activities:
Purchases of investments (2,442,912) (1,445,400)
Proceeds from sales and maturities of investments 2,835,350 1,526,320
Proceeds from (Purchase of) short-term investments, net 325,000 850,000
Amortization (Accretion) of premiums and discounts, net 70,650 140,629
(Increase) Decrease in receivable for interest (8,755) (44,415)
(Increase) Decrease in other assets 4,712 3,950
Increase (Decrease) in payable for investments purchased (571,069) (1,106,139)
Increase (Decrease) in payable for Preferred share dividends (1,135) 186
Increase (Decrease) in accrued management fees (1,222) 3,405
Increase (Decrease) in accrued other liabilities 374 7,267
Net realized (gain) loss from investments (52,774) (109,318)
Change in net unrealized (appreciation) depreciation of investments 3,288,249 6,107,054
---------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 961,027 1,171,866
---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in cash overdraft balance -- 309,705
Increase (Decrease) in floating rate obligations (115,000) (200,000)
Cash distributions paid to Common shareholders (751,781) (1,281,571)
---------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (866,781) (1,171,866)
---------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 94,246 --
Cash at the beginning of period 31,854 --
---------------------------------------------------------------------------------------------------------
CASH AT THE END OF PERIOD $ 126,100 $ --
=========================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest on floating rate obligations was $79,774 and $96,306 for
North Carolina Dividend Advantage (NRB) and North Carolina Dividend Advantage 3
(NII), respectively Non-cash financing activities not included herein consist of
reinvestments of Common share distributions of $27,287 and $11,874 for North
Carolina Dividend Advantage (NRB) and North Carolina Dividend Advantage 3 (NII),
respectively.
See accompanying notes to financial statements.
56
| Notes to
| FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
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) (collectively, the "Funds").
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 may establish 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. Futures contracts are valued using
the closing settlement price, or, in the absence of such a price, at the mean of
the bid and asked prices. If the pricing service is unable to supply a price for
an investment or derivative instrument, each Fund may use market quotes provided
by major broker/dealers in such investments. If it is determined that the market
price for an investment or derivative instrument is unavailable or
inappropriate, the Board of Trustees of the Funds, or its designee, may
establish fair value in accordance with procedures established in good faith by
the Board of Trustees. Temporary investments in securities that have variable
rate and demand features qualifying them as short-term investments are valued at
amortized cost, which approximates 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/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 November 30, 2008, 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.
57
| Notes to
| FINANCIAL STATEMENTS (continued) (Unaudited)
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all of its 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. Net realized capital gains and ordinary income distributions paid
by the Funds are subject to federal taxation.
Effective November 30, 2007, the Funds adopted Financial Accounting Standards
Board (FASB) Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
(FIN 48). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the affirmative evaluation of tax positions taken or expected to be
taken in the course of preparing the Funds' tax returns to determine whether it
is "more-likely-than-not" (i.e., a greater than 50-percent likelihood) of being
sustained by the applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold may result in a tax expense in the current year.
Implementation of FIN 48 required management of the Funds to analyze all open
tax years, as defined by the statute of limitations, for all major
jurisdictions, which includes federal and certain states. Open tax years are
those that are open for examination by taxing authorities (i.e., generally the
last four tax year ends and the interim tax period since then). The Funds have
no examinations in progress.
For all open tax years and all major taxing jurisdictions through the end of the
reporting period, management of the Funds has reviewed all tax positions taken
or expected to be taken in the preparation of the Funds' tax returns and
concluded the adoption of FIN 48 resulted in no impact to the Funds' net assets
or results of operations as of and during the six months ended November 30,
2008.
The Funds are also not aware of any tax positions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will significantly
change in the next twelve months.
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 at least 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.
58
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. As of November 30,
2008, 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 --
============================================================================================================
Beginning in February 2008, more shares for sale were submitted in the regularly
scheduled auctions for the Preferred shares issued by the Funds than there were
offers to buy. This meant that these auctions "failed to clear," and that many
Preferred shareholders who wanted to sell their shares in these auctions were
unable to do so. Preferred shareholders unable to sell their shares received
distributions at the "maximum rate" applicable to failed auctions as calculated
in accordance with the pre-established terms of the Preferred shares.
These developments have generally not affected the portfolio management or
investment policies of these Funds. However, one implication of these auction
failures for Common shareholders is that the Funds' cost of leverage will likely
be higher, at least temporarily, than it otherwise would have been had the
auctions continued to be successful. As a result, the Funds' future Common share
earnings may be lower than they otherwise would have been.
On June 11, 2008, Nuveen Investments, Inc. ("Nuveen") announced the Fund Board's
approval of plans to use tender option bonds (TOBs), also known as "floaters" or
floating rate obligations, to refinance a portion of the municipal funds'
outstanding Preferred shares, whose auctions have been failing for several
months. The plan included an initial phase of approximately $1 billion in
forty-one funds. These Funds did not redeem any of their Preferred shares during
the six months ended November, 2008.
Inverse Floating Rate Securities
Each Fund is authorized to invest in inverse floating rate securities. An
inverse floating rate security is created by depositing a municipal bond,
typically with a fixed interest rate, into a special purpose trust created by a
broker-dealer. In turn, this trust (a) issues floating rate certificates, in
face amounts equal to some fraction of the deposited bond's par amount or market
value, that typically pay short-term tax-exempt interest rates to third parties,
and (b) issues to a long-term investor (such as one of the Funds) an inverse
floating rate certificate (sometimes referred to as an "inverse floater") that
represents all remaining or residual interest in the trust. The income received
by the inverse floater holder varies inversely with the short-term rate paid to
the floating rate certificates' holders, and in most circumstances the inverse
floater holder bears substantially all of the underlying bond's downside
investment risk and also benefits disproportionately from any potential
appreciation of the underlying bond's value. The price of an inverse floating
rate security will be more volatile than that of the underlying bond because the
interest rate is dependent on not only the fixed coupon rate of the underlying
bond but also on the short-term interest paid on the floating rate certificates,
and because the inverse floating rate security essentially bears the risk of
loss of the greater face value of the underlying bond.
