Washington, D.C. 20549
Kevin J. McCarthy
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.
INVESTMENT ADVISER NAME CHANGE
Effective January 1, 2011, Nuveen Asset Management, the Funds’ investment adviser, changed its name to Nuveen Fund Advisors, Inc. (“Nuveen Fund Advisors”). Concurrently, Nuveen Fund Advisors formed a wholly-owned subsidiary, Nuveen Asset Management, LLC, to house its portfolio management capabilities.
NUVEEN INVESTMENTS COMPLETES STRATEGIC COMBINATION WITH FAF ADVISORS
On December 31, 2010, Nuveen Investments completed the strategic combination between Nuveen Asset Management, the largest investment affiliate of Nuveen Investments, and FAF Advisors. As part of this transaction, U.S. Bancorp – the parent of FAF Advisors – received cash consideration and a 9.5% stake in Nuveen Investments in exchange for the long-term investment business of FAF Advisors, including investment management responsibilities for the non-money market mutual funds of the First American Funds family.
The approximately $27 billion of mutual fund and institutional assets managed by FAF Advisors, along with the investment professionals managing these assets and other key personnel, have become part of Nuveen Asset Management, LLC. With these additions to Nuveen Asset Management, LLC, this affiliate now manages more than $100 billion of assets across a broad range of strategies from municipal and taxable fixed income to traditional and specialized equity investments.
This combination does not affect the investment objectives or strategies of the Funds in this report. Over time, Nuveen Investments expects that the combination will provide even more ways to meet the needs of investors who work with financial advisors and consultants by enhancing the multi-boutique model of Nuveen Investments, which also includes highly respected investment teams at HydePark, NWQ Investment Management, Santa Barbara Asset Management, Symphony Asset Management, Tradewinds Global Investors and Winslow Capital. Nuveen Investments managed approximately $206 billion of assets as of March 31, 2011.
Table of Contents
| Chairman’s Letter to Shareholders | 4 |
| Portfolio Manager’s Comments | 5 |
| Common Share Dividend and Share Price Information | 13 |
| Performance Overviews | 14 |
| Shareholder Meeting Report | 21 |
| Report of Independent Registered Public Accounting Firm | 24 |
| Portfolios of Investments | 25 |
| Statement of Assets and Liabilities | 57 |
| Statement of Operations | 59 |
| Statement of Changes in Net Assets | 61 |
| Statement of Cash Flows | 64 |
| Financial Highlights | 66 |
| Notes to Financial Statements | 77 |
| Board Members & Officers | 91 |
| Annual Investment Management Agreement Approval Process | 96 |
| Reinvest Automatically, Easily and Conveniently | 104 |
| Glossary of Terms Used in this Report | 106 |
| Other Useful Information | 111 |
Chairman’s
Letter to Shareholders
Dear Shareholders,
In 2010, the global economy recorded another year of recovery from the financial and economic crises of 2008, but many of the factors that caused the downturn still weigh on the prospects for continued improvement. In the U.S., ongoing weakness in housing values has put pressure on homeowners and mortgage lenders. Similarly, the strong earnings recovery for corporations and banks is only slowly being translated into increased hiring or more active lending. Globally, deleveraging by private and public borrowers has inhibited economic growth and that process is far from complete.
Encouragingly, constructive actions are being taken by governments around the world to deal with economic issues. In the U.S., the recent passage of a stimulatory tax bill relieved some of the pressure on the Federal Reserve to promote economic expansion through quantitative easing and offers the promise of sustained economic growth. A number of European governments are undertaking programs that could significantly reduce their budget deficits. Governments across the emerging markets are implementing various steps to deal with global capital flows without undermining international trade and investment.
The success of these government actions could determine whether 2011 brings further economic recovery and financial market progress. One risk associated with the extraordinary efforts to strengthen U.S. economic growth is that the debt of the U.S. government will continue to grow to unprecedented levels. Another risk is that over time there could be inflationary pressures on asset values in the U.S. and abroad, because what happens in the U.S. impacts the rest of the world economy. Also, these various actions are being taken in a setting of heightened global economic uncertainty, primarily about the supplies of energy and other critical commodities. In this challenging environment, your Nuveen investment team continues to seek sustainable investment opportunities and to remain alert to potential risks in a recovery still facing many headwinds. On your behalf, we monitor their activities to assure they maintain their investment disciplines.
As you will note elsewhere in this report, on December 31, 2010, Nuveen Investments completed a strategic combination with FAF Advisors, Inc., the manager of the First American Funds. The combination adds highly respected and distinct investment teams to meet the needs of investors and their advisors and is designed to benefit all fund shareholders by creating a fund organization with the potential for further economies of scale and the ability to draw from even greater talent and expertise to meet those investor needs.
As of the end of June 2011, Nuveen Investments had completed the refinancing of all of the Auction Rate Preferred Securities issued by its taxable closed-end funds and 93% of the MuniPreferred shares issued by its tax-exempt closed-end funds. Please consult the Nuveen Investments web site, www.Nuveen.com, for the current status of this important refinancing program.
As always, I encourage you to contact your financial consultant if you have any questions about your investment in a Nuveen Fund. On behalf of the other members of your Fund Board, we look forward to continuing to earn your trust in the months and years ahead.
Sincerely,
Robert P. Bremner
Chairman of the Board
July 21, 2011
Portfolio Manager’s Comments
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)
Portfolio manager Daniel Close reviews economic and municipal market conditions at the national and state levels, key investment strategies, and the twelve-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 factors affected the U.S. economic and municipal market environments during the twelve-month reporting period ended May 31, 2011?
During this period, the U.S. economy demonstrated some signs of modest improvement, supported by the efforts of both the Federal Reserve (Fed) and the federal government. For its part, the Fed continued to hold the benchmark fed funds rate in a target range of zero to 0.25% since cutting it to this record low level in December 2008. At its June 2011 meeting (following the end of this reporting period), the central bank stated that it anticipated keeping the fed funds rate at “exceptionally low levels” for an “extended period.” The Fed also completed its second round of quantitative easing with the purchase of $600 billion in longer-term U.S. Treasury bonds. The goal of this plan was to lower long-term interest rates and thereby stimulate economic activity and create jobs. The federal government continued to focus on implementing the economic stimulus package passed in early 2009 and aimed at providing job creation, tax relief, fiscal assistance to state and local governments, and expansion of unemployment benefits and other federal social welfare programs.
In the first quarter of 2011, the U.S. economy, as measured by the U.S. gross domestic product (GDP), grew at an annualized rate of 1.9%, marking the seventh consecutive quarter of positive growth. The employment situation slowly improved, with the national jobless rate registering 9.1% in May 2011, down from 9.6% a year earlier. While the Fed’s longer-term inflation expectations remained stable, inflation over this period posted its largest twelve-month gain since October 2008, as the Consumer Price Index (CPI) rose 3.6% year-over-year as of May 2011. The core CPI (which excludes food and energy) increased 1.5%, staying within the Fed’s unofficial objective of 2.0% or lower for this measure. The housing market remained a major weak spot in the economy. For the twelve months ended April 2011 (most recent data available at the time this report was prepared), the average home price in the Standard & Poor’s (S&P)/Case-Shiller Index of
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.
Any reference to credit ratings for portfolio holdings denotes the highest rating assigned by a Nationally Recognized Statistical Rating Organization (NRSRO) such as Standard & Poor’s (S&P), Moody’s or Fitch. AAA, AA, A and BBB ratings are investment grade; BB, B, CCC, CC C, and D ratings are below investment grade. Holdings and ratings may change over time.
20 major metropolitan areas lost 4.0%, with six of the 20 metropolitan areas hitting their lowest levels since housing prices peaked in 2006.
The municipal bond market was affected by a significant decline in new tax exempt issuance during this period. One reason for the decrease in new tax-exempt supply was the heavy issuance of taxable municipal debt in 2010 under the Build America Bond (BAB) program, which was created as part of the American Recovery and Reinvestment Act of February 2009 and expired on December 31, 2010. Between the beginning of this reporting period on June 1, 2010, and the end of the BAB program, taxable Build America Bond issuance totaled $74.5 billion, accounting for 28% of new bonds issued in the municipal market.
After rallying strongly during the first part of the period, the municipal market suffered a reversal in mid-November 2010, due largely to investor concerns about inflation, the federal deficit, and the deficit’s impact on demand for U.S. Treasury securities. Adding to this market pressure was media coverage of the strained finances of some state and local governments. As a result, money began to flow out of municipal mutual funds as yields rose and valuations declined. As we moved into the second quarter of 2011, we saw the environment in the municipal market improve.
Over the twelve months ended May 31, 2011, municipal bond issuance nationwide—both tax-exempt and taxable—totaled $335.7 billion, a decrease of 15% compared with the issuance of the twelve-month period ended May 31, 2010. For the first five months of 2011, municipal issuance nationwide was down 50% from the first five months of 2010. This decline reflects the heavy issuance of BABs at the end of 2010, as borrowers took advantage of the program’s favorable terms before its expiration at year end.
How were economic and market conditions in Georgia and North Carolina during this period?
Georgia was hard hit by the recent recession, with major job losses in financial services, manufacturing, construction, and the government sector. To date, the state’s economic recovery has been weaker than in many other states. In 2010, the Georgia economy expanded at a rate of 1.4%, compared with the national average growth of 2.6%. As of May 2011, unemployment in Georgia was 9.8%, its lowest level since June 2009, down from 10.0% in May 2010 but still higher than the national rate of 9.1%. In the state’s housing market, foreclosure activity remained higher than the national average. Although the national inventory of houses in foreclosure has dropped to 2008 levels, Georgia’s inventory of foreclosed homes was approximately 20% higher than the national level. According to the S&P/Case-Shiller home price Index, housing prices in Atlanta fell 3.5% between April 2010 and April 2011 (most recent data available at the time this report was prepared), compared with a gain of 0.2% for the twelve-month period ended April 2010. In April 2011, Georgia adopted an $18.3 billion fiscal 2012 state budget, which cut spending across all state agencies by an average of 7%. Despite these circumstances, Georgia’s recovery appeared to remain on track. The state has a diverse economic base supported by service, manufacturing and agricultural industries. As of May 2011, Georgia’s general obligation debt continued to be rated Aaa and AAA, with stable outlooks by both Moody’s and S&P, respectively. For the twelve months ended May 31, 2011, municipal issuance in Georgia totaled $6.8 billion, down 39% from the previous twelve months.
In 2010, North Carolina recorded GDP growth of 3.4%, compared with the national measure of 2.6%. In recent months, the state’s recovery from recession has stalled somewhat, as job gains in the professional and business services and financial sectors were offset to some degree by continued losses in other sectors, especially construction. As of May 2011, North Carolina’s unemployment rate was 9.7%, its lowest level since January 2009, down from 10.8% in May 2010 but still higher than the national rate of 9.1%. In the years preceding the most recent recession, North Carolina worked to transition its economy away from old-line manufacturing into sectors oriented toward research, technology, and services. As a result, the state now serves as an important high-tech base and its major universities attract both technology firms and professionals. Although the pre-recession bubble in housing prices was smaller in North Carolina than nationally, the state’s housing market has been slow to reverse the decline. As homes prices nationally lost 4.0% during the twelve months ended April 2011 (most recent data available at the time this report was prepared), according to the S&P/Case-Shiller home price Index, housing prices in Charlotte dropped 6.6%, reaching a new low. According to current projections, North Carolina faces a budget gap equal to $2.4 billion, or about 12% of the $19.7 billion fiscal 2012 state budget. As of May 2011, Moody’s and S&P rated North Carolina general obligation debt at Aaa and AAA, respectively. During the twelve months ended May 31, 2011, $6.7 billion of municipal debt was issued in North Carolina, down 28% from that issued during the twelve months ended May 31, 2010.
What key strategies were used to manage these Funds during this reporting period?
As previously mentioned, the new issue supply of tax-exempt bonds declined nationally during this period, due largely to the issuance of taxable bonds under the BAB program. The BAB program also affected the availability of tax-exempt bonds in Georgia and North Carolina. Between the beginning of this reporting period on June 1, 2010, and the end of the BAB program, BABs accounted for approximately 8% of municipal supply in Georgia and 15% in North Carolina. Since interest payments from BABs represent taxable income, we did not view these bonds as appropriate investment opportunities for these Funds. Further compounding the supply situation was the drop-off in new municipal issuance during the first five months of 2011, when issuance in Georgia and North Carolina declined 55% and 30%, respectively, from that of the same period in 2010.
In this environment of constrained tax-exempt municipal bond issuance, we continued to take a bottom-up approach to discovering undervalued sectors and individual credits with the potential to perform well over the long term. During this period, we found value in several areas of the market, including health care and water and sewer bonds, which we added to all seven of these Funds. In general, these purchases focused on water and sewer bonds with higher credit quality ratings, while our health care purchases tended to be in the lower-rated categories. NPG and NKG also purchased tax increment financing (TIF) bonds, while NZX added an airport credit. During this period, the Funds generally focused on purchasing longer maturity bonds in order to take advantage of attractive yields at the longer end of the municipal yield curve.
Cash for new purchases during this period was generated primarily by the proceeds from bond calls and maturing bonds, particularly in North Carolina, where a large call involving bonds issued for the Raleigh Durham Airport affected all of the North Carolina Funds. In addition, most of the Georgia and North Carolina Funds sold small amounts of pre-refunded bonds, and the North Carolina Funds sold some credits with structures that were attractive to retail investors. NPG and NKG also trimmed their out-of-state
holdings, while NZX sold intermediate-term student housing credits. Throughout the period, we worked to redeploy the proceeds from these calls and sales to keep the Funds as fully invested as possible.
As of May 31, 2011, all of these Funds continued to use inverse floating rate securities. We employ inverse floaters as a form of leverage for a variety of reasons, including duration management, income enhancement and total return enhancement.
How did the Funds perform?
Individual results for the 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 5/31/11
| | 1-Year | 5-Year | 10-Year |
| Georgia Funds | | | |
| NPG | 1.81% | 4.01% | 5.34% |
| NZX | 2.17% | 4.57% | N/A |
| NKG | 2.13% | 4.22% | N/A |
| | | | |
Standard & Poor’s (S&P) Georgia Municipal Bond Index1 | 3.80% | 4.56% | 4.96% |
Standard & Poor’s (S&P) National Municipal Bond Index2 | 3.17% | 4.46% | 5.02% |
Lipper Other States Municipal Debt Funds Average3 | 2.49% | 4.18% | 5.60% |
| | | | |
| North Carolina Funds | | | |
| NNC | 2.57% | 4.86% | 5.78% |
| NRB | 1.72% | 5.16% | 6.44% |
| NNO | 1.92% | 4.91% | N/A |
| NII | 1.79% | 5.00% | N/A |
| | | | |
Standard & Poor’s (S&P) North Carolina Municipal Bond Index1 | 3.66% | 4.95% | 5.26% |
Standard & Poor’s (S&P) National Municipal Bond Index2 | 3.17% | 4.46% | 5.02% |
Lipper Other States Municipal Debt Funds Average3 | 2.49% | 4.18% | 5.60% |
For the twelve months ended May 31, 2011, the total returns on common share net asset value (NAV) for all of the Georgia and North Carolina Funds underperformed the returns for their respective state’s Standard & Poor’s (S&P) Municipal Bond Index as well as the Standard & Poor’s (S&P) National Municipal Bond Index. For the same period, NNC exceeded the average return for the Lipper Other States Municipal Debt Funds Average, while the remaining Funds lagged this benchmark.
Key management factors that influenced the Funds’ returns during this period included duration and yield curve positioning, credit exposure and sector allocation. The use of leverage also had an impact on the Funds’ performance. Leverage is discussed in more detail on page nine.
During this period, municipal bonds with intermediate maturities generally outperformed other maturity categories, with credits at both the shorter and longer ends of the yield curve posting weaker returns. Overall, duration and yield curve positioning was a positive contributor to the performance of NPG, NZX, NKG, NNC, NNO, and NII. All of these Funds had good exposure to the intermediate parts of the yield curve that performed best, with NNC being the most advantageously positioned for the market environment of the past
| | 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. |
| | |
| 1 | The Standard & Poor’s (S&P) Municipal Bond Indexes for Georgia and North Carolina are unleveraged, market value-weighted indexes designed to measure the performance of the tax-exempt, investment-grade Georgia and North Carolina municipal bond markets, respectively. These indexes do not reflect any initial or ongoing expenses and are not available for direct investment. |
| | |
| 2 | The Standard & Poor’s (S&P) National Municipal Bond Index is an unleveraged, market value-weighted index designed to measure the performance of the tax-exempt, investment-grade U.S. municipal bond market. This index does not reflect any initial or ongoing expenses and is not available for direct investment. |
| | |
| 3 | 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: 1-year, 46 funds; 5-year, 46 funds; and 10-year, 27 funds. Lipper returns account for the effects of management fees and assume reinvestment of dividends, but do not reflect any applicable sales charges. The Lipper average is not available for direct investment. Shareholders should note that the performance of the Lipper Other States category represents the overall average of returns for funds from ten different states with a wide variety of municipal market conditions, which may make direct comparisons less meaningful. |
twelve months. On the other hand, NRB was modestly underweighted in the intermediate part of the curve, which detracted from the Fund’s performance during this period.
Credit exposure also played a role in performance. During the market reversal of late 2010, as redemption activity in high-yield funds increased and risk aversion mounted, lower-rated credits were negatively impacted. For the period as a whole, bonds rated BBB typically underperformed those rated AAA. In this environment, the Funds’ performance generally benefited from their allocations to higher quality credits. Overall, the North Carolina Funds tended to have smaller weightings of bonds rated BBB than the Georgia Funds, due to the fact that North Carolina generally issues fewer BBB bonds. As of May 31, 2011, NPG had the heaviest exposure to bonds rated BBB among all of these Funds and a correspondingly lower weighting in AAA bonds, which restrained the Fund’s performance during this period.
Holdings that generally made positive contributions to the Funds’ returns during this period included general obligation (GO) and other tax-supported bonds, housing credits and resource recovery bonds. The electric utilities, water and sewer, and leasing sectors also outperformed the municipal market as a whole. All of these Funds were underweighted in the tax-supported sector, specifically in state GOs, which hurt their performance. In general, these Funds tended to be underweighted in transportation, which helped their performance.
IMPACT OF THE FUNDS’ LEVERAGE STRATEGIES ON PERFORMANCE
One important factor impacting the returns of all these Funds relative to the comparative indexes was the Funds’ use of leverage. The Funds use leverage because their managers believe that, over time, leveraging provides opportunities for additional income and total return for common shareholders. However, use of leverage also can expose common shareholders to additional volatility. For example, as the prices of securities held by a Fund decline, the negative impact of these valuation changes on common share net asset value and common shareholder total return is magnified by the use of leverage. This is what happened in these Funds during the period, as the use of leverage hurt their overall performance.
APPROVED FUND MERGERS
After the close of this reporting period, the Funds’ Board of Trustees approved a series of mergers for all the Georgia and North Carolina funds included in this report. The mergers are subject to shareholder approval at the Funds’ regular shareholder meeting later this year. The mergers in each respective state are intended to create a single, larger state fund with enhanced trading appeal and lower operating expenses of traded common shares of the fund.
More information on the proposed mergers will be contained in the proxy materials expected to be filed with the Securities and Exchange Commission in the coming weeks. The proposed fund mergers are as follows:
| Acquired Fund | Acquiring Fund |
| Georgia Funds | |
| Nuveen Georgia Premium Income Municipal Fund (NPG) | Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG) |
| Nuveen Georgia Dividend Advantage Municipal Fund (NZX) | |
| Acquired Fund | Acquiring Fund |
| North Carolina Funds | |
| Nuveen North Carolina Dividend Advantage Municipal Fund (NRB) | Nuveen North Carolina Premium Income Municipal Fund (NNC) |
| Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO) | |
| Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII) | |
RECENT DEVELOPMENTS REGARDING THE FUNDS’ REDEMPTION OF AUCTION RATE PREFERRED SHARES
Shortly after their respective inceptions, each of the Funds issued auction rate preferred shares (ARPS) to create structural leverage. As noted in past shareholder reports, the ARPS issued by many closed-end funds, including these Funds, have been hampered by a lack of liquidity since February 2008. Since that time, more ARPS have been submitted for sale in each of their regularly scheduled auctions than there have been offers to buy. In fact, offers to buy have been almost completely nonexistent since late February 2008. This means that these auctions have “failed to clear,” and that many, or all, of the ARPS shareholders who wanted to sell their shares in these auctions were unable to do so. This lack of liquidity in ARPS did not lower the credit quality of these shares, and ARPS shareholders unable to sell their shares continued to receive distributions at the “maximum rate” applicable to failed auctions, as calculated in accordance with the pre-established terms of the ARPS. In the recent market, with short term rates at multi-generational lows, those maximum rates also have been low. One continuing implication for common shareholders from the auction failures is that each Fund’s cost of leverage likely has been incrementally higher at times than it otherwise might have been had the auctions continued to be successful. As a result, each Fund’s common share earnings likely have been incrementally lower at times than they otherwise might have been.
As noted in past shareholder reports, the Nuveen funds’ Board of Directors/Trustees authorized several methods that can be used separately or in combination to refinance a portion of the Nuveen funds’ outstanding ARPS. Some funds have utilized tender option bonds (TOBs), also known as inverse floating rate securities, for leverage purposes. The amount of TOBs that a fund may use varies according to the composition of each fund’s portfolio. Some funds have a greater ability to use TOBs than others. Some funds have issued Variable Rate Demand Preferred (VRDP) Shares or Variable MuniFund Term Preferred (VMTP) Shares, which are a floating rate form of preferred stock with a mandatory term redemption. Some funds have issued MuniFund Term Preferred (MTP) Shares, a fixed rate form of preferred stock with a mandatory redemption period of three to five years.
While all these efforts have reduced the total amount of outstanding ARPS issued by the Nuveen funds, the funds cannot provide any assurance on when the remaining outstanding ARPS might be redeemed.
During 2010 and 2011, certain Nuveen leveraged closed-end funds (excluding all the Funds included in this report) received a demand letter from a law firm on behalf of purported holders of common shares of each such fund, alleging that Nuveen and the funds’ officers and Board of Directors/Trustees breached their fiduciary duties related to the redemption at par of the funds’ ARPS. In response, the Board established an ad hoc Demand Committee consisting of certain of its disinterested and independent Board members to investigate the claims. The Demand Committee retained independent counsel to assist it in conducting an extensive investigation. Based upon its investigation, the Demand Committee found that it was not in the best interests of each fund or its
shareholders to take the actions suggested in the demand letters, and recommended that the full Board reject the demands made in the demand letters. After reviewing the findings and recommendation of the Demand Committee, the full Board of each fund unanimously adopted the Demand Committee’s recommendation.
Subsequently, the funds that received demand letters were named in a consolidated complaint as nominal defendants in a putative shareholder derivative action captioned Martin Safier, et al. v. Nuveen Asset Management, et al. that was filed in the Circuit Court of Cook County, Illinois, Chancery Division (the “Cook County Chancery Court”) on February 18, 2011 (the “Complaint”). The Complaint, filed on behalf of purported holders of each fund’s common shares, also name Nuveen Fund Advisors, Inc. as a defendant, together with current and former Officers and interested Directors/Trustees of each of the funds (together with the nominal defendants, collectively, the “Defendants”). The Complaint contains the same basic allegations contained in the demand letters. The suits seek a declaration that the Defendants have breached their fiduciary duties, an order directing the Defendants not to redeem any ARPS at their liquidation value using fund assets, indeterminate monetary damages in favor of the funds and an award of plaintiffs’ costs and disbursements in pursuing the action. Nuveen Fund Advisors, Inc. believes that the Complaint is without merit, and is defending vigorously against these charges.
As of May 31, 2011, each of the Funds has redeemed all of their outstanding ARPS at par.
MTP Shares
As of May 31, 2011, the following Funds have issued and outstanding MTP Shares, at liquidation value, as shown in the accompanying table.
| | | | |
| | | MTP Shares | |
| Fund | | at Liquidation Value | |
| NPG | | $ | 28,340,000 | |
| NZX | | | 14,340,000 | |
| NKG | | | 32,265,000 | |
| NNC | | | 49,835,000 | |
| NRB | | | 16,600,000 | |
| NNO | | | 29,700,000 | |
| NII | | | 28,725,000 | |
The net proceeds from each Fund’s issuance of MTP Shares was used to refinance all, or a portion of, the Fund’s remaining outstanding ARPS at par. Each Fund’s MTP Shares trade on the New York Stock Exchange (NYSE). At May 31, 2011, the details on each Fund’s series of MTP Shares are as shown in the following table.
| | | | | | | | | | | | | | |
| Fund | | Series | | Shares Issued
At Liquidation Value | | Annual
Interest Rate | NYSE
Ticker | |
| NPG | | | 2015 | | $ | 28,340,000 | | | 2.65 | % | | NPG Pr C | |
| NZX | | | 2015 | | | 14,340,000 | | | 2.65 | % | | NZX Pr C | |
| NKG | | | 2015 | | | 32,265,000 | | | 2.65 | % | | NKG Pr C | |
| NNC | | | 2015 | | | 24,300,000 | | | 2.65 | % | | NNC Pr C | |
| NNC | | | 2016 | | | 25,535,000 | | | 2.60 | % | | NNC Pr D | |
| NRB | | | 2015 | | | 16,600,000 | | | 2.60 | % | | NRB Pr C | |
| NNO | | | 2015 | | | 29,700,000 | | | 2.60 | % | | NNO Pr C | |
| NII | | | 2015 | | | 28,725,000 | | | 2.65 | % | | NII Pr C | |
(Refer to Notes to Financial Statements, Footnote 1 – General Information and Significant Accounting Policies and Footnote 4 – Fund Shares for further details on MTP Shares.)
At the time this report was prepared, all 84 of the Nuveen closed-end municipal funds that had issued ARPS have redeemed at par all or a portion of these shares. These redemptions bring the total amount of Nuveen’s municipal closed-end funds’ ARPS redemptions to approximately $10.3 billion of the approximately $11.0 billion originally outstanding. For up-to-date information, please visit the Nuveen CEF Auction Rate Preferred Resource Center at: http://www.nuveen.com/arps.
Regulatory Matters
During May 2011, Nuveen Securities, LLC known as Nuveen Investments LLC prior to April 30, 2011. entered into a settlement with the Financial Industry Regulatory Authority (FINRA) with respect to certain allegations regarding Nuveen-sponsored closed-end fund ARPS marketing brochures. As part of this settlement, Nuveen Securities, LLC neither admitted to nor denied FINRA’s allegations. Nuveen Securities, LLC is the broker-dealer subsidiary of Nuveen Investments.
The settlement with FINRA concludes an investigation that followed the widespread failure of auctions for ARPS and other auction rate securities, which generally began in mid-February 2008. In the settlement, FINRA alleged that certain marketing materials provided by Nuveen Securities, LLC were false and misleading. Nuveen Securities, LLC agreed to a censure and the payment of a $3 million fine.
RISK CONSIDERATIONS
Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Past performance is no guarantee of future results.
Price Risk; Common shares of closed-end investment companies like the Funds frequently trade at a discount to their net asset value. The Funds cannot predict whether the common shares will trade at, above or below net asset value. Your common shares at any point in time may be worth less than your original investment, even after taking into account the reinvestment of Fund dividends and distributions.
Leverage Risk; Each Fund’s use of leverage creates the possibility of higher volatility for the Fund’s per share NAV, market price, and distributions. Leverage risk can be introduced through structural leverage (issuing preferred shares or debt borrowings at the Fund level) or through certain derivative investments held in the Fund’s portfolio. Leverage typically magnifies the total return of a Fund’s portfolio, whether that return is positive or negative. There is no assurance that a Fund’s leveraging strategy will be successful.
Credit and Interest Rate Risk; Debt or fixed income securities are subject to credit risk and interest rate risk. The value of, and income generated by debt securities will decrease or increase based on changes in market interest rates. As interest rates rise, bond prices fall. Credit risk refers to an issuer’s ability to make interest and principal payments when due.
Common Share Dividend and Share Price Information
The monthly dividends of all seven Funds in this report remained stable throughout the twelve-month reporting period ended May 31, 2011.
All of these Funds seek to pay stable dividends at rates that reflect each Fund’s past results and projected future performance. During certain periods, each Fund may pay dividends at a rate that may be more or less than the amount of net investment income actually earned by the Fund during the period. If a Fund has cumulatively earned more than it has paid in dividends, it holds the excess in reserve as undistributed net investment income (UNII) as part of the Fund’s NAV. Conversely, if a Fund has cumulatively paid dividends in excess of its earnings, the excess constitutes negative UNII that is likewise reflected in the Fund’s NAV. Each Fund will, over time, pay all of its net investment income as dividends to shareholders. As of May 31, 2011, all seven of the Funds in this report had positive UNII balances for both tax and financial reporting purposes.
COMMON SHARE REPURCHASES AND SHARE PRICE INFORMATION
Since the inception of the Funds’ repurchase program, the Funds have not repurchased any of their outstanding common shares.
As of May 31, 2011, the Funds’ common share prices were trading at (+) premiums or (-) discounts to their common share NAVs as shown in the accompanying table.
| | 5/31/11 | | 12-Month Average |
| Fund | (+)Premium/(-)Discount | | (+)Premium/(-)Discount |
| NPG | (-)5.21% | | (-)3.11% |
| NZX | (-)3.55% | | (-)0.63% |
| NKG | (+)1.02% | | (-)2.83% |
| NNC | (+)0.49% | | (+)1.10% |
| NRB | (+)1.84% | | (+)4.83% |
| NNO | (-)2.34% | | (+)2.77% |
| NII | (+)0.07% | | (+)2.68% |
| NPG | | Nuveen Georgia |
| Performance | | Premium Income |
| OVERVIEW | | Municipal Fund |
| | | as of May 31, 2011 |
| | | | | |
| Fund Snapshot | | | | |
| Common Share Price | | $ | 13.27 | |
Common Share Net Asset Value (NAV) | | $ | 14.00 | |
| Premium/(Discount) to NAV | | | -5.21 | % |
| Market Yield | | | 5.34 | % |
Taxable-Equivalent Yield1 | | | 7.89 | % |
Net Assets Applicable to Common Shares ($000) | | $ | 53,294 | |
| Leverage | | | | |
| (as a % of managed assets) | | | | |
| Structural Leverage | | | 33.85 | % |
| Effective Leverage | | | 37.25 | % |
| Average Annual Total Return | | | | | | | |
| (Inception 5/20/93) | | | | | | | |
| | | On Share Price | | On NAV |
| 1-Year | | | 0.18 | % | | 1.81 | % |
| 5-Year | | | 2.37 | % | | 4.01 | % |
| 10-Year | | | 3.87 | % | | 5.34 | % |
Portfolio Composition3 | | | | |
| (as a % of total investments) | | | | |
| Tax Obligation/General | | | 24.0 | % |
| Education and Civic Organizations | | | 16.2 | % |
| Water and Sewer | | | 15.7 | % |
| Tax Obligation/Limited | | | 14.6 | % |
| Health Care | | | 9.9 | % |
| Utilities | | | 6.8 | % |
| U.S. Guaranteed | | | 5.1 | % |
| Other | | | 7.7 | % |
| | Refer to the Glossary of Terms used in this Report for further definition of the terms used within this Fund’s Performance Overview page. |
| 1 | Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.3%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. |
| 2 | Ratings shown are the highest of Standard & Poor’s Group, Moody’s Investor Service, Inc. or Fitch, Inc. AAA includes bonds with an implied AAA rating since they are backed by U.S. Government or agency securities. AAA, AA, A and BBB ratings are investment grade; BB, B, CCC, CC, C and D ratings are below-investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| 3 | Holdings are subject to change. |
| NZX | | Nuveen Georgia |
| Performance | | Dividend Advantage |
| OVERVIEW | | Municipal Fund |
| | | as of May 31, 2011 |
| Fund Snapshot | | | | |
| Common Share Price | | $ | 13.84 | |
Common Share Net Asset Value (NAV) | | $ | 14.35 | |
| Premium/(Discount) to NAV | | | -3.55 | % |
| Market Yield | | | 5.55 | % |
Taxable-Equivalent Yield1 | | | 8.20 | % |
Net Assets Applicable to Common Shares ($000) | | $ | 28,296 | |
| | | | | |
| Leverage | | | | |
| (as a % of managed assets) | | | | |
| Structural Leverage | | | 32.79 | % |
| Effective Leverage | | | 36.29 | % |
| Average Annual Total Return | | | | | | | |
| (Inception 9/25/01) | | | | | | | |
| | | On Share Price | | On NAV |
| 1-Year | | | -3.77 | % | | 2.17 | % |
| 5-Year | | | 2.88 | % | | 4.57 | % |
Since Inception | | | 4.64 | % | | 5.53 | % |
Portfolio Composition3 | | | | |
| (as a % of total investments) | | | | |
| Tax Obligation/General | | | 19.8 | % |
| Health Care | | | 15.9 | % |
| Water and Sewer | | | 13.9 | % |
| U.S. Guaranteed | | | 12.3 | % |
| Education and Civic Organizations | | | 9.5 | % |
| Housing/Single Family | | | 8.8 | % |
| Tax Obligation/Limited | | | 7.1 | % |
| Other | | | 12.7 | % |
| | Refer to the Glossary of Terms used in this Report for further definition of the terms used within this Fund’s Performance Overview page. |
| 1 | Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.3%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. |
| 2 | Ratings shown are the highest of Standard & Poor’s Group, Moody’s Investor Service, Inc. or Fitch, Inc. AAA includes bonds with an implied AAA rating since they are backed by U.S. Government or agency securities. AAA, AA, A and BBB ratings are investment grade; BB, B, CCC, CC, C and D ratings are below-investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| 3 | Holdings are subject to change. |
| NKG | | Nuveen Georgia |
| Performance | | Dividend Advantage |
| OVERVIEW | | Municipal Fund 2 |
| | | as of May 31, 2011 |
| Fund Snapshot | | | | |
| Common Share Price | | $ | 13.92 | |
Common Share Net Asset Value (NAV) | | $ | 13.78 | |
| Premium/(Discount) to NAV | | | 1.02 | % |
| Market Yield | | | 5.17 | % |
Taxable-Equivalent Yield1 | | | 7.64 | % |
Net Assets Applicable to Common Shares ($000) | | $ | 62,777 | |
| Leverage | | | | |
| (as a % of managed assets) | | | | |
| Structural Leverage | | | 33.11 | % |
| Effective Leverage | | | 36.49 | % |
| Average Annual Total Return | | | | | | | |
| (Inception 9/25/02) | | | | | | | |
| | | On Share Price | | On NAV |
| 1-Year | | | 4.84 | % | | 2.13 | % |
| 5-Year | | | 6.23 | % | | 4.22 | % |
Since Inception | | | 4.44 | % | | 4.64 | % |
| | | | | |
Portfolio Composition3 | | | | |
| (as a % of total investments) | | | | |
| Tax Obligation/General | | | 20.0 | % |
| Water and Sewer | | | 19.6 | % |
| Education and Civic Organizations | | | 11.7 | % |
| Tax Obligation/Limited | | | 11.6 | % |
| Health Care | | | 11.5 | % |
| U.S. Guaranteed | | | 9.7 | % |
| Transportation | | | 3.4 | % |
| Other | | | 12.5 | % |
| | Refer to the Glossary of Terms used in this Report for further definition of the terms used within this Fund’s Performance Overview page. |
| 1 | Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.3%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. |
| 2 | Ratings shown are the highest of Standard & Poor’s Group, Moody’s Investor Service, Inc. or Fitch, Inc. AAA includes bonds with an implied AAA rating since they are backed by U.S. Government or agency securities. AAA, AA, A and BBB ratings are investment grade; BB, B, CCC, CC, C and D ratings are below-investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| 3 | Holdings are subject to change. |
| NNC | | Nuveen North Carolina |
| Performance | | Premium Income |
| OVERVIEW | | Municipal Fund |
| | | as of May 31, 2011 |
| Fund Snapshot | | | | |
| Common Share Price | | $ | 14.41 | |
Common Share Net Asset Value (NAV) | | $ | 14.34 | |
| Premium/(Discount) to NAV | | | 0.49 | % |
| Market Yield | | | 5.16 | % |
Taxable-Equivalent Yield1 | | | 7.77 | % |
Net Assets Applicable to Common Shares ($000) | | $ | 91,256 | |
| Leverage | | | | |
| (as a % of managed assets) | | | | |
| Structural Leverage | | | 34.91 | % |
| Effective Leverage | | | 37.62 | % |
| Average Annual Total Return | | | | | | | |
| (Inception 5/20/93) | | | | | | | |
| | | On Share Price | | On NAV |
| 1-Year | | | -1.27 | % | | 2.57 | % |
| 5-Year | | | 4.04 | % | | 4.86 | % |
| 10-Year | | | 5.03 | % | | 5.78 | % |
Portfolio Composition3 | | | | |
| (as a % of total investments) | | | | |
| Tax Obligation/Limited | | | 22.2 | % |
| Health Care | | | 17.7 | % |
| Education and Civic Organizations | | | 12.8 | % |
| U.S. Guaranteed | | | 11.8 | % |
| Water and Sewer | | | 11.3 | % |
| Transportation | | | 7.4 | % |
| Utilities | | | 5.8 | % |
| Other | | | 11.0 | % |
| | Refer to the Glossary of Terms used in this Report for further definition of the terms used within this Fund’s Performance Overview page. |
| 1 | Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 33.6%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. |
| 2 | Ratings shown are the highest of Standard & Poor’s Group, Moody’s Investor Service, Inc. or Fitch, Inc. AAA includes bonds with an implied AAA rating since they are backed by U.S. Government or agency securities. AAA, AA, A and BBB ratings are investment grade; BB, B, CCC, CC, C and D ratings are below-investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| 3 | Holdings are subject to change. |
| NRB | | Nuveen North Carolina |
| Performance | | Dividend Advantage |
| OVERVIEW | | Municipal Fund |
| | | as of May 31, 2011 |
| Fund Snapshot | | | | |
| Common Share Price | | $ | 14.94 | |
Common Share Net Asset Value (NAV) | | $ | 14.67 | |
| Premium/(Discount) to NAV | | | 1.84 | % |
| Market Yield | | | 5.62 | % |
Taxable-Equivalent Yield1 | | | 8.46 | % |
Net Assets Applicable to Common Shares ($000) | | $ | 33,337 | |
| Leverage | | | | |
| (as a % of managed assets) | | | | |
| Structural Leverage | | | 32.64 | % |
| Effective Leverage | | | 41.62 | % |
| Average Annual Total Return | | | | | | | |
| (Inception 1/25/01) | | | | | | | |
| | | On Share Price | | On NAV |
| 1-Year | | | -2.16 | % | | 1.72 | % |
| 5-Year | | | 1.85 | % | | 5.16 | % |
| 10-Year | | | 5.47 | % | | 6.44 | % |
Portfolio Composition3 | | | | |
| (as a % of total investments) | | | | |
| Water and Sewer | | | 30.7 | % |
| Health Care | | | 16.5 | % |
| Tax Obligation/Limited | | | 15.9 | % |
| U.S. Guaranteed | | | 8.2 | % |
| Tax Obligation/General | | | 7.0 | % |
| Education and Civic Organizations | | | 5.8 | % |
| Transportation | | | 5.7 | % |
| Utilities | | | 5.2 | % |
| Other | | | 5.0 | % |
| | Refer to the Glossary of Terms used in this Report for further definition of the terms used within this Fund’s Performance Overview page. |
| 1 | Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 33.6%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. |
| 2 | Ratings shown are the highest of Standard & Poor’s Group, Moody’s Investor Service, Inc. or Fitch, Inc. AAA includes bonds with an implied AAA rating since they are backed by U.S. Government or agency securities. AAA, AA, A and BBB ratings are investment grade; BB, B, CCC, CC, C and D ratings are below-investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| 3 | Holdings are subject to change. |
| NNO | | Nuveen North Carolina |
| Performance | | Dividend Advantage |
| OVERVIEW | | Municipal Fund 2 |
| | | as of May 31, 2011 |
| Fund Snapshot | | | | |
| Common Share Price | | $ | 14.21 | |
Common Share Net Asset Value (NAV) | | $ | 14.55 | |
| Premium/(Discount) to NAV | | | -2.34 | % |
| Market Yield | | | 5.74 | % |
Taxable-Equivalent Yield1 | | | 8.64 | % |
Net Assets Applicable to Common Shares ($000) | | $ | 54,593 | |
| Leverage | | | | |
| (as a % of managed assets) | | | | |
| Structural Leverage | | | 35.23 | % |
| Effective Leverage | | | 38.78 | % |
| | | | | | | | |
| Average Annual Total Return | | | | | | | |
| (Inception 11/15/01) | | | | | | | |
| | | On Share Price | | On NAV |
| 1-Year | | | -4.55 | % | | 1.92 | % |
| 5-Year | | | 3.78 | % | | 4.91 | % |
| | | 4.99 | % | | 5.78 | % |
| | | | | |
Portfolio Composition3 | | | | |
| (as a % of total investments) | | | | |
| Health Care | | | 22.7 | % |
| Tax Obligation/Limited | | | 22.0 | % |
| Water and Sewer | | | 19.4 | % |
| Transportation | | | 8.3 | % |
| Education and Civic Organizations | | | 7.1 | % |
| Tax Obligation/General | | | 6.1 | % |
| U.S. Guaranteed | | | 5.1 | % |
| Other | | | 9.3 | % |
| | Refer to the Glossary of Terms used in this Report for further definition of the terms used within this Fund’s Performance Overview page. |
| 1 | Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 33.6%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. |
| 2 | Ratings shown are the highest of Standard & Poor’s Group, Moody’s Investor Service, Inc. or Fitch, Inc. AAA includes bonds with an implied AAA rating since they are backed by U.S. Government or agency securities. AAA, AA, A and BBB ratings are investment grade; BB, B, CCC, CC, C and D ratings are below-investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| 3 | Holdings are subject to change. |
| NII | | Nuveen North Carolina |
| Performance | | Dividend Advantage |
| OVERVIEW | | Municipal Fund 3 |
| | | as of May 31, 2011 |
| Fund Snapshot | | | | |
| Common Share Price | | $ | 14.22 | |
Common Share Net Asset Value (NAV) | | $ | 14.21 | |
| Premium/(Discount) to NAV | | | 0.07 | % |
| Market Yield | | | 5.57 | % |
Taxable-Equivalent Yield1 | | | 8.39 | % |
Net Assets Applicable to Common Shares ($000) | | $ | 55,959 | |
| Leverage | | | | |
| (as a % of managed assets) | | | | |
| Structural Leverage | | | 33.92 | % |
| Effective Leverage | | | 39.29 | % |
| Average Annual Total Return | | | | | | | |
| (Inception 9/25/02) | | | | | | | |
| | | On Share Price | | On NAV |
| 1-Year | | | -5.28 | % | | 1.79 | % |
| 5-Year | | | 4.85 | % | | 5.00 | % |
| | | 4.56 | % | | 5.11 | % |
Portfolio Composition3 | | | | |
| (as a % of total investments) | | | | |
| Water and Sewer | | | 27.6 | % |
| Tax Obligation/Limited | | | 21.4 | % |
| Health Care | | | 15.3 | % |
| U.S. Guaranteed | | | 12.0 | % |
| Utilities | | | 9.1 | % |
| Other | | | 14.6 | % |
| | Refer to the Glossary of Terms used in this Report for further definition of the terms used within this Fund’s Performance Overview page. |
| 1 | Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 33.6%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. |
| 2 | Ratings shown are the highest of Standard & Poor’s Group, Moody’s Investor Service, Inc. or Fitch, Inc. AAA includes bonds with an implied AAA rating since they are backed by U.S. Government or agency securities. AAA, AA, A and BBB ratings are investment grade; BB, B, CCC, CC, C and D ratings are below-investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| 3 | Holdings are subject to change. |
| NPG | | Shareholder Meeting Report (Unaudited) |
| NZX | | |
| NKG | | The annual meeting of shareholders was held in the offices of Nuveen Investments on November 16, 2010; at this meeting the shareholders were asked to vote on the election of Board Members, the elimination of Fundamental Investment Policies and the approval of new Fundamental Investment Policies. The meeting for NRB and NNO was subsequently adjourned to January 6, 2011 and additionally adjourned to March 14, 2011. |
| | | | NPG | | | NZX | | | NKG | |
| | | | Common and | | | | | | Common and | | | | | | Common and | | | | |
| | | | Preferred | | | Preferred | | | Preferred | | | Preferred | | | Preferred | | | Preferred | |
| | | | shares voting | | | shares voting | | | shares voting | | | shares voting | | | shares voting | | | shares voting | |
| | | | together | | | together | | | together | | | together | | | together | | | together | |
| | | | as a class | | | as a class | | | as a class | | | as a class | | | as a class | | | as a class | |
| To approve the elimination of the Fund’s fundamental policy relating to investments in municipal securities and below investment grade securities. | | | | | | | | | | | | | | | | | | | |
| For | | | — | | | — | | | — | | | — | | | — | | | — | |
| Against | | | — | | | — | | | — | | | — | | | — | | | — | |
| Abstain | | | — | | | — | | | — | | | — | | | — | | | — | |
| Broker Non-Votes | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total | | | — | | | — | | | — | | | — | | | — | | | — | |
| To approve the new fundamental policy relating to investments in municipal securities for the Fund. | | | | | | | | | | | | | | | | | | | |
| For | | | — | | | — | | | — | | | — | | | — | | | — | |
| Against | | | — | | | — | | | — | | | — | | | — | | | — | |
| Abstain | | | — | | | — | | | — | | | — | | | — | | | — | |
| Broker Non-Votes | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total | | | — | | | — | | | — | | | — | | | — | | | — | |
| Approval of the Board Members was reached as follows: | | | | | | | | | | | | | | | | | | | |
| William C. Hunter | | | | | | | | | | | | | | | | | | | |
| For | | | — | | | 2,647,539 | | | — | | | 1,310,311 | | | — | | | 2,922,834 | |
| Withhold | | | — | | | 25,334 | | | — | | | 2,000 | | | — | | | 133,564 | |
| Total | | | — | | | 2,672,873 | | | — | | | 1,312,311 | | | — | | | 3,056,398 | |
| William J. Schneider | | | | | | | | | | | | | | | | | | | |
| For | | | — | | | 2,647,539 | | | — | | | 1,310,311 | | | — | | | 2,922,834 | |
| Withhold | | | — | | | 25,334 | | | — | | | 2,000 | | | — | | | 133,564 | |
| Total | | | — | | | 2,672,873 | | | — | | | 1,312,311 | | | — | | | 3,056,398 | |
| Judith M. Stockdale | | | | | | | | | | | | | | | | | | | |
| For | | | 6,227,438 | | | — | | | 3,175,540 | | | — | | | 7,179,606 | | | — | |
| Withhold | | | 103,606 | | | — | | | 55,867 | | | — | | | 266,202 | | | — | |
| Total | | | 6,331,044 | | | — | | | 3,231,407 | | | — | | | 7,445,808 | | | — | |
| Carole E. Stone | | | | | | | | | | | | | | | | | | | |
| For | | | 6,227,438 | | | — | | | 3,175,540 | | | — | | | 7,180,195 | | | — | |
| Withhold | | | 103,606 | | | — | | | 55,867 | | | — | | | 265,613 | | | — | |
| Total | | | 6,331,044 | | | — | | | 3,231,407 | | | — | | | 7,445,808 | | | — | |
| NNC | | Shareholder Meeting Report (Unaudited) (continued) |
| NRB | | |
| NNO | | |
| | | | NNC | | | NRB | | | NNO | |
| | | | Common and | | | | | | Common and | | | | | | Common and | | | | |
| | | | Preferred | | | Preferred | | | Preferred | | | Preferred | | | Preferred | | | Preferred | |
| | | | shares voting | | | shares voting | | | shares voting | | | shares voting | | | shares voting | | | shares voting | |
| | | | together | | | together | | | together | | | together | | | together | | | together | |
| | | | as a class | | | as a class | | | as a class | | | as a class | | | as a class | | | as a class | |
| To approve the elimination of the Fund’s fundamental policy relating to investments in municipal securities and below investment grade securities. | | | | | | | | | | | | | | | | | | | |
| For | | | — | | | — | | | 2,044,858 | | | — | | | 3,446,564 | | | — | |
| Against | | | — | | | — | | | 114,537 | | | — | | | 168,063 | | | — | |
| Abstain | | | — | | | — | | | 63,655 | | | — | | | 94,998 | | | — | |
| Broker Non-Votes | | | — | | | — | | | 474,457 | | | — | | | 820,613 | | | — | |
| Total | | | — | | | — | | | 2,697,507 | | | — | | | 4,530,238 | | | — | |
| To approve the new fundamental policy relating to investments in municipal securities for the Fund. | | | | | | | | | | | | | | | | | | | |
| For | | | — | | | — | | | 2,069,018 | | | — | | | 3,455,125 | | | — | |
| Against | | | — | | | — | | | 94,635 | | | — | | | 164,069 | | | — | |
| Abstain | | | — | | | — | | | 59,397 | | | — | | | 90,431 | | | — | |
| Broker Non-Votes | | | — | | | — | | | 474,457 | | | — | | | 820,613 | | | — | |
| Total | | | — | | | — | | | 2,697,507 | | | — | | | 4,530,238 | | | — | |
| Approval of the Board Members was reached as follows: | | | | | | | | | | | | | | | | | | | |
| William C. Hunter | | | | | | | | | | | | | | | | | | | |
| For | | | — | | | 2,277,588 | | | — | | | 866,679 | | | — | | | 1,647,111 | |
| Withhold | | | — | | | 2,000 | | | — | | | 7,500 | | | — | | | 18,000 | |
| Total | | | — | | | 2,279,588 | | | — | | | 874,179 | | | — | | | 1,665,111 | |
| William J. Schneider | | | | | | | | | | | | | | | | | | | |
| For | | | — | | | 2,277,588 | | | — | | | 866,679 | | | — | | | 1,647,111 | |
| Withhold | | | — | | | 2,000 | | | — | | | 7,500 | | | — | | | 18,000 | |
| Total | | | — | | | 2,279,588 | | | — | | | 874,179 | | | — | | | 1,665,111 | |
| Judith M. Stockdale | | | | | | | | | | | | | | | | | | | |
| For | | | 8,134,652 | | | — | | | 2,570,744 | | | — | | | 4,348,615 | | | — | |
| Withhold | | | 131,136 | | | — | | | 105,162 | | | — | | | 147,242 | | | — | |
| Total | | | 8,265,788 | | | — | | | 2,675,906 | | | — | | | 4,495,857 | | | — | |
| Carole E. Stone | | | | | | | | | | | | | | | | | | | |
| For | | | 8,143,601 | | | — | | | 2,570,744 | | | — | | | 4,360,486 | | | — | |
| Withhold | | | 122,187 | | | — | | | 105,162 | | | — | | | 135,371 | | | — | |
| Total | | | 8,265,788 | | | — | | | 2,675,906 | | | — | | | 4,495,857 | | | — | |
| | | | NII | |
| | | | Common and | | | | |
| | | | Preferred | | | Preferred | |
| | | | shares voting | | | shares voting | |
| | | | together | | | together | |
| | | | as a class | | | as a class | |
| To approve the elimination of the Fund’s fundamental policy relating to investments in municipal securities and below investment grade securities. | | | | | | | |
| For | | | — | | | — | |
| Against | | | — | | | — | |
| Abstain | | | — | | | — | |
| Broker Non-Votes | | | — | | | — | |
| Total | | | — | | | — | |
| To approve the new fundamental policy relating to investments in municipal securities for the Fund. | | | | | | | |
| For | | | — | | | — | |
| Against | | | — | | | — | |
| Abstain | | | — | | | — | |
| Broker Non-Votes | | | — | | | — | |
| Total | | | — | | | — | |
| Approval of the Board Members was reached as follows: | | | | | | | |
| William C. Hunter | | | | | | | |
| For | | | — | | | 2,512,732 | |
| Withhold | | | — | | | 22,736 | |
| Total | | | — | | | 2,535,468 | |
| William J. Schneider | | | | | | | |
| For | | | — | | | 2,512,732 | |
| Withhold | | | — | | | 22,736 | |
| Total | | | — | | | 2,535,468 | |
| Judith M. Stockdale | | | | | | | |
| For | | | 6,215,772 | | | — | |
| Withhold | | | 139,418 | | | — | |
| Total | | | 6,355,190 | | | — | |
| Carole E. Stone | | | | | | | |
| For | | | 6,228,212 | | | — | |
| Withhold | | | 126,978 | | | — | |
| Total | | | 6,355,190 | | | — | |
Report of Independent
Registered Public Accounting Firm
The Board of Trustees and Shareholders
Nuveen Georgia Premium Income Municipal Fund
Nuveen Georgia Dividend Advantage Municipal Fund
Nuveen Georgia Dividend Advantage Municipal Fund 2
Nuveen North Carolina Premium Income Municipal Fund
Nuveen North Carolina Dividend Advantage Municipal Fund
Nuveen North Carolina Dividend Advantage Municipal Fund 2
Nuveen North Carolina Dividend Advantage Municipal Fund 3
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Nuveen Georgia Premium Income Municipal Fund, Nuveen Georgia Dividend Advantage Municipal Fund, Nuveen Georgia Dividend Advantage Municipal Fund 2, Nuveen North Carolina Premium Income Municipal Fund, Nuveen North Carolina Dividend Advantage Municipal Fund, Nuveen North Carolina Dividend Advantage Municipal Fund 2, and Nuveen North Carolina Dividend Advantage Municipal Fund 3 (the “Funds”) as of May 31, 2011, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of May 31, 2011, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Nuveen Georgia Premium Income Municipal Fund, Nuveen Georgia Dividend Advantage Municipal Fund, Nuveen Georgia Dividend Advantage Municipal Fund 2, Nuveen North Carolina Premium Income Municipal Fund, Nuveen North Carolina Dividend Advantage Municipal Fund, Nuveen North Carolina Dividend Advantage Municipal Fund 2, and Nuveen North Carolina Dividend Advantage Municipal Fund 3 at May 31, 2011, and the results of their operations and their cash flows for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with U.S. generally accepted accounting principles.