59
| Notes to
| FINANCIAL STATEMENTS (continued) (Unaudited)
A Fund may purchase an inverse floating rate security in a secondary market
transaction without first owning the underlying bond (referred to as an
"externally-deposited inverse floater"), or instead by first selling a
fixed-rate bond to a broker-dealer for deposit into the special purpose trust
and receiving in turn the residual interest in the trust (referred to as a
"self-deposited inverse floater"). The inverse floater held by a Fund gives the
Fund the right (a) to cause the holders of the floating rate certificates to
tender their notes at par, and (b) to have the broker transfer the fixed-rate
bond held by the trust to the Fund, thereby collapsing the trust. An investment
in an externally-deposited inverse floater is identified in the Portfolio of
Investments as an "Inverse floating rate investment". An investment in a
self-deposited inverse floater is accounted for as a financing transaction in
accordance with Statement of Financial Accounting Standards No. 140 (SFAS No.
140) "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities". In such instances, a fixed-rate bond deposited
into a special purpose trust is identified in the Portfolio of Investments as an
"Underlying bond of an inverse floating rate trust", with the Fund accounting
for the short-term floating rate certificates issued by the trust as "Floating
rate obligations" on the Statement of Assets and Liabilities. In addition, the
Fund reflects in Investment Income the entire earnings of the underlying bond
and the related interest paid to the holders of the short-term floating rate
certificates is included as "Interest expense on floating rate obligations" on
the Statement of Operations.
During the six months ended November 30, 2008, each Fund invested in
externally-deposited inverse floaters and/or self-deposited inverse floaters.
Each Fund may also enter into shortfall and forbearance agreements (sometimes
referred to as a "recourse trust" or "credit recovery swap") (such agreements
referred to herein as "Recourse Trusts") with a broker-dealer by which a Fund
agrees to reimburse the broker-dealer, in certain circumstances, for the
difference between the liquidation value of the fixed-rate bond held by the
trust and the liquidation value of the floating rate certificates issued by the
trust plus any shortfalls in interest cash flows. Under these agreements, a
Fund's potential exposure to losses related to or on inverse floaters may
increase beyond the value of a Fund's inverse floater investments as a Fund may
potentially be liable to fulfill all amounts owed to holders of the floating
rate certificates. At period end, any such shortfall is included as "Unrealized
depreciation on Recourse Trusts" on the Statement of Assets and Liabilities.
At November 30, 2008, the Funds were not invested in any externally-deposited
Recourse Trusts.
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)
--------------------------------------------------------------------------------------------------------------------
Maximum exposure $ -- $ -- $ -- $ -- $ -- $ -- $ --
====================================================================================================================
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the six months
ended November 30, 2008, were 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)
---------------------------------------------------------------------------------------------------------------------
Average floating rate
obligations $ 1,925,820 $ 1,040,984 $ 2,238,115 $ 3,797,186 $ 6,324,235 $ 4,952,432 $ 7,637,377
Average annual interest
rate and fees 3.12% 3.12% 3.12% 2.51% 2.52% 2.51% 2.52%
=====================================================================================================================
60
Forward Swap Transactions Each
Fund is authorized to invest in forward interest rate swap transactions. Each
Fund's use of forward interest rate swap transactions is intended to help the
Fund manage its overall interest rate sensitivity, either shorter or longer,
generally to more closely align the Fund's interest rate sensitivity with that
of the broader municipal market. Forward interest rate swap transactions involve
each Fund's agreement with a counterparty to pay, in the future, a fixed or
variable rate payment in exchange for the counterparty paying the Fund a
variable or fixed 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 the
termination date of the swap (which is akin to a bond's maturity). The value of
the Fund's swap commitment would increase or decrease based primarily on the
extent to which long-term interest rates for bonds having a maturity of the
swap's termination date increases or decreases. The Funds may terminate a swap
contract prior to the effective date, at which point a realized gain or loss is
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 reduce 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 predetermined threshold amount. Georgia Dividend Advantage
(NZX) invested in forward interest rate swap transactions during the six months
ended November 30, 2008.
Futures Contracts
Each Fund is authorized to invest in futures contracts. Upon entering into a
futures contract, a Fund is required to deposit with the broker an amount of
cash or liquid securities equal to a specified percentage of the contract
amount. This is known as the "initial margin." Subsequent payments ("variation
margin") are made or received by a Fund each day, depending on the daily
fluctuation of the value of the contract.
During the period the futures contract is open, changes in the value of the
contract are recognized as an unrealized gain or loss by "marking-to-market" on
a daily basis to reflect the changes in market value of the contract. When the
contract is closed or expired, a Fund records a realized gain or loss equal to
the difference between the value of the contract on the closing date and value
of the contract when originally entered into. Cash held by the broker to cover
initial margin requirements on open futures contracts, if any, is recognized on
the Statement of Assets and Liabilities. Additionally, the Statement of Assets
and Liabilities reflects a receivable or payable for the variation margin, when
applicable. Georgia Dividend Advantage (NZX), North Carolina Premium Income
(NNC) and North Carolina Dividend Advantage 2 (NNO) invested in futures
contracts during the six months ended November 30, 2008.
Risks of investments in futures contracts include the possible adverse movement
of the securities or indices underlying the contracts, the possibility that
there may not be a liquid secondary market for the contracts and/or that a
change in the value of the contract may not correlate with a change in the value
of the underlying securities or indices.
Zero Coupon Securities
Each Fund is authorized to invest in zero coupon securities. A zero coupon
security does not pay a regular interest coupon to its holders during the life
of the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the security
at issuance and the par value of the security at maturity and is effectively
paid at maturity. Such securities are included in the Portfolios of Investments
with a 0.000% coupon rate in their description. The market prices of zero coupon
securities generally are more volatile than the market prices of securities that
pay interest periodically.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by net credits earned on each Fund's cash on
deposit with the bank. Such deposit arrangements are an alternative to overnight
investments. Credits for cash balances may be offset by charges for any days on
which a Fund overdraws its account at the custodian bank.
61
| Notes to
| FINANCIAL STATEMENTS (continued) (Unaudited)
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.
2. FAIR VALUE MEASUREMENTS
During the current fiscal period, the Funds adopted the provisions of Statement
of Financial Accounting Standards No. 157 (SFAS No. 157) "Fair Value
Measurements." SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosure about fair value measurements. In determining the value of each
Fund's investments various inputs are used. These inputs are summarized in the
three broad levels listed below:
Level 1 - Quoted prices in active markets for identical securities.
Level 2 - Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit
risk, etc.).
Level 3 - Significant unobservable inputs (including management's
assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of each Fund's fair value measurements as of November
30, 2008:
GEORGIA PREMIUM INCOME (NPG) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------
Investments $ -- $ 72,495,122 $ -- $ 72,495,122
=============================================================================================
GEORGIA DIVIDEND ADVANTAGE (NZX) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------
Investments $ -- $ 39,233,968 $ -- $ 39,233,968
=============================================================================================
GEORGIA DIVIDEND ADVANTAGE 2 (NKG) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------
Investments $ -- $ 84,559,758 $ -- $ 84,559,758
=============================================================================================
NORTH CAROLINA PREMIUM INCOME (NNC) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------
Investments $ -- $ 124,521,663 $ -- $ 124,521,663
=============================================================================================
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------
Investments $ -- $ 52,005,651 $ -- $ 52,005,651
=============================================================================================
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------
Investments $ -- $ 80,020,848 $ -- $ 80,020,848
=============================================================================================
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------
Investments $ -- $ 84,174,626 $ -- $ 84,174,626
=============================================================================================
62
3. FUND SHARES
Common Shares
On July 30, 2008, the Funds' Board of Trustees approved an open-market share
repurchase program under which each Fund may repurchase an aggregate of up to
approximately 10% of its outstanding Common shares. The Funds did not repurchase
any of their Common shares during the six months ended November 30, 2008.
Transactions in Common shares were as follows:
GEORGIA GEORGIA DIVIDEND GEORGIA DIVIDEND
PREMIUM INCOME (NPG) ADVANTAGE (NZX) ADVANTAGE 2 (NKG)
--------------------- ------------------------ ------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
11/30/08 5/31/08 11/30/08 5/31/08 11/30/08 5/31/08
-------------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders due to
reinvestment of distributions -- -- -- 888 -- 715
=========================================================================================================================
NORTH CAROLINA NORTH CAROLINA
PREMIUM INCOME (NNC) DIVIDEND ADVANTAGE (NRB)
------------------------ ------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
11/30/08 5/31/08 11/30/08 5/31/08
-------------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders due to
reinvestment of distributions -- -- 1,891 2,628
=========================================================================================================================
NORTH CAROLINA NORTH CAROLINA
DIVIDEND DIVIDEND
ADVANTAGE 2 (NNO) ADVANTAGE 3 (NII)
---------------------- ------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
11/30/08 5/31/08 11/30/08 5/31/08
-------------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders due to
reinvestment of distributions -- 667 892 1,326
=========================================================================================================================
4. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the six months ended November 30, 2008, were
as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
-------------------------------------------------------------------------------------------------------------------------
Purchases $ 5,513,901 $ 2,511,328 $ 5,372,524
Sales and maturities 4,950,100 2,234,909 5,340,880
=========================================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
-------------------------------------------------------------------------------------------------------------------------
Purchases $ 2,698,080 $ 2,442,912 $ 1,938,095 $ 1,445,400
Sales and maturities 3,047,953 2,835,350 1,766,651 1,526,320
=========================================================================================================================
5. 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 timing differences in recognizing taxable market discount,
timing differences in recognizing certain gains and losses on investment
transactions and the treatment of investments in inverse floating rate
transactions subject to SFAS No. 140. To the extent that differences arise that
are permanent in nature, such amounts are reclassified within the capital
accounts on the Statement of Assets and Liabilities presented in the annual
report, based on their federal tax basis treatment; temporary differences do not
require reclassification. Temporary and permanent differences do not impact the
net asset values of the Funds.