Chicago, Illinois
July 28, 2011
| | | Nuveen Georgia Premium Income Municipal Fund |
| NPG | | Portfolio of Investments |
| | | May 31, 2011 |
| | 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 Asset-Backed Refunding Bonds, Series 2002, 5.500%, 5/15/39 | 5/12 at 100.00 | BBB | $ | 815,940 | |
| | | | Education and Civic Organizations – 24.0% (16.2% of Total Investments) | | | | | |
| | 750 | | Athens Housing Authority, Georgia, Student Housing Lease Revenue Bonds, UGAREF East Campus Housing LLC Project, Series 2009, 5.250%, 6/15/35 | 6/19 at 100.00 | Aa2 | | 762,765 | |
| | 1,000 | | Athens-Clarke County Unified Government Development Authority, Georgia, Educational Facilities Revenue Bonds, UGAREF CCRC Building LLC Project, Series 2002, 5.000%, 12/15/16 – AMBAC Insured | 12/12 at 100.00 | N/R | | 1,034,310 | |
| | 2,800 | | Atlanta Development Authority, Georgia, Educational Facilities Revenue Bonds, Science Park LLC Project, Series 2007, 5.000%, 7/01/39 | 7/17 at 100.00 | Aa3 | | 2,783,144 | |
| | 1,550 | | Bulloch County Development Authority, Georgia, Student Housing and Athletic Facility Lease Revenue Bonds, Georgia Southern University, Series 2004, 5.250%, 8/01/21 – SYNCORA GTY Insured | 8/14 at 100.00 | A1 | | 1,609,675 | |
| | 700 | | Carrollton Payroll Development Authority, Georgia, Student Housing Revenue Bonds, University of West Georgia, Series 2004A, 5.000%, 9/01/21 – SYNCORA GTY Insured | 9/14 at 100.00 | A1 | | 726,670 | |
| | 1,535 | | Fulton County Development Authority, Georgia, Revenue Bonds, Georgia Tech Molecular Science Building, Series 2004, 5.250%, 5/01/15 – NPFG Insured | 5/14 at 100.00 | Aa3 | | 1,699,675 | |
| | 150 | | Georgia Higher Education Facilities Authority, Revenue Bonds, USG Real Estate Foundation I LLC Project, Series 2008, 6.000%, 6/15/28 | 6/18 at 100.00 | A2 | | 163,773 | |
| | | | Private Colleges and Universities Authority, Georgia, Revenue Bonds, Emory University, Series 2009B, Trust 3404: | | | | | |
| | 270 | | 17.087%, 3/01/17 (IF) | No Opt. Call | AA | | 320,825 | |
| | 430 | | 17.115%, 3/01/17 (IF) | No Opt. Call | AA | | 485,608 | |
| | 1,180 | | Savannah Economic Development Authority, Georgia, Revenue Bonds, Armstrong Atlantic State University, Compass Point LLC Project, Series 2005, 5.000%, 7/01/25 – SYNCORA GTY Insured | 7/15 at 100.00 | A2 | | 1,201,523 | |
| | 1,490 | | Savannah Economic Development Authority, Georgia, Revenue Bonds, Armstrong Center LLC, Series 2005A, 5.000%, 12/01/34 – SYNCORA GTY Insured | 12/15 at 100.00 | A3 | | 1,492,086 | |
| | 500 | | Savannah Economic Development Authority, Georgia, Revenue Bonds, GTREP Project, Series 2002, 5.000%, 7/01/22 – NPFG Insured | 7/12 at 100.00 | Aa3 | | 507,250 | |
| | 12,355 | | Total Education and Civic Organizations | | | | 12,787,304 | |
| | | | Health Care – 14.7% (9.9% of Total Investments) | | | | | |
| | | | Coffee County Hospital Authority, Georgia, Revenue Bonds, Coffee County Regional Medical Center, Series 2004: | | | | | |
| | 100 | | 5.000%, 12/01/19 | 12/14 at 100.00 | BBB– | | 101,451 | |
| | 900 | | 5.250%, 12/01/22 | 12/14 at 100.00 | BBB– | | 904,131 | |
| | 185 | | 5.000%, 12/01/26 | 12/14 at 100.00 | BBB– | | 171,249 | |
| | 100 | | Coweta County Development Authority, Georgia, Revenue Bonds, Piedmont Healthcare, Inc. Project, Series 2010, 5.000%, 6/15/40 | 6/20 at 100.00 | AA– | | 93,198 | |
| | 1,000 | | Franklin County Industrial Building Authority, Georgia, Revenue Bonds, Ty Cobb Regional Medical Center Project, Series 2010, 8.000%, 12/01/40 | 12/20 at 100.00 | N/R | | 996,630 | |
| | | | Gainesville and Hall County Hospital Authority, Georgia, Revenue Anticipation Certificates, Northeast Georgia Health Services Inc., Series 2010B: | | | | | |
| | 300 | | 5.125%, 2/15/40 | No Opt. Call | A+ | | 285,072 | |
| | 1,700 | | 5.250%, 2/15/45 | 2/41 at 100.00 | A+ | | 1,632,476 | |
| | 900 | | Houston County Hospital Authority, Georgia, Revenue Bonds, Houston Healthcare Project, Series 2007, 5.250%, 10/01/35 | 10/17 at 100.00 | A2 | | 882,963 | |
| | 225 | | Macon-Bibb County Hospital Authority, Georgia, Revenue Anticipation Certificates, Medical Center of Central Georgia Inc., Series 2009, 5.000%, 8/01/35 | 8/19 at 100.00 | AA | | 215,255 | |
| | 770 | | Royston Hospital Authority, Georgia, Revenue Anticipation Certificates, Ty Cobb Healthcare System Inc., Series 1999, 6.700%, 7/01/16 | 7/11 at 100.00 | N/R | | 769,908 | |
| | 1,000 | | Savannah Hospital Authority, Georgia, Revenue Bonds, St. Joseph’s/Candler Health System, Series 2003, 5.250%, 7/01/23 – RAAI Insured | 1/14 at 100.00 | Baa1 | | 1,001,750 | |
| | | Nuveen Georgia Premium Income Municipal Fund (continued) |
| NPG | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Health Care (continued) | | | | | |
| $ | 800 | | Valdosta and Lowndes County Hospital Authority, Georgia, Revenue Certificates, South Georgia Medical Center, Series 2007, 5.000%, 10/01/33 | 10/17 at 100.00 | A+ | $ | 755,736 | |
| | 7,980 | | Total Health Care | | | | 7,809,819 | |
| | | | Housing/Multifamily – 1.6% (1.1% of Total Investments) | | | | | |
| | 1,000 | | Cobb County Development Authority, Georgia, Student Housing Revenue Bonds, KSU Village II Real Estate Foundation LLC Project, Series 2007A, 5.250%, 7/15/38 – AMBAC Insured | 7/17 at 100.00 | Baa2 | | 856,770 | |
| | | | Housing/Single Family – 1.7% (1.1% of Total Investments) | | | | | |
| | 900 | | Georgia Housing and Finance Authority, Single Family Mortgage Bonds, Series 2002B-2, 5.350%, 12/01/22 (Alternative Minimum Tax) | 12/11 at 100.00 | AAA | | 903,078 | |
| | | | Materials – 1.9% (1.3% of Total Investments) | | | | | |
| | 1,000 | | Richmond County Development Authority, Georgia, Environmental Improvement Revenue Bonds, International Paper Company, Series 2001A, 6.250%, 2/01/25 (Alternative Minimum Tax) | 8/11 at 101.00 | BBB | | 1,009,560 | |
| | | | Tax Obligation/General – 35.6% (24.0% of Total Investments) | | | | | |
| | 540 | | Cherokee County Resource Recovery Development Authority, Georgia, Solid Waste Disposal Revenue Bonds, Ball Ground Recycling LLC Project, Series 2007A, 5.000%, 7/01/37 – AMBAC Insured (Alternative Minimum Tax) | 7/17 at 100.00 | AA+ | | 515,387 | |
| | 500 | | Clarke County Hospital Authority, Georgia, Hospital Revenue Bonds, Athens Regional Medical Center, Series 2007, 5.000%, 1/01/27 – NPFG Insured | 1/17 at 100.00 | Aa1 | | 511,460 | |
| | 2,000 | | Clarke County Hospital Authority, Georgia, Hospital Revenue Certificates, Athens Regional Medical Center, Series 2002, 5.125%, 1/01/32 – NPFG Insured | 1/12 at 101.00 | Aa1 | | 2,003,380 | |
| | 2,215 | | Decatur, Georgia, General Obligation Bonds, Series 2007, 5.000%, 1/01/31 – AGM Insured | 1/17 at 100.00 | AA+ | | 2,333,281 | |
| | 3,000 | | Floyd County Hospital Authority, Georgia, Revenue Anticipation Certificates, Floyd Medical Center Project, Series 2002, 5.200%, 7/01/32 – NPFG Insured | 7/12 at 101.00 | Aa2 | | 3,015,960 | |
| | 1,090 | | Floyd County Hospital Authority, Georgia, Revenue Anticipation Certificates, Floyd Medical Center, Series 2003, 5.000%, 7/01/19 – NPFG Insured | 7/13 at 101.00 | Aa2 | | 1,140,543 | |
| | 1,000 | | Georgia Environmental Loan Acquisition Corporation, Local Government Loan Securitization Bonds, Loan Pool Series 2011, 5.125%, 3/15/31 | 3/21 at 100.00 | Aaa | | 1,027,320 | |
| | 905 | | Georgia Municipal Association Inc., Certificates of Participation, Riverdale Public Purpose Project, Series 2009, 5.375%, 5/01/32 – AGC Insured | 5/19 at 100.00 | AA+ | | 934,385 | |
| | 1,000 | | Georgia State, General Obligation Bonds, Series 2005B, 5.000%, 7/01/15 | No Opt. Call | AAA | | 1,158,120 | |
| | 100 | | Georgia State, General Obligation Bonds, Series 2007E, 5.000%, 8/01/24 | 8/17 at 100.00 | AAA | | 110,362 | |
| | 210 | | Georgia State, General Obligation Bonds, Series 2009B, 5.000%, 1/01/26 | 1/19 at 100.00 | AAA | | 232,659 | |
| | 1,800 | | Gwinnett County School District, Georgia, General Obligation Bonds, Series 2008, 5.000%, 2/01/36 (UB) | 2/18 at 100.00 | AAA | | 1,854,882 | |
| | 1,060 | | Henry County Hospital Authority, Georgia, Revenue Certificates, Henry Medical Center, Series 2004, 5.000%, 7/01/20 – NPFG Insured | 7/14 at 101.00 | Aa1 | | 1,117,176 | |
| | 2,500 | | Paulding County School District, Georgia, General Obligation Bonds, Series 2007, 5.000%, 2/01/33 | 2/17 at 100.00 | AA+ | | 2,547,350 | |
| | 500 | | Wayne County Hospital Authority, Georgia, Hospital Revenue Bonds, Series 2006, 5.000%, 3/01/23 – SYNCORA GTY Insured | 3/16 at 100.00 | N/R | | 489,185 | |
| | 18,420 | | Total Tax Obligation/General | | | | 18,991,450 | |
| | | | Tax Obligation/Limited – 21.7% (14.6% of Total Investments) | | | | | |
| | | | Atlanta, Georgia, Tax Allocation Bonds Atlanta Station Project, Series 2007: | | | | | |
| | 70 | | 5.250%, 12/01/19 – AGC Insured | No Opt. Call | AA+ | | 74,837 | |
| | 420 | | 5.000%, 12/01/23 – AGC Insured | 12/17 at 100.00 | AA+ | | 425,393 | |
| | 750 | | Atlanta, Georgia, Tax Allocation Bonds, Eastside Project, Series 2005A, 5.625%, 1/01/16 (Alternative Minimum Tax) | No Opt. Call | A– | | 783,683 | |
| | 50 | | Atlanta, Georgia, Tax Allocation Bonds, Eastside Project, Series 2005B, 5.400%, 1/01/20 | 7/15 at 100.00 | A– | | 50,802 | |
| | 2,000 | | Cobb-Marietta Coliseum and Exhibit Hall Authority, Cobb County, Georgia, Revenue Bonds, Performing Arts Center, Series 2004, 5.000%, 1/01/22 | 1/14 at 100.00 | AAA | | 2,159,760 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Tax Obligation/Limited (continued) | | | | | |
| $ | 25 | | Cobb-Marietta Coliseum and Exhibit Hall Authority, Georgia, Revenue Bonds, Refunding Series 2005, 5.500%, 10/01/26 – NPFG Insured | No Opt. Call | A+ | $ | 29,345 | |
| | 3,890 | | Cobb-Marietta Coliseum and Exhibit Hall Authority, Georgia, Revenue Refunding Bonds, Series 1993, 5.625%, 10/01/26 – NPFG Insured | 10/19 at 100.00 | Baa1 | | 4,108,112 | |
| | 2,600 | | Macon-Bibb County Urban Development Authority, Georgia, Revenue Refunding Bonds, Public Facilities Projects, Series 2002A, 5.375%, 8/01/17 | 8/12 at 101.00 | AA | | 2,758,522 | |
| | 1,000 | | Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax Revenue Refunding Bonds, Series 1992P, 6.250%, 7/01/20 – AMBAC Insured | No Opt. Call | Aa2 | | 1,188,370 | |
| | 10,805 | | Total Tax Obligation/Limited | | | | 11,578,824 | |
| | | | Transportation – 4.8% (3.2% of Total Investments) | | | | | |
| | 215 | | Atlanta, Georgia, Airport General Revenue Bonds, Series 2000B, 5.625%, 1/01/30 – FGIC Insured (Alternative Minimum Tax) | 7/11 at 100.50 | A+ | | 215,587 | |
| | 2,290 | | Atlanta, Georgia, Airport General Revenue Bonds, Series 2004G, 5.000%, 1/01/26 – AGM Insured | 1/15 at 100.00 | AA+ | | 2,341,479 | |
| | 2,505 | | Total Transportation | | | | 2,557,066 | |
| | | | U.S. Guaranteed – 7.6% (5.1% of Total Investments) (4) | | | | | |
| | 735 | | Coweta County Development Authority, Georgia, Revenue Bonds, Newnan Water and Sewer, and Light Commission Project, Series 2002, 5.250%, 1/01/18 (Pre-refunded 1/01/13) – FGIC Insured | 1/13 at 100.00 | N/R (4) | | 791,147 | |
| | 25 | | Georgia Municipal Electric Authority, Senior Lien General Power Revenue Bonds, Series 1993Z, 5.500%, 1/01/20 (Pre-refunded 1/01/17) – FGIC Insured | 1/17 at 100.00 | A+ (4) | | 28,207 | |
| | 500 | | Georgia, General Obligation Bonds, Series 2002D, 5.000%, 8/01/16 (Pre-refunded 8/01/12) | 8/12 at 100.00 | AAA | | 527,680 | |
| | 2,550 | | Gwinnett County Hospital Authority, Georgia, Revenue Anticipation Certificates, Gwinnett Hospital System Inc. Project, Series 1997B, 5.300%, 9/01/27 (Pre-refunded 2/14/12) – NPFG Insured | 2/12 at 102.00 | Aaa | | 2,685,992 | |
| | 3,810 | | Total U.S. Guaranteed | | | | 4,033,026 | |
| | | | Utilities – 10.0% (6.8% of Total Investments) | | | | | |
| | 1,000 | | Georgia Municipal Electric Authority, General Power Revenue Bonds, Project 1, Series 2007A, 5.000%, 1/01/25 – NPFG Insured | 1/17 at 100.00 | A | | 1,030,630 | |
| | 975 | | Georgia Municipal Electric Authority, Senior Lien General Power Revenue Bonds, Series 1993Z, 5.500%, 1/01/20 – FGIC Insured | No Opt. Call | A+ | | 1,082,572 | |
| | 1,000 | | Municipal Electric Authority of Georgia, Combustion Turbine Revenue Bonds, Series 2003A, 5.000%, 11/01/20 – NPFG Insured | 11/13 at 100.00 | A1 | | 1,072,570 | |
| | 1,000 | | Municipal Electric Authority of Georgia, Project One Subordinated Lien Revenue Bonds, Series 2003A, 5.000%, 1/01/22 – NPFG Insured | 1/13 at 100.00 | A2 | | 1,040,300 | |
| | 1,200 | | Virgin Islands Water and Power Authority, Electric System Revenue Bonds, Series 2007B, 5.000%, 7/01/31 | 7/17 at 100.00 | BBB– | | 1,115,148 | |
| | 5,175 | | Total Utilities | | | | 5,341,220 | |
| | | | Water and Sewer – 23.3% (15.7% of Total Investments) | | | | | |
| | 190 | | Atlanta, Georgia, Water and Wastewater Revenue Bonds, Series 1999A, 5.000%, 11/01/38 – FGIC Insured | 8/11 at 100.00 | A1 | | 182,729 | |
| | 1,225 | | Atlanta, Georgia, Water and Wastewater Revenue Bonds, Series 2004, 5.000%, 11/01/24 – AGM Insured | 11/14 at 100.00 | AA+ | | 1,263,208 | |
| | 2,490 | | Cherokee County Water and Sewerage Authority, Georgia, Revenue Bonds, Series 2001, 5.000%, 8/01/35 – AGM Insured | 8/18 at 100.00 | AA+ | | 2,550,831 | |
| | 335 | | Coweta County Water and Sewer Authority, Georgia, Revenue Bonds, Series 2001, 5.250%, 6/01/26 – AMBAC Insured | 6/13 at 100.00 | Aa2 | | 342,605 | |
| | | | Coweta County Water and Sewer Authority, Georgia, Revenue Bonds, Series 2007: | | | | | |
| | 500 | | 5.000%, 6/01/32 | 6/18 at 100.00 | Aa2 | | 513,210 | |
| | 150 | | 5.000%, 6/01/37 | 6/18 at 100.00 | Aa2 | | 152,166 | |
| | 890 | | Douglasville-Douglas County Water and Sewer Authority, Georgia, Water and Sewer Revenue Bonds, Series 2007, 5.000%, 6/01/37 – NPFG Insured | 6/17 at 100.00 | Aa2 | | 905,913 | |
| | | Nuveen Georgia Premium Income Municipal Fund (continued) |
| NPG | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Water and Sewer (continued) | | | | | |
| $ | 750 | | Forsyth County Water and Sewerage Authority, Georgia, Revenue Bonds, Series 2007, 5.000%, 4/01/37 – AGM Insured | 4/17 at 100.00 | Aaa | $ | 766,500 | |
| | 1,950 | | Fulton County, Georgia, Water and Sewerage Revenue Bonds, Series 2004, 5.000%, 1/01/22 – FGIC Insured | 1/14 at 100.00 | AA– | | 2,088,392 | |
| | 500 | | Georgia Environmental Loan Acquisition Corporation, Local Government Loan Securitization Bonds, Cobb County-Marietta Water Authority Loans, Series 2011, 5.250%, 2/15/36 | 2/21 at 100.00 | Aaa | | 516,275 | |
| | 1,000 | | Midgeville, Georgia, Water and Sewerage Revenue Refunding Bonds, Series 1996, 6.000%, 12/01/21 – AGM Insured | No Opt. Call | AA+ | | 1,164,140 | |
| | 1,000 | | Unified Government of Athens-Clarke County, Georgia, Water and Sewerage Revenue Bonds, Series 2008, 5.500%, 1/01/38 | 1/19 at 100.00 | Aa2 | | 1,054,740 | |
| | 890 | | Walton County Water and Sewerage Authority, Georgia, Revenue Bonds, The Oconee-Hard Creek Reservoir Project, Series 2008, 5.000%, 2/01/38 – AGM Insured | 2/18 at 100.00 | Aa2 | | 901,762 | |
| | 11,870 | | Total Water and Sewer | | | | 12,402,471 | |
| $ | 76,820 | | Total Investments (cost $77,314,411) – 148.4% | | | | 79,086,528 | |
| | | | Floating Rate Obligations – (2.2)% | | | | (1,190,000 | ) |
| | | | MuniFund Term Preferred Shares, at Liquidation Value – (53.2)% (5) | | | | (28,340,000 | ) |
| | | | Other Assets Less Liabilities – 7.0% | | | | 3,737,247 | |
| | | | Net Assets Applicable to Common Shares – 100% | | | $ | 53,293,775 | |
| (1) | | All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. |
| (2) | | Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. |
| (3) | | Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (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) | | MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 35.8%. |
| N/R | | Not rated. |
| (IF) | | Inverse floating rate investment. |
| (UB) | | Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Footnote 1 – General Information and Significant Accounting Policies, Inverse Floating Rate Securities for more information. |
See accompanying notes to financial statements.
| | | Nuveen Georgia Dividend Advantage Municipal Fund |
| NZX | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Education and Civic Organizations – 13.8% (9.5% of Total Investments) | | | | | |
| $ | 500 | | Athens Housing Authority, Georgia, Student Housing Lease Revenue Bonds, UGAREF East Campus Housing LLC Project, Series 2009, 5.250%, 6/15/35 | 6/19 at 100.00 | Aa2 | $ | 508,510 | |
| | 1,200 | | Atlanta Development Authority, Georgia, Educational Facilities Revenue Bonds, Science Park LLC Project, Series 2007, 5.000%, 7/01/39 | 7/17 at 100.00 | Aa3 | | 1,192,776 | |
| | 1,000 | | Fulton County Development Authority, Georgia, Revenue Bonds, Georgia Tech Athletic Association, Series 2001, 5.000%, 10/01/20 – AMBAC Insured | 4/12 at 100.00 | N/R | | 1,007,380 | |
| | | | Private Colleges and Universities Authority, Georgia, Revenue Bonds, Emory University, Series 2009B, Trust 3404: | | | | | |
| | 145 | | 17.087%, 3/01/17 (IF) | No Opt. Call | AA | | 172,295 | |
| | 230 | | 17.115%, 3/01/17 (IF) | No Opt. Call | AA | | 259,744 | |
| | 750 | | Savannah Economic Development Authority, Georgia, Revenue Bonds, GTREP Project, Series 2002, 5.000%, 7/01/19 – NPFG Insured | 7/12 at 100.00 | Aa3 | | 765,608 | |
| | 3,825 | | Total Education and Civic Organizations | | | | 3,906,313 | |
| | | | Energy – 1.9% (1.3% of Total Investments) | | | | | |
| | 650 | | Virgin Islands Public Finance Authority, Revenue Bonds, Refinery Project Hovensa LLC, Series 2007, 4.700%, 7/01/22 (Alternative Minimum Tax) | 1/15 at 100.00 | Baa3 | | 541,275 | |
| | | | Health Care – 23.2% (15.9% of Total Investments) | | | | | |
| | 105 | | Baldwin County Hospital Authority, Georgia, Revenue Bonds, Oconee Regional Medical Center, Series 1997, 5.250%, 12/01/12 | 8/11 at 100.00 | BB+ | | 103,812 | |
| | 190 | | Baldwin County Hospital Authority, Georgia, Revenue Bonds, Oconee Regional Medical Center, Series 1998, 5.375%, 12/01/28 | 12/11 at 100.00 | BB+ | | 155,922 | |
| | 500 | | Coffee County Hospital Authority, Georgia, Revenue Bonds, Coffee County Regional Medical Center, Series 2004, 5.250%, 12/01/22 | 12/14 at 100.00 | BBB– | | 502,295 | |
| | 115 | | Coweta County Development Authority, Georgia, Revenue Bonds, Piedmont Healthcare, Inc. Project, Series 2010, 5.000%, 6/15/40 | 6/20 at 100.00 | AA– | | 107,178 | |
| | 500 | | Franklin County Industrial Building Authority, Georgia, Revenue Bonds, Ty Cobb Regional Medical Center Project, Series 2010, 8.000%, 12/01/40 | 12/20 at 100.00 | N/R | | 498,315 | |
| | 600 | | Gainesville and Hall County Hospital Authority, Georgia, Revenue Anticipation Certificates, Northeast Georgia Health Services Inc., Series 2010B, 5.250%, 2/15/45 | 2/41 at 100.00 | A+ | | 576,168 | |
| | 500 | | Houston County Hospital Authority, Georgia, Revenue Bonds, Houston Healthcare Project, Series 2007, 5.250%, 10/01/35 | 10/17 at 100.00 | A2 | | 490,535 | |
| | | | Macon-Bibb County Hospital Authority, Georgia, Revenue Anticipation Certificates, Medical Center of Central Georgia Inc., Series 2009: | | | | | |
| | 200 | | 5.000%, 8/01/32 | 8/19 at 100.00 | AA | | 196,146 | |
| | 300 | | 5.000%, 8/01/35 | 8/19 at 100.00 | AA | | 287,007 | |
| | | | Royston Hospital Authority, Georgia, Revenue Anticipation Certificates, Ty Cobb Healthcare System Inc., Series 1999: | | | | | |
| | 200 | | 6.700%, 7/01/16 | 7/11 at 100.00 | N/R | | 199,976 | |
| | 250 | | 6.500%, 7/01/27 | 7/11 at 100.00 | N/R | | 225,768 | |
| | 500 | | Savannah Hospital Authority, Georgia, Revenue Bonds, St. Joseph’s/Candler Health System, Series 2003, 5.250%, 7/01/23 – RAAI Insured | 1/14 at 100.00 | Baa1 | | 500,875 | |
| | 2,000 | | Valdosta and Lowndes County Hospital Authority, Georgia, Revenue Certificates, South Georgia Medical Center, Series 2002, 5.250%, | 10/12 at 101.00 | A+ | | 2,003,760 | |
| | | | 10/01/27 – AMBAC Insured | | | | | |
| | 750 | | Valdosta and Lowndes County Hospital Authority, Georgia, Revenue Certificates, South Georgia Medical Center, Series 2007, 5.000%, 10/01/33 | 10/17 at 100.00 | A+ | | 708,503 | |
| | 6,710 | | Total Health Care | | | | 6,556,260 | |
| | | Nuveen Georgia Dividend Advantage Municipal Fund (continued) |
| NZX | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Housing/Multifamily – 1.1% (0.7% of Total Investments) | | | | | |
| $ | 350 | | Cobb County Development Authority, Georgia, Student Housing Revenue Bonds, KSU Village II Real Estate Foundation LLC Project, Series 2007A, 5.250%, 7/15/38 – AMBAC Insured | 7/17 at 100.00 | Baa2 | $ | 299,870 | |
| | | | Housing/Single Family – 12.9% (8.8% of Total Investments) | | | | | |
| | 650 | | Georgia Housing and Finance Authority, Single Family Mortgage Bonds, Series 2002B-2, 5.350%, 12/01/22 (Alternative Minimum Tax) | 12/11 at 100.00 | AAA | | 652,223 | |
| | 1,000 | | Georgia Housing and Finance Authority, Single Family Mortgage Bonds, Series 2006C-2, 4.500%, 12/01/27 (Alternative Minimum Tax) | 12/15 at 100.00 | AAA | | 931,490 | |
| | 2,000 | | Georgia Housing and Finance Authority, Single Family Mortgage Resolution 1 Bonds, Series 2002A-2, 5.450%, 12/01/22 (Alternative Minimum Tax) | 12/11 at 100.00 | AAA | | 2,061,000 | |
| | 3,650 | | Total Housing/Single Family | | | | 3,644,713 | |
| | | | Industrials – 3.5% (2.4% of Total Investments) | | | | | |
| | 1,000 | | Cartersville Development Authority, Georgia, Waste and Wastewater Facilities Revenue Refunding Bonds, Anheuser Busch Cos. Inc. Project, Series 2002, 5.950%, 2/01/32 (Alternative Minimum Tax) | 2/12 at 100.00 | A– | | 1,005,450 | |
| | | | Long-Term Care – 0.9% (0.6% of Total Investments) | | | | | |
| | 250 | | Medical Center Hospital Authority, Georgia, Revenue Bonds, Spring Harbor at Green Island, Series 2007, 5.000%, 7/01/11 | No Opt. Call | N/R | | 249,895 | |
| | | | Materials – 2.2% (1.5% of Total Investments) | | | | | |
| | 20 | | Richmond County Development Authority, Georgia, Environmental Improvement Revenue Bonds, International Paper Company, Series 2003A, 5.750%, 11/01/27 (Alternative Minimum Tax) | 11/13 at 100.00 | BBB | | 20,028 | |
| | 600 | | Richmond County Development Authority, Georgia, Environmental Improvement Revenue Refunding Bonds, International Paper Company, Series 2002A, 6.000%, 2/01/25 (Alternative Minimum Tax) | 2/12 at 101.00 | BBB | | 602,004 | |
| | 620 | | Total Materials | | | | 622,032 | |
| | | | Tax Obligation/General – 28.9% (19.8% of Total Investments) | | | | | |
| | 360 | | Cherokee County Resource Recovery Development Authority, Georgia, Solid Waste Disposal Revenue Bonds, Ball Ground Recycling LLC Project, Series 2007A, 5.000%, 7/01/37 – AMBAC Insured (Alternative Minimum Tax) | 7/17 at 100.00 | AA+ | | 343,591 | |
| | 500 | | Clarke County Hospital Authority, Georgia, Hospital Revenue Bonds, Athens Regional Medical Center, Series 2007, 5.000%, 1/01/27 – NPFG Insured | 1/17 at 100.00 | Aa1 | | 511,460 | |
| | 1,000 | | Clarke County Hospital Authority, Georgia, Hospital Revenue Certificates, Athens Regional Medical Center, Series 2002, 5.375%, 1/01/19 – NPFG Insured | 1/12 at 101.00 | Aa1 | | 1,022,430 | |
| | 200 | | Decatur, Georgia, General Obligation Bonds, Series 2007, 5.000%, 1/01/31 – AGM Insured | 1/17 at 100.00 | AA+ | | 210,680 | |
| | 2,000 | | Georgia Environmental Loan Acquisition Corporation, Local Government Loan Securitization Bonds, Loan Pool Series 2011, 5.125%, 3/15/31 | 3/21 at 100.00 | Aaa | | 2,054,640 | |
| | 250 | | Georgia Municipal Association Inc., Certificates of Participation, Riverdale Public Purpose Project, Series 2009, 5.500%, 5/01/38 – AGC Insured | 5/19 at 100.00 | AA+ | | 257,008 | |
| | 500 | | Georgia State, General Obligation Bonds, Series 2005B, 5.000%, 7/01/15 | No Opt. Call | AAA | | 579,060 | |
| | 700 | | Georgia State, General Obligation Bonds, Series 2007E, 5.000%, 8/01/24 | 8/17 at 100.00 | AAA | | 772,534 | |
| | 100 | | Georgia State, General Obligation Bonds, Series 2009B, 5.000%, 1/01/26 | 1/19 at 100.00 | AAA | | 110,790 | |
| | 1,000 | | Gwinnett County School District, Georgia, General Obligation Bonds, Series 2008, 5.000%, 2/01/36 (UB) | 2/18 at 100.00 | AAA | | 1,030,490 | |
| | 500 | | Henry County Hospital Authority, Georgia, Revenue Certificates, Henry Medical Center, Series 2004, 5.000%, 7/01/20 – NPFG Insured | 7/14 at 101.00 | Aa1 | | 526,970 | |
| | 150 | | La Grange-Troup County Hospital Authority, Georgia, Revenue Anticipation Certificates, Series 2008A, 5.500%, 7/01/38 | 7/18 at 100.00 | Aa2 | | 150,428 | |
| | 600 | | Paulding County School District, Georgia, General Obligation Bonds, Series 2007, 5.000%, 2/01/33 | 2/17 at 100.00 | AA+ | | 611,364 | |
| | 7,860 | | Total Tax Obligation/General | | | | 8,181,445 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Tax Obligation/Limited – 10.3% (7.1% of Total Investments) | | | | | |
| $ | 40 | | Atlanta, Georgia, Tax Allocation Bonds Atlanta Station Project, Series 2007, 5.000%, 12/01/23 – AGC Insured | 12/17 at 100.00 | AA+ | $ | 40,514 | |
| | 500 | | Atlanta, Georgia, Tax Allocation Bonds, Beltline Project Series 2008B. Remarketed, 7.375%, 1/01/31 | No Opt. Call | N/R | | 509,080 | |
| | 100 | | Atlanta, Georgia, Tax Allocation Bonds, Eastside Project, Series 2005A, 5.625%, 1/01/16 (Alternative Minimum Tax) | No Opt. Call | A– | | 104,491 | |
| | | | Atlanta, Georgia, Tax Allocation Bonds, Eastside Project, Series 2005B: | | | | | |
| | 300 | | 5.400%, 1/01/20 | 7/15 at 100.00 | A– | | 304,812 | |
| | 75 | | 5.600%, 1/01/30 | 7/15 at 100.00 | A– | | 71,744 | |
| | 215 | | Atlanta, Georgia, Tax Allocation Bonds, Princeton Lakes Project, Series 2006, 5.500%, 1/01/31 | 1/16 at 100.00 | N/R | | 184,980 | |
| | | | Cobb-Marietta Coliseum and Exhibit Hall Authority, Georgia, Revenue Refunding Bonds, Series 1993: | | | | | |
| | 20 | | 5.500%, 10/01/18 – NPFG Insured | No Opt. Call | Baa1 | | 21,191 | |
| | 65 | | 5.625%, 10/01/26 – NPFG Insured | 10/19 at 100.00 | Baa1 | | 68,645 | |
| | 1,525 | | Macon-Bibb County Urban Development Authority, Georgia, Revenue Refunding Bonds, Public Facilities Projects, Series 2002A, 5.000%, 8/01/14 | 8/12 at 101.00 | AA | | 1,614,319 | |
| | 2,840 | | Total Tax Obligation/Limited | | | | 2,919,776 | |
| | | | Transportation – 7.1% (4.9% of Total Investments) | | | | | |
| | 1,000 | | Atlanta, Georgia, Airport General Revenue Refunding Bonds, Series 2000A, 5.400%, 1/01/15 – FGIC Insured | 7/11 at 100.50 | A+ | | 1,007,950 | |
| | 1,000 | | Atlanta, Georgia, Airport Passenger Facilities Charge Revenue Bonds, Refunding Series 2004C, 5.000%, 1/01/33 – AGM Insured | 7/14 at 100.00 | AA+ | | 1,002,080 | |
| | 2,000 | | Total Transportation | | | | 2,010,030 | |
| | | | U.S. Guaranteed – 18.0% (12.3% of Total Investments) (4) | | | | | |
| | 1,000 | | Athens Housing Authority, Georgia, Student Housing Lease Revenue Bonds, UGAREF East Campus Housing LLC Project, Series 2002, 5.250%, 12/01/21 (Pre-refunded 12/01/12) – AMBAC Insured | 12/12 at 100.00 | Aa2 (4) | | 1,069,720 | |
| | 1,500 | | Coweta County Development Authority, Georgia, Revenue Bonds, Newnan Water and Sewer, and Light Commission Project, Series 2002, 5.250%, 1/01/18 (Pre-refunded 1/01/13) – FGIC Insured | 1/13 at 100.00 | N/R (4) | | 1,614,585 | |
| | 1,100 | | Gwinnett County Hospital Authority, Georgia, Revenue Anticipation Certificates, Gwinnett Hospital System Inc. Project, Series 1997B, 5.300%, 9/01/27 (Pre-refunded 2/14/12) – NPFG Insured | 2/12 at 102.00 | Aaa | | 1,158,663 | |
| | 1,200 | | Private Colleges and Universities Authority, Georgia, Revenue Bonds, Mercer University, Series 2001, 5.750%, 10/01/31 (Pre-refunded 10/01/11) | 10/11 at 102.00 | Baa2 (4) | | 1,245,768 | |
| | 4,800 | | Total U.S. Guaranteed | | | | 5,088,736 | |
| | | | Utilities – 1.9% (1.3% of Total Investments) | | | | | |
| | 500 | | Municipal Electric Authority of Georgia, Combustion Turbine Revenue Bonds, Series 2003A, 5.250%, 11/01/15 – NPFG Insured | 11/13 at 100.00 | A1 | | 543,685 | |
| | | | Water and Sewer – 20.2% (13.9% of Total Investments) | | | | | |
| | 1,200 | | Atlanta, Georgia, Water and Wastewater Revenue Bonds, Series 2004, 5.000%, 11/01/24 – AGM Insured | 11/14 at 100.00 | AA+ | | 1,237,428 | |
| | 625 | | Cherokee County Water and Sewerage Authority, Georgia, Revenue Bonds, Series 2001, 5.000%, 8/01/35 – AGM Insured | 8/18 at 100.00 | AA+ | | 640,269 | |
| | 350 | | Coweta County Water and Sewer Authority, Georgia, Revenue Bonds, Series 2007, 5.000%, 6/01/37 | 6/18 at 100.00 | Aa2 | | 355,054 | |
| | 890 | | Douglasville-Douglas County Water and Sewer Authority, Georgia, Water and Sewer Revenue Bonds, Series 2007, 5.000%, 6/01/37 – NPFG Insured | 6/17 at 100.00 | Aa2 | | 905,913 | |
| | 375 | | Forsyth County Water and Sewerage Authority, Georgia, Revenue Bonds, Series 2007, 5.000%, 4/01/37 – AGM Insured | 4/17 at 100.00 | Aaa | | 383,250 | |
| | | Nuveen Georgia Dividend Advantage Municipal Fund (continued) |
| NZX | | Portfolio of Investments |
| | | May 31, 2011 |
| | 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, Series 2004, 5.000%, 1/01/22 – FGIC Insured | 1/14 at 100.00 | AA– | $ | 535,485 | |
| | 1,395 | | Macon Water Authority, Georgia, Water and Sewer Revenue Bonds, Series 2001B, 5.000%, 10/01/21 | 10/11 at 101.00 | Aa1 | | 1,428,620 | |
| | 230 | | Walton County Water and Sewerage Authority, Georgia, Revenue Bonds, The Oconee-Hard Creek Reservoir Project, Series 2008, 5.000%, 2/01/38 – AGM Insured | 2/18 at 100.00 | Aa2 | | 233,035 | |
| | 5,565 | | Total Water and Sewer | | | | 5,719,054 | |
| $ | 40,620 | | Total Investments (cost $40,715,431) – 145.9% | | | | 41,288,534 | |
| | | | Floating Rate Obligations – (2.3)% | | | | (660,000 | ) |
| | | | MuniFund Term Preferred Shares, at Liquidation Value – (50.7)% (5) | | | | (14,340,000 | ) |
| | | | Other Assets Less Liabilities – 7.1% | | | | 2,007,575 | |
| | | | Net Assets Applicable to Common Shares – 100% | | | $ | 28,296,109 | |
| (1) | | All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. |
| (2) | | Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. |
| (3) | | Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (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) | | MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 34.7%. |
| N/R | | Not rated. |
| (IF) | | Inverse floating rate investment. |
| (UB) | | Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Footnote 1 – General Information and Significant Accounting Policies, Inverse Floating Rate Securities for more information. |
See accompanying notes to financial statements.