63
| Notes to
| FINANCIAL STATEMENTS (continued) (Unaudited)
At November 30, 2008, the cost of investments was as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
-------------------------------------------------------------------------------------------------------------------------
Cost of investments $ 78,023,834 $ 42,177,672 $ 94,456,898
=========================================================================================================================
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 $ 130,699,169 $ 48,178,053 $ 80,257,017 $ 81,750,447
=========================================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at November 30, 2008, were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
--------------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 1,402,191 $ 822,995 $ 586,556
Depreciation (6,930,903) (3,766,699) (10,483,696)
--------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ (5,528,712) $ (2,943,704) $ (9,897,140)
==========================================================================================================================
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 $ 1,000,888 $ 753,328 $ 1,066,726 $ 879,963
Depreciation (10,724,629) (3,160,435) (6,108,042) (5,936,404)
--------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ (9,723,741) $ (2,407,107) $ (5,041,316) $ (5,056,441)
==========================================================================================================================
64
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at May 31, 2008, the Funds' last tax year end,
were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
-------------------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $ 112,057 $ 34,694 $ 58,395
Undistributed net ordinary income ** -- -- --
Undistributed net long-term capital gains -- -- --
=========================================================================================================================
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 * $ 227,772 $ 95,621 $ 109,793 $ 93,533
Undistributed net ordinary income ** -- -- -- --
Undistributed net long-term capital gains -- -- -- --
=========================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on May 1, 2008, paid on June 2, 2008.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the Funds' last tax year ended
May 31, 2008, was designated for purposes of the dividends paid deduction as
follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
-------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $ 3,261,414 $ 1,816,938 $ 4,091,700
Distributions from net ordinary income ** -- -- --
Distributions from net long-term capital gains 216,827 -- --
=========================================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
-------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $ 5,252,559 $ 2,121,763 $ 3,313,278 $ 3,475,571
Distributions from net ordinary income ** -- -- -- --
Distributions from net long-term capital gains 309,603 98,768 318,627 --
=========================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At May 31, 2008, the Funds' last tax year end, 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:
May 31, 2012 $ -- $ -- $ -- $ 119,458
May 31, 2013 -- 102,004 -- 36,008
May 31, 2014 28,172 287,093 -- 474,910
May 31, 2015 17,587 -- -- --
May 31, 2016 -- -- 38,847 115,010
-------------------------------------------------------------------------------------------------------------------------
Total $ 45,759 $ 389,097 $ 38,847 $ 745,386
=========================================================================================================================
65
| Notes to
| FINANCIAL STATEMENTS (continued) (Unaudited)
The following Funds have elected to defer net realized losses from investments
incurred from November 1, 2007 through May 31, 2008, the Funds' last tax year
end, ("post-October losses") in accordance with federal income tax regulations.
Post-October losses are treated as having arisen on the first day of the current
fiscal year:
NORTH NORTH NORTH NORTH
GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE 2 INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPG) (NKG) (NNC) (NRB) (NNO) (NII)
-------------------------------------------------------------------------------------------------------------------------
Post-October capital losses $ 71,737 $ 203,274 $ 381,548 $ 56,537 $ 155,810 $ 151,433
=========================================================================================================================
6. MANAGEMENT FEES 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, 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:
GEORGIA PREMIUM INCOME (NPG)
NORTH CAROLINA PREMIUM INCOME (NNC)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS 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)
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS 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
============================================================================================================================
66
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 following table.
As of November 30, 2008, the complex-level fee rate was .2000%.
The complex-level fee schedule is as follows:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
--------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1691
$125 billion .1599
$200 billion .1505
$250 billion .1469
$300 billion .1445
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate daily net assets of all Nuveen funds,
with such daily net assets to include assets attributable to preferred
stock issued by or borrowings by such funds but to exclude assets
attributable to investments in other Nuveen funds.
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 its Trustees who are affiliated with the
Adviser or to its 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.
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.
67
| Notes to
| FINANCIAL STATEMENTS (continued) (Unaudited)
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 their 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.
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.
68
7. NEW ACCOUNTING PRONOUNCEMENT
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 161 (SFAS No. 161) In March 2008, the FASB issued SFAS No. 161, "Disclosures
about Derivative Instruments and Hedging Activities." This standard is intended
to enhance financial statement disclosures for derivative instruments and
hedging activities and enable investors to understand: a) how and why a fund
uses derivative instruments, b) how derivative instruments and related hedge
items are accounted for, and c) how derivative instruments and related hedge
items affect a fund's financial position, results of operations and cash flows.
SFAS No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. As of November 30, 2008,
management does not believe the adoption of SFAS No. 161 will impact the
financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
8. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on December 31, 2008, to shareholders of
record on December 15, 2008, 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 $ .0515 $ .0550 $ .0530 $ .0505 $ .0580 $ .0540 $ .0555
=========================================================================================================================
Preferred Shares
On January 8, 2009, Georgia Dividend Advantage 2 (NKG) noticed for redemption
$1.3 million of its outstanding Preferred shares, at liquidation value, using
the proceeds from the issuance of TOBs and portfolio sales.