| | | Nuveen Georgia Dividend Advantage Municipal Fund 2 |
| NKG | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Consumer Staples – 2.6% (1.7% of Total Investments) | | | | | |
| $ | 2,000 | | Puerto Rico, The Children’s Trust Fund, Tobacco Settlement Asset-Backed Refunding Bonds, Series 2002, 5.500%, 5/15/39 | 5/12 at 100.00 | BBB | $ | 1,631,880 | |
| | | | Education and Civic Organizations – 17.6% (11.7% of Total Investments) | | | | | |
| | 2,320 | | Athens Housing Authority, Georgia, Student Housing Lease Revenue Bonds, UGAREF East Campus Housing LLC Project, Series 2002, 5.000%, 12/01/33 – AMBAC Insured | 12/12 at 100.00 | Aa2 | | 2,331,136 | |
| | 500 | | Athens Housing Authority, Georgia, Student Housing Lease Revenue Bonds, UGAREF East Campus Housing LLC Project, Series 2009, 5.250%, 6/15/35 | 6/19 at 100.00 | Aa2 | | 508,510 | |
| | 1,225 | | Athens-Clarke County Unified Government Development Authority, Georgia, Educational Facilities Revenue Bonds, UGAREF CCRC Building LLC Project, Series 2002, 5.000%, 12/15/18 – AMBAC Insured | 12/12 at 100.00 | N/R | | 1,253,420 | |
| | 3,000 | | Atlanta Development Authority, Georgia, Educational Facilities Revenue Bonds, Science Park LLC Project, Series 2007, 5.000%, 7/01/39 | 7/17 at 100.00 | Aa3 | | 2,981,940 | |
| | 2,000 | | Fulton County Development Authority, Georgia, Revenue Bonds, Georgia | 11/13 at 100.00 | Aa3 | | 2,047,800 | |
| | | | Tech – Klaus Parking and Family Housing, Series 2003, 5.000%, 11/01/23 – | | | | | |
| | | | NPFG Insured | | | | | |
| | 1,050 | | Fulton County Development Authority, Georgia, Revenue Bonds, TUFF Morehouse Project, Series 2002A, 5.000%, 2/01/34 – AMBAC Insured | 2/12 at 100.00 | A2 | | 1,025,567 | |
| | | | Private Colleges and Universities Authority, Georgia, Revenue Bonds, Emory University, Series 2009B, Trust 3404: | | | | | |
| | 315 | | 17.087%, 3/01/17 (IF) | No Opt. Call | AA | | 374,296 | |
| | 490 | | 17.115%, 3/01/17 (IF) | No Opt. Call | AA | | 553,367 | |
| | 10,900 | | Total Education and Civic Organizations | | | | 11,076,036 | |
| | | | Health Care – 17.4% (11.5% of Total Investments) | | | | | |
| | 100 | | Baldwin County Hospital Authority, Georgia, Revenue Bonds, Oconee Regional Medical Center, Series 1997, 5.250%, 12/01/12 | 8/11 at 100.00 | BB+ | | 98,869 | |
| | | | Baldwin County Hospital Authority, Georgia, Revenue Bonds, Oconee Regional Medical Center, Series 1998: | | | | | |
| | 65 | | 5.250%, 12/01/22 | 8/11 at 100.00 | BB+ | | 57,051 | |
| | 550 | | 5.375%, 12/01/28 | 12/11 at 100.00 | BB+ | | 451,352 | |
| | | | Coffee County Hospital Authority, Georgia, Revenue Bonds, Coffee County Regional Medical Center, Series 2004: | | | | | |
| | 185 | | 5.000%, 12/01/19 | 12/14 at 100.00 | BBB– | | 187,684 | |
| | 1,000 | | 5.250%, 12/01/22 | 12/14 at 100.00 | BBB– | | 1,004,590 | |
| | 500 | | Coweta County Development Authority, Georgia, Revenue Bonds, Piedmont Healthcare, Inc. Project, Series 2010, 5.000%, 6/15/40 | 6/20 at 100.00 | AA– | | 465,990 | |
| | 1,000 | | Franklin County Industrial Building Authority, Georgia, Revenue Bonds, Ty Cobb Regional Medical Center Project, Series 2010, 8.000%, 12/01/40 | 12/20 at 100.00 | N/R | | 996,630 | |
| | | | Gainesville and Hall County Hospital Authority, Georgia, Revenue Anticipation Certificates, Northeast Georgia Health Services Inc., Series 2010B: | | | | | |
| | 700 | | 5.125%, 2/15/40 | No Opt. Call | A+ | | 665,168 | |
| | 1,645 | | 5.250%, 2/15/45 | 2/41 at 100.00 | A+ | | 1,579,661 | |
| | 1,140 | | Houston County Hospital Authority, Georgia, Revenue Bonds, Houston Healthcare Project, Series 2007, 5.250%, 10/01/35 | 10/17 at 100.00 | A2 | | 1,118,420 | |
| | | | Macon-Bibb County Hospital Authority, Georgia, Revenue Anticipation Certificates, Medical Center of Central Georgia Inc., Series 2009: | | | | | |
| | 200 | | 5.000%, 8/01/32 | 8/19 at 100.00 | AA | | 196,146 | |
| | 450 | | 5.000%, 8/01/35 | 8/19 at 100.00 | AA | | 430,511 | |
| | | | Royston Hospital Authority, Georgia, Revenue Anticipation Certificates, Ty Cobb Healthcare System Inc., Series 1999: | | | | | |
| | 350 | | 6.700%, 7/01/16 | 7/11 at 100.00 | N/R | | 349,958 | |
| | 650 | | 6.500%, 7/01/27 | 7/11 at 100.00 | N/R | | 586,996 | |
| | | Nuveen Georgia Dividend Advantage Municipal Fund 2 (continued) |
| NKG | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Health Care (continued) | | | | | |
| $ | 2,000 | | Savannah Hospital Authority, Georgia, Revenue Bonds, St. Joseph’s/Candler Health System, Series 2003, 5.250%, 7/01/23 – RAAI Insured | 1/14 at 100.00 | Baa1 | $ | 2,003,500 | |
| | 750 | | Valdosta and Lowndes County Hospital Authority, Georgia, Revenue Certificates, South Georgia Medical Center, Series 2007, 5.000%, 10/01/33 | 10/17 at 100.00 | A+ | | 708,503 | |
| | 11,285 | | Total Health Care | | | | 10,901,029 | |
| | | | Housing/Multifamily – 4.7% (3.1% of Total Investments) | | | | | |
| | 25 | | Cobb County Development Authority, Georgia, Student Housing Revenue Bonds, KSU Village II Real Estate Foundation LLC Project, Series 2007A, 5.250%, 7/15/38 – AMBAC Insured | 7/17 at 100.00 | Baa2 | | 21,419 | |
| | | | 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 | | 508,315 | |
| | 980 | | 5.200%, 11/20/27 (Alternative Minimum Tax) | 11/12 at 102.00 | AAA | | 980,902 | |
| | 1,465 | | 5.250%, 11/20/32 (Alternative Minimum Tax) | 11/12 at 102.00 | AAA | | 1,455,653 | |
| | 2,970 | | Total Housing/Multifamily | | | | 2,966,289 | |
| | | | Housing/Single Family – 0.4% (0.3% of Total Investments) | | | | | |
| | 170 | | Georgia Housing and Finance Authority, Single Family Mortgage Bonds, Series 2006C-2, 4.550%, 12/01/31 (Alternative Minimum Tax) | 12/15 at 100.00 | AAA | | 153,585 | |
| | 100 | | Georgia Housing and Finance Authority, Single Family Mortgage Resolution 1 Bonds, Series 2001B-2, 5.400%, 12/01/31 (Alternative Minimum Tax) | 12/11 at 100.00 | AAA | | 103,085 | |
| | 270 | | Total Housing/Single Family | | | | 256,670 | |
| | | | Industrials – 3.2% (2.1% of Total Investments) | | | | | |
| | 2,190 | | Cobb County Development Authority, Georgia, Solid Waste Disposal Revenue Bonds, Georgia Waste Management Project, Series 2004A, 5.000%, 4/01/33 (Alternative Minimum Tax) | 4/16 at 101.00 | BBB | | 1,982,738 | |
| | | | Long Term Care – 0.4% (0.3% of Total Investments) | | | | | |
| | 250 | | Medical Center Hospital Authority, Georgia, Revenue Bonds, Spring Harbor at Green Island, Series 2007, 5.000%, 7/01/11 | No Opt. Call | N/R | | 249,895 | |
| | | | Materials – 2.6% (1.7% of Total Investments) | | | | | |
| | 1,000 | | Richmond County Development Authority, Georgia, Environmental Improvement Revenue Bonds, International Paper Company, Series 2001A, 6.250%, 2/01/25 (Alternative Minimum Tax) | 8/11 at 101.00 | BBB | | 1,009,560 | |
| | 250 | | Richmond County Development Authority, Georgia, Environmental Improvement Revenue Refunding Bonds, International Paper Company, Series 2002A, 6.000%, 2/01/25 (Alternative Minimum Tax) | 2/12 at 101.00 | BBB | | 250,835 | |
| | 370 | | Savannah Economic Development Authority, Georgia, Pollution Control Revenue Bonds, Union Camp Corporation, Series 1995, 6.150%, 3/01/17 | No Opt. Call | Baa3 | | 399,918 | |
| | 1,620 | | Total Materials | | | | 1,660,313 | |
| | | | Tax Obligation/General – 30.2% (20.0% of Total Investments) | | | | | |
| | 600 | | Cherokee County Resource Recovery Development Authority, Georgia, Solid Waste Disposal Revenue Bonds, Ball Ground Recycling LLC Project, Series 2007A, 5.000%, 7/01/37 – AMBAC Insured (Alternative Minimum Tax) | 7/17 at 100.00 | AA+ | | 572,652 | |
| | 900 | | Decatur, Georgia, General Obligation Bonds, Series 2007, 5.000%, 1/01/31 – AGM Insured | 1/17 at 100.00 | AA+ | | 948,060 | |
| | 1,000 | | Floyd County Hospital Authority, Georgia, Revenue Anticipation Certificates, Floyd Medical Center Project, Series 2002, 5.200%, 7/01/32 – NPFG Insured | 7/12 at 101.00 | Aa2 | | 1,005,320 | |
| | 1,000 | | Forsyth County, Georgia, General Obligation Bonds, Series 2004, 5.250%, 3/01/19 | 3/14 at 101.00 | Aaa | | 1,100,510 | |
| | 1,000 | | Georgia Environmental Loan Acquisition Corporation, Local Government Loan Securitization Bonds, Loan Pool Series 2011, 5.125%, 3/15/31 | 3/21 at 100.00 | Aaa | | 1,027,320 | |
| | 915 | | Georgia Municipal Association Inc., Certificates of Participation, Riverdale Public Purpose Project, Series 2009, 5.500%, 5/01/38 – AGC Insured | 5/19 at 100.00 | AA+ | | 940,647 | |
| | 1,000 | | Georgia State, General Obligation Bonds, Series 2005B, 5.000%, 7/01/15 | No Opt. Call | AAA | | 1,158,120 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Tax Obligation/General (continued) | | | | | |
| $ | 1,700 | | Georgia State, General Obligation Bonds, Series 2007E, 5.000%, 8/01/24 | 8/17 at 100.00 | AAA | $ | 1,876,154 | |
| | 1,645 | | Georgia State, General Obligation Bonds, Series 2009B, 5.000%, 1/01/26 | 1/19 at 100.00 | AAA | | 1,822,496 | |
| | 750 | | Georgia, General Obligation Bonds, Series 1998D, 5.250%, 10/01/15 | No Opt. Call | AAA | | 882,218 | |
| | 2,100 | | Gwinnett County School District, Georgia, General Obligation Bonds, Series 2008, 5.000%, 2/01/36 (UB) | 2/18 at 100.00 | AAA | | 2,164,029 | |
| | 295 | | La Grange-Troup County Hospital Authority, Georgia, Revenue Anticipation Certificates, Series 2008A, 5.500%, 7/01/38 | 7/18 at 100.00 | Aa2 | | 295,841 | |
| | | | Oconee County, Georgia, General Obligation Bonds, Recreation Project, Series 2003: | | | | | |
| | 1,410 | | 5.500%, 1/01/23 – AMBAC Insured | 1/13 at 101.00 | Aa2 | | 1,501,086 | |
| | 1,470 | | 5.250%, 1/01/26 – AMBAC Insured | 1/13 at 101.00 | Aa2 | | 1,534,754 | |
| | 1,200 | | Paulding County School District, Georgia, General Obligation Bonds, Series 2007, 5.000%, 2/01/33 | 2/17 at 100.00 | AA+ | | 1,222,728 | |
| | 950 | | Wayne County Hospital Authority, Georgia, Hospital Revenue Bonds, Series 2006, 5.000%, 3/01/23 – SYNCORA GTY Insured | 3/16 at 100.00 | N/R | | 929,452 | |
| | 17,935 | | Total Tax Obligation/General | | | | 18,981,387 | |
| | | | Tax Obligation/Limited – 17.5% (11.6% of Total Investments) | | | | | |
| | | | Atlanta, Georgia, Tax Allocation Bonds Atlanta Station Project, Series 2007: | | | | | |
| | 5 | | 5.250%, 12/01/21 – AGC Insured | No Opt. Call | AA+ | | 5,233 | |
| | 620 | | 5.000%, 12/01/23 – AGC Insured | 12/17 at 100.00 | AA+ | | 627,961 | |
| | 1,000 | | Atlanta, Georgia, Tax Allocation Bonds, Beltline Project Series 2008B. Remarketed, 7.375%, 1/01/31 | No Opt. Call | N/R | | 1,018,160 | |
| | 500 | | Atlanta, Georgia, Tax Allocation Bonds, Eastside Project, Series 2005A, 5.625%, 1/01/16 (Alternative Minimum Tax) | No Opt. Call | A– | | 522,455 | |
| | | | Atlanta, Georgia, Tax Allocation Bonds, Eastside Project, Series 2005B: | | | | | |
| | 450 | | 5.400%, 1/01/20 | 7/15 at 100.00 | A– | | 457,218 | |
| | 350 | | 5.600%, 1/01/30 | 7/15 at 100.00 | A– | | 334,803 | |
| | 340 | | Atlanta, Georgia, Tax Allocation Bonds, Princeton Lakes Project, Series 2006, 5.500%, 1/01/31 | 1/16 at 100.00 | N/R | | 292,526 | |
| | | | Cobb-Marietta Coliseum and Exhibit Hall Authority, Georgia, Revenue Refunding Bonds, Series 1993: | | | | | |
| | 145 | | 5.500%, 10/01/18 – NPFG Insured | No Opt. Call | Baa1 | | 153,638 | |
| | 1,755 | | 5.625%, 10/01/26 – NPFG Insured | 10/19 at 100.00 | Baa1 | | 1,853,403 | |
| | 750 | | Georgia Municipal Association Inc., Certificates of Participation, Atlanta Court Project, Series 2002, 5.125%, 12/01/21 – AMBAC Insured | 6/12 at 101.00 | N/R | | 761,640 | |
| | 2,500 | | Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax Revenue Refunding Bonds, Series 1992P, 6.250%, 7/01/20 – AMBAC Insured | No Opt. Call | Aa2 | | 2,970,925 | |
| | 1,945 | | Tift County Hospital Authority, Georgia, Revenue Anticipation Bonds, Tift Regional Medical Center, Series 2002, 5.250%, 12/01/19 – AMBAC Insured | 12/12 at 101.00 | Aa3 | | 1,982,500 | |
| | 10,360 | | Total Tax Obligation/Limited | | | | 10,980,462 | |
| | | | Transportation – 5.1% (3.4% of Total Investments) | | | | | |
| | 3,195 | | Atlanta, Georgia, Airport General Revenue Refunding Bonds, Series 2000A, 5.500%, 1/01/21 – FGIC Insured | 1/12 at 100.00 | A+ | | 3,221,327 | |
| | | | U.S. Guaranteed – 14.7% (9.7% of Total Investments) (4) | | | | | |
| | 180 | | Athens Housing Authority, Georgia, Student Housing Lease Revenue Bonds, UGAREF East Campus Housing LLC Project, Series 2002, 5.000%, 12/01/33 (Pre-refunded 12/01/12) – AMBAC Insured | 12/12 at 100.00 | Aa2 (4) | | 191,880 | |
| | 1,000 | | Augusta, Georgia, Water and Sewerage Revenue Bonds, Series 2002, 5.250%, 10/01/22 (Pre-refunded 10/01/12) – AGM Insured | 10/12 at 100.00 | AA+ (4) | | 1,066,020 | |
| | 1,000 | | Cherokee County School System, Georgia, General Obligation Bonds, Series 2003, 5.000%, 8/01/16 (Pre-refunded 8/01/13) – NPFG Insured | 8/13 at 100.00 | AA+ (4) | | 1,097,580 | |
| | | Nuveen Georgia Dividend Advantage Municipal Fund 2 (continued) |
| NKG | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | U.S. Guaranteed (4) (continued) | | | | | |
| | | | Newnan Hospital Authority, Georgia, Revenue Anticipation Certificates, Newnan Hospital Inc., Series 2002: | | | | | |
| $ | 2,260 | | 5.500%, 1/01/19 (Pre-refunded 1/01/13) – NPFG Insured | 1/13 at 100.00 | Aa3 (4) | $ | 2,441,546 | |
| | 3,020 | | 5.500%, 1/01/20 (Pre-refunded 1/01/13) – NPFG Insured | 1/13 at 100.00 | Aa3 (4) | | 3,262,597 | |
| | 1,100 | | Private Colleges and Universities Authority, Georgia, Revenue Bonds, Mercer University, Series 2001, 5.750%, 10/01/31 (Pre-refunded 10/01/11) | 10/11 at 102.00 | Baa2 (4) | | 1,141,954 | |
| | 8,560 | | Total U.S. Guaranteed | | | | 9,201,577 | |
| | | | Utilities – 4.9% (3.3% of Total Investments) | | | | | |
| | 1,000 | | Elberton, Georgia, Combined Utility System Revenue Refunding and Improvement Bonds, Series 2001, 5.000%, 1/01/22 – AMBAC Insured | 1/12 at 100.00 | A3 | | 1,018,410 | |
| | 1,000 | | Georgia Municipal Electric Authority, General Power Revenue Bonds, Project 1, Series 2007A, 5.000%, 1/01/25 – NPFG Insured | 1/17 at 100.00 | A | | 1,030,630 | |
| | 1,000 | | Municipal Electric Authority of Georgia, Project One Subordinated Lien Revenue Bonds, Series 2003A, 5.000%, 1/01/22 – NPFG Insured | 1/13 at 100.00 | A2 | | 1,040,300 | |
| | 3,000 | | Total Utilities | | | | 3,089,340 | |
| | | | Water and Sewer – 29.7% (19.6% of Total Investments) | | | | | |
| | | | Atlanta, Georgia, Water and Wastewater Revenue Bonds, Series 2004: | | | | | |
| | 500 | | 5.250%, 11/01/15 – AGM Insured | 11/14 at 100.00 | AA+ | | 555,080 | |
| | 700 | | 5.000%, 11/01/37 – AGM Insured | 11/14 at 100.00 | AA+ | | 696,409 | |
| | 3,500 | | Augusta, Georgia, Water and Sewerage Revenue Bonds, Series 2002, 5.000%, 10/01/27 – AGM Insured | 10/12 at 100.00 | AA+ | | 3,544,590 | |
| | 1,990 | | Cherokee County Water and Sewerage Authority, Georgia, Revenue Bonds, Series 2001, 5.000%, 8/01/35 – AGM Insured | 8/18 at 100.00 | AA+ | | 2,038,616 | |
| | | | Coweta County Water and Sewer Authority, Georgia, Revenue Bonds, Series 2007: | | | | | |
| | 500 | | 5.000%, 6/01/32 | 6/18 at 100.00 | Aa2 | | 513,210 | |
| | 500 | | 5.000%, 6/01/37 | 6/18 at 100.00 | Aa2 | | 507,220 | |
| | 1,000 | | Douglasville-Douglas County Water and Sewer Authority, Georgia, Water and Sewer Revenue Bonds, Series 2005, 5.000%, 6/01/29 – NPFG Insured | 12/15 at 100.00 | Aa2 | | 1,036,430 | |
| | 445 | | Douglasville-Douglas County Water and Sewer Authority, Georgia, Water and Sewer Revenue Bonds, Series 2007, 5.000%, 6/01/37 – NPFG Insured | 6/17 at 100.00 | Aa2 | | 452,957 | |
| | 4,000 | | Forsyth County Water and Sewerage Authority, Georgia, Revenue Bonds, Series 2002, 5.000%, 4/01/32 | 4/13 at 100.00 | Aaa | | 4,038,000 | |
| | 375 | | Forsyth County Water and Sewerage Authority, Georgia, Revenue Bonds, Series 2007, 5.000%, 4/01/37 – AGM Insured | 4/17 at 100.00 | Aaa | | 383,250 | |
| | 950 | | Fulton County, Georgia, Water and Sewerage Revenue Bonds, Series 1998, 5.000%, 1/01/16 – FGIC Insured | 8/11 at 100.00 | AA– | | 953,439 | |
| | 3,100 | | Harris County, Georgia, Water System Revenue Bonds, Series 2002, 5.000%, 12/01/22 – AMBAC Insured | 12/12 at 100.00 | N/R | | 3,207,694 | |
| | 685 | | Walton County Water and Sewerage Authority, Georgia, Revenue Bonds, The Oconee-Hard Creek Reservoir Project, Series 2008, 5.000%, 2/01/38 – AGM Insured | 2/18 at 100.00 | Aa2 | | 694,049 | |
| | 18,245 | | Total Water and Sewer | | | | 18,620,944 | |
| $ | 92,780 | | Total Investments (cost $93,586,369) – 151.0% | | | | 94,819,887 | |
| | | | Floating Rate Obligations – (2.2)% | | | | (1,395,000 | ) |
| | | | MuniFund Term Preferred Shares, at Liquidation Value – (51.4)% (5) | | | | (32,265,000 | ) |
| | | | Other Assets Less Liabilities – 2.6% | | | | 1,616,655 | |
| | | | Net Assets Applicable to Common Shares – 100% | | | $ | 62,776,542 | |
| (1) | | All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. |
| (2) | | Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. |
| (3) | | Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (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) | | MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 34.0%. |
| N/R | | Not rated. |
| (IF) | | Inverse floating rate investment. |
| (UB) | | Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Footnote 1 – General Information and Significant Accounting Policies, Inverse Floating Rate Securities for more information. |
See accompanying notes to financial statements.
| | | Nuveen North Carolina Premium Income Municipal Fund |
| NNC | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Education and Civic Organizations – 20.2% (12.8% of Total Investments) | | | | | |
| $ | 2,500 | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2005A, 5.000%, 10/01/41 (UB) | 10/15 at 100.00 | AA+ | $ | 2,537,250 | |
| | | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Johnson and Wales University, Series 2003A: | | | | | |
| | 970 | | 5.250%, 4/01/23 – SYNCORA GTY Insured | 4/13 at 100.00 | N/R | | 981,970 | |
| | 500 | | 5.000%, 4/01/33 – SYNCORA GTY Insured | 4/13 at 100.00 | N/R | | 466,305 | |
| | 2,285 | | North Carolina State University at Raleigh, General Revenue Bonds, Series 2003A, 5.000%, 10/01/15 | 10/13 at 100.00 | Aa1 | | 2,491,518 | |
| | 1,530 | | University of North Carolina System, Pooled Revenue Bonds, Series 2005A, 5.000%, 4/01/15 – AMBAC Insured | No Opt. Call | A+ | | 1,709,500 | |
| | 120 | | University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.375%, 4/01/22 – AMBAC Insured | 10/12 at 100.00 | A+ | | 124,834 | |
| | | | 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 | A– | | 1,490,804 | |
| | 1,505 | | 5.000%, 6/01/24 – FGIC Insured | 6/16 at 100.00 | A– | | 1,557,826 | |
| | | | University of North Carolina, Chapel Hill, System Net Revenue Bonds, Series 2003: | | | | | |
| | 2,380 | | 5.000%, 12/01/19 | 12/13 at 100.00 | Aaa | | 2,528,155 | |
| | 2,725 | | 5.000%, 12/01/21 | 12/13 at 100.00 | Aaa | | 2,956,053 | |
| | 1,500 | | 5.000%, 12/01/23 | 12/13 at 100.00 | Aaa | | 1,614,540 | |
| | 17,445 | | Total Education and Civic Organizations | | | | 18,458,755 | |
| | | | Energy – 1.6% (1.0% of Total Investments) | | | | | |
| | 1,500 | | Virgin Islands Public Finance Authority, Revenue Bonds, Refinery Project – Hovensa LLC, Series 2003, 6.125%, 7/01/22 (Alternative Minimum Tax) | 1/14 at 100.00 | Baa3 | | 1,421,400 | |
| | | | Health Care – 28.0% (17.7% of Total Investments) | | | | | |
| | 1,145 | | Albemarle Hospital Authority, North Carolina, Health Care Facilities Revenue Bonds, Series 2007, 5.250%, 10/01/27 | 10/17 at 100.00 | N/R | | 950,705 | |
| | 2,300 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas HealthCare System Revenue Bonds, Series 2008A, 5.000%, 1/15/47 | 1/18 at 100.00 | AA– | | 2,207,632 | |
| | 500 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Health Care Refunding Revenue Bonds, Carolinas HealthCare System, Series 2009A, 5.250%, 1/15/39 | 1/19 at 100.00 | AA– | | 502,465 | |
| | 1,000 | | Johnston Memorial Hospital Authority, North Carolina, Mortgage Revenue Bonds, Johnston Memorial Hospital Project, Series 2008, 5.250%, | 4/18 at 100.00 | AA+ | | 1,013,380 | |
| | | | 10/01/36 – AGM Insured | | | | | |
| | 225 | | New Hanover County, North Carolina, Hospital Revenue Bonds, New Hanover Regional Medical Center, Series 2006B, 5.125%, 10/01/31 – AGM Insured | 10/19 at 100.00 | AA+ | | 229,109 | |
| | | | North Carolina Medical Care Commission Health Care Facilities Revenue Bonds Novant Health Inc., Series 2010A: | | | | | |
| | 500 | | 5.250%, 11/01/40 | 11/20 at 100.00 | A+ | | 464,700 | |
| | 3,000 | | 5.000%, 11/01/43 | 11/20 at 100.00 | A+ | | 2,615,580 | |
| | 500 | | North Carolina Medical Care Commission, Health Care Facilities Refunding Revenue Bonds, Blue Ridge HealthCare, Series 2010A, 5.000%, 1/01/36 | 1/20 at 100.00 | A | | 449,730 | |
| | 1,000 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Appalachian Regional HealthCare System, Series 2011A, 6.500%, 7/01/31 | 7/21 at 100.00 | BBB+ | | 1,034,300 | |
| | 920 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, WakeMed, Series 2009A, 5.625%, 10/01/38 – AGC Insured | 10/14 at 100.00 | AA+ | | 937,241 | |
| | 2,000 | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Novant Health Obligated Group, Series 2003A, 5.000%, 11/01/19 | 11/13 at 100.00 | A+ | | 2,045,420 | |
| | 2,000 | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Stanly Memorial Hospital, Series 1999, 6.375%, 10/01/29 | 10/11 at 100.00 | BBB+ | | 2,000,440 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Health Care (continued) | | | | | |
| | | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Union Regional Medical Center, Series 2002A: | | | | | |
| $ | 1,000 | | 5.500%, 1/01/19 | 1/12 at 100.00 | A+ | $ | 1,009,570 | |
| | 550 | | 5.500%, 1/01/20 | 1/12 at 100.00 | A+ | | 554,818 | |
| | 1,750 | | 5.375%, 1/01/32 | 1/12 at 100.00 | A+ | | 1,748,828 | |
| | 3,000 | | North Carolina Medical Care Commission, Hospital Revenue Bonds, Southeastern Regional Medical Center, Series 2002, 5.375%, 6/01/32 | 6/12 at 101.00 | A | | 2,910,060 | |
| | 1,500 | | North Carolina Medical Care Commission, Hospital Revenue Bonds, Wilson Medical Center, Series 2007, 5.000%, 11/01/27 | 11/17 at 100.00 | A– | | 1,452,600 | |
| | 1,395 | | North Carolina Medical Care Commission, Revenue Bonds, Blue Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 – FGIC Insured | 1/15 at 100.00 | A | | 1,277,778 | |
| | | | 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 | | 621,270 | |
| | 500 | | 5.250%, 7/01/22 – AMBAC Insured | 7/14 at 100.00 | A | | 512,400 | |
| | 300 | | Northern Hospital District of Surry County, North Carolina, Health Care Facilities Revenue Bonds, Series 2008, 6.250%, 10/01/38 | 4/18 at 100.00 | BBB | | 301,125 | |
| | 660 | | Onslow County Hospital Authority, North Carolina, FHA Insured Mortgage Revenue Bonds, Onslow Memorial Hospital Project, Series 2006, 5.000%, 4/01/31 – NPFG Insured | 10/16 at 100.00 | Baa1 | | 669,359 | |
| | 26,345 | | Total Health Care | | | | 25,508,510 | |
| | | | Housing/Multifamily – 4.6% (2.9% of Total Investments) | | | | | |
| | 1,000 | | Asheville Housing Authority, North Carolina, GNMA-Collateralized Multifamily Housing Revenue Bonds, Woodridge Apartments, Series 1997, 5.800%, 11/20/39 (Alternative Minimum Tax) | 8/11 at 100.00 | AAA | | 1,000,160 | |
| | 2,260 | | Mecklenburg County, North Carolina, FNMA Multifamily Housing Revenue Bonds, Little Rock Apartments, Series 2003, 5.375%, 1/01/36 (Alternative Minimum Tax) | 7/13 at 105.00 | AAA | | 2,277,741 | |
| | 1,000 | | North Carolina Capital Facilities Financing Agency, Housing Revenue Bonds, Elizabeth City State University, Series 2003A, 5.000%, 6/01/28 – AMBAC Insured | 6/13 at 100.00 | N/R | | 914,760 | |
| | 4,260 | | Total Housing/Multifamily | | | | 4,192,661 | |
| | | | Housing/Single Family – 5.9% (3.7% of Total Investments) | | | | | |
| | 840 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement, Series 10A, 5.400%, 7/01/32 – AMBAC Insured (Alternative Minimum Tax) | 7/11 at 100.00 | AA | | 839,992 | |
| | 1,820 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement, Series 6A, 6.200%, 1/01/29 (Alternative Minimum Tax) | 7/11 at 100.00 | AA | | 1,821,201 | |
| | 960 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 2007-29A, 4.800%, 7/01/33 (Alternative Minimum Tax) | 1/17 at 100.00 | AA | | 906,269 | |
| | 805 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 25-A, 4.900%, 7/01/37 (Alternative Minimum Tax) | 7/16 at 100.00 | AA | | 755,412 | |
| | 1,085 | | North Carolina Housing Finance Agency, Single Family Revenue Bonds, Series 1996HH, 6.300%, 3/01/26 (Alternative Minimum Tax) | 9/11 at 100.00 | AA | | 1,085,944 | |
| | 5,510 | | Total Housing/Single Family | | | | 5,408,818 | |
| | | | Long-Term Care – 0.4% (0.2% of Total Investments) | | | | | |
| | 375 | | North Carolina Medical Care Commission, Revenue Bonds, Pines at Davidson, Series 2006A, 5.000%, 1/01/36 | 1/16 at 100.00 | N/R | | 333,251 | |
| | | | Materials – 0.5% (0.3% of Total Investments) | | | | | |
| | 500 | | Columbus County Industrial Facilities and Pollution Control Financing Authority, North Carolina, Environmental Improvement Revenue Bonds, International Paper Company Project, Series 2007A, 4.625%, 3/01/27 | 3/17 at 100.00 | BBB | | 445,290 | |
| | | | Tax Obligation/General – 4.5% (2.9% of Total Investments) | | | | | |
| | 1,820 | | Durham, North Carolina, General Obligation Bonds, Series 2007, 5.000%, 4/01/21 | 4/17 at 100.00 | AAA | | 2,057,364 | |
| | 2,000 | | Wake County, North Carolina, Limited Obligation Bonds, Series 2010, 5.000%, 1/01/37 | 1/20 at 100.00 | AA+ | | 2,061,140 | |
| | 3,820 | | Total Tax Obligation/General | | | | 4,118,504 | |
| | | Nuveen North Carolina Premium Income Municipal Fund (continued) |
| NNC | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Tax Obligation/Limited – 35.1% (22.2% of Total Investments) | | | | | |
| $ | 1,330 | | Cabarrus County, North Carolina, Certificates of Participation, Series 2002, 5.250%, 2/01/17 | 2/13 at 100.00 | AA | $ | 1,406,010 | |
| | 1,800 | | Catawba County, North Carolina, Certificates of Participation, Series 2004, 5.250%, 6/01/21 – NPFG Insured | 6/14 at 100.00 | Aa2 | | 1,891,800 | |
| | 1,700 | | Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects, Series 2003G, 5.375%, 6/01/26 | 6/13 at 100.00 | AA+ | | 1,751,935 | |
| | 950 | | Charlotte, North Carolina, Certificates of Participation, Transit Projects Phase 2, Series 2008A, 5.000%, 6/01/33 | 6/18 at 100.00 | AA+ | | 960,336 | |
| | 1,505 | | Charlotte, North Carolina, Certificates of Participation, Transit Projects, Series 2003A, 5.000%, 6/01/33 | 6/13 at 100.00 | AA+ | | 1,523,692 | |
| | | | Charlotte, North Carolina, Storm Water Fee Revenue Bonds, Series 2002: | | | | | |
| | 1,050 | | 5.250%, 6/01/20 | 6/12 at 101.00 | AAA | | 1,103,046 | |
| | 1,750 | | 5.000%, 6/01/25 | 6/12 at 101.00 | AAA | | 1,825,005 | |
| | 1,400 | | Craven County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 6/01/27 – NPFG Insured | 6/17 at 100.00 | AA– | | 1,456,224 | |
| | 1,000 | | Davidson County, North Carolina, Certificates of Participation, Series 2004, 5.250%, 6/01/14 – AMBAC Insured | No Opt. Call | Aa3 | | 1,103,930 | |
| | 750 | | Harnett County, North Carolina, Certificates of Participation, Series 2009, 5.000%, 6/01/28 – AGC Insured | 6/19 at 100.00 | AA+ | | 775,725 | |
| | | | Lee County, North Carolina, Certificates of Participation, Public Schools and Community College, Series 2004: | | | | | |
| | 1,715 | | 5.250%, 4/01/18 – AGM Insured | 4/14 at 100.00 | AA+ | | 1,847,861 | |
| | 500 | | 5.250%, 4/01/20 – AGM Insured | 4/14 at 100.00 | AA+ | | 530,460 | |
| | 1,000 | | 5.250%, 4/01/22 – AGM Insured | 4/14 at 100.00 | AA+ | | 1,050,300 | |
| | 200 | | Mecklenburg County, North Carolina, Certificates of Participation, Series 2009A, 5.000%, 2/01/27 | No Opt. Call | AA+ | | 211,122 | |
| | 1,500 | | North Carolina Infrastructure Finance Corporation, Certificates of Participation, Correctional Facilities, Series 2004A, 5.000%, 2/01/23 | 2/14 at 100.00 | AA+ | | 1,608,030 | |
| | 1,500 | | North Carolina, Certificates of Participation, Repair and Renovation Project, Series 2004B, 5.000%, 6/01/20 | 6/14 at 100.00 | AA+ | | 1,591,080 | |
| | | | North Carolina, Certificates of Participation, Series 2003: | | | | | |
| | 1,130 | | 5.250%, 6/01/21 | 6/13 at 100.00 | AA+ | | 1,203,258 | |
| | 1,000 | | 5.250%, 6/01/23 | 6/13 at 100.00 | AA+ | | 1,056,130 | |
| | 2,000 | | Puerto Rico Highway and Transportation Authority, Grant Anticipation Revenue Bonds, Series 2004, 5.000%, 9/15/21 – NPFG Insured | 3/14 at 100.00 | A+ | | 1,999,700 | |
| | 3,675 | | Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, Series 2010A, 0.000%, 8/01/35 | No Opt. Call | A+ | | 737,058 | |
| | 285 | | Raleigh, North Carolina, Certificates of Participation, Series 2007, 5.000%, 2/01/27 | 2/17 at 100.00 | AA+ | | 298,939 | |
| | 1,000 | | Randolph County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/20 – AGM Insured | 6/14 at 102.00 | AA+ | | 1,071,880 | |
| | 1,000 | | Rutherford County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 12/01/27 – AGM Insured | 12/17 at 100.00 | AA+ | | 1,045,960 | |
| | 1,950 | | Sampson County, North Carolina, Certificates of Participation, Series 2006, 5.000%, 6/01/34 – AGM Insured (UB) | 6/17 at 100.00 | AA+ | | 1,966,595 | |
| | 1,200 | | Wilmington, North Carolina, Certificates of Participation, Series 2008A, 5.000%, 6/01/29 | 6/18 at 100.00 | AA | | 1,254,372 | |
| | 700 | | Wilson County, North Carolina, Certificates of Participation, School Facilities Project, Series 2007, 5.000%, 4/01/25 – AMBAC Insured | 4/17 at 100.00 | Aa3 | | 723,723 | |
| | 33,590 | | Total Tax Obligation/Limited | | | | 31,994,171 | |
| | | | Transportation – 11.6% (7.4% of Total Investments) | | | | | |
| | 2,500 | | Charlotte, North Carolina, Airport Revenue Bonds, Charlotte Douglas International Refunding Series 2010A, 5.000%, 7/01/39 | 7/20 at 100.00 | A+ | | 2,511,675 | |
| | | | Charlotte, North Carolina, Airport Revenue Bonds, Series 2004A: | | | | | |
| | 600 | | 5.250%, 7/01/24 – NPFG Insured | 7/14 at 100.00 | A+ | | 629,166 | |
| | 2,710 | | 5.000%, 7/01/29 – NPFG Insured | 7/14 at 100.00 | A+ | | 2,746,558 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Transportation (continued) | | | | | |
| $ | 1,020 | | North Carolina State Ports Authority, Port Facilities Revenue Bonds, Senior Lien Series 2010A, 5.250%, 2/01/40 | 2/20 at 100.00 | A3 | $ | 1,019,021 | |
| | 600 | | North Carolina Turnpike Authority, Triangle Expressway System Revenue Bonds, Series 2009A, 5.750%, 1/01/39 – AGC Insured | 1/19 at 100.00 | AA+ | | 624,438 | |
| | 4,230 | | North Carolina Turnpike Authority, Triangle Expressway System Senior Lien Revenue Bonds, Series 2009B, 0.000%, 1/01/33 – AGC Insured | No Opt. Call | AA+ | | 1,173,444 | |
| | 500 | | Piedmont Triad Airport Authority, North Carolina, Airport Revenue Bonds, Series 2005A, 5.000%, 7/01/20 – SYNCORA GTY Insured | 7/15 at 100.00 | A2 | | 531,620 | |
| | 1,375 | | Raleigh Durham Airport Authority, North Carolina, Airport Revenue Bonds, Refunding Series 2010A, 5.000%, 5/01/36 | No Opt. Call | Aa3 | | 1,396,203 | |
| | 13,535 | | Total Transportation | | | | 10,632,125 | |
| | | | U.S. Guaranteed – 18.7% (11.8% of Total Investments) (4) | | | | | |
| | 1,890 | | Craven County, North Carolina, General Obligation Bonds, Series 2002, 5.000%, 5/01/21 (Pre-refunded 5/01/12) – AMBAC Insured | 5/12 at 101.00 | AA (4) | | 1,991,701 | |
| | 4,035 | | Durham County, North Carolina, General Obligation Bonds, Series 2002B, 5.000%, 4/01/16 (Pre-refunded 4/01/12) | 4/12 at 100.00 | AAA | | 4,196,360 | |
| | 1,530 | | North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph’s Health System, Series 2001, 5.250%, 10/01/31 (Pre-refunded 10/01/11) | 10/11 at 101.00 | AA (4) | | 1,571,203 | |
| | 735 | | North Carolina Medical Care Commission, Revenue Bonds, Northeast Medical Center, Series 2004, 5.000%, 11/01/24 (Pre-refunded 11/01/14) | 11/14 at 100.00 | Aa3 (4) | | 841,538 | |
| | 4,260 | | North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Series 1986, 5.000%, 1/01/20 (ETM) | No Opt. Call | AAA | | 4,983,305 | |
| | | | University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A: | | | | | |
| | 420 | | 5.375%, 4/01/22 (Pre-refunded 10/01/12) – AMBAC Insured | 10/12 at 100.00 | N/R (4) | | 448,253 | |
| | 460 | | 5.375%, 4/01/22 (Pre-refunded 10/01/12) – AMBAC Insured | 10/12 at 100.00 | N/R (4) | | 490,622 | |
| | 1,675 | | University of North Carolina, Wilmington, General Revenue Bonds, Series 2002A, 5.000%, 1/01/23 (Pre-refunded 1/01/12) – AMBAC Insured | 1/12 at 101.00 | A1 (4) | | 1,738,734 | |
| | 800 | | Winston-Salem, North Carolina, Water and Sewerage System Revenue Bonds, Series 2002A, 5.000%, 6/01/18 (Pre-refunded 6/01/12) | 6/12 at 100.00 | AAA | | 837,688 | |
| | 15,805 | | Total U.S. Guaranteed | | | | 17,099,404 | |
| | | | Utilities – 9.1% (5.8% of Total Investments) | | | | | |
| | 25 | | North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2003C, 5.375%, 1/01/17 | 1/13 at 100.00 | A– | | 26,252 | |
| | 3,000 | | North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2003F, 5.500%, 1/01/15 | 1/13 at 100.00 | A– | | 3,167,610 | |
| | 1,000 | | North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2005, 5.250%, 1/01/20 – AMBAC Insured | 1/16 at 100.00 | A– | | 1,100,510 | |
| | | | North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series 1993B: | | | | | |
| | 5 | | 5.500%, 1/01/17 – FGIC Insured | 8/11 at 100.00 | Baa1 | | 5,012 | |
| | 65 | | 5.500%, 1/01/21 | 8/11 at 100.00 | A– | | 65,096 | |
| | 165 | | 6.000%, 1/01/22 – FGIC Insured | No Opt. Call | Baa1 | | 197,819 | |
| | 575 | | North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Refunding Series 2009A, 5.000%, 1/01/30 | 1/19 at 100.00 | A | | 593,090 | |
| | 2,000 | | North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Series 2003A, 5.250%, 1/01/15 – AMBAC Insured | 1/13 at 100.00 | A | | 2,119,160 | |
| | 1,000 | | Wake County Industrial Facilities and Pollution Control Financing Authority, North Carolina, Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17 | 2/12 at 101.00 | A1 | | 1,038,020 | |
| | 7,835 | | Total Utilities | | | | 8,312,569 | |
| | | Nuveen North Carolina Premium Income Municipal Fund (continued) |
| NNC | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Water and Sewer – 17.8% (11.3% of Total Investments) | | | | | |
| $ | 1,605 | | Broad River Water Authority, North Carolina, Water System Revenue Bonds, Series 2005, 5.000%, 6/01/20 – SYNCORA GTY Insured | 6/15 at 100.00 | A2 | $ | 1,668,654 | |
| | 500 | | Brunswick County, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%, 4/01/31 – AGM Insured | 4/18 at 100.00 | AA+ | | 513,795 | |
| | 50 | | Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2001, 5.125%, 6/01/26 | 12/11 at 101.00 | AAA | | 50,634 | |
| | 2,540 | | Dare County, North Carolina, Utilities System Revenue Bonds, Series 2011, 5.000%, 2/01/36 | 2/21 at 100.00 | AA | | 2,635,479 | |
| | 1,000 | | Durham, North Carolina, Utility System Revenue Bonds, Refunding Series 2011, 5.000%, 6/01/41 (WI/DD, Settling 6/01/11) | 6/21 at 100.00 | AAA | | 1,046,880 | |
| | 1,295 | | Greensboro, North Carolina, Combined Enterprise System Revenue Bonds, Series 2005A, 5.000%, 6/01/26 | 6/15 at 100.00 | AAA | | 1,364,697 | |
| | | | Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2009A: | | | | | |
| | 550 | | 6.000%, 6/01/34 – AGC Insured | 6/19 at 100.00 | AA+ | | 578,683 | |
| | 1,000 | | 6.000%, 6/01/36 – AGC Insured | 6/19 at 100.00 | AA+ | | 1,044,830 | |
| | | | Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2011: | | | | | |
| | 500 | | 5.625%, 6/01/30 – AGC Insured | 6/21 at 100.00 | AA+ | | 530,215 | |
| | 1,300 | | 5.750%, 6/01/36 – AGC Insured | 6/21 at 100.00 | AA+ | | 1,342,406 | |
| | 500 | | Onslow County, North Carolina, Combined Enterprise System Revenue Bonds, Series 2004B, 5.000%, 6/01/23 – SYNCORA GTY Insured | 6/14 at 100.00 | A+ | | 528,175 | |
| | 1,000 | | Puerto Rico Aqueduct and Sewerage Authority, Revenue Bonds, Senior Lien Series 2008A, 6.000%, 7/01/44 | 7/18 at 100.00 | Baa1 | | 1,001,075 | |
| | 3,865 | | Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, Series 2007A, 5.000%, 6/01/37 (UB) | 6/17 at 100.00 | AAA | | 3,983,037 | |
| | 15,705 | | Total Water and Sewer | | | | 16,288,560 | |
| $ | 146,225 | | Total Investments (cost $140,941,081) – 158.0% | | | | 144,214,018 | |
| | | | Floating Rate Obligations – (5.7)% | | | | (5,195,000 | ) |
| | | | MuniFund Term Preferred Shares, at Liquidation Value – (54.6)% (5) | | | | (49,835,000 | ) |
| | | | Other Assets Less Liabilities – 2.3% | | | | 2,072,110 | |
| | | | Net Assets Applicable to Common Shares – 100% | | | $ | 91,256,128 | |
| (1) | | All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. |
| (2) | | Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. |
| (3) | | Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (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) | | MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 34.6%. |
| N/R | | Not rated. |
| WI/DD | | Purchased on a when-issued or delayed delivery basis. |
| (ETM) | | Escrowed to maturity. |
| (UB) | | Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Footnote 1 – General Information and Significant Accounting Policies, Inverse Floating Rate Securities for more information. |
See accompanying notes to financial statements.
| | | Nuveen North Carolina Dividend Advantage Municipal Fund |
| NRB | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Education and Civic Organizations – 9.7% (5.8% of Total Investments) | | | | | |
| $ | 380 | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2001A, 5.125%, 10/01/26 | 10/11 at 100.00 | AA+ | $ | 381,813 | |
| | 150 | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Johnson and Wales University, Series 2003A, 5.000%, 4/01/33 – SYNCORA GTY Insured | 4/13 at 100.00 | N/R | | 139,892 | |
| | 520 | | University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.375%, 4/01/17 – AMBAC Insured | 10/12 at 100.00 | A+ | | 545,886 | |
| | 1,750 | | University of North Carolina, Chapel Hill, System Net Revenue Bonds, Series 2001A, 5.000%, 12/01/25 | 12/11 at 100.00 | Aaa | | 1,755,425 | |
| | 400 | | University of North Carolina, Chapel Hill, System Net Revenue Bonds, Series 2002B, 5.000%, 12/01/11 | No Opt. Call | Aaa | | 409,544 | |
| | 3,200 | | Total Education and Civic Organizations | | | | 3,232,560 | |
| | | | Energy – 1.5% (0.9% of Total Investments) | | | | | |
| | 500 | | Virgin Islands Public Finance Authority, Refinery Facilities Revenue Bonds, Hovensa Coker Project, Senior Lien Series 2002, 6.500%, 7/01/21 (Alternative Minimum Tax) | 1/13 at 100.00 | Baa3 | | 491,605 | |
| | | | Health Care – 27.6% (16.5% of Total Investments) | | | | | |
| | 565 | | Albemarle Hospital Authority, North Carolina, Health Care Facilities Revenue Bonds, Series 2007, 5.250%, 10/01/38 | 10/17 at 100.00 | N/R | | 420,688 | |
| | 950 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas HealthCare System Revenue Bonds, Series 2008A, 5.000%, 1/15/47 | 1/18 at 100.00 | AA– | | 911,848 | |
| | 1,000 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Health Care Refunding Revenue Bonds, Carolinas HealthCare System, Series 2009A, 5.250%, 1/15/39 | 1/19 at 100.00 | AA– | | 1,004,930 | |
| | 250 | | Johnston Memorial Hospital Authority, North Carolina, Mortgage Revenue Bonds, Johnston Memorial Hospital Project, Series 2008, 5.250%, | 4/18 at 100.00 | AA+ | | 253,345 | |
| | | | 10/01/36 – AGM Insured | | | | | |
| | 30 | | New Hanover County, North Carolina, Hospital Revenue Bonds, New Hanover Regional Medical Center, Series 2006B, 5.125%, 10/01/31 – AGM Insured | 10/19 at 100.00 | AA+ | | 30,548 | |
| | | | North Carolina Medical Care Commission Health Care Facilities Revenue Bonds Novant Health Inc., Series 2010A: | | | | | |
| | 1,000 | | 5.250%, 11/01/40 | 11/20 at 100.00 | A+ | | 929,400 | |
| | 500 | | 5.000%, 11/01/43 | 11/20 at 100.00 | A+ | | 435,930 | |
| | 250 | | North Carolina Medical Care Commission, Health Care Facilities Refunding Revenue Bonds, Blue Ridge HealthCare, Series 2010A, 5.000%, 1/01/36 | 1/20 at 100.00 | A | | 224,865 | |
| | 180 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Appalachian Regional HealthCare System, Series 2011A, 6.500%, 7/01/31 | 7/21 at 100.00 | BBB+ | | 186,174 | |
| | 280 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, WakeMed, Series 2009A, 5.625%, 10/01/38 – AGC Insured | 10/14 at 100.00 | AA+ | | 285,247 | |
| | 1,110 | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Union Regional Medical Center, Series 2002A, 5.250%, 1/01/15 | 1/12 at 100.00 | A+ | | 1,127,216 | |
| | 980 | | North Carolina Medical Care Commission, Healthcare Revenue Bonds, Carolina Medicorp, Series 1996, 5.250%, 5/01/26 | 11/11 at 100.00 | A+ | | 980,529 | |
| | 1,500 | | North Carolina Medical Care Commission, Hospital Revenue Bonds, Southeastern Regional Medical Center, Series 2002, 5.250%, 6/01/22 | 6/12 at 101.00 | A | | 1,517,145 | |
| | 500 | | North Carolina Medical Care Commission, Hospital Revenue Bonds, Wilson Medical Center, Series 2007, 5.000%, 11/01/20 | 11/17 at 100.00 | A– | | 522,795 | |
| | 250 | | North Carolina Medical Care Commission, Revenue Bonds, Blue Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 – FGIC Insured | 1/15 at 100.00 | A | | 228,993 | |
| | 150 | | Northern Hospital District of Surry County, North Carolina, Health Care Facilities Revenue Bonds, Series 2008, 6.250%, 10/01/38 | 4/18 at 100.00 | BBB | | 150,563 | |
| | 9,495 | | Total Health Care | | | | 9,210,216 | |
| | | | Housing/Single Family – 4.3% (2.5% of Total Investments) | | | | | |
| | 335 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement, Series 10A, 5.400%, 7/01/32 – AMBAC Insured (Alternative Minimum Tax) | 7/11 at 100.00 | AA | | 334,997 | |
| | | Nuveen North Carolina Dividend Advantage Municipal Fund (continued) |
| NRB | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Housing/Single Family (continued) | | | | | |
| $ | 555 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement, Series 5A, 5.625%, 7/01/30 (Alternative Minimum Tax) | 7/11 at 100.00 | AA | $ | 555,105 | |
| | 240 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 2007-29A, 4.800%, 7/01/33 (Alternative Minimum Tax) | 1/17 at 100.00 | AA | | 226,567 | |
| | 320 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 25-A, 4.900%, 7/01/37 (Alternative Minimum Tax) | 7/16 at 100.00 | AA | | 300,288 | |
| | 1,450 | | Total Housing/Single Family | | | | 1,416,957 | |
| | | | Long-Term Care – 1.7% (1.0% of Total Investments) | | | | | |
| | | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Presbyterian Homes, Series 2006: | | | | | |
| | 200 | | 5.400%, 10/01/27 | 10/16 at 100.00 | N/R | | 176,208 | |
| | 300 | | 5.500%, 10/01/31 | 10/16 at 100.00 | N/R | | 254,424 | |
| | 150 | | North Carolina Medical Care Commission, Revenue Bonds, Pines at Davidson, Series 2006A, 5.000%, 1/01/36 | 1/16 at 100.00 | N/R | | 133,301 | |
| | 650 | | Total Long-Term Care | | | | 563,933 | |
| | | | Materials – 1.1% (0.6% of Total Investments) | | | | | |
| | 400 | | Columbus County Industrial Facilities and Pollution Control Financing Authority, North Carolina, Environmental Improvement Revenue Bonds, International Paper Company Project, Series 2007A, 4.625%, 3/01/27 | 3/17 at 100.00 | BBB | | 356,232 | |
| | | | Tax Obligation/General – 11.6% (7.0% of Total Investments) | | | | | |
| | 1,000 | | Durham, North Carolina, General Obligation Bonds, Series 2007, 5.000%, 4/01/21 | 4/17 at 100.00 | AAA | | 1,130,420 | |
| | | | North Carolina, General Obligation Bonds, Series 2004A: | | | | | |
| | 1,000 | | 5.000%, 3/01/18 | 3/14 at 100.00 | AAA | | 1,102,070 | |
| | 1,000 | | 5.000%, 3/01/22 | 3/14 at 100.00 | AAA | | 1,084,890 | |
| | 550 | | Wake County, North Carolina, Limited Obligation Bonds, Series 2010, 5.000%, 1/01/37 | 1/20 at 100.00 | AA+ | | 566,814 | |
| | 3,550 | | Total Tax Obligation/General | | | | 3,884,194 | |
| | | | Tax Obligation/Limited – 26.7% (15.9% of Total Investments) | | | | | |
| | 1,400 | | Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects, Series 2003G, 5.375%, 6/01/26 (UB) | 6/13 at 100.00 | AA+ | | 1,442,770 | |
| | 305 | | Charlotte, North Carolina, Certificates of Participation, Transit Projects Phase 2, Series 2008A, 5.000%, 6/01/33 | 6/18 at 100.00 | AA+ | | 308,318 | |
| | 160 | | Craven County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 6/01/23 – NPFG Insured | 6/17 at 100.00 | AA– | | 171,171 | |
| | 1,870 | | Dare County, North Carolina, Certificates of Participation, Series 2002, 5.250%, 6/01/15 – AMBAC Insured | 12/12 at 100.00 | AA– | | 1,989,474 | |
| | 1,250 | | Davidson County, North Carolina, Certificates of Participation, Series 2004, 5.250%, 6/01/21 – AMBAC Insured | 6/14 at 100.00 | Aa3 | | 1,307,213 | |
| | 1,390 | | Durham, North Carolina, Certificates of Participation, Series 2005B, 5.000%, 6/01/25 | 6/15 at 100.00 | AA+ | | 1,458,777 | |
| | 50 | | Harnett County, North Carolina, Certificates of Participation, Series 2009, 5.000%, 6/01/28 – AGC Insured | 6/19 at 100.00 | AA+ | | 51,715 | |
| | 525 | | Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, Series 2010A, 0.000%, 8/01/35 | No Opt. Call | A+ | | 105,294 | |
| | 470 | | Raleigh, North Carolina, Certificates of Participation, Downtown Improvement Project, Series 2004B, 5.000%, 6/01/20 | 6/14 at 100.00 | AA+ | | 498,538 | |
| | 170 | | Raleigh, North Carolina, Certificates of Participation, Series 2007, 5.000%, 2/01/27 | 2/17 at 100.00 | AA+ | | 178,315 | |
| | 150 | | Rutherford County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 12/01/27 – AGM Insured | 12/17 at 100.00 | AA+ | | 156,894 | |
| | 700 | | Sampson County, North Carolina, Certificates of Participation, Series 2006, 5.000%, 6/01/34 – AGM Insured (UB) | 6/17 at 100.00 | AA+ | | 705,957 | |
| | 250 | | Wilmington, North Carolina, Certificates of Participation, Series 2008A, 5.000%, 6/01/29 | 6/18 at 100.00 | AA | | 261,328 | |
| | 250 | | Wilson County, North Carolina, Certificates of Participation, School Facilities Project, Series 2007, 5.000%, 4/01/25 – AMBAC Insured | 4/17 at 100.00 | Aa3 | | 258,473 | |
| | 8,940 | | Total Tax Obligation/Limited | | | | 8,894,237 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Transportation – 9.6% (5.7% of Total Investments) | | | | | |
| $ | 1,000 | | Charlotte, North Carolina, Airport Revenue Bonds, Charlotte Douglas International Refunding Series 2010A, 5.000%, 7/01/39 | 7/20 at 100.00 | A+ | $ | 1,004,670 | |
| | 360 | | North Carolina State Ports Authority, Port Facilities Revenue Bonds, Senior Lien Series 2010A, 5.250%, 2/01/40 | 2/20 at 100.00 | A3 | | 359,654 | |
| | | | North Carolina Turnpike Authority, Triangle Expressway System Revenue Bonds, Series 2009A: | | | | | |
| | 50 | | 5.375%, 1/01/26 – AGC Insured | 1/19 at 100.00 | AA+ | | 53,329 | |
| | 275 | | 5.750%, 1/01/39 – AGC Insured | 1/19 at 100.00 | AA+ | | 286,201 | |
| | | | North Carolina Turnpike Authority, Triangle Expressway System Senior Lien Revenue Bonds, Series 2009B: | | | | | |
| | 2,270 | | 0.000%, 1/01/34 – AGC Insured | No Opt. Call | AA+ | | 589,519 | |
| | 175 | | 0.000%, 1/01/38 – AGC Insured | No Opt. Call | AA+ | | 34,703 | |
| | 300 | | Piedmont Triad Airport Authority, North Carolina, Airport Revenue Bonds, Series 2005A, 5.000%, 7/01/20 – SYNCORA GTY Insured | 7/15 at 100.00 | A2 | | 318,972 | |
| | 550 | | Raleigh Durham Airport Authority, North Carolina, Airport Revenue Bonds, Refunding Series 2010A, 5.000%, 5/01/36 | No Opt. Call | Aa3 | | 558,481 | |
| | 4,980 | | Total Transportation | | | | 3,205,529 | |
| | | | U.S. Guaranteed – 13.8% (8.2% of Total Investments) (4) | | | | | |
| | 100 | | Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, DBA Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15) | 1/15 at 100.00 | AAA | | 114,432 | |
| | 500 | | Greenville, North Carolina, Combined Enterprise System Revenue Bonds, Series 2001, 5.250%, 9/01/21 (Pre-refunded 9/01/11) – AGM Insured | 9/11 at 101.00 | AA+ (4) | | 511,285 | |
| | 620 | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2001A, 5.125%, 10/01/26 (Pre-refunded 10/01/11) | 10/11 at 100.00 | AAA | | 630,199 | |
| | 125 | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, High Point University, Series 2001, 5.125%, 9/01/18 (Pre-refunded 9/01/11) | 9/11 at 101.00 | N/R (4) | | 127,644 | |
| | 800 | | North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph’s Health System, Series 2001, 5.250%, 10/01/31 (Pre-refunded 10/01/11) | 10/11 at 101.00 | AA (4) | | 821,544 | |
| | 300 | | North Carolina Medical Care Commission, Revenue Bonds, Northeast Medical Center, Series 2004, 5.000%, 11/01/24 (Pre-refunded 11/01/14) | 11/14 at 100.00 | Aa3 (4) | | 343,485 | |
| | | | University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A: | | | | | |
| | 1,020 | | 5.375%, 4/01/17 (Pre-refunded 10/01/12) – AMBAC Insured | 10/12 at 100.00 | N/R (4) | | 1,088,615 | |
| | 910 | | 5.375%, 4/01/17 (Pre-refunded 10/01/12) – AMBAC Insured | 10/12 at 100.00 | N/R (4) | | 970,579 | |
| | 4,375 | | Total U.S. Guaranteed | | | | 4,607,783 | |
| | | | Utilities – 8.6% (5.2% of Total Investments) | | | | | |
| | 500 | | North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2005, 5.250%, 1/01/20 – AMBAC Insured | 1/16 at 100.00 | A– | | 550,255 | |
| | 745 | | North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series 1993B, 5.500%, 1/01/17 – FGIC Insured | 8/11 at 100.00 | Baa1 | | 746,736 | |
| | 25 | | North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Refunding Series 2009A, 5.000%, 1/01/30 | 1/19 at 100.00 | A | | 25,787 | |
| | 1,500 | | Wake County Industrial Facilities and Pollution Control Financing Authority, North Carolina, Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17 | 2/12 at 101.00 | A1 | | 1,557,030 | |
| | 2,770 | | Total Utilities | | | | 2,879,808 | |
| | | | Water and Sewer – 51.4% (30.7% of Total Investments) | | | | | |
| | 100 | | Brunswick County, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%, 4/01/31 – AGM Insured | 4/18 at 100.00 | AA+ | | 102,759 | |
| | 505 | | Cape Fear Public Utility Authority, North Carolina, Water & Sewer System Revenue Bonds, Series 2008, 5.000%, 8/01/35 | 8/18 at 100.00 | AA | | 521,695 | |
| | 2,250 | | Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2001, 5.125%, 6/01/26 | 12/11 at 101.00 | AAA | | 2,278,508 | |
| | 1,000 | | Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2008, 5.000%, 7/01/38 | 7/18 at 100.00 | AAA | | 1,040,770 | |
| | 250 | | Dare County, North Carolina, Utilities System Revenue Bonds, Series 2011, 5.000%, 2/01/41 | 2/21 at 100.00 | AA | | 257,815 | |
| | | Nuveen North Carolina Dividend Advantage Municipal Fund (continued) |
| NRB | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Water and Sewer (continued) | | | | | |
| $ | 1,500 | | Durham, North Carolina, Utility System Revenue Bonds, Refunding Series 2011, 5.000%, 6/01/41 (WI/DD, Settling 6/01/11) | 6/21 at 100.00 | AAA | $ | 1,570,320 | |
| | 500 | | Greensboro, North Carolina, Combined Enterprise System Revenue Bonds, Series 2005A, 5.000%, 6/01/25 | 6/15 at 100.00 | AAA | | 529,245 | |
| | 700 | | Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2009A, 6.000%, 6/01/34 – AGC Insured | 6/19 at 100.00 | AA+ | | 736,505 | |
| | 400 | | Onslow County, North Carolina, Combined Enterprise System Revenue Bonds, Series 2004B, 5.000%, 6/01/23 – SYNCORA GTY Insured | 6/14 at 100.00 | A+ | | 422,540 | |
| | 500 | | Puerto Rico Aqueduct and Sewerage Authority, Revenue Bonds, Senior Lien Series 2008A, 6.000%, 7/01/44 | 7/18 at 100.00 | Baa1 | | 500,534 | |
| | | | Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A: | | | | | |
| | 4,440 | | 5.000%, 3/01/31 (UB) | 3/16 at 100.00 | AAA | | 4,644,773 | |
| | 3,000 | | 5.000%, 3/01/36 (UB) | 3/16 at 100.00 | AAA | | 3,088,530 | |
| | 5 | | Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A, Residuals Series 11-R-645-2, 13.766%, 3/01/14 (IF) | No Opt. Call | AAA | | 5,443 | |
| | 1,385 | | Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, Series 2007A, 5.000%, 6/01/37 (UB) | 6/17 at 100.00 | AAA | | 1,427,298 | |
| | 16,535 | | Total Water and Sewer | | | | 17,126,735 | |
| $ | 56,845 | | Total Investments (cost $54,776,396) – 167.6% | | | | 55,869,789 | |
| | | | Floating Rate Obligations – (21.5)% | | | | (7,160,000 | ) |
| | | | MuniFund Term Preferred Shares, at Liquidation Value – (49.8)% (5) | | | | (16,600,000 | ) |
| | | | Other Assets Less Liabilities – 3.7% | | | | 1,226,784 | |
| | | | Net Assets Applicable to Common Shares – 100% | | | $ | 33,336,573 | |
| (1) | | All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. |
| (2) | | Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. |
| (3) | | Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (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) | | MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 29.7%. |
| N/R | | Not rated. |
| WI/DD | | Purchased on a when-issued or delayed delivery basis. |
| (IF) | | Inverse floating rate investment. |
| (UB) | | Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Footnote 1 – General Information and Significant Accounting Policies, Inverse Floating Rate Securities for more information. |
See accompanying notes to financial statements.
| | | Nuveen North Carolina Dividend Advantage Municipal Fund 2 |
| NNO | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Education and Civic Organizations – 11.4% (7.1% 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 – NPFG Insured | 7/12 at 100.00 | Aa3 | $ | 1,086,852 | |
| | 1,000 | | 5.000%, 7/15/15 – NPFG Insured | 7/12 at 100.00 | Aa3 | | 1,037,290 | |
| | | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2001A: | | | | | |
| | 715 | | 5.125%, 10/01/26 | 10/11 at 100.00 | AA+ | | 718,411 | |
| | 380 | | 5.125%, 10/01/41 | 10/11 at 100.00 | AA+ | | 380,217 | |
| | 800 | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Johnson and Wales University, Series 2003A, 5.000%, 4/01/33 – SYNCORA GTY Insured | 4/13 at 100.00 | N/R | | 746,088 | |
| | 130 | | University of North Carolina System, Pooled Revenue Bonds, Series 2002B, 5.375%, 4/01/19 – AMBAC Insured | 10/12 at 100.00 | A+ | | 135,898 | |
| | 1,000 | | University of North Carolina System, Pooled Revenue Bonds, Series 2005A, 5.000%, 4/01/22 – AMBAC Insured | 4/15 at 100.00 | A+ | | 1,047,950 | |
| | 500 | | University of North Carolina Wilmington, Certificates of Participation, Student Housing Project Revenue Bonds, Series 2006, 5.000%, 6/01/21 – FGIC Insured | 6/16 at 100.00 | A– | | 529,515 | |
| | 250 | | University of North Carolina, Chapel Hill, System Net Revenue Bonds, Series 2002B, 5.000%, 12/01/11 | No Opt. Call | Aaa | | 255,965 | |
| | 250 | | University of North Carolina, Charlotte, Certificates of Participation, Student Housing Project, Series 2005, 5.000%, 3/01/21 – AMBAC Insured | 3/15 at 100.00 | A | | 264,130 | |
| | 6,065 | | Total Education and Civic Organizations | | | | 6,202,316 | |
| | | | Energy – 1.8% (1.1% of Total Investments) | | | | | |
| | 1,000 | | Virgin Islands Public Finance Authority, Refinery Facilities Revenue Bonds, Hovensa Coker Project, Senior Lien Series 2002, 6.500%, 7/01/21 (Alternative Minimum Tax) | 1/13 at 100.00 | Baa3 | | 983,210 | |
| | | | Health Care – 36.5% (22.7% of Total Investments) | | | | | |
| | 1,065 | | Albemarle Hospital Authority, North Carolina, Health Care Facilities Revenue Bonds, Series 2007, 5.250%, 10/01/38 | 10/17 at 100.00 | N/R | | 792,978 | |
| | 1,000 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas HealthCare System Revenue Bonds, Series 2008A, 5.000%, 1/15/47 | 1/18 at 100.00 | AA– | | 959,840 | |
| | 750 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Health Care Refunding Revenue Bonds, Carolinas HealthCare System, Series 2009A, 5.250%, 1/15/39 | 1/19 at 100.00 | AA– | | 753,698 | |
| | 1,000 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Health Care Revenue Bonds, Carolinas HealthCare System, Series 2011A, 5.250%, 1/15/42 | 1/21 at 100.00 | AA– | | 1,002,930 | |
| | 1,640 | | Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, Carolinas Healthcare System, Series 2001A, 5.000%, 1/15/31 | 1/12 at 100.00 | AA– | | 1,640,410 | |
| | 500 | | Johnston Memorial Hospital Authority, North Carolina, Mortgage Revenue Bonds, Johnston Memorial Hospital Project, Series 2008, 5.250%, | 4/18 at 100.00 | AA+ | | 506,690 | |
| | | | 10/01/36 – AGM Insured | | | | | |
| | 120 | | New Hanover County, North Carolina, Hospital Revenue Bonds, New Hanover Regional Medical Center, Series 2006B, 5.125%, 10/01/31 – AGM Insured | 10/19 at 100.00 | AA+ | | 122,191 | |
| | | | North Carolina Medical Care Commission Health Care Facilities Revenue Bonds Novant Health Inc., Series 2010A: | | | | | |
| | 1,250 | | 5.250%, 11/01/40 | 11/20 at 100.00 | A+ | | 1,161,750 | |
| | 1,000 | | 5.000%, 11/01/43 | 11/20 at 100.00 | A+ | | 871,860 | |
| | 1,000 | | North Carolina Medical Care Commission, Health Care Facilities Refunding Revenue Bonds, Blue Ridge HealthCare, Series 2010A, 5.000%, 1/01/36 | 1/20 at 100.00 | A | | 899,460 | |
| | 500 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Appalachian Regional HealthCare System, Series 2011A, 6.500%, 7/01/31 | 7/21 at 100.00 | BBB+ | | 517,150 | |
| | 680 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Cleveland County Healthcare System, Refunding Series 2011A, 5.750%, 1/01/35 | 1/21 at 100.00 | A | | 685,440 | |
| | | Nuveen North Carolina Dividend Advantage Municipal Fund 2 (continued) |
| NNO | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Health Care (continued) | | | | | |
| $ | 455 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, WakeMed, Series 2009A, 5.625%, 10/01/38 – AGC Insured | 10/14 at 100.00 | AA+ | $ | 463,527 | |
| | 2,000 | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Novant Health Obligated Group, Series 2003A, 5.000%, 11/01/20 | 11/13 at 100.00 | A+ | | 2,038,540 | |
| | 1,005 | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Union Regional Medical Center, Series 2002A, 5.250%, 1/01/13 | 1/12 at 100.00 | A+ | | 1,024,658 | |
| | | | North Carolina Medical Care Commission, Hospital Revenue Bonds, Southeastern Regional Medical Center, Series 2002: | | | | | |
| | 1,000 | | 5.500%, 6/01/15 | 6/12 at 101.00 | A | | 1,038,620 | |
| | 2,100 | | 5.250%, 6/01/22 | 6/12 at 101.00 | A | | 2,124,003 | |
| | 925 | | North Carolina Medical Care Commission, Hospital Revenue Bonds, Wilson Medical Center, Series 2007, 5.000%, 11/01/27 | 11/17 at 100.00 | A– | | 895,770 | |
| | 1,250 | | North Carolina Medical Care Commission, Revenue Bonds, Blue Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 – FGIC Insured | 1/15 at 100.00 | A | | 1,144,963 | |
| | | | 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 | | 616,093 | |
| | 500 | | 5.250%, 7/01/22 – AMBAC Insured | 7/14 at 100.00 | A | | 512,400 | |
| | 150 | | Northern Hospital District of Surry County, North Carolina, Health Care Facilities Revenue Bonds, Series 2008, 6.250%, 10/01/38 | 4/18 at 100.00 | BBB | | 150,563 | |
| | 20,485 | | Total Health Care | | | | 19,923,534 | |
| | | | Housing/Single Family – 3.4% (2.1% of Total Investments) | | | | | |
| | 290 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement, Series 10A, 5.400%, 7/01/32 – AMBAC Insured (Alternative Minimum Tax) | 7/11 at 100.00 | AA | | 289,997 | |
| | | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 13A: | | | | | |
| | 540 | | 4.700%, 7/01/12 (Alternative Minimum Tax) | 7/11 at 100.00 | AA | | 541,177 | |
| | 545 | | 4.850%, 7/01/13 (Alternative Minimum Tax) | 7/11 at 100.00 | AA | | 545,943 | |
| | 500 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 25-A, 4.900%, 7/01/37 (Alternative Minimum Tax) | 7/16 at 100.00 | AA | | 469,200 | |
| | 1,875 | | Total Housing/Single Family | | | | 1,846,317 | |
| | | | Long-Term Care – 1.6% (1.0% of Total Investments) | | | | | |
| | | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Presbyterian Homes, Series 2006: | | | | | |
| | 250 | | 5.400%, 10/01/27 | 10/16 at 100.00 | N/R | | 220,260 | |
| | 600 | | 5.500%, 10/01/31 | 10/16 at 100.00 | N/R | | 508,848 | |
| | 185 | | North Carolina Medical Care Commission, Revenue Bonds, Pines at Davidson, Series 2006A, 5.000%, 1/01/36 | 1/16 at 100.00 | N/R | | 164,404 | |
| | 1,035 | | Total Long-Term Care | | | | 893,512 | |
| | | | Materials – 0.5% (0.3% of Total Investments) | | | | | |
| | 300 | | Columbus County Industrial Facilities and Pollution Control Financing Authority, North Carolina, Environmental Improvement Revenue Bonds, International Paper Company Project, Series 2007A, 4.625%, 3/01/27 | 3/17 at 100.00 | BBB | | 267,174 | |
| | | | Tax Obligation/General – 9.8% (6.1% of Total Investments) | | | | | |
| | 1,475 | | Durham, North Carolina, General Obligation Bonds, Series 2007, 5.000%, 4/01/22 | 4/17 at 100.00 | AAA | | 1,652,516 | |
| | 1,050 | | Forsyth County, North Carolina, General Obligation Bonds, Limited Obligation Series 2009, 5.000%, 4/01/30 | 4/20 at 100.00 | AA+ | | 1,115,783 | |
| | 500 | | North Carolina, General Obligation Bonds, Series 2004A, 5.000%, 3/01/22 | 3/14 at 100.00 | AAA | | 542,445 | |
| | 2,000 | | Wake County, North Carolina, Limited Obligation Bonds, Series 2010, 5.000%, 1/01/37 | 1/20 at 100.00 | AA+ | | 2,061,140 | |
| | 5,025 | | Total Tax Obligation/General | | | | 5,371,884 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Tax Obligation/Limited – 35.4% (22.0% of Total Investments) | | | | | |
| $ | 30 | | Cabarrus County, North Carolina, Certificates of Participation, Series 2002, 5.250%, 2/01/16 | 2/13 at 100.00 | AA | $ | 31,794 | |
| | 1,750 | | Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects, Series 2003G, 5.000%, 6/01/28 | 6/13 at 100.00 | AA+ | | 1,782,130 | |
| | 575 | | Charlotte, North Carolina, Certificates of Participation, Transit Projects Phase 2, Series 2008A, 5.000%, 6/01/33 | 6/18 at 100.00 | AA+ | | 581,256 | |
| | 1,850 | | Charlotte, North Carolina, Storm Water Fee Revenue Bonds, Series 2002, 5.250%, 6/01/18 | 6/12 at 101.00 | AAA | | 1,943,462 | |
| | 800 | | Craven County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 6/01/27 – NPFG Insured | 6/17 at 100.00 | AA– | | 832,128 | |
| | 500 | | Harnett County, North Carolina, Certificates of Participation, Series 2009, 5.000%, 6/01/29 – AGC Insured | 6/19 at 100.00 | AA+ | | 513,090 | |
| | | | Hartnett County, North Carolina, Certificates of Participation, Series 2002: | | | | | |
| | 1,000 | | 5.250%, 12/01/15 – AGM Insured | 12/12 at 101.00 | AA+ | | 1,071,560 | |
| | 2,025 | | 5.375%, 12/01/16 – AGM Insured | 12/12 at 101.00 | AA+ | | 2,171,468 | |
| | 715 | | Lee County, North Carolina, Certificates of Participation, Public Schools and Community College, Series 2004, 5.250%, 4/01/20 – AGM Insured | 4/14 at 100.00 | AA+ | | 758,558 | |
| | 1,380 | | Pasquotank County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/25 – NPFG Insured | 6/14 at 100.00 | A | | 1,400,521 | |
| | 2,070 | | Pitt County, North Carolina, Certificates of Participation, School Facilities Project, Series 2004B, 5.000%, 4/01/29 – AMBAC Insured | 4/14 at 100.00 | AA– | | 2,089,168 | |
| | 2,625 | | Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, Series 2010A, 0.000%, 8/01/35 | No Opt. Call | A+ | | 526,470 | |
| | | | Raleigh, North Carolina, Certificates of Participation, Downtown Improvement Project, Series 2004B: | | | | | |
| | 805 | | 5.000%, 6/01/20 | 6/14 at 100.00 | AA+ | | 853,880 | |
| | 1,310 | | 5.000%, 6/01/21 | 6/14 at 100.00 | AA+ | | 1,382,626 | |
| | 115 | | Raleigh, North Carolina, Certificates of Participation, Series 2007, 5.000%, 2/01/27 | 2/17 at 100.00 | AA+ | | 120,625 | |
| | 1,000 | | Randolph County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/20 – AGM Insured | 6/14 at 102.00 | AA+ | | 1,071,880 | |
| | 100 | | Rutherford County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 12/01/27 – AGM Insured | 12/17 at 100.00 | AA+ | | 104,596 | |
| | 1,150 | | Sampson County, North Carolina, Certificates of Participation, Series 2006, 5.000%, 6/01/34 – AGM Insured (UB) | 6/17 at 100.00 | AA+ | | 1,159,787 | |
| | 500 | | Wilmington, North Carolina, Certificates of Participation, Series 2008A, 5.000%, 6/01/29 | 6/18 at 100.00 | AA | | 522,655 | |
| | 400 | | Wilson County, North Carolina, Certificates of Participation, School Facilities Project, Series 2007, 5.000%, 4/01/25 – AMBAC Insured | 4/17 at 100.00 | Aa3 | | 413,556 | |
| | 20,700 | | Total Tax Obligation/Limited | | | | 19,331,210 | |
| | | | Transportation – 13.4% (8.3% of Total Investments) | | | | | |
| | 1,000 | | Charlotte, North Carolina, Airport Revenue Bonds, Charlotte Douglas International Refunding Series 2010A, 5.000%, 7/01/39 | 7/20 at 100.00 | A+ | | 1,004,670 | |
| | 1,935 | | Charlotte, North Carolina, Airport Revenue Bonds, Series 2004A, 5.000%, 7/01/34 – NPFG Insured | 7/14 at 100.00 | A+ | | 1,943,417 | |
| | 660 | | North Carolina State Ports Authority, Port Facilities Revenue Bonds, Senior Lien Series 2010A, 5.250%, 2/01/40 | 2/20 at 100.00 | A3 | | 659,366 | |
| | | | North Carolina Turnpike Authority, Triangle Expressway System Revenue Bonds, Series 2009A: | | | | | |
| | 90 | | 5.375%, 1/01/26 – AGC Insured | 1/19 at 100.00 | AA+ | | 95,991 | |
| | 220 | | 5.500%, 1/01/29 – AGC Insured | 1/19 at 100.00 | AA+ | | 232,907 | |
| | 430 | | 5.750%, 1/01/39 – AGC Insured | 1/19 at 100.00 | AA+ | | 447,514 | |
| | | | North Carolina Turnpike Authority, Triangle Expressway System Senior Lien Revenue Bonds, Series 2009B: | | | | | |
| | 150 | | 0.000%, 1/01/31 – AGC Insured | No Opt. Call | AA+ | | 47,310 | |
| | 125 | | 0.000%, 1/01/33 – AGC Insured | No Opt. Call | AA+ | | 34,676 | |
| | 50 | | 0.000%, 1/01/35 – AGC Insured | No Opt. Call | AA+ | | 12,177 | |
| | 5,600 | | 0.000%, 1/01/37 – AGC Insured | No Opt. Call | AA+ | | 1,188,992 | |
| | 350 | | 0.000%, 1/01/38 – AGC Insured | No Opt. Call | AA+ | | 69,405 | |
| | | Nuveen North Carolina Dividend Advantage Municipal Fund 2 (continued) |
| NNO | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Transportation (continued) | | | | | |
| $ | 435 | | Piedmont Triad Airport Authority, North Carolina, Airport Revenue Bonds, Series 2005A, 5.000%, 7/01/20 – SYNCORA GTY Insured | 7/15 at 100.00 | A2 | $ | 462,509 | |
| | 1,100 | | Raleigh Durham Airport Authority, North Carolina, Airport Revenue Bonds, Refunding Series 2010A, 5.000%, 5/01/36 | No Opt. Call | Aa3 | | 1,116,962 | |
| | 12,145 | | Total Transportation | | | | 7,315,896 | |
| | | | U.S. Guaranteed – 8.3% (5.1% of Total Investments) (4) | | | | | |
| | 200 | | Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, DBA Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15) | 1/15 at 100.00 | AAA | | 228,864 | |
| | 370 | | North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph’s Health System, Series 2001, 5.250%, 10/01/31 (Pre-refunded 10/01/11) | 10/11 at 101.00 | AA (4) | | 379,964 | |
| | 500 | | North Carolina Medical Care Commission, Revenue Bonds, Northeast Medical Center, Series 2004, 5.000%, 11/01/24 (Pre-refunded 11/01/14) | 11/14 at 100.00 | Aa3 (4) | | 572,475 | |
| | | | 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 | | 1,119,380 | |
| | 1,250 | | 5.000%, 3/01/22 (Pre-refunded 3/01/14) | 3/14 at 100.00 | AAA | | 1,396,313 | |
| | 505 | | University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.375%, 4/01/19 (Pre-refunded 10/01/12) – AMBAC Insured | 10/12 at 100.00 | N/R (4) | | 538,618 | |
| | 270 | | University of North Carolina, Charlotte, Parking System Revenue Bonds, Series 2002, 5.000%, 1/01/20 (Pre-refunded 1/01/12) – NPFG Insured | 1/12 at 101.00 | A1 (4) | | 280,109 | |
| | 4,095 | | Total U.S. Guaranteed | | | | 4,515,723 | |
| | | | Utilities – 7.8% (4.8% of Total Investments) | | | | | |
| | 500 | | North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2005, 5.250%, 1/01/20 – AMBAC Insured | 1/16 at 100.00 | A– | | 550,255 | |
| | | | North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series 1993B: | | | | | |
| | 745 | | 5.500%, 1/01/17 – FGIC Insured | 8/11 at 100.00 | Baa1 | | 746,736 | |
| | 15 | | 5.500%, 1/01/21 | 8/11 at 100.00 | A– | | 15,022 | |
| | 225 | | North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Refunding Series 2009A, 5.000%, 1/01/30 | 1/19 at 100.00 | A | | 232,079 | |
| | 2,600 | | Wake County Industrial Facilities and Pollution Control Financing Authority, North Carolina, Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17 | 2/12 at 101.00 | A1 | | 2,698,852 | |
| | 4,085 | | Total Utilities | | | | 4,242,944 | |
| | | | Water and Sewer – 31.2% (19.4% of Total Investments) | | | | | |
| | 500 | | Brunswick County, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%, 4/01/31 – AGM Insured | 4/18 at 100.00 | AA+ | | 513,795 | |
| | 500 | | Cape Fear Public Utility Authority, North Carolina, Water & Sewer System Revenue Bonds, Series 2008, 5.000%, 8/01/35 | 8/18 at 100.00 | AA | | 516,530 | |
| | 1,520 | | Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2002A, 5.250%, 7/01/13 | No Opt. Call | AAA | | 1,671,286 | |
| | 500 | | Dare County, North Carolina, Utilities System Revenue Bonds, Series 2011, 5.000%, 2/01/41 | 2/21 at 100.00 | AA | | 515,630 | |
| | 1,000 | | Durham County, North Carolina, Enterprise System Revenue Bonds, Series 2002, 5.000%, 6/01/23 – NPFG Insured | 6/13 at 100.00 | AA | | 1,053,210 | |
| | 3,050 | | Durham, North Carolina, Utility System Revenue Bonds, Refunding Series 2011, 5.000%, 6/01/41 (WI/DD, Settling 6/01/11) | 6/21 at 100.00 | AAA | | 3,192,984 | |
| | 610 | | Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%, 6/01/23 – NPFG Insured | 6/18 at 100.00 | A2 | | 638,505 | |
| | 700 | | Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2009A, 6.000%, 6/01/34 – AGC Insured | 6/19 at 100.00 | AA+ | | 736,505 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Water and Sewer (continued) | | | | | |
| $ | 500 | | Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2011, 5.750%, 6/01/36 – AGC Insured | 6/21 at 100.00 | AA+ | $ | 516,310 | |
| | | | Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A: | | | | | |
| | 3,095 | | 5.000%, 3/01/31 (UB) | 3/16 at 100.00 | AAA | | 3,237,741 | |
| | 975 | | 5.000%, 3/01/36 (UB) | 3/16 at 100.00 | AAA | | 1,003,772 | |
| | 40 | | Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A, Residuals Series 11-R-645-2, 13.766%, 3/01/14 (IF) | No Opt. Call | AAA | | 45,533 | |
| | 1,000 | | Wilmington, North Carolina, Water and Sewer Revenue Bonds, Series 2005, 5.000%, 6/01/25 – AGM Insured | 6/15 at 100.00 | AA+ | | 1,061,206 | |
| | 2,275 | | Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, Series 2007A, 5.000%, 6/01/37 (UB) | 6/17 at 100.00 | AAA | | 2,344,479 | |
| | 16,265 | | Total Water and Sewer | | | | 17,047,486 | |
| $ | 93,075 | | Total Investments (cost $86,347,349) – 161.1% | | | | 87,941,206 | |
| | | | Floating Rate Obligations – (8.8)% | | | | (4,805,000 | ) |
| | | | MuniFund Term Preferred Shares, at Liquidation Value – (54.4)% (5) | | | | (29,700,000 | ) |
| | | | Other Assets Less Liabilities – 2.1% | | | | 1,156,956 | |
| | | | Net Assets Applicable to Common Shares – 100% | | | $ | 54,593,162 | |
| (1) | | All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. |
| (2) | | Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. |
| (3) | | Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (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) | | MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 33.8%. |
| N/R | | Not rated. |
| WI/DD | | Purchased on a when-issued or delayed delivery basis. |
| (IF) | | Inverse floating rate investment. |
| (UB) | | Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Footnote 1 – General Information and Significant Accounting Policies, Inverse Floating Rate Securities for more information. |
See accompanying notes to financial statements.