69
| Financial
| HIGHLIGHTS(Unaudited)
Selected data for a Common share outstanding throughout each period:
Investment Operations
--------------------------------------------------------------
Distributions Distributions
Beginning from Net from
Common Net Investment Capital
Share Net Realized/ Income to Gains to
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
------------------------------------------------------------------------------------------------
GEORGIA PREMIUM INCOME (NPG)
------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) $ 14.19 $ .43 $ (2.14) $ (.13) $ -- $ (1.84)
2008 14.55 .84 (.30) (.24) (.01) .29
2007 14.55 .86 .04 (.23) -- .67
2006 15.19 .87 (.48) (.17) (.01) .21
2005 14.42 .92 .84 (.09) -- 1.67
2004 15.36 .97 (.96) (.05) -- (.04)
GEORGIA DIVIDEND ADVANTAGE (NZX)
------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 14.47 .46 (1.95) (.14) -- (1.63)
2008 14.65 .90 (.16) (.26) -- .48
2007 14.71 .92 .02 (.25) -- .69
2006 15.30 .94 (.47) (.19) -- .28
2005 14.47 .96 .85 (.10) -- 1.71
2004 15.62 .97 (1.18) (.06) -- (.27)
================================================================================================
Less Distributions
---------------------------------- Offering
Net Costs and Ending
Investment Capital Preferred Common
Income to Gains to Share Share Ending
Common Common Underwriting Net Asset Market
Shareholders Shareholders Total Discounts Value Value
------------------------------------------------------------------------------------------------------------
GEORGIA PREMIUM INCOME (NPG)
------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) $ (.30) $ -- $ (.30) $ -- $ 12.05 $ 9.72
2008 (.61) (.04) (.65) -- 14.19 13.15
2007 (.67) -- (.67) -- 14.55 14.12
2006 (.78) (.07) (.85) -- 14.55 15.16
2005 (.90) -- (.90) -- 15.19 16.70
2004 (.90) -- (.90) -- 14.42 15.30
GEORGIA DIVIDEND ADVANTAGE (NZX)
------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) (.33) -- (.33) -- 12.51 10.90
2008 (.66) -- (.66) -- 14.47 13.47
2007 (.75) -- (.75) -- 14.65 16.00
2006 (.87) -- (.87) -- 14.71 15.50
2005 (.88) (.01) (.89) .01 15.30 15.89
2004 (.87) (.01) (.88) -- 14.47 13.95
============================================================================================================
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:
2009(b) $ 27,800 $ 25,000 $ 66,251
2008 27,800 25,000 73,571
2007 27,800 25,000 74,784
2006 27,800 25,000 74,747
2005 27,800 25,000 76,877
2004 27,800 25,000 74,107
GEORGIA DIVIDEND ADVANTAGE (NZX)
---------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 15,000 25,000 66,054
2008 15,000 25,000 72,497
2007 15,000 25,000 73,052
2006 15,000 25,000 73,187
2005 15,000 25,000 75,012
2004 15,000 25,000 72,247
=============================================================================================
70
Ratios/Supplemental Data
---------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
------------------ ---------------------------------------------
Based on Ending Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value* Value* Shares (000) Interest++(a) Interest++(a) Income++
-----------------------------------------------------------------------------------------------------------------------
GEORGIA PREMIUM INCOME (NPG)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 24.06)% (13.08)% $ 45,871 1.43%*** 1.31%*** 6.42%***
2008 (2.17) 2.06 54,011 1.25 1.25 5.86
2007 (2.55) 4.62 55,359 1.25 1.25 5.84
2006 (4.12) 1.42 55,318 1.25 1.25 5.87
2005 15.46 11.88 57,687 1.25 1.25 6.15
2004 (4.56) (.23) 54,607 1.23 1.23 6.54
GEORGIA DIVIDEND ADVANTAGE (NZX)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) (16.80) (11.42) 24,632 1.53*** 1.41*** 6.41***
2008 (11.73) 3.33 28,498 1.32 1.32 5.86
2007 8.10 4.75 28,831 1.35 1.35 5.74
2006 2.91 1.87 28,912 1.31 1.31 5.82
2005 20.74 12.10 30,007 1.27 1.27 5.93
2004 (5.15) (1.73) 28,348 1.27 1.27 6.03
=======================================================================================================================
Ratios/Supplemental Data
----------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement**
--------------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
---------------------------------------------------------------------------------------------------------------
GEORGIA PREMIUM INCOME (NPG)
---------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 1.41%*** 1.29%*** 6.44%*** 6%
2008 1.23 1.23 5.88 31
2007 1.23 1.23 5.86 4
2006 1.22 1.22 5.90 15
2005 1.23 1.23 6.17 18
2004 1.22 1.22 6.55 12
GEORGIA DIVIDEND ADVANTAGE (NZX)
---------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 1.25*** 1.13*** 6.70*** 5
2008 .97 .97 6.21 22
2007 .92 .92 6.16 11
2006 .85 .85 6.28 5
2005 .80 .80 6.39 12
2004 .81 .81 6.49 5
===============================================================================================================
* Total Return Based 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. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based 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. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for the
last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
*** Annualized.
+ 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) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
(b) For the six months ended November 30, 2008.
See accompanying notes to financial statements.
71
| Financial
| HIGHLIGHTS (continued) (Unaudited)
Selected data for a Common share outstanding throughout each period:
Investment Operations
---------------------------------------------------------------
Distributions Distributions
Beginning from Net from
Common Net Investment Capital
Share Net Realized/ Income to Gains to
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
----------------------------------------------------------------------------------------------------------------
GEORGIA DIVIDEND ADVANTAGE 2 (NKG)
----------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) $ 13.92 $ .44 $ (2.34) $ (.13) $ -- $ (2.03)
2008 14.44 .88 (.50) (.26) -- .12
2007 14.25 .89 .17 (.24) -- .82
2006 14.71 .88 (.45) (.19) -- .24
2005 13.79 .87 .94 (.11) -- 1.70
2004 15.01 .88 (1.23) (.05) -- (.40)
================================================================================================================
Less Distributions
----------------------------------
Offering
Net Costs and Ending
Investment Capital Preferred Common
Income to Gains to Share Share Ending
Common Common Underwriting Net Asset Market
Shareholders Shareholders Total Discounts Value Value
-----------------------------------------------------------------------------------------------------------
GEORGIA DIVIDEND ADVANTAGE 2 (NKG)
-----------------------------------------------------------------------------------------------------------
Year Ended 5/3
2009(b) $ (.31) $ -- $ (.31) $ -- $ 11.58 $ 11.52
2008 (.64) -- (.64) -- 13.92 13.18
2007 (.63) -- (.63) -- 14.44 14.50
2006 (.70) -- (.70) -- 14.25 13.26
2005 (.78) -- (.78) -- 14.71 14.18
2004 (.80) (.02) (.82) -- 13.79 13.20
===========================================================================================================
Preferred Shares at End of Period
-----------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
--------------------------------------------------------------------------------------------------------
GEORGIA DIVIDEND ADVANTAGE 2 (NKG)
--------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) $ 33,000 $ 25,000 $ 64,960
2008 33,000 25,000 73,032
2007 33,000 25,000 74,825
2006 33,000 25,000 74,168
2005 33,000 25,000 75,738
2004 33,000 25,000 72,583
========================================================================================================
72
Ratios/Supplemental Data
-------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
------------------- ----------------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value* Value* Shares (000) Interest++(a) Interest++(a) Income++
------------------------------------------------------------------------------------------------------------------------------
GEORGIA DIVIDEND ADVANTAGE 2 (NKG)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) (10.29)% (14.73)% $ 52,747 1.43%*** 1.31%*** 6.49%***
2008 (4.64) .89 63,402 1.23 1.23 5.82
2007 14.40 5.79 65,770 1.24 1.24 5.63
2006 (1.61) 1.68 64,901 1.24 1.24 5.63
2005 13.61 12.61 66,974 1.23 1.23 5.58
2004 (6.57) (2.67) 62,810 1.22 1.22 5.63
==============================================================================================================================
Ratios/Supplemental Data
----------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement**
----------------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
--------------------------------------------------------------------------------------------------------------
GEORGIA DIVIDEND ADVANTAGE 2 (NKG)
--------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 1.09%*** .97%*** 6.83%*** 6%
2008 .81 .81 6.24 23
2007 .74 .74 6.12 7
2006 .75 .75 6.12 7
2005 .74 .74 6.07 5
2004 .73 .73 6.12 12
==============================================================================================================
* Total Return Based 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. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based 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. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for the