| | | Nuveen North Carolina Dividend Advantage Municipal Fund 3 |
| NII | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Consumer Staples – 2.9% (1.8% of Total Investments) | | | | | |
| $ | 2,000 | | Puerto Rico, The Children’s Trust Fund, Tobacco Settlement Asset-Backed Refunding Bonds, Series 2002, 5.500%, 5/15/39 | 5/12 at 100.00 | BBB | $ | 1,631,880 | |
| | | | Education and Civic Organizations – 3.3% (2.0% 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+ | | 331,574 | |
| | 95 | | 5.125%, 10/01/41 | 10/11 at 100.00 | AA+ | | 95,054 | |
| | 200 | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Johnson and Wales University, Series 2003A, 5.000%, 4/01/33 – SYNCORA GTY Insured | 4/13 at 100.00 | N/R | | 186,522 | |
| | 705 | | University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.000%, 4/01/27 – AMBAC Insured | 10/12 at 100.00 | A+ | | 710,238 | |
| | 500 | | University of North Carolina Wilmington, Certificates of Participation, Student Housing Project Revenue Bonds, Series 2006, 5.000%, 6/01/21 – FGIC Insured | 6/16 at 100.00 | A– | | 529,515 | |
| | 1,830 | | Total Education and Civic Organizations | | | | 1,852,903 | |
| | | | Energy – 1.8% (1.1% of Total Investments) | | | | | |
| | 1,000 | | Virgin Islands Public Finance Authority, Refinery Facilities Revenue Bonds, Hovensa Coker Project, Senior Lien Series 2002, 6.500%, 7/01/21 (Alternative Minimum Tax) | 1/13 at 100.00 | Baa3 | | 983,210 | |
| | | | Health Care – 24.9% (15.3% of Total Investments) | | | | | |
| | | | Albemarle Hospital Authority, North Carolina, Health Care Facilities Revenue Bonds, Series 2007: | | | | | |
| | 695 | | 5.250%, 10/01/27 | 10/17 at 100.00 | N/R | | 577,065 | |
| | 70 | | 5.250%, 10/01/38 | 10/17 at 100.00 | N/R | | 52,121 | |
| | 1,200 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas HealthCare System Revenue Bonds, Series 2008A, 5.000%, 1/15/47 | 1/18 at 100.00 | AA– | | 1,151,808 | |
| | 500 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Health Care Refunding Revenue Bonds, Carolinas HealthCare System, Series 2009A, 5.250%, 1/15/39 | 1/19 at 100.00 | AA– | | 502,465 | |
| | 1,000 | | Charlotte-Mecklenberg Hospital Authority, North Carolina, Health Care Revenue Bonds, Carolinas HealthCare System, Series 2011A, 5.250%, 1/15/42 | 1/21 at 100.00 | AA– | | 1,002,930 | |
| | 580 | | Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, Carolinas Healthcare System, Series 2001A, 5.000%, 1/15/31 | 1/12 at 100.00 | AA– | | 580,145 | |
| | 520 | | Johnston Memorial Hospital Authority, North Carolina, Mortgage Revenue Bonds, Johnston Memorial Hospital Project, Series 2008, 5.250%, | 4/18 at 100.00 | AA+ | | 526,958 | |
| | | | 10/01/36 – AGM Insured | | | | | |
| | 180 | | New Hanover County, North Carolina, Hospital Revenue Bonds, New Hanover Regional Medical Center, Series 2006B, 5.125%, 10/01/31 – AGM Insured | 10/19 at 100.00 | AA+ | | 183,287 | |
| | | | North Carolina Medical Care Commission Health Care Facilities Revenue Bonds Novant Health Inc., Series 2010A: | | | | | |
| | 2,000 | | 5.250%, 11/01/40 | 11/20 at 100.00 | A+ | | 1,858,800 | |
| | 500 | | 5.000%, 11/01/43 | 11/20 at 100.00 | A+ | | 435,930 | |
| | 1,000 | | North Carolina Medical Care Commission, Health Care Facilities Refunding Revenue Bonds, Blue Ridge HealthCare, Series 2010A, 5.000%, 1/01/36 | 1/20 at 100.00 | A | | 899,460 | |
| | 1,000 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Appalachian Regional HealthCare System, Series 2011A, 6.500%, 7/01/31 | 7/21 at 100.00 | BBB+ | | 1,034,300 | |
| | 1,000 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Cleveland County Healthcare System, Refunding Series 2011A, 5.750%, 1/01/35 | 1/21 at 100.00 | A | | 1,008,000 | |
| | 545 | | North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, WakeMed, Series 2009A, 5.625%, 10/01/38 – AGC Insured | 10/14 at 100.00 | AA+ | | 555,213 | |
| | 2,000 | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Novant Health Obligated Group, Series 2003A, 5.000%, 11/01/18 | 11/13 at 100.00 | A+ | | 2,057,880 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Health Care (continued) | | | | | |
| $ | 1,000 | | North Carolina Medical Care Commission, Hospital Revenue Bonds, Wilson Medical Center, Series 2007, 5.000%, 11/01/27 | 11/17 at 100.00 | A– | $ | 968,400 | |
| | 400 | | North Carolina Medical Care Commission, Revenue Bonds, Blue Ridge Healthcare System, Series 2005, 5.000%, 1/01/33 – FGIC Insured | 1/15 at 100.00 | A | | 366,388 | |
| | 150 | | Northern Hospital District of Surry County, North Carolina, Health Care Facilities Revenue Bonds, Series 2008, 6.250%, 10/01/38 | 4/18 at 100.00 | BBB | | 150,563 | |
| | 14,340 | | Total Health Care | | | | 13,911,713 | |
| | | | Housing/Multifamily – 1.9% (1.1% of Total Investments) | | | | | |
| | 1,000 | | Mecklenburg County, North Carolina, FNMA Multifamily Housing Revenue Bonds, Little Rock Apartments, Series 2003, 5.150%, 1/01/22 (Alternative Minimum Tax) | 7/13 at 105.00 | AAA | | 1,037,480 | |
| | | | Housing/Single Family – 2.6% (1.6% of Total Investments) | | | | | |
| | 550 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement, Series 5A, 5.625%, 7/01/30 (Alternative Minimum Tax) | 7/11 at 100.00 | AA | | 550,105 | |
| | 480 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 2007-29A, 4.800%, 7/01/33 (Alternative Minimum Tax) | 1/17 at 100.00 | AA | | 453,134 | |
| | 495 | | North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 25-A, 4.900%, 7/01/37 (Alternative Minimum Tax) | 7/16 at 100.00 | AA | | 464,508 | |
| | 1,525 | | Total Housing/Single Family | | | | 1,467,747 | |
| | | | Long-Term Care – 1.6% (1.0% of Total Investments) | | | | | |
| | | | North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Presbyterian Homes, Series 2006: | | | | | |
| | 250 | | 5.400%, 10/01/27 | 10/16 at 100.00 | N/R | | 220,260 | |
| | 600 | | 5.500%, 10/01/31 | 10/16 at 100.00 | N/R | | 508,848 | |
| | 190 | | North Carolina Medical Care Commission, Revenue Bonds, Pines at Davidson, Series 2006A, 5.000%, 1/01/36 | 1/16 at 100.00 | N/R | | 168,847 | |
| | 1,040 | | Total Long-Term Care | | | | 897,955 | |
| | | | Materials – 0.3% (0.2% of Total Investments) | | | | | |
| | 200 | | Columbus County Industrial Facilities and Pollution Control Financing Authority, North Carolina, Environmental Improvement Revenue Bonds, International Paper Company Project, Series 2007A, 4.625%, 3/01/27 | 3/17 at 100.00 | BBB | | 178,116 | |
| | | | Tax Obligation/General – 1.6% (1.0% of Total Investments) | | | | | |
| | 300 | | North Carolina, General Obligation Bonds, Series 2004A, 5.000%, 3/01/22 | 3/14 at 100.00 | AAA | | 325,467 | |
| | 550 | | Wake County, North Carolina, Limited Obligation Bonds, Series 2010, 5.000%, 1/01/37 | 1/20 at 100.00 | AA+ | | 566,814 | |
| | 850 | | Total Tax Obligation/General | | | | 892,281 | |
| | | | Tax Obligation/Limited – 34.8% (21.4% of Total Investments) | | | | | |
| | 1,800 | | Catawba County, North Carolina, Certificates of Participation, Series 2004, 5.250%, 6/01/22 – NPFG Insured | 6/14 at 100.00 | Aa2 | | 1,880,514 | |
| | 2,750 | | Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects, Series 2003G, 5.000%, 6/01/33 | 6/13 at 100.00 | AA+ | | 2,784,155 | |
| | 575 | | Charlotte, North Carolina, Certificates of Participation, Transit Projects Phase 2, Series 2008A, 5.000%, 6/01/33 | 6/18 at 100.00 | AA+ | | 581,256 | |
| | 800 | | Craven County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 6/01/27 – NPFG Insured | 6/17 at 100.00 | AA– | | 832,128 | |
| | 3,000 | | Dare County, North Carolina, Certificates of Participation, Series 2002, 5.000%, 6/01/23 – AMBAC Insured | 12/12 at 100.00 | AA– | | 3,111,060 | |
| | 200 | | Harnett County, North Carolina, Certificates of Participation, Series 2009, 5.000%, 6/01/28 – AGC Insured | 6/19 at 100.00 | AA+ | | 206,860 | |
| | | Nuveen North Carolina Dividend Advantage Municipal Fund 3 (continued) |
| NII | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Tax Obligation/Limited (continued) | | | | | |
| $ | 500 | | Lee County, North Carolina, Certificates of Participation, Public Schools and Community College, Series 2004, 5.250%, 4/01/20 – AGM Insured | 4/14 at 100.00 | AA+ | $ | 530,460 | |
| | 200 | | Mecklenburg County, North Carolina, Certificates of Participation, Series 2009A, 5.000%, 2/01/27 | No Opt. Call | AA+ | | 211,122 | |
| | 1,000 | | North Carolina, Certificates of Participation, Repair and Renovation Project, Series 2004B, 5.000%, 6/01/20 | 6/14 at 100.00 | AA+ | | 1,060,720 | |
| | 2,625 | | Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, Series 2010A, 0.000%, 8/01/35 | No Opt. Call | A+ | | 526,470 | |
| | 565 | | Raleigh, North Carolina, Certificates of Participation, Series 2007, 5.000%, 2/01/27 | 2/17 at 100.00 | AA+ | | 592,634 | |
| | 2,000 | | Rutherford County, North Carolina, Certificates of Participation, Series 2002, 5.000%, 9/01/21 – AMBAC Insured | 9/12 at 101.00 | A1 | | 2,065,420 | |
| | 1,000 | | Rutherford County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 12/01/27 – AGM Insured | 12/17 at 100.00 | AA+ | | 1,045,960 | |
| | 1,200 | | Sampson County, North Carolina, Certificates of Participation, Series 2006, 5.000%, 6/01/34 – AGM Insured (UB) | 6/17 at 100.00 | AA+ | | 1,210,212 | |
| | 1,785 | | Union County, North Carolina, Certificates of Participation, Series 2003, 5.000%, 6/01/20 – AMBAC Insured | 6/13 at 101.00 | Aa2 | | 1,912,842 | |
| | 500 | | Wilmington, North Carolina, Certificates of Participation, Series 2008A, 5.000%, 6/01/29 | 6/18 at 100.00 | AA | | 522,655 | |
| | 400 | | Wilson County, North Carolina, Certificates of Participation, School Facilities Project, Series 2007, 5.000%, 4/01/25 – AMBAC Insured | 4/17 at 100.00 | Aa3 | | 413,556 | |
| | 20,900 | | Total Tax Obligation/Limited | | | | 19,488,024 | |
| | | | Transportation – 7.9% (4.8% of Total Investments) | | | | | |
| | 500 | | Charlotte, North Carolina, Airport Revenue Bonds, Charlotte Douglas International Refunding Series 2010A, 5.000%, 7/01/39 | 7/20 at 100.00 | A+ | | 502,335 | |
| | 660 | | North Carolina State Ports Authority, Port Facilities Revenue Bonds, Senior Lien Series 2010A, 5.250%, 2/01/40 | 2/20 at 100.00 | A3 | | 659,366 | |
| | | | North Carolina Turnpike Authority, Triangle Expressway System Revenue Bonds, Series 2009A: | | | | | |
| | 260 | | 5.500%, 1/01/29 – AGC Insured | 1/19 at 100.00 | AA+ | | 275,254 | |
| | 1,155 | | 5.750%, 1/01/39 – AGC Insured | 1/19 at 100.00 | AA+ | | 1,202,043 | |
| | | | North Carolina Turnpike Authority, Triangle Expressway System Senior Lien Revenue Bonds, Series 2009B: | | | | | |
| | 2,295 | | 0.000%, 1/01/35 – AGC Insured | No Opt. Call | AA+ | | 558,901 | |
| | 100 | | 0.000%, 1/01/37 – AGC Insured | No Opt. Call | AA+ | | 21,232 | |
| | 300 | | 0.000%, 1/01/38 – AGC Insured | No Opt. Call | AA+ | | 59,490 | |
| | 1,100 | | Raleigh Durham Airport Authority, North Carolina, Airport Revenue Bonds, Refunding Series 2010A, 5.000%, 5/01/36 | No Opt. Call | Aa3 | | 1,116,962 | |
| | 6,370 | | Total Transportation | | | | 4,395,583 | |
| | | | U.S. Guaranteed – 19.4% (12.0% of Total Investments) (4) | | | | | |
| | 200 | | Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, DBA Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15) | 1/15 at 100.00 | AAA | | 228,864 | |
| | | | 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) | | 1,433,451 | |
| | 770 | | 5.250%, 1/01/19 (Pre-refunded 1/01/13) | 1/13 at 101.00 | AA+ (4) | | 834,541 | |
| | | | Lincoln County, North Carolina, General Obligation Bonds, Series 2002A: | | | | | |
| | 850 | | 5.000%, 6/01/19 (Pre-refunded 6/01/12) – FGIC Insured | 6/12 at 101.00 | AA– (4) | | 898,969 | |
| | 900 | | 5.000%, 6/01/20 (Pre-refunded 6/01/12) – FGIC Insured | 6/12 at 101.00 | AA– (4) | | 951,849 | |
| | 1,050 | | 5.000%, 6/01/21 (Pre-refunded 6/01/12) – FGIC Insured | 6/12 at 101.00 | AA– (4) | | 1,110,491 | |
| | 920 | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2001A, 5.125%, 10/01/26 (Pre-refunded 10/01/11) | 10/11 at 100.00 | AAA | | 935,134 | |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | U.S. Guaranteed (4) (continued) | | | | | |
| $ | 1,600 | | North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2002A, 5.125%, 7/01/42 (Pre-refunded 10/01/12) | 10/12 at 100.00 | AAA | $ | 1,701,872 | |
| | 500 | | North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph’s Health System, Series 2001, 5.250%, 10/01/31 (Pre-refunded 10/01/11) | 10/11 at 101.00 | AA (4) | | 513,465 | |
| | 500 | | North Carolina Medical Care Commission, Revenue Bonds, Northeast Medical Center, Series 2004, 5.000%, 11/01/24 (Pre-refunded 11/01/14) | 11/14 at 100.00 | Aa3 (4) | | 572,475 | |
| | 400 | | Raleigh, North Carolina, General Obligation Bonds, Series 2002, 5.000%, 6/01/21 (Pre-refunded 6/01/12) | 6/12 at 100.00 | AAA | | 419,052 | |
| | | | University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A: | | | | | |
| | 610 | | 5.000%, 4/01/27 (Pre-refunded 10/01/12) – AMBAC Insured | 10/12 at 100.00 | N/R (4) | | 647,991 | |
| | 585 | | 5.000%, 4/01/27 (Pre-refunded 10/01/12) – AMBAC Insured | 10/12 at 100.00 | N/R (4) | | 621,030 | |
| | 10,210 | | Total U.S. Guaranteed | | | | 10,869,184 | |
| | | | Utilities – 14.8% (9.1% of Total Investments) | | | | | |
| | 150 | | North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2003F, 5.500%, 1/01/16 | 1/13 at 100.00 | A– | | 158,067 | |
| | 500 | | North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2005, 5.250%, 1/01/20 – AMBAC Insured | 1/16 at 100.00 | A– | | 550,255 | |
| | 1,400 | | North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2009B, 5.000%, 1/01/26 | 1/19 at 100.00 | A– | | 1,451,786 | |
| | | | North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series 1993B: | | | | | |
| | 1,210 | | 5.500%, 1/01/17 – FGIC Insured | 8/11 at 100.00 | Baa1 | | 1,212,819 | |
| | 25 | | 6.000%, 1/01/22 | No Opt. Call | A– | | 30,070 | |
| | 15 | | 6.000%, 1/01/22 – FGIC Insured | No Opt. Call | Baa1 | | 17,984 | |
| | 275 | | North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Refunding Series 2009A, 5.000%, 1/01/30 | 1/19 at 100.00 | A | | 283,652 | |
| | 2,665 | | North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Series 2003A, 5.250%, 1/01/15 – AMBAC Insured | 1/13 at 100.00 | A | | 2,823,781 | |
| | 250 | | North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Series 2008A, 5.250%, 1/01/20 | 1/18 at 100.00 | A | | 281,700 | |
| | 1,400 | | Wake County Industrial Facilities and Pollution Control Financing Authority, North Carolina, Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17 | 2/12 at 101.00 | A1 | | 1,453,228 | |
| | 7,890 | | Total Utilities | | | | 8,263,342 | |
| | | | Water and Sewer �� 44.9% (27.6% of Total Investments) | | | | | |
| | 2,000 | | Brunswick County, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%, 4/01/31 – AGM Insured | 4/18 at 100.00 | AA+ | | 2,055,180 | |
| | 425 | | Cape Fear Public Utility Authority, North Carolina, Water & Sewer System Revenue Bonds, Series 2008, 5.000%, 8/01/28 | 8/18 at 100.00 | AA | | 452,459 | |
| | | | Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2001: | | | | | |
| | 750 | | 5.125%, 6/01/26 | 12/11 at 101.00 | AAA | | 759,503 | |
| | 1,780 | | 5.125%, 6/01/26 – FGIC Insured | 12/11 at 101.00 | Aaa | | 1,801,627 | |
| | | | Dare County, North Carolina, Utilities System Revenue Bonds, Series 2011: | | | | | |
| | 1,320 | | 5.000%, 2/01/36 | 2/21 at 100.00 | AA | | 1,369,619 | |
| | 500 | | 5.000%, 2/01/41 | 2/21 at 100.00 | AA | | 515,630 | |
| | 300 | | Durham County, North Carolina, Enterprise System Revenue Bonds, Series 2002, 5.000%, 6/01/18 – NPFG Insured | 6/13 at 100.00 | AA | | 318,594 | |
| | 3,050 | | Durham, North Carolina, Utility System Revenue Bonds, Refunding Series 2011, 5.000%, 6/01/41 (WI/DD, Settling 6/01/11) | 6/21 at 100.00 | AAA | | 3,192,984 | |
| | | Nuveen North Carolina Dividend Advantage Municipal Fund 3 (continued) |
| NII | | Portfolio of Investments |
| | | May 31, 2011 |
| | Principal | | | Optional Call | | | | |
| | Amount (000) | | Description (1) | Provisions (2) | Ratings (3) | | Value | |
| | | | Water and Sewer (continued) | | | | | |
| $ | 2,500 | | Kannapolis, North Carolina, Water and Sewerage System Revenue Bonds, Series 2001B, 5.250%, 2/01/26 – AGM Insured (Alternative Minimum Tax) | 2/12 at 101.00 | AA+ | $ | 2,426,425 | |
| | 600 | | Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%, 6/01/23 – NPFG Insured | 6/18 at 100.00 | A2 | | 628,038 | |
| | | | Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2009A: | | | | | |
| | 50 | | 6.000%, 6/01/34 – AGC Insured | 6/19 at 100.00 | AA+ | | 52,608 | |
| | 20 | | 6.000%, 6/01/36 – AGC Insured | 6/19 at 100.00 | AA+ | | 20,897 | |
| | 300 | | Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2011, 5.750%, 6/01/36 – AGC Insured | 6/21 at 100.00 | AA+ | | 309,786 | |
| | 500 | | Onslow County, North Carolina, Combined Enterprise System Revenue Bonds, Series 2004B, 5.000%, 6/01/23 – SYNCORA GTY Insured | 6/14 at 100.00 | A+ | | 528,172 | |
| | | | Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A: | | | | | |
| | 4,950 | | 5.000%, 3/01/31 (UB) | 3/16 at 100.00 | AAA | | 5,178,294 | |
| | 3,000 | | 5.000%, 3/01/36 (UB) | 3/16 at 100.00 | AAA | | 3,088,530 | |
| | 5 | | Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A, Residuals Series 11-R-645-2, 13.766%, 3/01/14 (IF) | No Opt. Call | AAA | | 5,443 | |
| | 2,375 | | Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, Series 2007A, 5.000%, 6/01/37 (UB) | 6/17 at 100.00 | AAA | | 2,447,533 | |
| | 24,425 | | Total Water and Sewer | | | | 25,151,322 | |
| $ | 93,580 | | Total Investments (cost $90,051,814) – 162.7% | | | | 91,020,740 | |
| | | | Floating Rate Obligations – (13.4)% | | | | (7,480,000 | ) |
| | | | MuniFund Term Preferred Shares, at Liquidation Value – (51.3)% (5) | | | | (28,725,000 | ) |
| | | | Other Assets Less Liabilities – 2.0% | | | | 1,143,285 | |
| | | | Net Assets Applicable to Common Shares – 100% | | | $ | 55,959,025 | |
| (1) | | All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. |
| (2) | | Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. |
| (3) | | Ratings (not covered by the report of independent registered public accounting firm): Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (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) | | MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 31.6%. |
| N/R | | Not rated. |
| WI/DD | | Purchased on a when-issued or delayed delivery basis. |
| (IF) | | Inverse floating rate investment. |
| (UB) | | Underlying bond of an inverse floating rate trust reflected as a financing transaction. See Notes to Financial Statements, Footnote 1 – General Information and Significant Accounting Policies, Inverse Floating Rate Securities for more information. |
See accompanying notes to financial statements.
| | | Statement of |
| | | Assets & Liabilities |
May 31, 2011
| | | | Georgia | | | Georgia | | | Georgia | |
| | | | Premium | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | |
| | | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Assets | | | | | | | | | | |
| Investments, at value (cost $77,314,411, $40,715,431 and $93,586,369, respectively) | | $ | 79,086,528 | | $ | 41,288,534 | | $ | 94,819,887 | |
| Cash | | | 1,210,535 | | | 1,311,567 | | | 53,174 | |
| Receivables: | | | | | | | | | | |
| Interest | | | 1,436,942 | | | 716,531 | | | 1,629,285 | |
| Investments sold | | | 1,086,300 | | | — | | | — | |
| Deferred offering costs | | | 489,359 | | | 313,816 | | | 541,916 | |
| Other assets | | | 12,152 | | | 5,127 | | | 13,638 | |
| Total assets | | | 83,321,816 | | | 43,635,575 | | | 97,057,900 | |
| Liabilities | | | | | | | | | | |
| Floating rate obligations | | | 1,190,000 | | | 660,000 | | | 1,395,000 | |
| Payables: | | | | | | | | | | |
| Investments purchased | | | — | | | — | | | — | |
| Common share dividends | | | 208,319 | | | 119,509 | | | 266,511 | |
| Interest | | | 62,596 | | | 31,672 | | | 71,264 | |
| Offering costs | | | 156,267 | | | 149,190 | | | 205,437 | |
| MuniFund Term Preferred (MTP) shares, at liquidation value | | | 28,340,000 | | | 14,340,000 | | | 32,265,000 | |
| Accrued expenses: | | | | | | | | | | |
| Management fees | | | 44,458 | | | 21,400 | | | 51,778 | |
| Other | | | 26,401 | | | 17,695 | | | 26,368 | |
| Total liabilities | | | 30,028,041 | | | 15,339,466 | | | 34,281,358 | |
| Net assets applicable to Common shares | | $ | 53,293,775 | | $ | 28,296,109 | | $ | 62,776,542 | |
| Common shares outstanding | | | 3,806,942 | | | 1,972,481 | | | 4,555,299 | |
| Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) | | $ | 14.00 | | $ | 14.35 | | $ | 13.78 | |
| Net assets applicable to Common shares consist of: | | | | | | | | | | |
| Common shares, $.01 par value per share | | $ | 38,069 | | $ | 19,725 | | $ | 45,553 | |
| Paid-in surplus | | | 52,232,344 | | | 27,842,531 | | | 64,084,498 | |
| Undistributed (Over-distribution of) net investment income | | | 425,925 | | | 163,614 | | | 305,803 | |
| Accumulated net realized gain (loss) | | | (1,174,680 | ) | | (302,864 | ) | | (2,892,830 | ) |
| Net unrealized appreciation (depreciation) | | | 1,772,117 | | | 573,103 | | | 1,233,518 | |
| Net assets applicable to Common shares | | $ | 53,293,775 | | $ | 28,296,109 | | $ | 62,776,542 | |
| Authorized shares: | | | | | | | | | | |
| Common | | | Unlimited | | | Unlimited | | | Unlimited | |
| Auction Rate Preferred Shares (ARPS) | | | Unlimited | | | Unlimited | | | Unlimited | |
| MTP | | | Unlimited | | | Unlimited | | | Unlimited | |
See accompanying notes to financial statements.
| | | Statement of |
| | | Assets & Liabilities (continued) |
| | | | North | | | North | | | North | | | North | |
| | | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Assets | | | | | | | | | | | | | |
| Investments, at value (cost $140,941,081, $54,776,396, $86,347,349 and $90,051,814, respectively) | | $ | 144,214,018 | | $ | 55,869,789 | | $ | 87,941,206 | | $ | 91,020,740 | |
| Cash | | | 251,693 | | | 1,321,535 | | | 2,839,388 | | | 2,933,955 | |
| Receivables: | | | | | | | | | | | | | |
| Interest | | | 2,489,490 | | | 926,321 | | | 1,410,835 | | | 1,425,121 | |
| Investments sold | | | 209,654 | | | 586,778 | | | 122,471 | | | 61,307 | |
| Deferred offering costs | | | 1,127,460 | | | 386,060 | | | 544,239 | | | 519,868 | |
| Other assets | | | 38,172 | | | 5,659 | | | 9,298 | | | 9,581 | |
| Total assets | | | 148,330,487 | | | 59,096,142 | | | 92,867,437 | | | 95,970,572 | |
| Liabilities | | | | | | | | | | | | | |
| Floating rate obligations | | | 5,195,000 | | | 7,160,000 | | | 4,805,000 | | | 7,480,000 | |
| Payables: | | | | | | | | | | | | | |
| Investments purchased | | | 1,045,640 | | | 1,568,460 | | | 3,189,202 | | | 3,189,202 | |
| Common share dividends | | | 365,171 | | | 153,588 | | | 250,453 | | | 256,352 | |
| Interest | | | 108,996 | | | 35,960 | | | 64,338 | | | 63,446 | |
| Offering costs | | | 411,546 | | | 189,126 | | | 193,219 | | | 226,618 | |
| MuniFund Term Preferred (MTP) shares, at liquidation value | | | 49,835,000 | | | 16,600,000 | | | 29,700,000 | | | 28,725,000 | |
| Accrued expenses: | | | | | | | | | | | | | |
| Management fees | | | 75,677 | | | 27,035 | | | 41,232 | | | 45,004 | |
| Other | | | 37,329 | | | 25,400 | | | 30,831 | | | 25,925 | |
| Total liabilities | | | 57,074,359 | | | 25,759,569 | | | 38,274,275 | | | 40,011,547 | |
| Net assets applicable to Common shares | | $ | 91,256,128 | | $ | 33,336,573 | | $ | 54,593,162 | | $ | 55,959,025 | |
| Common shares outstanding | | | 6,364,792 | | | 2,272,296 | | | 3,752,970 | | | 3,937,358 | |
| Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) | | $ | 14.34 | | $ | 14.67 | | $ | 14.55 | | $ | 14.21 | |
| Net assets applicable to Common shares consist of: | | | | | | | | | | | | | |
| Common shares, $.01 par value per share | | $ | 63,648 | | $ | 22,723 | | $ | 37,530 | | $ | 39,374 | |
| Paid-in surplus | | | 87,779,645 | | | 32,111,995 | | | 53,078,609 | | | 55,381,330 | |
| Undistributed (Over-distribution of) net investment income | | | 682,618 | | | 228,092 | | | 270,752 | | | 201,994 | |
| Accumulated net realized gain (loss) | | | (542,720 | ) | | (119,630 | ) | | (387,586 | ) | | (632,599 | ) |
| Net unrealized appreciation (depreciation) | | | 3,272,937 | | | 1,093,393 | | | 1,593,857 | | | 968,926 | |
| Net assets applicable to Common shares | | $ | 91,256,128 | | $ | 33,336,573 | | $ | 54,593,162 | | $ | 55,959,025 | |
| Authorized shares: | | | | | | | | | | | | | |
| Common | | | Unlimited | | | Unlimited | | | Unlimited | | | Unlimited | |
| Auction Rate Preferred Shares (ARPS) | | | Unlimited | | | Unlimited | | | Unlimited | | | Unlimited | |
| MTP | | | Unlimited | | | Unlimited | | | Unlimited | | | Unlimited | |
See accompanying notes to financial statements.
Year Ended May 31, 2011
| | | | Georgia | | | Georgia | | | Georgia | |
| | | | Premium | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | |
| | | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Investment Income | | $ | 4,010,296 | | $ | 2,134,852 | | $ | 4,693,755 | |
| Expenses | | | | | | | | | | |
| Management fees | | | 521,575 | | | 272,946 | | | 616,295 | |
| Auction fees | | | — | | | — | | | — | |
| Dividend disbursing agent fees | | | — | | | — | | | — | |
| Shareholders’ servicing agent fees and expenses | | | 27,184 | | | 23,603 | | | 23,655 | |
| Interest expense and amortization of offering costs | | | 888,910 | | | 467,788 | | | 1,011,229 | |
| Custodian’s fees and expenses | | | 20,184 | | | 13,643 | | | 23,182 | |
| Trustees’ fees and expenses | | | 2,191 | | | 1,146 | | | 2,552 | |
| Professional fees | | | 20,247 | | | 19,273 | | | 20,594 | |
| Shareholders’ reports – printing and mailing expenses | | | 25,493 | | | 14,575 | | | 25,112 | |
| Stock exchange listing fees | | | 25,398 | | | 274 | | | 25,984 | |
| Other expenses | | | 23,670 | | | 23,208 | | | 15,573 | |
| Total expenses before custodian fee credit and expense reimbursement | | | 1,554,852 | | | 836,456 | | | 1,764,176 | |
| Custodian fee credit | | | (482 | ) | | (305 | ) | | (475 | ) |
| Expense reimbursement | | | — | | | (28,708 | ) | | (26,461 | ) |
| Net expenses | | | 1,554,370 | | | 807,443 | | | 1,737,240 | |
| Net investment income (loss) | | | 2,455,926 | | | 1,327,409 | | | 2,956,515 | |
| Realized and Unrealized Gain (Loss) | | | | | | | | | | |
| Net realized gain (loss) from investments | | | 144,637 | | | 119,104 | | | (37,160 | ) |
| Change in net unrealized appreciation (depreciation) of investments | | | (1,648,415 | ) | | (851,317 | ) | | (1,588,354 | ) |
| Net realized and unrealized gain (loss) | | | (1,503,778 | ) | | (732,213 | ) | | (1,625,514 | ) |
| Distributions to Auction Rate Preferred Shareholders | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | |
| Decrease in net assets applicable to Common shares from distributions to Auction Rate Preferred shareholders | | | — | | | — | | | — | |
| Net increase (decrease) in net assets applicable to Common shares from operations | | $ | 952,148 | | $ | 595,196 | | $ | 1,331,001 | |
See accompanying notes to financial statements.
| | | Statement of |
| | | Operations (continued) |
| | | | North | | | North | | | North | | | North | |
| | | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Investment Income | | $ | 6,649,402 | | $ | 2,632,434 | | $ | 4,121,670 | | $ | 4,256,466 | |
| Expenses | | | | | | | | | | | | | |
| Management fees | | | 888,114 | | | 323,865 | | | 535,931 | | | 534,501 | |
| Auction fees | | | 18,800 | | | — | | | — | | | — | |
| Dividend disbursing agent fees | | | 12,521 | | | 10,000 | | | — | | | — | |
| Shareholders’ servicing agent fees and expenses | | | 33,684 | | | 20,737 | | | 20,952 | | | 23,795 | |
| Interest expense and amortization of offering costs | | | 1,178,625 | | | 567,472 | | | 936,151 | | | 934,726 | |
| Custodian’s fees and expenses | | | 31,384 | | | 15,831 | | | 22,827 | | | 22,276 | |
| Trustees’ fees and expenses | | | 3,928 | | | 1,448 | | | 2,375 | | | 2,281 | |
| Professional fees | | | 21,988 | | | 19,446 | | | 20,300 | | | 20,323 | |
| Shareholders’ reports – printing and mailing expenses | | | 36,397 | | | 21,723 | | | 31,037 | | | 24,304 | |
| Stock exchange listing fees | | | 34,718 | | | 17,262 | | | 17,468 | | | 547 | |
| Other expenses | | | 18,994 | | | 15,847 | | | 15,932 | | | 15,825 | |
| Total expenses before custodian fee credit and expense reimbursement | | | 2,279,153 | | | 1,013,631 | | | 1,602,973 | | | 1,578,578 | |
| Custodian fee credit | | | (1,484 | ) | | (766 | ) | | (1,035 | ) | | (1,041 | ) |
| Expense reimbursement | | | — | | | (17,378 | ) | | (64,102 | ) | | (22,747 | ) |
| Net expenses | | | 2,277,669 | | | 995,487 | | | 1,537,836 | | | 1,554,790 | |
| Net investment income (loss) | | | 4,371,733 | | | 1,636,947 | | | 2,583,834 | | | 2,701,676 | |
| Realized and Unrealized Gain (Loss) | | | | | | | | | | | | | |
| Net realized gain (loss) from investments | | | 182,780 | | | 84,515 | | | 199,622 | | | 210,747 | |
| Change in net unrealized appreciation (depreciation) of investments | | | (2,183,452 | ) | | (1,143,283 | ) | | (1,744,087 | ) | | (1,916,912 | ) |
| Net realized and unrealized gain (loss) | | | (2,000,672 | ) | | (1,058,768 | ) | | (1,544,465 | ) | | (1,706,165 | ) |
| Distributions to Auction Rate Preferred Shareholders | | | | | | | | | | | | | |
| From net investment income | | | (56,262 | ) | | — | | | — | | | — | |
| Decrease in net assets applicable to Common shares from distributions to Auction Rate Preferred shareholders | | | (56,262 | ) | | — | | | — | | | — | |
| Net increase (decrease) in net assets applicable to Common shares from operations | | $ | 2,314,799 | | $ | 578,179 | | $ | 1,039,369 | | $ | 995,511 | |
See accompanying notes to financial statements.
| | | Statement of |
| | | Changes in Net Assets |
| | | Georgia Premium Income (NPG) | | Georgia Dividend Advantage (NZX) | | Georgia Dividend Advantage 2 (NKG) | |
| | | | Year | | | Year | | | Year | | | Year | | | Year | | | Year | |
| | | | Ended | | | Ended | | | Ended | | | Ended | | | Ended | | | Ended | |
| | | | 5/31/11 | | | 5/31/10 | | | 5/31/11 | | | 5/31/10 | | | 5/31/11 | | | 5/31/10 | |
| Operations | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 2,455,926 | | $ | 2,971,871 | | $ | 1,327,409 | | $ | 1,657,597 | | $ | 2,956,515 | | $ | 3,530,852 | |
| Net realized gain (loss) from investments | | | 144,637 | | | (80,448 | ) | | 119,104 | | | (247,298 | ) | | (37,160 | ) | | (701,883 | ) |
| Change in net unrealized appreciation (depreciation) of investments | | | (1,648,415 | ) | | 2,560,292 | | | (851,317 | ) | | 1,731,310 | | | (1,588,354 | ) | | 4,718,199 | |
| Distributions to Auction Rate | | | | | | | | | | | | | | | | | | | |
| Preferred Shareholders: | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | (86,098 | ) | | — | | | (47,292 | ) | | — | | | (93,719 | ) |
| From accumulated net realized gains | | | — | | | — | | | — | | | — | | | — | | | — | |
| Net increase (decrease) in net assets applicable to Common shares from operations | | | 952,148 | | | 5,365,617 | | | 595,196 | | | 3,094,317 | | | 1,331,001 | | | 7,453,449 | |
| Distributions to Common Shareholders | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (2,694,971 | ) | | (2,574,524 | ) | | (1,514,237 | ) | | (1,447,538 | ) | | (3,279,797 | ) | | (3,156,398 | ) |
| From accumulated net realized gains | | | — | | | — | | | — | | | — | | | — | | | — | |
| Decrease in net assets applicable to Common shares from distributions to Common shareholders | | | (2,694,971 | ) | | (2,574,524 | ) | | (1,514,237 | ) | | (1,447,538 | ) | | (3,279,797 | ) | | (3,156,398 | ) |
| Capital Share Transactions | | | | | | | | | | | | | | | | | | | |
| Net proceeds from Common shares issued to shareholders due to reinvestment of distributions | | | 18,644 | | | — | | | 35,966 | | | 10,096 | | | 4,430 | | | 4,625 | |
| Net increase (decrease) in net assets applicable to Common shares from capital share transactions | | | 18,644 | | | — | | | 35,966 | | | 10,096 | | | 4,430 | | | 4,625 | |
| Net increase (decrease) in net assets applicable to Common shares | | | (1,724,179 | ) | | 2,791,093 | | | (883,075 | ) | | 1,656,875 | | | (1,944,366 | ) | | 4,301,676 | |
| Net assets applicable to Common shares at the beginning of year | | | 55,017,954 | | | 52,226,861 | | | 29,179,184 | | | 27,522,309 | | | 64,720,908 | | | 60,419,232 | |
| Net assets applicable to Common shares at the end of year | | $ | 53,293,775 | | $ | 55,017,954 | | $ | 28,296,109 | | $ | 29,179,184 | | $ | 62,776,542 | | $ | 64,720,908 | |
| Undistributed (Over-distribution of) net investment income at the end of year | | $ | 425,925 | | $ | 536,108 | | $ | 163,614 | | $ | 267,475 | | $ | 305,803 | | $ | 484,394 | |
See accompanying notes to financial statements.
| | | Statement of |
| | | Changes in Net Assets (continued) |
| | | North Carolina Premium Income (NNC) | | North Carolina Dividend Advantage (NRB) | |
| | | | Year | | | Year | | | Year | | | Year | |
| | | | Ended | | | Ended | | | Ended | | | Ended | |
| | | | 5/31/11 | | | 5/31/10 | | | 5/31/11 | | | 5/31/10 | |
| Operations | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 4,371,733 | | $ | 5,173,597 | | $ | 1,636,947 | | $ | 2,123,558 | |
| Net realized gain (loss) from investments | | | 182,780 | | | 423,483 | | | 84,515 | | | 28,829 | |
| Change in net unrealized appreciation (depreciation) of investments | | | (2,183,452 | ) | | 5,030,176 | | | (1,143,283 | ) | | 1,416,200 | |
| Distributions to Auction Rate | | | | | | | | | | | | | |
| Preferred Shareholders: | | | | | | | | | | | | | |
| From net investment income | | | (56,262 | ) | | (162,889 | ) | | — | | | (62,338 | ) |
| From accumulated net realized gains | | | — | | | — | | | — | | | — | |
| Net increase (decrease) in net assets applicable to Common shares from operations | | | 2,314,799 | | | 10,464,367 | | | 578,179 | | | 3,506,249 | |
| Distributions to Common Shareholders | | | | | | | | | | | | | |
| From net investment income | | | (4,733,444 | ) | | (4,536,632 | ) | | (1,907,610 | ) | | (1,829,817 | ) |
| From accumulated net realized gains | | | — | | | — | | | — | | | — | |
| Decrease in net assets applicable to Common shares from distributions to Common shareholders | | | (4,733,444 | ) | | (4,536,632 | ) | | (1,907,610 | ) | | (1,829,817 | ) |
| Capital Share Transactions | | | | | | | | | | | | | |
| Net proceeds from Common shares issued to shareholders due to reinvestment of distributions | | | 104,888 | | | 84,012 | | | 49,047 | | | 47,006 | |
| Net increase (decrease) in net assets applicable to Common shares from capital share transactions | | | 104,888 | | | 84,012 | | | 49,047 | | | 47,006 | |
| Net increase (decrease) in net assets applicable to Common shares | | | (2,313,757 | ) | | 6,011,747 | | | (1,280,384 | ) | | 1,723,438 | |
| Net assets applicable to Common shares at the beginning of year | | | 93,569,885 | | | 87,558,138 | | | 34,616,957 | | | 32,893,519 | |
| Net assets applicable to Common shares at the end of year | | $ | 91,256,128 | | $ | 93,569,885 | | $ | 33,336,573 | | $ | 34,616,957 | |
| Undistributed (Over-distribution of) net investment income at the end of year | | $ | 682,618 | | $ | 910,543 | | $ | 228,092 | | $ | 398,182 | |
See accompanying notes to financial statements.
| | | North Carolina Dividend Advantage 2 (NNO) | | North Carolina Dividend Advantage 3 (NII) | |
| | | | Year | | | Year | | | Year | | | Year | |
| | | | Ended | | | Ended | | | Ended | | | Ended | |
| | | | 5/31/11 | | | 5/31/10 | | | 5/31/11 | | | 5/31/10 | |
| Operations | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 2,583,834 | | $ | 3,324,701 | | $ | 2,701,676 | | $ | 3,337,128 | |
| Net realized gain (loss) from investments | | | 199,622 | | | 59,796 | | | 210,747 | | | 112,606 | |
| Change in net unrealized appreciation (depreciation) of investments | | | (1,744,087 | ) | | 2,550,370 | | | (1,916,912 | ) | | 2,553,468 | |
| Distributions to Auction Rate | | | | | | | | | | | | | |
| Preferred Shareholders: | | | | | | | | | | | | | |
| From net investment income | | | — | | | (104,048 | ) | | — | | | (91,210 | ) |
| From accumulated net realized gains | | | — | | | (2,285 | ) | | — | | | — | |
| Net increase (decrease) in net assets applicable to Common shares from operations | | | 1,039,369 | | | 5,828,534 | | | 995,511 | | | 5,911,992 | |
| Distributions to Common Shareholders | | | | | | | | | | | | | |
| From net investment income | | | (3,061,963 | ) | | (2,908,243 | ) | | (3,117,824 | ) | | (2,956,668 | ) |
| From accumulated net realized gains | | | — | | | (8,625 | ) | | — | | | — | |
| Decrease in net assets applicable to Common shares from distributions to Common shareholders | | | (3,061,963 | ) | | (2,916,868 | ) | | (3,117,824 | ) | | (2,956,668 | ) |
| Capital Share Transactions | | | | | | | | | | | | | |
| Net proceeds from Common shares issued to shareholders due to reinvestment of distributions | | | 26,093 | | | 24,591 | | | 26,901 | | | 34,165 | |
| Net increase (decrease) in net assets applicable to Common shares from capital share transactions | | | 26,093 | | | 24,591 | | | 26,901 | | | 34,165 | |
| Net increase (decrease) in net assets applicable to Common shares | | | (1,996,501 | ) | | 2,936,257 | | | (2,095,412 | ) | | 2,989,489 | |
| Net assets applicable to Common shares at the beginning of year | | | 56,589,663 | | | 53,653,406 | | | 58,054,437 | | | 55,064,948 | |
| Net assets applicable to Common shares at the end of year | | $ | 54,593,162 | | $ | 56,589,663 | | $ | 55,959,025 | | $ | 58,054,437 | |
| Undistributed (Over-distribution of) net investment income at the end of year | | $ | 270,752 | | $ | 607,929 | | $ | 201,994 | | $ | 481,174 | |
See accompanying notes to financial statements.
Year Ended May 31, 2011
| | | | Georgia | | | Georgia | | | Georgia | |
| | | | Premium | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | |
| | | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Cash Flows from Operating Activities: | | | | | | | | | | |
| Net Increase (Decrease) in Net Assets Applicable to Common Shares from Operations | | $ | 952,148 | | $ | 595,196 | | $ | 1,331,001 | |
| 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 | | | (4,163,543 | ) | | (4,025,564 | ) | | (4,190,213 | ) |
| Proceeds from sales and maturities of investments | | | 6,411,682 | | | 5,381,402 | | | 4,215,691 | |
| Amortization (Accretion) of premiums and discounts, net | | | 197,681 | | | 89,027 | | | 285,056 | |
| (Increase) Decrease in: | | | | | | | | | | |
| Receivable for interest | | | (2,250 | ) | | 18,196 | | | (39,465 | ) |
| Receivable for investments sold | | | (1,086,300 | ) | | — | | | — | |
| Other assets | | | (2,914 | ) | | (121 | ) | | (2,736 | ) |
| Increase (Decrease) in: | | | | | | | | | | |
| Payable for interest | | | 12 | | | 5 | | | 12 | |
| Payable for investments purchased | | | — | | | — | | | — | |
| Accrued management fees | | | (1,601 | ) | | 1,141 | | | 4,962 | |
| Accrued other expenses | | | (12,090 | ) | | (6,952 | ) | | (14,014 | ) |
| Net realized (gain) loss from investments | | | (144,637 | ) | | (119,104 | ) | | 37,160 | |
| Change in net unrealized (appreciation) depreciation of investments | | | 1,648,415 | | | 851,317 | | | 1,588,354 | |
| Taxes paid on undistributed capital gains | | | (262 | ) | | (108 | ) | | (260 | ) |
| Net cash provided by (used in) operating activities | | | 3,796,341 | | | 2,784,435 | | | 3,215,548 | |
| Cash Flows from Financing Activities: | | | | | | | | | | |
| (Increase) Decrease in deferred offering costs | | | 130,378 | | | 83,607 | | | 147,390 | |
| Increase (Decrease) in: | | | | | | | | | | |
| Cash overdraft balance | | | — | | | (50,277 | ) | | (2,223 | ) |
| Payable for offering costs | | | (45,386 | ) | | (27,549 | ) | | (34,338 | ) |
| ARPS, at liquidation value | | | — | | | — | | | — | |
| MTP shares, at liquidation value | | | — | | | — | | | — | |
| Cash distributions paid to Common shareholders | | | (2,675,197 | ) | | (1,478,649 | ) | | (3,273,203 | ) |
| Net cash provided by (used in) financing activities | | | (2,590,205 | ) | | (1,472,868 | ) | | (3,162,374 | ) |
| Net Increase (Decrease) in Cash | | | 1,206,136 | | | 1,311,567 | | | 53,174 | |
| Cash at the beginning of year | | | 4,399 | | | — | | | — | |
| Cash at the End of Year | | $ | 1,210,535 | | $ | 1,311,567 | | $ | 53,174 | |
Supplemental Disclosure of Cash Flow Information
Non-cash financing activities not included herein consist of reinvestments of Common share distributions as follows:
| | | | | | | | | | | |
| | | | Georgia | | | Georgia | | | Georgia | |
| | | | Premium | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | |
| | | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| | | $ | 18,644 | | $ | 35,966 | | $ | 4,430 | |
Cash paid for interest (excluding amortization of offering costs) was as follows:
| | | | | | | | | | | |
| | | | Georgia | | | Georgia | | | Georgia | |
| | | | Premium | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | |
| | | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| | | $ | 758,520 | | $ | 384,176 | | $ | 863,827 | |
See accompanying notes to financial statements.
| | | | North | | | North | | | North | | | North | |
| | | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Cash Flows from Operating Activities: | | | | | | | | | | | | | |
| Net Increase (Decrease) in Net Assets Applicable to Common Shares from Operations | | $ | 2,314,799 | | $ | 578,179 | | $ | 1,039,369 | | $ | 995,511 | |
| 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 | | | (13,191,052 | ) | | (6,540,031 | ) | | (13,293,649 | ) | | (16,308,634 | ) |
| Proceeds from sales and maturities of investments | | | 8,821,327 | | | 5,770,160 | | | 12,407,794 | | | 15,663,239 | |
| Amortization (Accretion) of premiums and discounts, net | | | 334,925 | | | 122,694 | | | 138,069 | | | 178,480 | |
| (Increase) Decrease in: | | | | | | | | | | | | | |
| Receivable for interest | | | (41,118 | ) | | 31,635 | | | 44,441 | | | 51,665 | |
| Receivable for investments sold | | | (30,469 | ) | | 459,033 | | | 86,621 | | | 469,279 | |
| Other assets | | | (14,797 | ) | | 13 | | | 35 | | | (245 | ) |
| Increase (Decrease) in: | | | | | | | | | | | | | |
| Payable for interest | | | 55,333 | | | (7 | ) | | (12 | ) | | 12 | |
| Payable for investments purchased | | | 1,045,640 | | | 1,568,460 | | | 3,140,839 | | | 3,189,202 | |
| Accrued management fees | | | (138 | ) | | 1,134 | | | 2,033 | | | 4,117 | |
| Accrued other expenses | | | (16,037 | ) | | (2,518 | ) | | (7,313 | ) | | (12,705 | ) |
| Net realized (gain) loss from investments | | | (182,780 | ) | | (84,515 | ) | | (199,622 | ) | | (210,747 | ) |
| Change in net unrealized (appreciation) depreciation of investments | | | 2,183,452 | | | 1,143,283 | | | 1,744,087 | | | 1,916,912 | |
| Taxes paid on undistributed capital gains | | | (813 | ) | | — | | | (51 | ) | | (229 | ) |
| Net cash provided by (used in) operating activities | | | 1,278,272 | | | 3,047,520 | | | 5,102,641 | | | 5,935,857 | |
| Cash Flows from Financing Activities: | | | | | | | | | | | | | |
| (Increase) Decrease in deferred offering costs | | | (505,677 | ) | | 100,580 | | | 141,788 | | | 138,506 | |
| Increase (Decrease) in: | | | | | | | | | | | | | |
| Cash overdraft balance | | | (1,525 | ) | | — | | | — | | | (22,631 | ) |
| Payable for offering costs | | | 122,274 | | | (40,274 | ) | | (46,181 | ) | | (28,150 | ) |
| ARPS, at liquidation value | | | (21,550,000 | ) | | — | | | — | | | — | |
| MTP shares, at liquidation value | | | 25,535,000 | | | — | | | — | | | — | |
| Cash distributions paid to Common shareholders | | | (4,626,651 | ) | | (1,858,247 | ) | | (3,035,270 | ) | | (3,089,627 | ) |
| Net cash provided by (used in) financing activities | | | (1,026,579 | ) | | (1,797,941 | ) | | (2,939,663 | ) | | (3,001,902 | ) |
| Net Increase (Decrease) in Cash | | | 251,693 | | | 1,249,579 | | | 2,162,978 | | | 2,933,955 | |
| Cash at the beginning of year | | | — | | | 71,956 | | | 676,410 | | | — | |
| Cash at the End of Year | | $ | 251,693 | | $ | 1,321,535 | | $ | 2,839,388 | | $ | 2,933,955 | |
Supplemental Disclosure of Cash Flow Information
Non-cash financing activities not included herein consist of reinvestments of Common share distributions as follows:
| | | | | | | | | | | | | | |
| | | | North | | | North | | | North | | | North | |
| | | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| | | $ | 104,888 | | $ | 49,047 | | $ | 26,093 | | $ | 26,901 | |
Cash paid for interest (excluding amortization of offering costs) was as follows:
| | | | | | | | | | | | | | |
| | | | North | | | North | | | North | | | North | |
| | | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| | | $ | 927,801 | | $ | 466,899 | | $ | 794,375 | | $ | 796,208 | |
See accompanying notes to financial statements.
| | | Financial |
| | | Highlights |
| | | |
| | Selected data for a Common share outstanding throughout each period: |
| | | | | Investment Operations | | Less Distributions | | | | | |
| | | Beginning Common Share Net Asset Value | | Net Investment Income | | Net Realized/ Unrealized Gain (Loss) | | Distributions from Net Investment Income to Auction Rate Preferred Share- holders | (a) | Distributions from Capital Gains to Auction Rate Preferred Share- holders | (a) | Total | | Net Investment Income to Common Share- holders | | Capital Gains to Common Share- holders | | Total | | Ending Common Share Net Asset Value | | Ending Market Value | |
| Georgia Premium Income (NPG) | | | | | | | | | | | | | | | | | | | | | | �� | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | $ | 14.46 | | $ | .65 | | $ | (.40 | ) | $ | — | | $ | — | | $ | .25 | | $ | (.71 | ) | $ | — | | $ | (.71 | ) | $ | 14.00 | | $ | 13.27 | |
| 2010 | | | 13.72 | | | .78 | | | .66 | | | (.02 | ) | | — | | | 1.42 | | | (.68 | ) | | — | | | (.68 | ) | | 14.46 | | | 13.95 | |
| 2009 | | | 14.19 | | | .85 | | | (.55 | ) | | (.16 | ) | | — | | | .14 | | | (.61 | ) | | — | | | (.61 | ) | | 13.72 | | | 12.10 | |
| 2008 | | | 14.55 | | | .84 | | | (.30 | ) | | (.24 | ) | | (.01 | ) | | .29 | | | (.61 | ) | | (.04 | ) | | (.65 | ) | | 14.19 | | | 13.15 | |
| 2007 | | | 14.55 | | | .86 | | | .04 | | | (.23 | ) | | — | | | .67 | | | (.67 | ) | | — | | | (.67 | ) | | 14.55 | | | 14.12 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Georgia Dividend Advantage (NZX) | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | 14.81 | | | .67 | | | (.36 | ) | | — | | | — | | | .31 | | | (.77 | ) | | — | | | (.77 | ) | | 14.35 | | | 13.84 | |
| 2010 | | | 13.98 | | | .84 | | | .75 | | | (.02 | ) | | — | | | 1.57 | | | (.74 | ) | | — | | | (.74 | ) | | 14.81 | | | 15.18 | |
| 2009 | | | 14.47 | | | .91 | | | (.57 | ) | | (.17 | ) | | — | | | .17 | | | (.66 | ) | | — | | | (.66 | ) | | 13.98 | | | 13.46 | |
| 2008 | | | 14.65 | | | .90 | | | (.16 | ) | | (.26 | ) | | — | | | .48 | | | (.66 | ) | | — | | | (.66 | ) | | 14.47 | | | 13.47 | |
| 2007 | | | 14.71 | | | .92 | | | .02 | | | (.25 | ) | | — | | | .69 | | | (.75 | ) | | — | | | (.75 | ) | | 14.65 | | | 16.00 | |
| (a) | The amounts shown are based on Common share equivalents. |
| (b) | 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. |
| | | | Ratios/Supplemental Data | |
| | Total Returns | | | | Ratios to Average Net Assets Applicable to Common Shares Before Reimbursement(c) | | Ratios to Average Net Assets Applicable to Common Shares After Reimbursement(c)(d) | | | |
| | Based on Market Value | (b) | Based on Common Share Net Asset Value | (b) | Ending Net Assets Applicable to Common Shares (000) | | Expenses | (e) | Net Investment Income (Loss) | | Expenses | (e) | Net Investment Income (Loss) | | Portfolio Turnover Rate | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | .18 | % | | 1.81 | % | $ | 53,294 | | | 2.91 | % | | 4.59 | % | | N/A | | | N/A | | | 5 | % |
| | | 21.21 | | | 10.52 | | | 55,018 | | | 1.69 | | | 5.51 | | | N/A | | | N/A | | | 2 | |
| | | (2.86 | ) | | 1.33 | | | 52,227 | | | 1.44 | | | 6.44 | | | N/A | | | N/A | | | 12 | |
| | | (2.17 | ) | | 2.06 | | | 54,011 | | | 1.25 | | | 5.86 | | | N/A | | | N/A | | | 31 | |
| | | (2.55 | ) | | 4.62 | | | 55,359 | | | 1.25 | | | 5.84 | | | N/A | | | N/A | | | 4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (3.77 | ) | | 2.17 | | | 28,296 | | | 2.93 | | | 4.55 | | | 2.83 | % | | 4.65 | % | | 9 | |
| | | 18.75 | | | 11.41 | | | 29,179 | | | 1.76 | | | 5.62 | | | 1.58 | | | 5.81 | | | 4 | |
| | | 5.67 | | | 1.46 | | | 27,522 | | | 1.53 | | | 6.50 | | | 1.27 | | | 6.76 | | | 8 | |
| | | (11.73 | ) | | 3.33 | | | 28,498 | | | 1.32 | | | 5.86 | | | .99 | | | 6.19 | | | 22 | |
| | | 8.10 | | | 4.75 | | | 28,831 | | | 1.35 | | | 5.74 | | | .94 | | | 6.14 | | | 11 | |
| (c) | Ratios do not reflect the effect of dividend payments to Auction Rate Preferred shareholders, where applicable; Net Investment Income ratios reflect income earned and expenses incurred on assets attributable to ARPS and/or MTP shares, where applicable. |
| (d) | After expense reimbursement from the Adviser, where applicable. Ratios do not reflect the effect of custodian fee credits earned on the Fund’s net cash on deposit with the custodian bank, where applicable. |
| (e) | The expense ratios reflect, among other things, all interest expense and other costs related to MTP shares and/or the interest expense deemed to have been paid by the Fund on the floating rate certificates issued by the special purpose trusts for the self-deposited inverse floaters held by the Fund, where applicable, both as described in Footnote 1 – General Information and Significant Accounting Policies, MuniFund Term Preferred Shares and Inverse Floating Rate Securities, respectively, as follows: |
| | Georgia Premium Income (NPG) | | | | |
| | Year Ended 5/31: | | | | |
| | 2011 | | | 1.66 | % |
| | 2010 | | | .46 | |
| | 2009 | | | .11 | |
| | 2008 | | | — | |
| | 2007 | | | — | |
| | | | | | |
| | Georgia Dividend Advantage (NZX) | | | | |
| | Year Ended 5/31: | | | | |
| | 2011 | | | 1.64 | |
| | 2010 | | | .46 | |
| | 2009 | | | .11 | |
| | 2008 | | | — | |
| | 2007 | | | — | |
| N/A | Fund does not have a contractual reimbursement with the Adviser. |
See accompanying notes to financial statements.
| | | Financial |
| | | Highlights (continued) |
| | | |
| | Selected data for a Common share outstanding throughout each period: |
| | | | | Investment Operations | | Less Distributions | | | | | |
| | | Beginning Common Share Net Asset Value | | Net Investment Income | | Net Realized/ Unrealized Gain (Loss) | | Distributions from Net Investment Income to Auction Rate Preferred Share- holders | (a) | Distributions from Capital Gains to Auction Rate Preferred Share- holders | (a) | Total | | Net Investment Income to Common Share- holders | | Capital Gains to Common Share- holders | | Total | | Ending Common Share Net Asset Value | | Ending Market Value | |
| Georgia Dividend Advantage 2 (NKG) | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | $ | 14.21 | | $ | .65 | | $ | (.36 | ) | $ | — | | $ | — | | $ | .29 | | $ | (.72 | ) | $ | — | | $ | (.72 | ) | $ | 13.78 | | $ | 13.92 | |
| 2010 | | | 13.27 | | | .78 | | | .87 | | | (.02 | ) | | — | | | 1.63 | | | (.69 | ) | | — | | | (.69 | ) | | 14.21 | | | 14.00 | |
| 2009 | | | 13.92 | | | .87 | | | (.73 | ) | | (.16 | ) | | — | | | (.02 | ) | | (.63 | ) | | — | | | (.63 | ) | | 13.27 | | | 11.88 | |
| 2008 | | | 14.44 | | | .88 | | | (.50 | ) | | (.26 | ) | | — | | | .12 | | | (.64 | ) | | — | | | (.64 | ) | | 13.92 | | | 13.18 | |
| 2007 | | | 14.25 | | | .89 | | | .17 | | | (.24 | ) | | — | | | .82 | | | (.63 | ) | | — | | | (.63 | ) | | 14.44 | | | 14.50 | |
| (a) | The amounts shown are based on Common share equivalents. |
| (b) | 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. |
| | | | Ratios/Supplemental Data | |
| | Total Returns | | | | Ratios to Average Net Assets Applicable to Common Shares Before Reimbursement(c) | | Ratios to Average Net Assets Applicable to Common Shares After Reimbursement(c)(d) | | | |
| | Based on Market Value | (b) | Based on Common Share Net Asset Value | (b) | Ending Net Assets Applicable to Common Shares (000) | | Expenses | (e) | Net Investment Income (Loss) | | Expenses | (e) | Net Investment Income (Loss) | | Portfolio Turnover Rate | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 4.84 | % | | 2.13 | % | $ | 62,777 | | | 2.79 | % | | 4.64 | % | | 2.75 | % | | 4.68 | % | | 4 | % |
| | | 24.23 | | | 12.54 | | | 64,721 | | | 1.75 | | | 5.43 | | | 1.59 | | | 5.59 | | | 3 | |
| | | (4.77 | ) | | .20 | | | 60,419 | | | 1.42 | | | 6.54 | | | 1.13 | | | 6.84 | | | 13 | |
| | | (4.64 | ) | | .89 | | | 63,402 | | | 1.23 | | | 5.82 | | | .83 | | | 6.22 | | | 23 | |
| | | 14.40 | | | 5.79 | | | 65,770 | | | 1.24 | | | 5.63 | | | .75 | | | 6.11 | | | 7 | |
| (c) | Ratios do not reflect the effect of dividend payments to Auction Rate Preferred shareholders, where applicable; Net Investment Income ratios reflect income earned and expenses incurred on assets attributable to ARPS and/or MTP shares, where applicable. |
| (d) | After expense reimbursement from the Adviser, where applicable. Ratios do not reflect the effect of custodian fee credits earned on the Fund’s net cash on deposit with the custodian bank, where applicable. As of September 30, 2010, the Adviser is no longer reimbursing Georgia Dividend Advantage 2 (NKG) for any fees and expenses. |
| (e) | The expense ratios reflect, among other things, all interest expense and other costs related to MTP shares and/or the interest expense deemed to have been paid by the Fund on the floating rate certificates issued by the special purpose trusts for the self-deposited inverse floaters held by the Fund, where applicable, both as described in Footnote 1 – General Information and Significant Accounting Policies, MuniFund Term Preferred Shares and Inverse Floating Rate Securities, respectively, as follows: |
| | Georgia Dividend Advantage 2 (NKG) | | | | |
| | Year Ended 5/31: | | | | |
| | 2011 | | | 1.60 | % |
| | 2010 | | | .55 | |
| | 2009 | | | .10 | |
| | 2008 | | | — | |
| | 2007 | | | — | |
See accompanying notes to financial statements.
| | | Financial |
| | | Highlights (continued) |
| | |
| | Selected data for a Common share outstanding throughout each period: |
| | | | | Investment Operations | | Less Distributions | | | | | | | |
| | | Beginning Common Share Net Asset Value | | Net Investment Income | | Net Realized/ Unrealized Gain (Loss) | | Distributions from Net Investment Income to Auction Rate Preferred Share- holders | (a) | Distributions from Capital Gains to Auction Rate Preferred Share- holders | (a) | Total | | Net Investment Income to Common Share- holders | | Capital Gains to Common Share- holders | | Total | | Ending Common Share Net Asset Value | | Ending Market Value | |
| North Carolina Premium Income (NNC) | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | $ | 14.72 | | $ | .69 | | $ | (.32 | ) | $ | (.01 | ) | $ | — | | $ | .36 | | $ | (.74 | ) | $ | — | | $ | (.74 | ) | $ | 14.34 | | $ | 14.41 | |
| 2010 | | | 13.78 | | | .81 | | | .87 | | | (.03 | ) | | — | | | 1.65 | | | (.71 | ) | | — | | | (.71 | ) | | 14.72 | | | 15.37 | |
| 2009 | | | 13.98 | | | .85 | | | (.27 | ) | | (.17 | ) | | — | | | .41 | | | (.61 | ) | | — | | | (.61 | ) | | 13.78 | | | 12.60 | |
| 2008 | | | 14.36 | | | .84 | | | (.35 | ) | | (.23 | ) | | (.01 | ) | | .25 | | | (.59 | ) | | (.04 | ) | | (.63 | ) | | 13.98 | | | 13.30 | |
| 2007 | | | 14.34 | | | .85 | | | .07 | | | (.23 | ) | | —* | | | .69 | | | (.66 | ) | | (.01 | ) | | (.67 | ) | | 14.36 | | | 14.30 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| North Carolina Dividend Advantage (NRB) | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | 15.26 | | | .72 | | | (.47 | ) | | — | | | — | | | .25 | | | (.84 | ) | | — | | | (.84 | ) | | 14.67 | | | 14.94 | |
| 2010 | | | 14.52 | | | .94 | | | .64 | | | (.03 | ) | | — | | | 1.55 | | | (.81 | ) | | — | | | (.81 | ) | | 15.26 | | | 16.15 | |
| 2009 | | | 14.52 | | | .95 | | | (.08 | ) | | (.17 | ) | | — | | | .70 | | | (.70 | ) | | — | | | (.70 | ) | | 14.52 | | | 14.26 | |
| 2008 | | | 14.78 | | | .93 | | | (.22 | ) | | (.24 | ) | | (.01 | ) | | .46 | | | (.69 | ) | | (.03 | ) | | (.72 | ) | | 14.52 | | | 15.28 | |
| 2007 | | | 14.87 | | | .93 | | | .03 | | | (.22 | ) | | (.01 | ) | | .73 | | | (.77 | ) | | (.05 | ) | | (.82 | ) | | 14.78 | | | 16.44 | |
| (a) | The amounts shown are based on Common share equivalents. |
| (b) | 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. |
| | | | | | | | Ratios/Supplemental Data | |
| | Total Returns | | | | | Ratios to Average Net Assets Applicable to Common Shares Before Reimbursement(c) | | Ratios to Average Net Assets Applicable to Common Shares After Reimbursement(c)(d) | | | | |
| | Based on Market Value | (b) | Based on Common Share Net Asset Value | (b) | Ending Net Assets Applicable to Common Shares (000 | ) | Expenses | (e) | Net Investment Income (Loss | ) | Expenses | (e) | Net Investment Income (Loss | ) | Portfolio Turnover Rate | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (1.27 | )% | | 2.57 | % | $ | 91,256 | | | 2.49 | % | | 4.77 | % | | N/A | | | N/A | | | 6 | % |
| | | 28.20 | | | 12.24 | | | 93,570 | | | 1.54 | | | 5.68 | | | N/A | | | N/A | | | 6 | |
| | | (.44 | ) | | 3.22 | | | 87,558 | | | 1.39 | | | 6.43 | | | N/A | | | N/A | | | 4 | |
| | | (2.52 | ) | | 1.76 | | | 88,827 | | | 1.39 | | | 5.94 | | | N/A | | | N/A | | | 12 | |
| | | (.78 | ) | | 4.84 | | | 91,191 | | | 1.27 | | | 5.82 | | | N/A | | | N/A | | | 13 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (2.16 | ) | | 1.72 | | | 33,337 | | | 3.01 | | | 4.80 | | | 2.95 | % | | 4.85 | % | | 10 | |
| | | 19.40 | | | 10.88 | | | 34,617 | | | 1.63 | | | 6.13 | | | 1.51 | | | 6.25 | | | 6 | |
| | | (1.82 | ) | | 5.17 | | | 32,894 | | | 1.71 | | | 6.63 | | | 1.51 | | | 6.83 | | | 7 | |
| | | (2.28 | ) | | 3.26 | | | 32,868 | | | 1.91 | | | 6.07 | | | 1.63 | | | 6.35 | | | 6 | |
| | | (2.26 | ) | | 4.98 | | | 33,409 | | | 1.68 | | | 5.82 | | | 1.34 | | | 6.17 | | | 15 | |
| (c) | Ratios do not reflect the effect of dividend payments to Auction Rate Preferred shareholders, where applicable; Net Investment Income ratios reflect income earned and expenses incurred on assets attributable to ARPS and/or MTP shares, where applicable. |
| (d) | After expense reimbursement from the Adviser, where applicable. Ratios do not reflect the effect of custodian fee credits earned on the Fund’s net cash on deposit with the custodian bank, where applicable. As of January 31, 2011, the Adviser is no longer reimbursing North Carolina Dividend Advantage (NRB) for any fees or expenses. |
| (e) | The expense ratios reflect, among other things, all interest expense and other costs related to MTP shares and/or the interest expense deemed to have been paid by the Fund on the floating rate certificates issued by the special purpose trusts for the self-deposited inverse floaters held by the Fund, where applicable, both as described in Footnote 1 – General Information and Significant Accounting Policies, MuniFund Term Preferred Shares and Inverse Floating Rate Securities, respectively, as follows: |
| | North Carolina Premium Income (NNC) | | | | |
| | Year Ended 5/31: | | | | |
| | 2011 | | | 1.29 | % |
| | 2010 | | | .34 | |
| | 2009 | | | .07 | |
| | 2008 | | | .14 | |
| | 2007 | | | .03 | |
| | North Carolina Dividend Advantage (NRB) | | | | |
| | Year Ended 5/31: | | | | |
| | 2011 | | | 1.68 | |
| | 2010 | | | .37 | |
| | 2009 | | | .34 | |
| | 2008 | | | .62 | |
| | 2007 | | | .39 | |
| * | Rounds to less than $0.1 per share. |
| N/A | Fund does not have a contractual reimbursement with the Adviser. |
See accompanying notes to financial statements.
| | | Financial |
| | | Highlights (continued) |
| | | |
| | | Selected data for a Common share outstanding throughout each period: |
| | | | | | Investment Operations | | | Less Distributions | | | | | | | |
| | | Beginning Common Share Net Asset Value | | | Net Investment Income | | | Net Realized/ Unrealized Gain (Loss | ) | | Distributions from Net Investment Income to Auction Rate Preferred Share- holders | (a) | | Distributions from Capital Gains to Auction Rate Preferred Share- holders | (a) | | Total | | | Net Investment Income to Common Share- holders | | | Capital Gains to Common Share- holders | | | Total | | | Ending Common Share Net Asset Value | | | Ending Market Value | |
| North Carolina Dividend Advantage 2 (NNO) | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | $ | 15.09 | | | $ | .69 | | | $ | (.41 | ) | | $ | — | | | $ | — | | | $ | .28 | | | $ | (.82 | ) | | $ | — | | | $ | (.82 | ) | | $ | 14.55 | | | $ | 14.21 | |
| 2010 | | | 14.31 | | | | .89 | | | | .70 | | | | (.03 | ) | | | — | * | | | 1.56 | | | | (.78 | ) | | | — | * | | | (.78 | ) | | | 15.09 | | | | 15.73 | |
| 2009 | | | 14.47 | | | | .92 | | | | (.26 | ) | | | (.17 | ) | | | — | | | | .49 | | | | (.65 | ) | | | — | | | | (.65 | ) | | | 14.31 | | | | 13.60 | |
| 2008 | | | 14.76 | | | | .91 | | | | (.24 | ) | | | (.25 | ) | | | (.02 | ) | | | .40 | | | | (.63 | ) | | | (.06 | ) | | | (.69 | ) | | | 14.47 | | | | 13.66 | |
| 2007 | | | 14.75 | | | | .91 | | | | .10 | | | | (.23 | ) | | | (.01 | ) | | | .77 | | | | (.71 | ) | | | (.05 | ) | | | (.76 | ) | | | 14.76 | | | | 15.50 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| North Carolina Dividend Advantage 3 (NII) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | 14.75 | | | | .69 | | | | (.44 | ) | | | — | | | | — | | | | .25 | | | | (.79 | ) | | | — | | | | (.79 | ) | | | 14.21 | | | | 14.22 | |
| 2010 | | | 14.00 | | | | .85 | | | | .67 | | | | (.02 | ) | | | — | | | | 1.50 | | | | (.75 | ) | | | — | | | | (.75 | ) | | | 14.75 | | | | 15.86 | |
| 2009 | | | 14.13 | | | | .90 | | | | (.21 | ) | | | (.16 | ) | | | — | | | | .53 | | | | (.66 | ) | | | — | | | | (.66 | ) | | | 14.00 | | | | 13.60 | |
| 2008 | | | 14.38 | | | | .88 | | | | (.25 | ) | | | (.23 | ) | | | — | | | | .40 | | | | (.65 | ) | | | — | | | | (.65 | ) | | | 14.13 | | | | 14.12 | |
| 2007 | | | 14.26 | | | | .89 | | | | .11 | | | | (.23 | ) | | | — | | | | .77 | | | | (.65 | ) | | | — | | | | (.65 | ) | | | 14.38 | | | | 14.64 | |
| (a) | The amounts shown are based on Common share equivalents. |
| (b) | 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. |
| | Total Returns | | | | | Ratios to Average Net Assets Applicable to Common Shares Before Reimbursement(c) | | Ratios to Average Net Assets Applicable to Common Shares After Reimbursement(c)(d) | | | | |
| | Based on Market Value | (b) | Based on Common Share Net Asset Value | (b) | Ending Net Assets Applicable to Common Shares (000 | ) | Expenses | (e) | Net Investment Income (Loss | ) | Expenses | (e) | Net Investment Income (Loss | ) | Portfolio Turnover Rate | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (4.55 | )% | | 1.92 | % | $ | 54,593 | | | 2.91 | % | | 4.57 | % | | 2.79 | % | | 4.69 | % | | 14 | % |
| | | 21.86 | | | 11.11 | | | 56,590 | | | 1.55 | | | 5.80 | | | 1.36 | | | 5.99 | | | 9 | |
| | | 4.72 | | | 3.69 | | | 53,653 | | | 1.48 | | | 6.39 | | | 1.21 | | | 6.66 | | | 4 | |
| | | (7.33 | ) | | 2.83 | | | 54,240 | | | 1.54 | | | 5.87 | | | 1.21 | | | 6.20 | | | 8 | |
| | | 6.64 | | | 5.24 | | | 55,349 | | | 1.39 | | | 5.68 | | | .97 | | | 6.09 | | | 9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (5.28 | ) | | 1.79 | | | 55,959 | | | 2.79 | | | 4.74 | | | 2.75 | | | 4.78 | | | 17 | |
| | | 22.76 | | | 10.95 | | | 58,054 | | | 1.76 | | | 5.71 | | | 1.60 | | | 5.87 | | | 6 | |
| | | 1.43 | | | 4.11 | | | 55,065 | | | 1.55 | | | 6.39 | | | 1.26 | | | 6.68 | | | 4 | |
| | | 1.12 | | | 2.90 | | | 55,555 | | | 1.68 | | | 5.79 | | | 1.28 | | | 6.19 | | | 15 | |
| | | 6.23 | | | 5.48 | | | 56,511 | | | 1.49 | | | 5.62 | | | 1.02 | | | 6.09 | | | 12 | |
| (c) | Ratios do not reflect the effect of dividend payments to Auction Rate Preferred shareholders, where applicable; Net Investment Income ratios reflect income earned and expenses incurred on assets attributable to ARPS and/or MTP shares, where applicable. |
| (d) | After expense reimbursement from the Adviser, where applicable. Ratios do not reflect the effect of custodian fee credits earned on the Fund’s net cash on deposit with the custodian bank, where applicable. As of September 30, 2010, the Adviser is no longer reimbursing North Carolina Dividend Advantage 3 (NII) for any fees or expenses. |
| (e) | The expense ratios reflect, among other things, all interest expense and other costs related to MTP shares and/or the interest expense deemed to have been paid by the Fund on the floating rate certificates issued by the special purpose trusts for the self-deposited inverse floaters held by the Fund, where applicable, both as described in Footnote 1 – General Information and Significant Accounting Policies, MuniFund Term Preferred Shares and Inverse Floating Rate Securities, respectively, as follows: |
| | North Carolina Dividend Advantage 2 (NNO) | | | | |
| | Year Ended 5/31: | | | | |
| | 2011 | | | 1.70 | % |
| | 2010 | | | .32 | |
| | 2009 | | | .16 | |
| | 2008 | | | .29 | |
| | 2007 | | | .15 | |
| | North Carolina Dividend Advantage 3 (NII) | | | | |
| | Year Ended 5/31: | | | | |
| | 2011 | | | 1.65 | |
| | 2010 | | | .56 | |
| | 2009 | | | .24 | |
| | 2008 | | | .44 | |
| | 2007 | | | .26 | |
| * | Rounds to less than $.01 per share. |
See accompanying notes to financial statements.