last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
*** Annualized.
+ 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) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
(b) For the six months ended November 30, 2008.
See accompanying notes to financial statements.
73
| Financial
| HIGHLIGHTS (continued) (Unaudited)
Selected data for a Common share outstanding throughout each period:
Investment Operations
-----------------------------------------------------------------
Distributions Distributions
Beginning from Net from
Common Net Investment Capital
Share Net Realized/ Income to Gains to
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
-----------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA PREMIUM INCOME (NNC)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) $ 13.98 $ .42 $ (1.72) $ (.13) $ -- $ (1.43)
2008 14.36 .84 (.35) (.23) (.01) .25
2007 14.34 .85 .07 (.23) --*** .69
2006 15.16 .88 (.57) (.16) (.02) .13
2005 14.55 .91 .70 (.11) -- 1.50
2004 15.50 .95 (.95) (.06) -- (.06)
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 14.52 .47 (1.42) (.14) -- (1.09)
2008 14.78 .93 (.22) (.24) (.01) .46
2007 14.87 .93 .03 (.22) (.01) .73
2006 15.46 .94 (.48) (.17) -- .29
2005 14.72 .97 .78 (.09) -- 1.66
2004 15.87 .98 (1.10) (.05) -- (.17)
=======================================================================================================================
Less Distributions
----------------------------------- Offering
Net Costs and Ending
Investment Capital Preferred Common
Income to Gains to Share Share Ending
Common Common Underwriting Net Asset Market
Shareholders Shareholders Total Discounts Value Value
----------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA PREMIUM INCOME (NNC)
----------------------------------------------------------------------------------------------------------------------
Year Ended 5/3
2009(b) $ (.30) $ -- $ (.30) $ -- $ 12.25 $ 10.80
2008 (.59) (.04) (.63) -- 13.98 13.30
2007 (.66) (.01) (.67) -- 14.36 14.30
2006 (.79) (.16) (.95) -- 14.34 15.09
2005 (.89) -- (.89) -- 15.16 17.20
2004 (.89) -- (.89) -- 14.55 15.40
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
----------------------------------------------------------------------------------------------------------------------
Year Ended 5/3
2009(b) (.35) -- (.35) -- 13.08 11.68
2008 (.69) (.03) (.72) -- 14.52 15.28
2007 (.77) (.05) (.82) -- 14.78 16.44
2006 (.88) -- (.88) -- 14.87 17.70
2005 (.92) -- (.92) -- 15.46 17.25
2004 (.91) (.07) (.98) -- 14.72 15.05
======================================================================================================================
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:
2009(b) $ 46,800 $ 25,000 $ 66,549
2008 46,800 25,000 72,450
2007 46,800 25,000 73,713
2006 46,800 25,000 73,629
2005 46,800 25,000 76,286
2004 46,800 25,000 74,114
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
-----------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 17,000 25,000 68,571
2008 17,000 25,000 73,335
2007 17,000 25,000 74,130
2006 17,000 25,000 74,319
2005 17,000 25,000 76,205
2004 17,000 25,000 73,692
=========================================================================================
74
Ratios/Supplemental Data
-------------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
------------------ ----------------------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value* Value* Shares (000) Interest++(a) Interest++(a) Income++
---------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA PREMIUM INCOME (NNC)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) (16.75)% (10.35)% $ 77,780 1.43%***** 1.31%***** 6.37%*****
2008 (2.52) 1.76 88,827 1.39 1.25 5.94
2007 (.78) 4.84 91,191 1.27 1.24 5.82
2006 (6.84) .87 91,033 1.25 1.25 5.98
2005 17.79 10.52 96,008 1.23 1.23 6.09
2004 (4.08) (.40) 91,941 1.23 1.23 6.35
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) (21.63) (7.62) 29,628 1.88***** 1.37***** 6.47*****
2008 (2.28) 3.26 32,868 1.91 1.29 6.07
2007 (2.26) 4.98 33,409 1.68 1.29 5.82
2006 8.03 1.93 33,537 1.29 1.29 5.79
2005 21.19 11.53 34,820 1.27 1.27 5.90
2004 (2.76) (1.08) 33,110 1.24 1.24 5.96
=================================================================================================================================
Ratios/Supplemental Data
------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement**
------------------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
---------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA PREMIUM INCOME (NNC)
---------------------------------------------------------------------------------------------------------------------------
Year Ended 5/3
2009(b) 1.43%***** 1.31%***** 6.37%***** 2%
2008 1.36 1.23 5.97 12
2007 1.25 1.22 5.84 13
2006 1.24 1.24 5.99 16
2005 1.22 1.22 6.10 19
2004 1.22 1.22 6.36 20
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
---------------------------------------------------------------------------------------------------------------------------
Year Ended 5/3
2009(b) 1.63***** 1.12***** 6.72***** 5
2008 1.61 .99 6.37 6
2007 1.31 .92 6.20 15
2006 .84 .84 6.24 4
2005 .81 .81 6.35 11
2004 .78 .78 6.42 15
===========================================================================================================================
* Total Return Based 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. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based 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. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for