| | | Financial |
| | | Highlights (continued) |
| | | ARPS at End of Period | | | MTP Shares at End of Period (a) | |
| | | Aggregate Amount Outstanding (000 | ) | | Liquidation Value Per Share | | | Asset Coverage Per Share | | | Aggregate Amount Outstanding (000 | ) | | Liquidation Value Per Share | | | Asset Coverage Per Share | |
| Georgia Premium Income (NPG) | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | |
| 2011 | | $ | — | | | $ | — | | | $ | — | | | $ | 28,340 | | | $ | 10.00 | | | $ | 28.81 | |
| 2010 | | | — | | | | — | | | | — | | | | 28,340 | | | | 10.00 | | | | 29.41 | |
| 2009 | | | 27,800 | | | | 25,000 | | | | 71,967 | | | | — | | | | — | | | | — | |
| 2008 | | | 27,800 | | | | 25,000 | | | | 73,571 | | | | — | | | | — | | | | — | |
| 2007 | | | 27,800 | | | | 25,000 | | | | 74,784 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Georgia Dividend Advantage (NZX) | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | — | | | | — | | | | — | | | | 14,340 | | | | 10.00 | | | | 29.73 | |
| 2010 | | | — | | | | — | | | | — | | | | 14,340 | | | | 10.00 | | | | 30.35 | |
| 2009 | | | 15,000 | | | | 25,000 | | | | 70,871 | | | | — | | | | — | | | | — | |
| 2008 | | | 15,000 | | | | 25,000 | | | | 72,497 | | | | — | | | | — | | | | — | |
| 2007 | | | 15,000 | | | | 25,000 | | | | 73,052 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Georgia Dividend Advantage 2 (NKG) | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | — | | | | — | | | | — | | | | 32,265 | | | | 10.00 | | | | 29.46 | |
| 2010 | | | — | | | | — | | | | — | | | | 32,265 | | | | 10.00 | | | | 30.06 | |
| 2009 | | | 31,700 | | | | 25,000 | | | | 72,649 | | | | — | | | | — | | | | — | |
| 2008 | | | 33,000 | | | | 25,000 | | | | 73,032 | | | | — | | | | — | | | | — | |
| 2007 | | | 33,000 | | | | 25,000 | | | | 74,825 | | | | — | | | | — | | | | — | |
| (a) | The Ending and Average Market Value Per Share for each Series of the Fund’s MTP Shares were as follows: |
| | | Series | | Ending Market Value Per Share | | Average Market Value Per Share | | Series | | Ending Market Value Per Share | | Average Market Value Per Share | |
| Georgia Premium Income (NPG) | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | |
| 2011 | | | 2015 | | $ | 10.06 | | $ | 10.02 | | | — | | $ | — | | $ | — | |
| 2010 | | | 2015 | | | 9.99 | | | 9.99 | ^ | | — | | | — | | | — | |
| 2009 | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2008 | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2007 | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | |
| Georgia Dividend Advantage (NZX) | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | |
| 2011 | | | 2015 | | | 10.07 | | | 10.03 | | | — | | | — | | | — | |
| 2010 | | | 2015 | | | 9.97 | | | 9.98 | ^ | | — | | | — | | | — | |
| 2009 | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2008 | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2007 | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | |
| Georgia Dividend Advantage 2 (NKG) | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | |
| 2011 | | | 2015 | | | 10.04 | | | 10.02 | | | — | | | — | | | — | |
| 2010 | | | 2015 | | | 10.00 | | | 9.99 | ^^ | | — | | | — | | | — | |
| 2009 | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2008 | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2007 | | | — | | | — | | | — | | | — | | | — | | | — | |
| ^ | For the period February 22, 2010 (first issuance date of shares) through May 31, 2010. |
| ^^ | For the period January 29, 2010 (first issuance date of shares) through May 31, 2010. |
| | | ARPS at End of Period | | | MTP Shares at End of Period (b) | | | ARPS and MTP Shares at End of Period | |
| | | Aggregate Amount Outstanding (000 | ) | | Liquidation Value Per Share | | | Asset Coverage Per Share | | | Aggregate Amount Outstanding (000 | ) | | Liquidation Value Per Share | | | Asset Coverage Per Share | | | Asset Coverage Per $1 Liquidation Preference | |
| North Carolina Premium Income (NNC) | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | $ | — | | | $ | — | | | $ | — | | | $ | 49,835 | | | $ | 10.00 | | | $ | 28.31 | | | $ | — | |
| 2010 | | | 21,550 | | | | 25,000 | | | | 76,020 | | | | 24,300 | | | | 10.00 | | | | 30.41 | | | | 3.04 | |
| 2009 | | | 46,800 | | | | 25,000 | | | | 71,773 | | | | — | | | | — | | | | — | | | | — | |
| 2008 | | | 46,800 | | | | 25,000 | | | | 72,450 | | | | — | | | | — | | | | — | | | | — | |
| 2007 | | | 46,800 | | | | 25,000 | | | | 73,713 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| North Carolina Dividend Advantage (NRB) | | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | — | | | | — | | | | — | | | | 16,600 | | | | 10.00 | | | | 30.08 | | | | — | |
| 2010 | | | — | | | | — | | | | — | | | | 16,600 | | | | 10.00 | | | | 30.85 | | | | — | |
| 2009 | | | 17,000 | | | | 25,000 | | | | 73,373 | | | | — | | | | — | | | | — | | | | — | |
| 2008 | | | 17,000 | | | | 25,000 | | | | 73,335 | | | | — | | | | — | | | | — | | | | — | |
| 2007 | | | 17,000 | | | | 25,000 | | | | 74,130 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| North Carolina Dividend Advantage 2 (NNO) | | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | — | | | | — | | | | — | | | | 29,700 | | | | 10.00 | | | | 28.38 | | | | — | |
| 2010 | | | — | | | | — | | | | — | | | | 29,700 | | | | 10.00 | | | | 29.05 | | | | — | |
| 2009 | | | 28,000 | | | | 25,000 | | | | 72,905 | | | | — | | | | — | | | | — | | | | — | |
| 2008 | | | 28,000 | | | | 25,000 | | | | 73,428 | | | | — | | | | — | | | | — | | | | — | |
| 2007 | | | 28,000 | | | | 25,000 | | | | 74,418 | | | | — | | | | — | | | | — | | | | — | |
| (b) | The Ending and Average Market Value Per Share for each Series of the Fund’s MTP Shares were as follows: |
| | | Series | | | Ending Market Value Per Share | | | Average Market Value Per Share | | | Series | | | Ending Market Value Per Share | | | Average Market Value Per Share | |
| North Carolina Premium Income (NNC) | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | |
| 2011 | | 2015 | | | $ | 10.04 | | | $ | 10.04 | | | | 2016 | | | $ | 10.00 | | | $ | 9.94 | ΩΩ |
| 2010 | | 2015 | | | | 9.99 | | | | 10.01 | Ω | | | — | | | | — | | | | — | |
| 2009 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| 2008 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| 2007 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| North Carolina Dividend Advantage (NRB) | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | 2015 | | | | 10.04 | | | | 10.01 | | | | — | | | | — | | | | — | |
| 2010 | | | 2015 | | | | 10.00 | | | | 9.97 | ΩΩΩ | | | — | | | | — | | | | — | |
| 2009 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| 2008 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| 2007 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| North Carolina Dividend Advantage 2 (NNO) | | | | | | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | | | | | | |
| 2011 | | | 2015 | | | | 10.01 | | | | 10.01 | | | | — | | | | — | | | | — | |
| 2010 | | | 2015 | | | | 9.97 | | | | 9.97 | ΩΩΩ | | | — | | | | — | | | | — | |
| 2009 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| 2008 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| 2007 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Ω | For the period January 21, 2010 (first issuance date of shares) through May 31, 2010. |
| ΩΩ | For the period December 14, 2010 (first issuance date of shares) through May 31, 2011. |
| ΩΩΩ | For the period March 30, 2010 (first issuance date of shares) through May 31, 2010. |
See accompanying notes to financial statements.
| | | Financial |
| | | Highlights (continued) |
| | | ARPS at End of Period | | | MTP Shares at End of Period (a) | |
| | | Aggregate Amount Outstanding (000 | ) | | Liquidation Value Per Share | | | Asset Coverage Per Share | | | Aggregate Amount Outstanding (000 | ) | | Liquidation Value Per Share | | | Asset Coverage Per Share | |
| North Carolina Dividend Advantage 3 (NII) | | | | | | | | | | | | | | | | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | |
| 2011 | | $ | — | | | $ | — | | | $ | — | | | $ | 28,725 | | | $ | 10.00 | | | $ | 29.48 | |
| 2010 | | | — | | | | — | | | | — | | | | 28,725 | | | | 10.00 | | | | 30.21 | |
| 2009 | | | 28,000 | | | | 25,000 | | | | 74,165 | | | | — | | | | — | | | | — | |
| 2008 | | | 28,000 | | | | 25,000 | | | | 74,602 | | | | — | | | | — | | | | — | |
| 2007 | | | 28,000 | | | | 25,000 | | | | 75,457 | | | | — | | | | — | | | | — | |
| (a) | The Ending and Average Market Value Per Share for each Series of the Fund’s MTP Shares were as follows: |
| | | Series | | Ending Market Value Per Share | | Average Market Value Per Share | | Series | | Ending Market Value Per Share | | Average Market Value Per Share | |
| North Carolina Dividend Advantage 3 (NII) | | | | | | | | | | | | | | | �� | |
| Year Ended 5/31: | | | | | | | | | | | | | | | | | | | |
| 2011 | | | 2015 | | $ | 10.02 | | $ | 10.03 | | | — | | $ | — | | $ | — | |
| 2010 | | | 2015 | | | 10.00 | | | 9.99 | ^ | | — | | | — | | | — | |
| 2009 | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2008 | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2007 | | | — | | | — | | | — | | | — | | | — | | | — | |
| ^ | For the period February 9, 2010 (first issuance date of shares) through May 31, 2010. |
See accompanying notes to financial statements.
| | | Notes to |
| | | Financial Statements |
1. General Information and Significant Accounting Policies
General Information
The state 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) (each a “Fund” and 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 New York Stock Exchange (“NYSE”) while Common shares of North Carolina Premium Income (NNC) are traded on the NYSE Amex. The Funds are registered under the Investment Company Act of 1940, as amended, as closed-end registered investment companies.
Effective January 1, 2011, the Funds’ adviser, Nuveen Asset Management, a wholly-owned subsidiary of Nuveen Investments, Inc. (“Nuveen”), changed its name to Nuveen Fund Advisors, Inc. (the “Adviser”). Concurrently, the Adviser formed a wholly-owned subsidiary, Nuveen Asset Management, LLC (the “Sub-Adviser”), to house its portfolio management capabilities and to serve as the Funds’ sub-adviser, and the Funds’ portfolio manager became an employee of the Sub-Adviser. This allocation of responsibilities between the Adviser and the Sub-Adviser affects each of the Funds. The Adviser will compensate the Sub-Adviser for the portfolio management services it provides to the Funds from each Fund’s management fee.
Each Fund seeks to provide current income exempt from both regular federal and designated state income taxes by investing primarily in a portfolio of municipal obligations issued by state and local government authorities within a single state or certain U.S. territories.
Significant Accounting Policies
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 (“U.S. GAAP”).
Investment Valuation
Prices of municipal bonds are provided by a pricing service approved by the Funds’ Board of Trustees. These securities are generally classified as Level 2 for fair value measurement purposes. When price quotes are not readily available (which is usually the case for municipal bonds) the pricing service establishes a security’s fair value using methods that may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor’s credit characteristics considered relevant. In pricing certain securities, particularly less liquid and lower quality securities, the pricing service may consider information about a security, its issuer, or market activity, provided by the Adviser. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs.
Certain securities may not be able to be priced by the pre-established pricing methods as described above. Such securities may be valued by the Funds’ Board of Trustees or its designee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; debt securities that have gone into default and for which there is no current market quotation; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of a Fund’s net asset value (as may be the case in non-U.S. markets on which the security is primarily traded) or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, is not deemed to reflect the security’s fair value. As a general principle, the fair value of a security would appear to be the amount that the owner might reasonably expect to receive for it in a current sale. A variety of factors may be considered in determining the fair value of such securities, which may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor’s credit characteristics considered relevant.
| | | Notes to |
| | | Financial Statements (continued) |
These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs. Regardless of the method employed to value a particular security, all valuations are subject to review by the Funds’ Board of Trustees or its designee.
Refer to Footnote 2 – Fair Value Measurements for further details on the leveling of securities held by the Funds as of the end of the reporting period.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and losses from transactions are determined on the specific identification method, which is the same basis used for federal income tax purposes. 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 May 31, 2011, North Carolina Premium Income (NNC), North Carolina Dividend Advantage (NRB), North Carolina Dividend Advantage 2 (NNO) and North Carolina Dividend Advantage 3 (NII) had outstanding delayed delivery purchase commitments of $1,045,640, $1,568,460, $3,189,202 and $3,189,202, respectively. There were no such outstanding purchase commitments in any of the other Funds.
Investment Income
Investment income, which reflects the amortization of premiums and includes accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Investment income also reflects paydown gains and losses, if any.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all 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 that 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.
For all open tax years and all major taxing jurisdictions, management of the Funds has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. 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). Furthermore, management of the Funds is 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 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 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. GAAP.
Auction Rate Preferred Shares
Each Fund is authorized to issue Auction Rate Preferred Shares (“ARPS”). During the fiscal year ended May 31, 2011, North Carolina Premium Income (NNC) had outstanding ARPS, $25,000 stated value per share, which approximates market value, as a means of effecting financial leverage. The Fund’s ARPS were issued in one Series. The dividend rate paid by the Fund on the Series was determined every seven days, pursuant to a dutch auction process overseen by the auction agent, and was payable at the end of each rate period.
Beginning in February 2008, more shares for sale were submitted in the regularly scheduled auctions for the ARPS issued by the Funds than there were offers to buy. This meant that these auctions “failed to clear,’’ and that many ARPS shareholders who wanted to sell their shares in these auctions were unable to do so. ARPS 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 ARPS. As of May 31, 2011, each Fund redeemed all of their outstanding ARPS, at liquidation value, as follows:
| | | | | | | | | | |
| | Georgia Premium Income (NPG | ) | Georgia Dividend Advantage (NZX | ) | Georgia Dividend Advantage 2 (NKG | ) |
| ARPS redeemed, at liquidation value | | $ | 27,800,000 | | | $ | 15,000,000 | | | $ | 33,000,000 | |
| | | | North | | | North | | | North | | | North | |
| | | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| ARPS redeemed, at liquidation value | | $ | 46,800,000 | | $ | 17,000,000 | | $ | 28,000,000 | | $ | 28,000,000 | |
During the current reporting period, Nuveen Investments, LLC, known as Nuveen Securities, LLC, effective April 30, 2011, (“Nuveen Securities”) entered into a settlement with the Financial Industry Regulatory Authority (“FINRA”) with respect to certain allegations regarding Nuveen-sponsored closed-end fund ARPS marketing brochures. As part of this settlement, Nuveen Securities neither admitted to nor denied FINRA’s allegations. Nuveen Securities is the broker-dealer subsidiary of Nuveen.
The settlement with FINRA concludes an investigation that followed the widespread failure of auctions for ARPS and other auction rate securities, which generally began in mid-February 2008. In the settlement, FINRA alleged that certain marketing materials provided by Nuveen Securities were false and misleading. Nuveen Securities agreed to a censure and the payment of a $3 million fine.
MuniFund Term Preferred Shares
The Funds have issued and outstanding MuniFund Term Preferred (“MTP”) Shares, with a $10 stated value per share. Proceeds from the issuance of MTP Shares, net of offering expenses, were used to redeem all, or a portion of, each Fund’s outstanding ARPS. Each Fund’s MTP Shares may be issued in more than one Series. Dividends, which are recognized as interest expense for financial reporting purposes, are paid monthly at a fixed annual rate, subject to adjustments in certain circumstances. The MTP Shares trade on the NYSE. As of May 31, 2011, the number of MTP Shares outstanding, annual interest rate and NYSE “ticker” symbol for each Fund’s series of MTP Shares are as follows:
| | | Georgia Premium Income (NPG) | | Georgia Dividend Advantage (NZX) | |
| | | | | | | Annual | | | | | | | | | Annual | | | | |
| | | | Shares | | | Interest | | | NYSE | | | Shares | | | Interest | | | NYSE | |
| | | | Outstanding | | | Rate | | | Ticker | | | Outstanding | | | Rate | | | Ticker | |
| Series 2015 | | | 2,834,000 | | | 2.65 | % | | NPG Pr C | | | 1,434,000 | | | 2.65 | % | | NZX Pr C | |
| | | Georgia Dividend Advantage 2 (NKG) | | North Carolina Premium Income (NNC) | |
| | | Shares Outstanding | | Annual Interest Rate | | NYSE Ticker | | Shares Outstanding | | Annual Interest Rate | | NYSE Ticker | |
| Series 2015 | | | 3,226,500 | | | 2.65 | % | | NKG Pr C | | | 2,430,000 | | | 2.65 | % | | NNC Pr C | |
| Series 2016 | | | — | | | — | | | — | | | 2,553,500 | | | 2.60 | | | NNC Pr D | |
| | | North Carolina Dividend Advantage (NRB) | | North Carolina Dividend Advantage 2 (NNO) | |
| | | Shares Outstanding | | Annual Interest Rate | | NYSE Ticker | | Shares Outstanding | | Annual Interest Rate | | NYSE Ticker | |
| Series 2015 | | | 1,660,000 | | | 2.60 | % | | NRB Pr C | | | 2,970,000 | | | 2.60 | % | | NNO Pr C | |
| | | North Carolina Dividend Advantage 3 (NII) | |
| | | Shares Outstanding | | Annual Interest Rate | | NYSE Ticker | |
| Series 2015 | | | 2,872,500 | | | 2.65 | % | | NII Pr C | |
Each Fund is obligated to redeem its MTP Shares by the date as specified in its offering document (“Term Redemption Date”), unless earlier redeemed or repurchased by the Fund. MTP Shares are subject to optional and mandatory redemption in certain circumstances. MTP Shares will be subject to redemption at the option of each Fund (“Optional Redemption Date”), subject to a payment of premium for one year following the Optional Redemption Date (“Premium Expiration Date”), and at par thereafter. MTP Shares also will be subject to redemption, at the option of each Fund, at par in the event of certain changes in the credit rating of the MTP Shares. Each Fund may be obligated to redeem certain of the MTP Shares if the Fund fails to maintain certain asset coverage and leverage ratio requirements and such failures are not cured by the applicable cure date. The redemption price per share is equal to the sum of the liquidation value per share plus any accumulated but unpaid dividends. The Term Redemption Date, Optional Redemption Date and Premium Expiration Date for each Fund’s series of MTP Shares are as follows:
| | | Notes to |
| | | Financial Statements (continued) |
| | | | Georgia | | | Georgia | | | Georgia | |
| | | | Premium | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | |
| | | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| | | | Series 2015 | | | Series 2015 | | | Series 2015 | |
| Term Redemption Date | | | March 1, 2015 | | | March 1, 2015 | | | February 1, 2015 | |
| Optional Redemption Date | | | March 1, 2011 | | | March 1, 2011 | | | February 1, 2011 | |
| Premium Expiration Date | | | February 29, 2012 | | | February 29, 2012 | | | January 31, 2012 | |
| | | | North | | | North | | | North | | | North | | | North | |
| | | | Carolina | | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | | Premium | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NNC | ) | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| | | | Series 2015 | | | Series 2016 | | | Series 2015 | | | Series 2015 | | | Series 2015 | |
| Term Redemption Date | | | February 1, 2015 | | | January 1, 2016 | | | April 1, 2015 | | | April 1, 2015 | | | March 1, 2015 | |
| Optional Redemption Date | | | February 1, 2011 | | | January 1, 2012 | | | April 1, 2011 | | | April 1, 2011 | | | March 1, 2011 | |
| Premium Expiration Date | | | January 31, 2012 | | | December 31, 2012 | | | March 31, 2012 | | | March 31, 2012 | | | February 29, 2012 | |
The average liquidation value of all MTP Shares outstanding for each Fund during the fiscal year ended May 31, 2011, was as follows:
| | | | Georgia | | | Georgia | | | Georgia | |
| | | | Premium | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | |
| | | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Average liquidation value of MTP Shares outstanding | | $ | 28,340,000 | | $ | 14,340,000 | | $ | 32,265,000 | |
| | | | North | | | North | | | North | | | North | |
| | | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Average liquidation value of MTP Shares outstanding | | $ | 36,040,945 | | $ | 16,600,000 | | $ | 29,700,000 | | $ | 28,725,000 | |
For financial reporting purposes only, the liquidation value of MTP Shares is recorded as a liability on the Statement of Assets and Liabilities. Unpaid dividends on MTP Shares are recognized as a component of “Interest payable” on the Statement of Assets and Liabilities. Dividends paid on MTP Shares are recognized as a component of “Interest expense and amortization of offering costs” on the Statement of Operations.
Net amounts earned by Nuveen as underwriter of each Fund’s MTP Share offering were recorded as reductions of offering costs recognized by the Funds. For the fiscal year ended May 31, 2011, the net amounts earned by Nuveen were as follows:
| | | | Georgia | | | Georgia | | | Georgia | |
| | | | Premium | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | |
| | | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Net amounts earned by Nuveen | | $ | — | | $ | — | | $ | — | |
| | | | North | | | North | | | North | | | North | |
| | | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Net amounts earned by Nuveen | | $ | — | | $ | — | | $ | — | | $ | — | |
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.
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 “(IF) – Inverse floating rate investment.” An investment in a self-deposited inverse floater is accounted for as a financing transaction. In such instances, a fixed-rate bond deposited into a special purpose trust is identified in the Portfolio of Investments as “(UB) – Underlying bond of an inverse floating rate trust reflected as a financing transaction,” 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 as a component of “Interest expense and amortization of offering costs” on the Statement of Operations.
During the fiscal year ended May 31, 2011, 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 recognized as “Unrealized depreciation on Recourse Trusts” on the Statement of Assets and Liabilities.
At May 31, 2011, the Funds were not invested in 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 to Recourse Trusts | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
The average floating rate obligations outstanding and average annual interest rate and fees related to self-deposited inverse floaters during the fiscal year ended May 31, 2011, were as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 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 outstanding | | $ | 1,190,000 | | | $ | 660,000 | | | $ | 1,395,000 | | | $ | 5,195,000 | | | $ | 7,160,000 | | | $ | 4,805,000 | | | $ | 7,480,000 | |
| Average annual interest rate and fees | | | 0.63 | % | | | 0.63 | % | | | 0.63 | % | | | 0.64 | % | | | 0.49 | % | | | 0.46 | % | | | 0.47 | % |
Derivative Financial Instruments
Each Fund is authorized to invest in certain derivative instruments, including foreign currency forwards, futures, options and swap contracts. Although the Funds are authorized to invest in such derivative instruments, and may do so in the future, they did not make any such investments during the fiscal year ended May 31, 2011.
Market and Counterparty Credit Risk
In the normal course of business each Fund may invest in financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to the transaction to perform (counterparty credit risk). The potential loss could exceed the value of the financial assets recorded on the financial statements. Financial assets, which potentially expose each Fund to counterparty credit risk, consist principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of each Fund’s exposure to counterparty credit risk in respect to these financial assets approximates their carrying value as recorded on the Statement of Assets and Liabilities. Futures contracts expose a Fund to minimal counterparty credit risk as they are exchange traded and the exchange’s clearinghouse, which is counterparty to all exchange traded futures, guarantees the futures contracts against default.
| | | Notes to |
| | | Financial Statements (continued) |
Each Fund helps manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations and by having the Adviser monitor the financial stability of the counterparties. Additionally, counterparties may be required to pledge collateral daily (based on the daily valuation of the financial asset) on behalf of each Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when each Fund has an unrealized loss, 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 valuations fluctuate, either up or down, by at least the predetermined threshold amount.
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. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically.
Offering Costs
Costs incurred by the Funds in connection with their offerings of MTP Shares were recorded as a deferred charge, which will be amortized over the life of the shares. Each Fund’s amortized deferred charges are recognized as a component of “Interest expense and amortization of offering costs” on the Statement of Operations. Each Fund’s offering costs incurred were as follows:
| | | Georgia | | | Georgia | | | Georgia | |
| | | Premium | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | |
| | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| MTP Shares offering costs | | $ | 655,100 | | | $ | 420,100 | | | $ | 738,975 | |
| | | | North | | | | North | | | | North | | | | North | |
| | | | Carolina | | | | Carolina | | | | Carolina | | | | Carolina | |
| | | | Premium | | | | Dividend | | | | Dividend | | | | Dividend | |
| | | | Income | | | | Advantage | | | | Advantage 2 | | | | Advantage 3 | |
| | | | (NNC | ) | | | (NRB | ) | | | (NNO | ) | | | (NII | ) |
| MTP Shares offering costs | | $ | 1,372,525 | | | $ | 504,000 | | | $ | 710,500 | | | $ | 700,875 | |
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.
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. GAAP 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
Fair value is defined as the price that the Funds would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The three-tier hierarchy of inputs is 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 methodologies 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 May 31, 2011:
| | | | | | | | | | | | | |
| Georgia Premium Income (NPG) | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Investments: | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 79,086,528 | | | $ | — | | | $ | 79,086,528 | |
| Georgia Dividend Advantage (NZX) | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Investments: | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 41,288,534 | | | $ | — | | | $ | 41,288,534 | |
| Georgia Dividend Advantage 2 (NKG) | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Investments: | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 94,819,887 | | | $ | — | | | $ | 94,819,887 | |
| North Carolina Premium Income (NNC) | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Investments: | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 144,214,018 | | | $ | — | | | $ | 144,214,018 | |
| North Carolina Dividend Advantage (NRB) | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Investments: | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 55,869,789 | | | $ | — | | | $ | 55,869,789 | |
| North Carolina Dividend Advantage 2 (NNO) | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Investments: | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 87,941,206 | | | $ | — | | | $ | 87,941,206 | |
| North Carolina Dividend Advantage 3 (NII) | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Investments: | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 91,020,740 | | | $ | — | | | $ | 91,020,740 | |
During the fiscal year ended May 31, 2011, the Funds recognized no significant transfers to/from Level 1, Level 2, or Level 3.
3. Derivative Instruments and Hedging Activities
The Funds record derivative instruments at fair value with changes in fair value recognized on the Statement of Operations, when applicable. Even though the Funds’ investments in derivatives may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes. The Funds did not invest in derivative instruments during the fiscal year ended May 31, 2011.
4. Fund Shares
Common Shares
Since the inception of the Funds’ repurchase program, the Funds have not repurchased any of their outstanding Common shares.
Transactions in Common shares were as follows:
| | | Georgia Premium Income (NPG) | | Georgia Dividend Advantage (NZX) | | Georgia Dividend Advantage 2 (NKG) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| Common shares issued to shareholders due to reinvestment of distributions | | | 1,290 | | | — | | | 2,445 | | | 686 | | | 313 | | | 327 | |
| | | North Carolina Premium Income (NNC) | | North Carolina Dividend Advantage (NRB) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| Common shares issued to shareholders due to reinvestment of distributions | | | 7,169 | | | 5,785 | | | 3,242 | | | 3,076 | |
| | | Notes to |
| | | Financial Statements (continued) |
| | | North Carolina Dividend Advantage 2 (NNO) | | North Carolina Dividend Advantage 3 (NII) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| Common shares issued to shareholders due to reinvestment of distributions | | | 1,708 | | | 1,620 | | | 1,828 | | | 2,340 | |
Preferred Shares
Transactions in ARPS were as follows:
| | | Georgia Premium Income (NPG) | | Georgia Dividend Advantage (NZX) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | |
| ARPS redeemed: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series M | | | — | | $ | — | | | — | | $ | — | | | — | | $ | — | | | 600 | | $ | 15,000,000 | |
| Series TH | | | — | | | — | | | 1,112 | | | 27,800,000 | | | — | | | — | | | — | | | — | |
| Total | | | — | | $ | — | | | 1,112 | | $ | 27,800,000 | | | — | | $ | — | | | 600 | | $ | 15,000,000 | |
| | | Georgia Dividend Advantage 2 (NKG) | | North Carolina Premium Income (NNC) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | |
| ARPS redeemed: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series TH | | | — | | $ | — | | | — | | $ | — | | | 862 | | $ | 21,550,000 | | | 944 | | $ | 23,600,000 | |
| Series F | | | — | | | — | | | 1,268 | | | 31,700,000 | | | — | | | — | | | — | | | — | |
| Total | | | — | | $ | — | | | 1,268 | | $ | 31,700,000 | | | 862 | | $ | 21,550,000 | | | 944 | | $ | 23,600,000 | |
| | | North Carolina Dividend Advantage (NRB) | | North Carolina Dividend Advantage 2 (NNO) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | |
| ARPS redeemed: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series T | | | — | | $ | — | | | 680 | | $ | 17,000,000 | | | — | | $ | — | | | — | | $ | — | |
| Series F | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,120 | | | 28,000,000 | |
| Total | | | — | | $ | — | | | 680 | | $ | 17,000,000 | | | — | | $ | — | | | 1,120 | | $ | 28,000,000 | |
| | | North Carolina Dividend Advantage 3 (NII) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| | | Shares | | Amount | | Shares | | Amount | |
| ARPS redeemed: | | | | | | | | | | | | | |
| Series W | | | — | | $ | — | | | 1,120 | | $ | 28,000,000 | |
Transactions in MTP Shares were as follows:
| | | Georgia Premium Income (NPG) | | Georgia Dividend Advantage (NZX) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | |
| MTP Shares issued: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series 2015 | | | — | | $ | — | | | 2,834,000 | | $ | 28,340,000 | | | — | | $ | — | | | 1,434,000 | | $ | 14,340,000 | |
| | | Georgia Dividend Advantage 2 (NKG) | | North Carolina Premium Income (NNC) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | |
| MTP Shares issued: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series 2015 | | | — | | $ | — | | | 3,226,500 | | $ | 32,265,000 | | | — | | $ | — | | | 2,430,000 | | $ | 24,300,000 | |
| Series 2016 | | | — | | | — | | | — | | | — | | | 2,553,500 | | | 25,535,000 | | | — | | | — | |
| | | North Carolina Dividend Advantage (NRB) | | North Carolina Dividend Advantage 2 (NNO) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | |
| MTP Shares issued: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series 2015 | | | — | | $ | — | | | 1,660,000 | | $ | 16,600,000 | | | — | | $ | — | | | 2,970,000 | | $ | 29,700,000 | |
| | | North Carolina Dividend Advantage 3 (NII) | |
| | | Year Ended 5/31/11 | | Year Ended 5/31/10 | |
| | | Shares | | Amount | | Shares | | Amount | |
| MTP Shares issued: | | | | | | | | | | | | | |
| Series 2015 | | | — | | $ | — | | | 2,872,500 | | $ | 28,725,000 | |
5. Investment Transactions
Purchases and sales (including maturities but excluding short-term investments, where applicable) during the fiscal year ended May 31, 2011, were as follows:
| | | | | | | | | | |
| | | Georgia | | | Georgia | | | Georgia | |
| | | Premium | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | |
| | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Purchases | | $ | 4,163,543 | | | $ | 4,025,564 | | | $ | 4,190,213 | |
| Sales and maturities | | | 6,411,682 | | | | 5,381,402 | | | | 4,215,691 | |
| | | North | | | North | | | North | | | North | |
| | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Purchases | | $ | 13,191,052 | | | $ | 6,540,031 | | | $ | 13,293,649 | | | $ | 16,308,634 | |
| Sales and maturities | | | 8,821,327 | | | | 5,770,160 | | | | 12,407,794 | | | | 15,663,239 | |
6. 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 securities reflected as financing transactions, if any. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts as detailed below. Temporary differences do not require reclassification. Temporary and permanent differences do not impact the net asset values of the Funds.
At May 31, 2011, the cost and unrealized appreciation (depreciation) of investments as determined on a federal income tax basis, were as follows:
| | | Georgia Premium Income (NPG | ) | | Georgia Dividend Advantage (NZX | ) | | Georgia Dividend Advantage 2 (NKG | ) |
| Cost of investments | | $ | 76,095,528 | | | $ | 40,046,049 | | | $ | 92,167,450 | |
| Gross unrealized: | | | | | | | | | | | | |
| Appreciation | | $ | 2,453,267 | | | $ | 1,014,437 | | | $ | 2,240,693 | |
| Depreciation | | | (652,096 | ) | | | (431,757 | ) | | | (983,659 | ) |
| Net unrealized appreciation (depreciation) of investments | | $ | 1,801,171 | | | $ | 582,680 | | | $ | 1,257,034 | |
| | | Notes to |
| | | Financial Statements (continued) |
| | | 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 | | $ | 135,746,528 | | | $ | 47,585,141 | | | $ | 81,525,402 | | | $ | 82,564,294 | |
| Gross unrealized: | | | | | | | | | | | | | | | | |
| Appreciation | | $ | 4,484,347 | | | $ | 1,601,064 | | | $ | 2,466,126 | | | $ | 2,131,479 | |
| Depreciation | | | (1,211,250 | ) | | | (476,644 | ) | | | (855,441 | ) | | | (1,154,808 | ) |
| Net unrealized appreciation (depreciation) of investments | | $ | 3,273,097 | | | $ | 1,124,420 | | | $ | 1,610,685 | | | $ | 976,671 | |
Permanent differences, primarily due to federal taxes paid, taxable market discount, nondeductible offering costs and distribution character reclassifications, resulted in reclassifications among the Funds’ components of Common share net assets at May 31, 2011, the Funds’ tax year end, as follows:
| | | Georgia | | | Georgia | | | Georgia | |
| | | Premium | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | |
| | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Paid-in-surplus | | $ | (129,124 | ) | | $ | (83,075 | ) | | $ | (145,916 | ) |
| Undistributed (Over-distribution of) net investment income | | | 128,862 | | | | 82,967 | | | | 144,691 | |
| Accumulated net realized gain (loss) | | | 262 | | | | 108 | | | | 1,225 | |
| | | North | | | North | | | North | | | North | |
| | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Paid-in-surplus | | $ | (190,886 | ) | | $ | (100,579 | ) | | $ | (141,839 | ) | | $ | (137,209 | ) |
| Undistributed (Over-distribution of) net investment income | | | 190,048 | | | | 100,573 | | | | 140,952 | | | | 136,968 | |
| Accumulated net realized gain (loss) | | | 838 | | | | 6 | | | | 887 | | | | 241 | |
The tax components of undistributed net tax-exempt income, net ordinary income and net long-term capital gains at May 31, 2011, the Funds’ tax year end, were as follows:
| | | | | | | | | | |
| | | Georgia | | | Georgia | | | Georgia | |
| | | Premium | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | |
| | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Undistributed net tax-exempt income * | | $ | 683,154 | | | $ | 311,638 | | | $ | 626,655 | |
| Undistributed net ordinary income ** | | | 920 | | | | 309 | | | | 210 | |
| 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 * | | $ | 1,169,156 | | | $ | 406,375 | | | $ | 572,168 | | | $ | 517,561 | |
| Undistributed net ordinary income ** | | | — | | | | 700 | | | | 1,298 | | | | — | |
| 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 2, 2011, paid on June 1, 2011. |
| ** | 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’ tax years ended May 31, 2011 and May 31, 2010, was designated for purposes of the dividends paid deduction as follows:
| | | | | | | | | | |
| | | Georgia | | | Georgia | | | Georgia | |
| | | Premium | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | |
| 2011 | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Distributions from net tax-exempt income*** | | $ | 3,445,893 | | | $ | 1,894,084 | | | $ | 4,134,788 | |
| Distributions from net ordinary income** | | | — | | | | — | | | | — | |
| Distributions from net long-term capital gains | | | — | | | | — | | | | — | |
| | | North | | | North | | | North | | | North | |
| | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| 2011 | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Distributions from net tax-exempt income*** | | $ | 5,682,816 | | | $ | 2,338,991 | | | $ | 3,834,059 | | | $ | 3,878,904 | |
| Distributions from net ordinary income** | | | — | | | | — | | | | — | | | | — | |
| Distributions from net long-term capital gains | | | — | | | | — | | | | — | | | | — | |
| ** | Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. |
| *** | The Funds hereby designate these amounts paid during the fiscal year ended May 31, 2011, as Exempt Interest Dividends. |
| | | | | | | | | | |
| | | Georgia | | | Georgia | | | Georgia | |
| | | Premium | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | |
| 2010 | | (NPG | ) | | (NZX | ) | | (NKG | ) |
| Distributions from net tax-exempt income | | $ | 2,778,948 | | | $ | 1,553,295 | | | $ | 3,437,916 | |
| Distributions from net ordinary income** | | | — | | | | — | | | | — | |
| Distributions from net long-term capital gains | | | — | | | | — | | | | — | |
| | | North | | | North | | | North | | | North | |
| | | Carolina | | | Carolina | | | Carolina | | | Carolina | |
| | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| 2010 | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Distributions from net tax-exempt income | | $ | 4,835,850 | | | $ | 1,912,327 | | | $ | 3,044,632 | | | $ | 13,185,473 | |
| Distributions from net ordinary income** | | | — | | | | — | | | | — | | | | — | |
| Distributions from net long-term capital gains | | | — | | | | — | | | | 11,059 | | | | — | |
| ** | Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. |
At May 31, 2011, the Funds’ tax year end, the 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:
| | | | | | | | | | | | | | | | | | | | | | |
| | | Georgia Premium Income (NPG | ) | | Georgia Dividend Advantage (NZX | ) | | Georgia Dividend Advantage 2 (NKG | ) | | North Carolina Premium Income (NNC | ) | | North Carolina Dividend Advantage (NRB | ) | | North Carolina Dividend Advantage 2 (NNO | ) | | North Carolina Dividend Advantage 3 (NII | ) |
| Expiration: | | | | | | | | | | | | | | | | | | | | | |
| May 31, 2013 | | $ | — | | | $ | — | | | $ | 102,004 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| May 31, 2014 | | | — | | | | — | | | | 287,093 | | | | — | | | | — | | | | — | | | | 419,388 | |
| May 31, 2016 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 115,010 | |
| May 31, 2017 | | | 780,813 | | | | 55,576 | | | | 1,087,212 | | | | 172,628 | | | | — | | | | — | | | | 42,115 | |
| May 31, 2018 | | | 393,867 | | | | 247,287 | | | | 1,329,548 | | | | 353,181 | | | | 134,623 | | | | 387,585 | | | | 56,088 | |
| May 31, 2019 | | | — | | | | — | | | | 48,370 | | | | — | | | | — | | | | — | | | | — | |
| Total | | $ | 1,174,680 | | | $ | 302,863 | | | $ | 2,854,227 | | | $ | 525,809 | | | $ | 134,623 | | | $ | 387,585 | | | $ | 632,601 | |
During the Funds’ tax year ended May 31, 2011, the following Funds utilized capital loss carryforwards as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | | Georgia | | | Georgia | | | North Carolina | | | North Carolina | | | North Carolina | | | North Carolina | |
| | | | Premium | | | Dividend | | | Premium | | | Dividend | | | Dividend | | | Dividend | |
| | | | Income | | | Advantage | | | Income | | | Advantage | | | Advantage 2 | | | Advantage 3 | |
| | | | (NPG | ) | | (NZX | ) | | (NNC | ) | | (NRB | ) | | (NNO | ) | | (NII | ) |
| Utilized capital loss carryforwards | | $ | 122,477 | | $ | 119,212 | | $ | 183,618 | | $ | 82,221 | | $ | 200,509 | | $ | 210,988 | |
The Funds have elected to defer net realized losses from investments incurred from November 1, 2010 through May 31, 2011, the Funds’ 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 following fiscal year. The following Fund has elected to defer post-October losses as follows:
| | | | | |
| | | | Georgia | |
| | | | Dividend | |
| | | | Advantage 2 | |
| | | | (NKG | ) |
| Post-October capital losses | | $ | 38,605 | |
| | | Notes to |
| | | Financial Statements (continued) |
7. Management Fees and Other Transactions with Affiliates
Each Fund’s management fee consists of two components – a fund-level fee, based only on the amount of assets within the Fund, and a complex-level fee, based on the aggregate amount of all fund assets managed by the Adviser. This pricing structure enables the Fund shareholders to benefit from growth in the assets within their respective Fund as well as from growth in the amount of complex-wide assets managed by the Adviser.
The annual fund-level fee for each Fund, payable monthly, is calculated according to the following schedules:
| | Georgia Premium Income (NPG) |
| | North Carolina Premium Income (NNC) |
| Average Daily Managed Assets* | 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 managed 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 Managed Assets* | 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 managed assets over $2 billion | .3750 | |
The annual complex-level fee for each Fund, payable monthly, is calculated according to the following schedule:
| Complex-Level Managed Asset Breakpoint Level* | 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 | |
| * | For the fund-level and complex-level fees, managed assets include closed-end fund assets managed by the Adviser that are attributable to financial leverage. For these purposes, financial leverage includes the funds’ use of preferred stock and borrowings and certain investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by a TOB trust that has been effectively financed by the trust’s issuance of floating rate securities, subject to an agreement by the Adviser as to certain funds to limit the amount of such assets for determining managed assets in certain circumstances. The complex-level fee is calculated based upon the aggregate daily managed assets of all Nuveen Funds that constitute “eligible assets.” Eligible assets do not include assets attributable to investments in other Nuveen Funds and assets in excess of $2 billion added to the Nuveen Fund complex in connection with the Adviser’s assumption of the management of the former First American Funds effective January 1, 2011. As of May 31, 2011, the complex level fee rate for each of these Funds was .1774%. |
The management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Adviser has entered into sub-advisory agreements with the Sub-Adviser under which the Sub-Adviser manages the investment portfolios of the Funds. The Sub-Adviser is compensated for its services to the Funds from the management fees paid to the Adviser.