the last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
*** Rounds to less than $.01 per share.
***** Annualized.
+ 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) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
(b) For the six months ended November 30, 2008.
See accompanying notes to financial statements.
75
| Financial
| HIGHLIGHTS (continued) (Unaudited)
Selected data for a Common share outstanding throughout each period:
Investment Operations
--------------------------------------------------------------
Distributions Distributions
Beginning from Net from
Common Net Investment Capital
Share Net Realized/ Income to Gains to
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
--------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) $ 14.47 $ .46 $ (1.64) $ (.14) $ -- $ (1.32)
2008 14.76 .91 (.24) (.25) (.02) .40
2007 14.75 .91 .10 (.23) (.01) .77
2006 15.55 .92 (.60) (.17) (.01) .14
2005 14.81 .94 .83 (.10) -- 1.67
2004 15.98 .94 (1.17) (.06) -- (.29)
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 14.13 .44 (1.52) (.13) -- (1.21)
2008 14.38 .88 (.25) (.23) -- .40
2007 14.26 .89 .11 (.23) -- .77
2006 14.78 .88 (.50) (.18) -- .20
2005 13.89 .89 .91 (.11) -- 1.69
2004 14.96 .90 (1.09) (.07) -- (.26)
================================================================================================================================
Less Distributions
----------------------------------- Offering
Net Costs and Ending
Investment Capital Preferred Common
Income to Gains to Share Share Ending
Common Common Underwriting Net Asset Market
Shareholders+ Shareholders Total Discounts Value Value
-------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
-------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) $ (.32) $ -- $ (.32) $ -- $ 12.83 $ 12.30
2008 (.63) (.06) (.69) -- 14.47 13.66
2007 (.71) (.05) (.76) -- 14.76 15.50
2006 (.82) (.12) (.94) -- 14.75 15.28
2005 (.86) (.07) (.93) -- 15.55 16.25
2004 (.85) (.03) (.88) -- 14.81 14.80
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
-------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) (.33) -- (.33) -- 12.59 11.12
2008 (.65) -- (.65) -- 14.13 14.12
2007 (.65) -- (.65) -- 14.38 14.64
2006 (.72) -- (.72) -- 14.26 14.42
2005 (.80) -- (.80) -- 14.78 15.40
2004 (.80) (.01) (.81) -- 13.89 13.68
===============================================================================================================================
Preferred Shares at End of Period
-----------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
-----------------------------------------------------------------------------------------
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
-----------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) $ 28,000 $ 25,000 $ 67,964
2008 28,000 25,000 73,428
2007 28,000 25,000 74,418
2006 28,000 25,000 74,332
2005 28,000 25,000 76,924
2004 28,000 25,000 74,385
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
-----------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 28,000 25,000 69,203
2008 28,000 25,000 74,602
2007 28,000 25,000 75,457
2006 28,000 25,000 75,044
2005 28,000 25,000 76,817
2004 28,000 25,000 73,644
=========================================================================================
76
Ratios/Supplemental Data
------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
------------------- ----------------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value* Value* Shares (000) Interest++(a) Interest++(a) Income++
------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) (7.69)% (9.25)% $ 48,120 1.56%*** 1.31%*** 6.28%***
2008 (7.33) 2.83 54,240 1.54 1.25 5.87
2007 6.64 5.24 55,349 1.39 1.24 5.68
2006 (.18) .97 55,251 1.24 1.24 5.62
2005 16.46 11.56 58,155 1.23 1.23 5.64
2004 (1.94) (1.83) 55,311 1.22 1.22 5.71
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) (19.22) (8.65) 49,507 1.68*** 1.31*** 6.28***
2008 1.12 2.90 55,555 1.68 1.24 5.79
2007 6.23 5.48 56,511 1.49 1.23 5.62
2006 (1.59) 1.41 56,049 1.23 1.23 5.58
2005 18.78 12.39 58,035 1.24 1.24 5.65
2004 (4.93) (1.75) 54,482 1.22 1.22 5.75
==============================================================================================================================
Ratios/Supplemental Data
----------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement**
----------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
----------------------------------------------------------------------------------------------------
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
----------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 1.24%*** 1.00%*** 6.60%*** 2%
2008 1.19 .89 6.22 8
2007 .96 .82 6.10 9
2006 .77 .77 6.09 9
2005 .77 .77 6.10 26
2004 .77 .77 6.16 13
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
----------------------------------------------------------------------------------------------------
Year Ended 5/31:
2009(b) 1.35*** .98*** 6.61*** 2
2008 1.26 .82 6.21 15
2007 1.00 .74 6.11 12
2006 .75 .75 6.07 2
2005 .76 .76 6.14 8
2004 .73 .73 6.23 14
====================================================================================================
* Total Return Based 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. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based 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. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for the
last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
*** Annualized.
+ 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) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
(b) For the six months ended November 30, 2008.
See accompanying notes to financial statements.
77
Reinvest Automatically
EASILY and CONVENIENTLY
NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR
REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Fund allows you to conveniently reinvest dividends and/or
capital gains distributions in additional Fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of 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
greater of the net asset value or 95% of the then-current market price. If the
shares are trading at less than net asset value, shares for your account will be
purchased on the open market. If the Plan Agent begins purchasing Fund shares on
the open market while shares are trading below net asset value, but the Fund's
shares subsequently trade at or above their net asset value before the Plan
Agent is able to complete its purchases, the Plan Agent may cease open-market
purchases and may invest the uninvested portion of the distribution in
newly-issued Fund shares at a price equal to the greater of the shares' net
asset value or 95% of the shares' market value on the last business day
immediately prior to the purchase date. 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.
78
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.
79
NOTES
80
NOTES
81
Glossary of
TERMS USED in this REPORT
o AUCTION RATE BOND: An auction rate bond is a security whose interest
payments are adjusted periodically through an auction process, which
process typically also serves as a means for buying and selling the bond.
Auctions that fail to attract enough buyers for all the shares offered for
sale are deemed to have "failed", with current holders receiving a
formula-based interest rate until the next scheduled auction.
o 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.
o AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity
of the bonds in a Fund's portfolio, computed by weighting each bond's time
to maturity (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 unless an escrow account has been
established to redeem the bond before maturity. The market value weighting
for an investment in an inverse floating rate security is the value of the
portfolio's residual interest in the inverse floating rate trust, and does
not include the value of the floating rate securities issued by the trust.
o INVERSE FLOATERS: Inverse floating rate securities are created by
depositing a municipal bond, typically with a fixed interest rate, into a
special purpose trust created by a broker-dealer. This trust, in turn, (a)
issues floating rate certificates typically paying short-term tax-exempt
interest rates to third parties in amounts equal to some fraction of the
deposited bond's par amount or market value, and (b) issues an inverse
floating rate certificate (sometimes referred to as an "inverse floater")
to an investor (such as a Fund) interested in gaining investment exposure
to a long-term municipal bond. The income received by the holder of the
inverse floater varies inversely with the short-term rate paid to the
floating rate certificates' holders, and in most circumstances the holder
of the inverse floater bears substantially all of the underlying bond's
downside investment risk. The holder of the inverse floater typically also
benefits disproportionately from any potential appreciation of the
underlying bond's value. Hence, an inverse floater essentially represents
an investment in the underlying bond on a leveraged basis.
o 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.
o MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An
investment's current annualized dividend divided by its current market
price.
o NET ASSET VALUE (NAV): A Fund's NAV per common share is calculated by
subtracting the liabilities of the Fund (including any Preferred shares
issued in order to leverage the Fund) from its total assets and then
dividing the remainder by the number of common shares outstanding. Fund
NAVs are calculated at the end of each business day.
o 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.
o ZERO COUPON BOND: A zero coupon bond does not pay a regular interest coupon
to its holders during the life of the bond. Tax-exempt income to the holder
of the bond comes from accretion of the difference between the original
purchase price of the bond at issuance and the par value of the bond at
maturity and is effectively paid at maturity. The market prices of zero
coupon bonds generally are more volatile than the market prices of bonds
that pay interest periodically.
82
| Other Useful INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
You may obtain (i) each Fund's quarterly portfolio of investments, (ii)
information regarding how the Funds voted proxies relating to portfolio
securities held during the twelve-month period ended June 30, 2008, and (iii) a
description of the policies and procedures that the Funds used to determine how
to vote proxies relating to portfolio securities 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 (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 100 F Street NE, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange
(NYSE) 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.
BOARD OF TRUSTEES
John P. Amboian
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Judith M. Stockdale
Carole E. Stone
Terence J. Toth
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 and/or redeem shares of its own common or
auction rate preferred stock in the future at such times and in such amounts as
is deemed advisable. No shares were repurchased or redeemed during the period
covered by this report. Any future repurchases and/or redemptions will be
reported to shareholders in the next annual or semi-annual report.
83
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.
Nuveen Investments is a global investment management firm that seeks to help
secure the long-term goals of institutions and high net worth investors as well
as the consultants and financial advisors who serve them. Nuveen Investments
markets its growing range of specialized investment solutions under the
high-quality brands of HydePark, NWQ, Nuveen, Rittenhouse, Santa Barbara,
Symphony and Tradewinds. In total, the Company managed $134 billion of assets on
September 30, 2008.
FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest. Be sure to obtain a
prospectus, where applicable. Investors should consider the investment objective
and policies, risk considerations, charges and expenses of the Fund carefully
before investing. The prospectus contains this and other information relevant to
an investment in the Fund. For a prospectus, please contact your securities
representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606.
Please read the prospectus carefully before you invest or send money.
Learn more about Nuveen Funds at: www.nuveen.com/etf
Share prices Fund details
Daily financial news
Investor education
Interactive planning tools
ESA-C-1108D
ITEM 2. CODE OF ETHICS.
Not applicable to this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to this filing.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this filing.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this filing.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board implemented after the registrant
last provided disclosure in response to this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")(17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable to
this filing.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: See
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: See 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 North Carolina Dividend Advantage Municipal Fund 2
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By (Signature and Title) /s/ Kevin J. McCarthy
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Kevin J. McCarthy
(Vice President and Secretary)
Date: February 6, 2009
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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
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Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: February 6, 2009
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By (Signature and Title) /s/ Stephen D. Foy
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Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: February 6, 2009
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