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 managed assets, for fees and expenses in the amounts and for the time periods set forth below:
| Year Ending | | | | Year Ending | | |
| September 30, | | | | September 30, | | |
| 2001* | .30 | % | | 2007 | .25 | % |
| 2002 | .30 | | | 2008 | .20 | |
| 2003 | .30 | | | 2009 | .15 | |
| 2004 | .30 | | | 2010 | .10 | |
| 2005 | .30 | | | 2011 | .05 | |
| 2006 | .30 | | | | | |
| * | From the commencement of operations. |
The Adviser has not agreed to reimburse Georgia Dividend Advantage (NZX) for any portion of its fees and expenses beyond September 30, 2011.
For the first eight years of Georgia Dividend Advantage 2’s (NKG) and North Carolina Dividend Advantage 3’s (NII) operations, the Adviser has agreed to reimburse the Funds, as a percentage of average daily managed assets, 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 managed assets, 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.
| | | Notes to |
| | | Financial Statements (continued) |
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 managed assets, 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.
8. New Accounting Pronouncements
Fair Value Measurements and Disclosures
On May 12, 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) modifying Topic 820, Fair Value Measurements and Disclosures. At the same time, the International Accounting Standards Board (“IASB”) issued International Financial Reporting Standard (“IFRS”) 13, Fair Value Measurement. The objective by the FASB and IASB is convergence of their guidance on fair value measurements and disclosures. Specifically, the ASU requires reporting entities to disclose i) the amounts of any transfers between Level 1 and Level 2, and the reasons for the transfers, ii) for Level 3 fair value measurements, a) quantitative information about significant unobservable inputs used, b) a description of the valuation processes used by the reporting entity and c) a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs if a change in those inputs might result in a significantly higher or lower fair value measurement. The effective date of the ASU is for interim and annual periods beginning after December 15, 2011. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.
9. Subsequent Events
Approved Fund Mergers
Subsequent to the reporting period, the Funds’ Board of Trustees approved a series of mergers for all the Georgia and North Carolina funds included in this report. The mergers are subject to shareholder approval at the Funds’ regular shareholder meeting later this year. The mergers in each respective state are intended to create a single, larger state fund with enhanced trading appeal and lower operating expenses of traded Common shares of the fund.
More information on the proposed mergers will be contained in the proxy materials expected to be filed with the Securities and Exchange Commission in the coming weeks. The proposed fund mergers are as follows:
| | | |
| Acquired Fund | | Acquiring Fund |
| Georgia Funds | | |
| Georgia Premium Income (NPG) | | Georgia Dividend Advantage 2 (NKG) |
| Georgia Dividend Advantage (NZX) | | |
| | | |
| North Carolina Funds | | |
| North Carolina Dividend Advantage (NRB) | | North Carolina Premium Income (NNC) |
| North Carolina Dividend Advantage 2 (NNO) | | |
| North Carolina Dividend Advantage 3 (NII) | | |
Board Members & Officers (Unaudited)
| | | The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board Members of the Funds. The number of board members of the Fund is currently set at ten. None of the board members who are not “interested” persons of the Funds (referred to herein as “independent board members”) has ever been a director or employee of, or consultant to, Nuveen or its affiliates. The names and business addresses of the board members and officers of the Funds, their principal occupations and other affiliations during the past five years, the number of portfolios each oversees and other directorships they hold are set forth below. |
| | Name, Birthdate & Address | | Position(s) Held with the Funds | | Year First Elected or Appointed and Term(1) | | Principal Occupation(s) Including other Directorships During Past 5 Years | | Number of Portfolios in Fund Complex Overseen by Board Member |
| | | | | | | | | | |
| Independent Board Members: | | | | | | |
| | | | | | | | | | |
| ■ | ROBERT P. BREMNER(2) 8/22/40 333 W. Wacker Drive Chicago, IL 60606 | | Chairman of the Board and Board Member | | 1996 | | Private Investor and Management Consultant; Treasurer and Director, Humanities Council of Washington, D.C.; Board Member, Independent Directors Council affiliated with the Investment Company Institute. | | 245 |
| | | | | | | | | | |
| ■ | JACK B. EVANS 10/22/48 333 W. Wacker Drive Chicago, IL 60606 | | Board Member | | 1999 | | President, The Hall-Perrine Foundation, a private philanthropic corporation (since 1996); Director and Chairman, United Fire Group, a publicly held company; member of the Board of Regents for the State of Iowa University System; Director, Source Media Group; Life Trustee of Coe College and the Iowa College Foundation; formerly, Director, Alliant Energy; formerly, Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm. | | 245 |
| | | | | | | | | | |
| ■ | WILLIAM C. HUNTER 3/6/48 333 W. Wacker Drive Chicago, IL 60606 | | Board Member | | 2004 | | Dean, Tippie College of Business, University of Iowa (since 2006); Director (since 2004) of Xerox Corporation; Director (since 2005), Beta Gamma Sigma International Honor Society; Director of Wellmark, Inc. (since 2009); formerly, Dean and Distinguished Professor of Finance, School of Business at the University of Connecticut (2003-2006); previously, Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago (1995-2003); formerly, Director (1997-2007), Credit Research Center at Georgetown University. | | 245 |
| | | | | | | | | | |
| ■ | DAVID J. KUNDERT(2) 10/28/42 333 W. Wacker Drive Chicago, IL 60606 | | Board Member | | 2005 | | Director, Northwestern Mutual Wealth Management Company; retired (since 2004) as Chairman, JPMorgan Fleming Asset Management, President and CEO, Banc One Investment Advisors Corporation, and President, One Group Mutual Funds; prior thereto, Executive Vice President, Banc One Corporation and Chairman and CEO, Banc One Investment Management Group; Member, Board of Regents, Luther College; member of the Wisconsin Bar Association; member of Board of Directors, Friends of Boerner Botanical Gardens; member of Board of Directors and Chair of Investment Committee, Greater Milwaukee Foundation. | | 245 |
| | | | | | | | | | |
| ■ | WILLIAM J. SCHNEIDER(2) 9/24/44 333 W. Wacker Drive Chicago, IL 60606 | | Board Member | | 1997 | | Chairman of Miller-Valentine Partners Ltd., a real estate investment company; formerly, Senior Partner and Chief Operating Officer (retired 2004) of Miller-Valentine Group; member, University of Dayton Business School Advisory Council;member, Mid-America Health System Board; formerly, member and chair, Dayton Philharmonic Orchestra Association; formerly, member, Business Advisory Council, Cleveland Federal Reserve Bank. | | 245 |
Board Members & Officers (Unaudited) (continued)
| | Name, Birthdate & Address | | Position(s) Held with the Funds | | Year First Elected or Appointed and Term(1) | | Principal Occupation(s) Including other Directorships During Past 5 Years | | Number of Portfolios in Fund Complex Overseen by Board Member |
| Independent Board Members: | | | | | | |
| | | | | | | | | | |
| ■ | 12/29/47 333 W. Wacker Drive Chicago, IL 60606 | | Board Member | | 1997 | | Executive Director, Gaylord and Dorothy Donnelley Foundation (since 1994); prior thereto, Executive Director, Great Lakes Protection Fund (1990-1994). | | 245 |
| | | | | | | | | | |
| ■ | 6/28/47 333 W. Wacker Drive Chicago, IL 60606 | | Board Member | | 2007 | | Director, Chicago Board Options Exchange (since 2006); Director, C2 Options Exchange, Incorporated (since 2009); formerly, Commissioner, New York State Commission on Public Authority Reform (2005-2010); formerly, Chair, New York Racing Association Oversight Board (2005-2007). | | 245 |
| | | | | | | | | | |
| ■ | 8/16/44 333 W. Wacker Drive Chicago, IL 60606 | | Board Member | | 2011 | | Board Member, Mutual Fund Directors Forum; Member, Governing Board, Investment Company Institute’s Independent Directors Council; governance consultant and non-profit board member; former Owner and President, Strategic Management Resources, Inc. a management consulting firm; previously, held several executive positions in general management, marketing and human resources at IBM and The Pillsbury Company; Independent Director, First American Fund Complex (1987-2010) and Chair (1997-2010). | | 245 |
| | | | | | | | | | |
| ■ | TERENCE J. TOTH(2) 9/29/59 333 W. Wacker Drive Chicago, IL 60606 | | Board Member | | 2008 | | Director, Legal & General Investment Management America, Inc. (since 2008); Managing Partner, Promus Capital (since 2008); formerly, CEO and President, Northern Trust Global Investments (2004-2007); Executive Vice President, Quantitative Management & Securities Lending (2000-2004); prior thereto, various positions with Northern Trust Company (since 1994); member: Goodman Theatre Board (since 2004), Chicago Fellowship Board (since 2005) and Catalyst Schools of Chicago Board (since 2008); formerly, member: Northern Trust Mutual Funds Board (2005-2007), Northern Trust Global Investments Board (2004-2007), Northern Trust Japan Board (2004-2007), Northern Trust Securities Inc. Board (2003-2007) and Northern Trust Hong Kong Board (1997-2004). | | 245 |
| | Interested Board Member: | | | | | | |
| | | | | | | | | | |
| ■ | 6/14/61 333 W. Wacker Drive Chicago, IL 60606 | | Board Member | | 2008 | | Chief Executive Officer and Chairman (since 2007), and Director (since 1999) of Nuveen Investments, Inc., formerly, President (1999-2007); Chief Executive Officer (since 2007) of Nuveen Investments Advisers Inc.; Director (since 1998) formerly, Chief Executive Officer (2007-2010) of Nuveen Fund Advisors, Inc. | | 245 |
| | Name, Birthdate and Address | | Position(s) Held with the Funds | | Year First Elected or Appointed(4) | | Principal Occupation(s) During Past 5 Years | | Number of Portfolios in Fund Complex Overseen by Officer |
| Officers of the Funds: | | | | | | |
| | | | | | | | | | |
| ■ | 9/9/56 333 W. Wacker Drive Chicago, IL 60606 | | Chief Administrative Officer | | 1988 | | Managing Director (since 2002), Assistant Secretary and Associate General Counsel of Nuveen Securities, LLC; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Managing Director (since 2002), Assistant Secretary (since 1997) and Co-General Counsel (since 2011) of Nuveen Fund Advisors, Inc.; Managing Director, Assistant Secretary and Associate General Counsel of Nuveen Asset Management, LLC (since 2011); Managing Director, Associate General Counsel and Assistant Secretary of Symphony Asset Management LLC (since 2003); Vice President and Assistant Secretary of NWQ Investment Management Company, LLC (since 2002), Nuveen Investments Advisers Inc. (since 2002), Tradewinds Global Investors LLC, and Santa Barbara Asset Management, LLC (since 2006), Nuveen HydePark Group LLC and Nuveen Investment Solutions, Inc. (since 2007) and of Winslow Capital Management Inc. (since 2010); Chief Administrative Officer and Chief Compliance Officer (since 2010) of Nuveen Commodities Asset Management, LLC; Chartered Financial Analyst. | | 245 |
| | | | | | | | | | |
| ■ | WILLIAM ADAMS IV 6/9/55 333 W. Wacker Drive Chicago, IL 60606 | | Vice President | | 2007 | | Senior Executive Vice President, Global Structured Products (since 2010), formerly, Executive Vice President (1999-2010) of Nuveen Securities, LLC; Co-President of Nuveen Fund Advisors, Inc. (since 2011); Managing Director (since 2010) of Nuveen Commodities Asset Management, LLC. | | 133 |
| | | | | | | | | | |
| ■ | 1/11/62 333 W. Wacker Drive Chicago, IL 60606 | | Vice President | | 2007 | | Managing Director of Nuveen Securities, LLC. | | 133 |
| | | | | | | | | | |
| ■ | 4/11/64 333 W. Wacker Drive Chicago, IL 60606 | | Vice President | | 2009 | | Executive Vice President (since 2008) of Nuveen Investments, Inc. and of Nuveen Fund Advisors, Inc. (since 2011); previously, Head of Institutional Asset Management (2007-2008) of Bear Stearns Asset Management; Head of Institutional Asset Management (1986-2007) of Bank of NY Mellon; Chartered Financial Analyst. | | 245 |
| | | | | | | | | | |
| ■ | 10/24/45 333 W. Wacker Drive Chicago, IL 60606 | | Vice President | | 1998 | | Managing Director (since 2005) of Nuveen Fund Advisors, Inc. | | 245 |
| | | | | | | | | | |
| ■ | 5/31/54 333 W. Wacker Drive Chicago, IL 60606 | | Vice President and Controller | | 1998 | | Senior Vice President (since 2010), formerly, Vice President (2005-2010) of Nuveen Fund Advisors, Inc.; Certified Public Accountant. | | 245 |
Board Members & Officers (Unaudited) (continued)
| | and Address | | Position(s) Heldwith the Funds | | Year First | | Principal Occupation(s)During Past 5 Years | | |
| Officers of the Funds: | | | | | | |
| | | | | | | | | | |
| ■ | 8/20/70 333 W. Wacker Drive Chicago, IL 60606 | | Vice President and Treasurer | | 2009 | | Managing Director, Corporate Finance & Development, Treasurer (since 2009) of Nuveen Securities, LLC; Managing Director and Treasurer (since 2009) of Nuveen Fund Advisors Inc., Nuveen Investment Solutions, Inc., Nuveen Investments Advisers Inc., Nuveen Investments Holdings Inc. and (since (2011) Nuveen Asset Management, LLC; Vice President and Treasurer of NWQ Investment Management Company, LLC, Tradewinds Global Investors, LLC, Symphony Asset Management LLC and Winslow Capital Management, Inc.; Vice President of Santa Barbara Asset Management, LLC; formerly, Treasurer (2006-2009), Senior Vice President (2008-2009), previously, Vice President (2006-2008) of Janus Capital Group, Inc.; formerly, Senior Associate in Morgan Stanley’s Global Financial Services Group (2000-2003); Chartered Accountant Designation. | | 245 |
| | | | | | | | | | |
| ■ | 2/24/70 333 W. Wacker Drive Chicago, IL 60606 | | Chief Compliance Officer and Vice President | | 2003 | | Senior Vice President (since 2008) and Assistant Secretary (since 2003) of Nuveen Fund Advisors, Inc. | | 245 |
| | | | | | | | | | |
| ■ | 8/27/61 333 W. Wacker Drive Chicago, IL 60606 | | Vice President | | 2002 | | Senior Vice President (since 2010), formerly, Vice President (2005-2010) of Nuveen Fund Advisors, Inc. | | 245 |
| | | | | | | | | | |
| ■ | 7/27/51 333 W. Wacker Drive Chicago, IL 60606 | | Vice President and Assistant Secretary | | 1997 | | Senior Vice President (since 2010), formerly, Vice President (1993-2010), Assistant Secretary and Assistant General Counsel of Nuveen Securities, LLC; Senior Vice President (since 2011) of Nuveen Asset Management, LLC: Senior Vice President (since 2010), formerly, Vice President (2005-2010), and Assistant Secretary of Nuveen Investments, Inc.; Senior Vice President (since 2010), formerly Vice President (2005-2010), and Assistant Secretary (since 1997) of Nuveen Fund Advisors, Inc.; Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002), NWQ Investment Management Company, LLC, Symphony Asset Management LLC (since 2003), Tradewinds Global Investors, LLC, Santa Barbara Asset Management, LLC (since 2006), Nuveen HydePark Group, LLC and Nuveen Investment Solutions, Inc. (since 2007), and of Winslow Capital Management, Inc. (since 2010); Vice President and Assistant Secretary of Nuveen Commodities Asset Management, LLC (since 2010). | | 245 |
| | | | | | | | | | |
| ■ | 3/26/66 333 W. Wacker Drive Chicago, IL 60606 | | Vice President and Secretary | | 2007 | | Managing Director (since 2008), formerly, Vice President (2007-2008), Nuveen Securities, LLC; Managing Director (since 2008), Assistant Secretary (since 2007) and Co-General Counsel (since 2011) of Nuveen Fund Advisors, Inc.; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Managing Director (since 2008), and Assistant Secretary, Nuveen Investment Holdings, Inc.; Vice President (since 2007) and Assistant Secretary of Nuveen Investments Advisers Inc., NWQ Investment Management Company, LLC, Tradewinds Global Investors LLC, NWQ Holdings, LLC, Symphony Asset Management LLC, Santa Barbara Asset Management, LLC, Nuveen HydePark Group, LLC, Nuveen Investment Solutions, Inc. (since 2007) and of Winslow Capital Management, Inc. (since 2010); Vice President and Secretary (since 2010) of Nuveen Commodities Asset Management, LLC; prior thereto, Partner, Bell, Boyd & Lloyd LLP (1997-2007). | | 245 |
| | Name, Birthdate and Address | | Position(s) Held with the Funds | | Year First Elected or Appointed(4) | | Principal Occupation(s) During Past 5 Years | | Number of Portfolios in Fund Complex Overseen by Officer |
| Officers of the Funds: | | | | | | | |
| | | | | | | | | | |
| ■ | 3/30/53 800 Nicollet Mall Minneapolis, MN 55402 | Vice President and Assistant Secretary | | 2011 | | Managing Director, Assistant Secretary and Co-General Counsel (since 2011) of Nuveen Fund Advisors, Inc.; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Managing Director and Assistant Secretary (since 2011) of Nuveen Securities, LLC; formerly, Deputy General Counsel, FAF Advisors, Inc. (2004-2010). | | 245 |
| (1) | Board Members serve three year terms, except for two board members who are elected by the holders of Preferred Shares. The Board of Trustees is divided into three classes, Class I, Class II, and Class III, with each being elected to serve until the third succeeding annual shareholders’ meeting subsequent to its election or thereafter in each case when its respective successors are duly elected or appointed, except two board members are elected by the holders of Preferred Shares to serve until the next annual shareholders’ meeting subsequent to its election or thereafter in each case when its respective successors are duly elected or appointed. The first year elected or appointed represents the year in which the board member was first elected or appointed to any fund in the Nuveen Complex. |
| (2) | Also serves as a trustee of the Nuveen Diversified Commodity Fund, an exchange-traded commodity pool managed by Nuveen Commodities Asset Management, LLC, an affiliate of the Adviser. |
| (3) | Mr. Amboian is an interested trustee because of his position with Nuveen Investments, Inc. and certain of its subsidiaries, which are affiliates of the Nuveen Funds. |
| (4) | Officers serve one year terms through August of each year. The year first elected or appointed represents the year in which the Officer was first elected or appointed to any fund in the Nuveen Complex. |
Annual Investment Management
Agreement Approval Process (Unaudited)
The Board of Trustees (each, a “Board” and each Trustee, a “Board Member”) of the Funds, including the Board Members who are not parties to the Funds’ advisory or sub-advisory agreements or “interested persons” of any such parties (the “Independent Board Members”), are responsible for approving the advisory agreements (each, an “Investment Management Agreement”) between each Fund and Nuveen Fund Advisors, Inc. (the “Advisor”) and the sub-advisory agreements (each a “Sub-Advisory Agreement”) between the Advisor and Nuveen Asset Management, LLC (the “Sub-Advisor”) (the Investment Management Agreements and the Sub-Advisory Agreements are referred to collectively as the “Advisory Agreements”) and their periodic continuation. Pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”), the Board is generally required to consider the continuation of advisory agreements and sub-advisory agreements on an annual basis. Accordingly, at an in-person meeting held on May 23-25, 2011 (the “May Meeting”), the Board, including a majority of the Independent Board Members, considered and approved the continuation of the Advisory Agreements for the Funds for an additional one-year period.
In preparation for their considerations at the May Meeting, the Board requested and received extensive materials prepared in connection with the review of the Advisory Agreements. The materials provided a broad range of information regarding the Funds, the Advisor and the Sub-Advisor (the Advisor and the Sub-Advisor are collectively, the “Fund Advisers” and each, a “Fund Adviser”). As described in more detail below, the information provided included, among other things, a review of Fund performance, including Fund investment performance assessments against peer groups and appropriate benchmarks, a comparison of Fund fees and expenses relative to peers, a description and assessment of shareholder service levels for the Funds, a summary of the performance of certain service providers, a review of product initiatives and shareholder communications and an analysis of the Fund Adviser���s profitability with comparisons to comparable peers in the managed fund business. As part of their annual review, the Board also held a separate meeting on April 19-20, 2011, to review the Funds’ investment performance and consider an analysis provided by the Advisor of the Sub-Advisor which generally evaluated the Sub-Advisor’s investment team, investment mandate, organizational structure and history, investment philosophy and process, performance of the applicable Fund, and significant changes to the foregoing. As a result of their review of the materials and discussions, the Board presented the Advisor with questions and the Advisor responded.
The materials and information prepared in connection with the review of the Advisory Agreements at the May Meeting supplemented the information provided to the Board
during the year. In this regard, throughout the year, the Board, acting directly or through its committees, regularly reviews the performance and various services provided by the Advisor and, since the internal restructuring described in Section A below, the Sub-Advisor. The Board meets at least quarterly as well as at other times as the need arises. At its quarterly meetings, the Board reviews reports by the Advisor which include, among other things, Fund performance, a review of the investment teams and compliance reports. The Board also meets with key investment personnel managing the Fund portfolios during the year. In addition, the Board continues its program of seeking to visit each sub-advisor to the Nuveen funds at least once over a multiple year rotation, meeting with key investment and business personnel. The Board also met with State Street Bank & Trust Company, the Funds’ accountant and custodian, in 2010. The Board considers factors and information that are relevant to its consideration of the renewal of the Advisory Agreements at these meetings held throughout the year. Accordingly, the Board considered the information provided and knowledge gained at these meetings when performing its review at the May Meeting of the Advisory Agreements. The Independent Board Members are assisted throughout the process by independent legal counsel who provided materials describing applicable law and the duties of directors or trustees in reviewing advisory contracts and met with the Independent Board Members in executive sessions without management present.
The Board considered all factors it believed relevant with respect to each Fund, including among other factors: (a) the nature, extent and quality of the services provided by the Fund Advisers, (b) the investment performance of the Fund and Fund Advisers, (c) the advisory fees and costs of the services to be provided to the Funds and the profitability of the Fund Advisers, (d) the extent of any economies of scale, (e) any benefits derived by the Fund Advisers from the relationship with the Fund and (f) other factors. Each Board Member may have accorded different weight to the various factors in reaching his or her conclusions with respect to a Fund’s Advisory Agreements. The Independent Board Members did not identify any single factor as all important or controlling. The Independent Board Members’ considerations were instead based on a comprehensive consideration of all the information presented. The principal factors considered by the Board and its conclusions are described below.
A. Nature, Extent and Quality of Services
In considering renewal of the Advisory Agreements, the Independent Board Members considered the nature, extent and quality of the Fund Adviser’s services, including advisory services and the resulting Fund performance and administrative services. The Independent Board Members reviewed materials outlining, among other things, the Fund Adviser’s organization and business; the types of services that the Fund Adviser or its affiliates provide to the Funds; the performance record of the applicable Fund (as described in further detail below); and any initiatives Nuveen had taken for the applicable fund product line.
Annual Investment Management Agreement
Approval Process (Unaudited) (continued)
In considering advisory services, the Board recognized that the Advisor provides various oversight, administrative, compliance and other services for the Funds and the Sub-Advisor provides the portfolio investment management services to the Funds. The Board recognized that Nuveen engaged in an internal restructuring in 2010 pursuant to which portfolio management services the Advisor had provided directly to the Funds were transferred to the Sub-Advisor, a newly-organized, wholly-owned subsidiary of the Advisor. Accordingly, in reviewing the portfolio management services provided to each Fund, the Board reviewed the materials provided by the Nuveen Investment Services Oversight Team analyzing, among other things, the Sub-Advisor’s investment team and changes thereto, organization and history, assets under management, Fund objectives and mandate, the investment teams’ philosophy and strategies in managing the Fund, developments affecting the Sub-Advisor or Fund and Fund performance. The Independent Board Members also reviewed portfolio manager compensation arrangements to evaluate each Fund Adviser’s ability to attract and retain high quality investment personnel, preserve stability, and reward performance but not provide an incentive to take undue risks. In addition, the Board considered the Advisor’s execution of its oversight responsibilities over the Sub-Advisor. Given the importance of compliance, the Independent Board Members also considered Nuveen’s compliance program, including the report of the chief compliance officer regarding the Funds’ compliance policies and procedures.
In addition to advisory services, the Board considered the quality and extent of administrative and other non-investment advisory services the Advisor and its affiliates provide to the Funds, including product management, investment services (such as oversight of investment policies and procedures, risk management, and pricing), fund administration, oversight of service providers, shareholder services, administration of Board relations, regulatory and portfolio compliance, legal support, managing leverage and promoting an orderly secondary market for common shares.
In reviewing the services provided, the Board also reviewed materials describing various notable initiatives and projects the Advisor performed in connection with the closed-end fund product line. These initiatives included continued activities to refinance auction rate preferred securities; ongoing services to manage leverage that has become increasingly complex; continued secondary market offerings and share repurchases for certain funds; and continued communications efforts with shareholders, fund analysts and financial advisers. With respect to the latter, the Independent Board Members noted Nuveen’s continued commitment to supporting the secondary market for the common shares of its closed-end funds through a comprehensive secondary market promotion program designed to raise investor and analyst awareness and understanding of closed-end funds. Nuveen’s support services included, among other things: continuing communications in support of refinancing efforts related to auction rate preferred securities; participating in conferences; communicating continually with closed-end fund analysts covering the Nuveen funds; providing marketing for the closed end funds; and maintaining and enhancing a closed-end fund website.
Based on their review, the Independent Board Members found that, overall, the nature, extent and quality of services provided to the respective Funds under each applicable Advisory Agreement were satisfactory.
B. The Investment Performance of the Funds and Fund Advisers
The Board, including the Independent Board Members, reviewed and considered the performance history of each Fund over various time periods. The Board reviewed, among other things, each Fund’s historic investment performance as well as information comparing the Fund’s performance information with that of other funds (the “Performance Peer Group”) based on data provided by an independent provider of mutual fund data and with recognized and/or customized benchmarks.
The Board reviewed reports, including a comprehensive analysis of the Funds’ performance and the applicable investment team. In this regard, the Board reviewed each Fund’s total return information compared to its Performance Peer Group for the quarter, one-, three- and five-year periods ending December 31, 2010 and for the same periods ending March 31, 2011. In addition, the Board reviewed each Fund’s total return information compared to recognized and/or customized benchmarks for the quarter, one-and three-year periods ending December 31, 2010 and for the same periods ending March 31, 2011. The Independent Board Members also reviewed historic premium and discount levels, including a summary of actions taken to address or discuss other developments affecting the secondary market discounts of various funds. This information supplemented the Fund performance information provided to the Board at each of its quarterly meetings.
In reviewing performance comparison information, the Independent Board Members recognized that the usefulness of the comparisons of the performance of certain funds with the performance of their respective Performance Peer Group may be limited because the Performance Peer Group may not adequately represent the objectives and strategies of the applicable funds or may be limited in size or number. In this regard, the Independent Board Members noted that the Performance Peer Groups of each of the Funds were classified as having significant differences from such Funds based on various considerations such as special fund objectives, potential investable universe and the composition of the peer set (e.g., the number and size of competing funds and number of competing managers). The Independent Board Members also noted that the investment experience of a particular shareholder in the Funds will vary depending on when such shareholder invests in the applicable Fund, the class held (if multiple classes are offered) and the performance of the Fund (or respective class) during that shareholder’s investment period.
With respect to each of the Funds, which, as noted above, had significant differences with its Performance Peer Group, the Independent Board Members considered the Fund’s performance compared to its respective benchmark. In this regard, the Independent Board Members noted that the Nuveen Georgia Premium Income Municipal Fund (the “Georgia Premium Fund”) underperformed its benchmark in the
Annual Investment Management Agreement
Approval Process (Unaudited) (continued)
one- and three-year periods and that each of the other Funds underperformed its respective benchmark in the one-year period, but outperformed its benchmark in the three-year period. With respect to any Funds that underperformed their peers and/or benchmarks from time to time, the Board monitors such Funds closely and considers any steps necessary or appropriate to address such issues.
Based on their review, the Independent Board Members determined that each Fund’s investment performance had been satisfactory.
C. Fees, Expenses and Profitability
1. Fees and Expenses
The Board evaluated the management fees and expenses of each Fund reviewing, among other things, such Fund’s gross management fees, net management fees and net expense ratios in absolute terms as well as compared to the fee and expenses of a comparable universe of funds based on data provided by an independent fund data provider (the “Peer Universe”) and in certain cases, to a more focused subset of funds in the Peer Universe (the “Peer Group”) and any expense limitations.
The Independent Board Members further reviewed the methodology regarding the construction of the applicable Peer Universe and Peer Group (if any). In reviewing the comparisons of fee and expense information, the Independent Board Members took into account that in certain instances various factors such as: the asset level of a fund relative to peers; the limited size and particular composition of the Peer Universe or Peer Group; the investment objectives of the peers; expense anomalies; changes in the funds comprising the Peer Universe or Peer Group from year to year; levels of reimbursement; the timing of information used; the differences in the type and use of leverage; and differences in the states reflected in the Peer Universe or Peer Group may impact the comparative data thereby limiting the ability to make a meaningful comparison with peers.
In reviewing the fee schedule for a Fund, the Independent Board Members also considered the fund-level and complex-wide breakpoint schedules (described in further detail below) and any fee waivers and reimbursements provided by Nuveen (applicable, in particular, for certain closed-end funds launched since 1999). In reviewing fees and expenses, the Board considered the expenses and fees to be higher if they were over 10 basis points higher, slightly higher if they were 6 to 10 basis points higher, in line if they were within 5 basis points higher than the peer average and below if they were below the peer average of the Peer Group (if available) or Peer Universe if there was no separate Peer Group.
The Independent Board Members noted that the Georgia Premium Fund and Nuveen North Carolina Premium Income Municipal Fund had net management fees slightly higher or higher than the peer average but a net expense ratio below or in line with the peer average. They observed that each of the other Funds had net management fees and net expense ratios below or in line with their peer averages.
Based on their review of the fee and expense information provided, the Independent Board Members determined that each Fund’s management fees were reasonable in light of the nature, extent and quality of services provided to the Fund.
2. Comparisons with the Fees of Other Clients
The Independent Board Members further reviewed information regarding the nature of services and fee rates offered by the Advisor to other clients, including municipal separately managed accounts and passively managed exchange traded funds (ETFs) sub advised by the Advisor. In evaluating the comparisons of fees, the Independent Board Members noted that the fee rates charged to the Funds and other clients vary, among other things, because of the different services involved and the additional regulatory and compliance requirements associated with registered investment companies, such as the Funds. Accordingly, the Independent Board Members considered the differences in the product types, including, but not limited to, the services provided, the structure and operations, product distribution and costs thereof, portfolio investment policies, investor profiles, account sizes and regulatory requirements. The Independent Board Members noted, in particular, that the range of services provided to the Funds (as discussed above) is much more extensive than that provided to separately managed accounts. Given the inherent differences in the products, particularly the extensive services provided to the Funds, the Independent Board Members believe such facts justify the different levels of fees.
In considering the fees of the Sub-Advisor, the Independent Board Members also considered the pricing schedule or fees that the Sub-Advisor charges for similar investment management services for other Nuveen funds.
3. Profitability of Fund Advisers
In conjunction with its review of fees, the Independent Board Members also considered the profitability of Nuveen for its advisory activities (which incorporated Nuveen’s wholly-owned affiliated sub advisers) and its financial condition. The Independent Board Members reviewed the revenues and expenses of Nuveen’s advisory activities for the last two years, the allocation methodology used in preparing the profitability data and an analysis of the key drivers behind the changes in revenues and expenses that impacted profitability in 2010. The Independent Board Members noted this information supplemented the profitability information requested and received during the year to help keep them apprised of developments affecting profitability (such as changes in fee waivers and expense reimbursement commitments). In this regard, the Independent Board Members noted that they have an Independent Board Member serve as a point person to review and keep them apprised of changes to the profitability analysis and/or methodologies during the year. The Independent Board Members also considered Nuveen’s revenues for advisory activities, expenses, and profit margin compared to that of various unaffiliated management firms with similar amounts of assets under management and relatively comparable asset composition prepared by Nuveen.
Annual Investment Management Agreement
Approval Process (Unaudited) (continued)
In reviewing profitability, the Independent Board Members recognized the subjective nature of determining profitability which may be affected by numerous factors including the allocation of expenses. Further, the Independent Board Members recognized the difficulties in making comparisons as the profitability of other advisers generally is not publicly available and the profitability information that is available for certain advisers or management firms may not be representative of the industry and may be affected by, among other things, the adviser’s particular business mix, capital costs, types of funds managed and expense allocations. Notwithstanding the foregoing, the Independent Board Members reviewed Nuveen’s methodology and assumptions for allocating expenses across product lines to determine profitability. In reviewing profitability, the Independent Board Members recognized Nuveen’s investment in its fund business. Based on their review, the Independent Board Members concluded that the Advisor’s level of profitability for its advisory activities was reasonable in light of the services provided.
In evaluating the reasonableness of the compensation, the Independent Board Members also considered other amounts paid to a Fund Adviser by the Funds as well as any indirect benefits (such as soft dollar arrangements, if any) the Fund Adviser and its affiliates receive, or are expected to receive, that are directly attributable to the management of the Funds, if any. See Section E below for additional information on indirect benefits the Fund Adviser may receive as a result of its relationship with the Funds. Based on their review of the overall fee arrangements of each Fund, the Independent Board Members determined that the advisory fees and expenses of the respective Fund were reasonable.
D. Economies of Scale and Whether Fee Levels Reflect These Economies of Scale
With respect to economies of scale, the Independent Board Members have recognized the potential benefits resulting from the costs of a fund being spread over a larger asset base, although economies of scale are difficult to measure and predict with precision, particularly on a fund-by-fund basis. One method to help ensure the shareholders share in these benefits is to include breakpoints in the advisory fee schedule. Generally, management fees for funds in the Nuveen complex are comprised of a fund-level component and a complex-level component, subject to certain exceptions. Accordingly, the Independent Board Members reviewed and considered the applicable fund-level breakpoints in the advisory fee schedules that reduce advisory fees as asset levels increase. Further, the Independent Board Members noted that although closed-end funds may from time-to-time make additional share offerings, the growth of their assets will occur primarily through the appreciation of such funds’ investment portfolio.
In addition to fund-level advisory fee breakpoints, the Board also considered the Funds’ complex-wide fee arrangement. Pursuant to the complex-wide fee arrangement, the fees of the funds in the Nuveen complex are generally reduced as the assets in the fund complex reach certain levels. The complex-wide fee arrangement seeks to provide the benefits of economies of scale to fund shareholders when total fund complex assets
increase, even if assets of a particular fund are unchanged or have decreased. The approach reflects the notion that some of Nuveen’s costs are attributable to services provided to all its funds in the complex and therefore all funds benefit if these costs are spread over a larger asset base.
Based on their review, the Independent Board Members concluded that the breakpoint schedules and complex-wide fee arrangement were acceptable and reflect economies of scale to be shared with shareholders when assets under management increase.
E. Indirect Benefits
In evaluating fees, the Independent Board Members received and considered information regarding potential “fall out” or ancillary benefits the respective Fund Adviser or its affiliates may receive as a result of its relationship with each Fund. In this regard, the Independent Board Members considered any revenues received by affiliates of the Advisor for serving as agent at Nuveen’s trading desk and as co-manager in initial public offerings of new closed-end funds.
In addition to the above, the Independent Board Members considered whether each Fund Adviser received any benefits from soft dollar arrangements whereby a portion of the commissions paid by a Fund for brokerage may be used to acquire research that may be useful to the Fund Adviser in managing the assets of the Funds and other clients. The Independent Board Members recognized that each Fund Adviser has the authority to pay a higher commission in return for brokerage and research services if it determines in good faith that the commission paid is reasonable in relation to the value of the brokerage and research services provided. Nevertheless, the Independent Board Members noted that commissions are generally not paid in connection with municipal securities transactions typically executed on a principal basis.
Based on their review, the Independent Board Members concluded that any indirect benefits received by a Fund Adviser as a result of its relationship with the Funds were reasonable and within acceptable parameters.
F. Other Considerations
The Independent Board Members did not identify any single factor discussed previously as all-important or controlling. The Board Members, including the Independent Board Members, unanimously concluded that the terms of each Advisory Agreement are fair and reasonable, that the respective Fund Adviser’s fees are reasonable in light of the services provided to each Fund and that the Advisory Agreements be renewed.
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 Automatic Reinvestment Plan
Your Nuveen Closed-End Fund allows you to conveniently reinvest distributions in additional Fund shares.
By choosing to reinvest, you’ll be able to invest money regularly and automatically, and watch your investment grow through the power of compounding. Just like distributions in cash, there may be times when income or capital gains taxes may be payable on 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 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. Distributions received to purchase shares in the open market will normally be invested shortly after the distribution payment date. No interest will be paid on 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 distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions.
Flexible
You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change.
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 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.
Glossary of Terms
Used in this Report
| ■ | 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. |
| | |
| ■ | Average Annual Total Return: This is a commonly used method to express an investment’s performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment’s actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered. |
| | |
| ■ | Average Effective Maturity: The market-value-weighted average of the effective maturity dates of the individual securities including cash. In the case of a bond that has been advance-refunded to a call date, the effective maturity is the date on which the bond is scheduled to be redeemed using the proceeds of an escrow account. In most other cases the effective maturity is the stated maturity date of the security. |
| | |
| ■ | Effective Leverage: Effective leverage is a Fund’s effective economic leverage, and includes both structural leverage and the leverage effects of certain derivative investments in the Fund’s portfolio. Currently, the leverage effects of Tender Option Bond (TOB) inverse floater holdings are included in effective leverage values, in addition to any structural leverage. |
| | |
| ■ | Inverse Floaters: Inverse floating rate securities, also known as inverse floaters, 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. |
| | |
| ■ | Leverage: Using borrowed money to invest in securities or other assets. |
| ■ | Leverage-Adjusted Duration: Duration is a measure of the expected period over which a bond’s principal and interest will be paid, and consequently is a measure of the sensitivity of a bond’s or bond Fund’s value to changes when market interest rates change. Generally, the longer a bond’s or Fund’s duration, the more the price of the bond or Fund will change as interest rates change. Leverage-adjusted duration takes into account the leveraging process for a Fund and therefore is longer than the duration of the Fund’s portfolio of bonds. |
| | |
| ■ | Market Yield (also known as Dividend Yield or Current Yield): An investment’s current annualized dividend divided by its current market price. |
| | |
| ■ | Net Asset Value (NAV): A Fund’s 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. |
| | |
| ■ | Pre-Refunding: Pre-Refunding, also known as advanced refundings or refinancings, is a procedure used by state and local governments to refinance municipal bonds to lower interest expenses. The issuer sells new bonds with a lower yield and uses the proceeds to buy U.S. Treasury securities, the interest from which is used to make payments on the higher-yielding bonds. Because of this collateral, pre-refunding generally raises a bond’s credit rating and thus its value. |
| | |
| ■ | Structural Leverage: Structural Leverage consists of preferred shares or debt issued by the fund. Both of these are part of a fund’s capital structure. Structural leverage is sometimes referred to as “40 Act Leverage” and is subject to asset coverage limits set in the Investment Company Act of 1940. |
| | |
| ■ | 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. |
| | |
| ■ | 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. |
Notes
Notes
Notes
Other Useful Information
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
Virginia L. Stringer
Terence J. Toth
Fund Manager
Nuveen Fund Advisors, Inc.
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
Quarterly Portfolio of Investments and Proxy Voting Information
You may obtain (i) each Fund’s quarterly portfolio of investments, (ii) information regarding how each Fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30, and (iii) a description of the policies and procedures that each Fund 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 (CEO) 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 SEC the certification of its Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act.
Common and Preferred Share Information
Each Fund intends to repurchase and/or redeem shares of its own common and/or auction rate preferred stock in the future at such times and in such amounts as is deemed advisable. During the period covered by this report, the Funds repurchased and/or redeemed shares of their common and/or auction rate preferred stock as shown in the accompanying table.
| | | Common Shares | | Preferred Shares |
| Fund | | Repurchased | | Redeemed |
| NPG | | — | | — |
| NZX | | — | | — |
| NKG | | — | | — |
| NNC | | — | | 862 |
| NRB | | — | | — |
| NNO | | — | | — |
| NII | | — | | — |
Any future repurchases and/or redemptions will be reported to shareholders in the next annual or semi-annual report.
Nuveen Investments:
Serving Investors for Generations
Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions through continued adherence to proven, long-term investing principles. Today, we offer a range of high quality equity and fixed-income solutions designed to be integral components of a well-diversified core portfolio.
Focused on meeting investor 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. We market our growing range of specialized investment solutions under the high-quality brands of HydePark, NWQ, Nuveen Asset Management, Santa Barbara, Symphony, Tradewinds and Winslow Capital. In total, Nuveen Investments managed approximately $206 billion of assets as of March 31, 2011.
Find out how we can help you.
To learn more about how the products and services of Nuveen Investments may be able to help you meet your financial goals, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Investors should consider the investment objective and policies, risk considerations, charges and expenses of any investment carefully. Where applicable, be sure to obtain a prospectus, which contains this and other relevant information. To obtain a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money. Learn more about Nuveen Funds at: www.nuveen.com/cef
| Nuveen makes things e-simple. It only takes a minute to sign up for e-Reports. Once enrolled, you’ll receive an e-mail as soon as your Nuveen Fund information is ready - no more waiting for delivery by regular mail. Just click on the link within the e-mail to see the report and save it on your computer if you wish. Free e-Reports right to your e-mail! www.investordelivery.com If you receive your Nuveen Fund distributions and statements from your financial advisor or brokerage account. OR www.nuveen.com/accountaccess If you receive your Nuveen Fund distributions and statements directly from Nuveen. | |
Distributed by
Nuveen Securities, LLC
333 West Wacker Drive
Chicago, IL 60606
www.nuveen.com
EAN-C-0511D
As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no amendments to or waivers from the Code during the period covered by this report. The registrant has posted the code of ethics on its website at www.nuveen.com/CEF/Info/Shareholder. (To view the code, click on Fund Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees (“Board”) determined that the registrant has at least one “audit committee financial expert” (as defined in Item 3 of Form N-CSR) serving on its Audit Committee. The registrant's audit committee financial expert is Carole E. Stone, who is “independent” for purposes of Item 3 of Form N-CSR.
Ms. Stone served for five years as Director of the New York State Division of the Budget. As part of her role as Director, Ms. Stone was actively involved in overseeing the development of the State's operating, local assistance and capital budgets, its financial plan and related documents; overseeing the development of the State's bond-related disclosure documents and certifying that they fairly presented the State's financial position; reviewing audits of various State and local agencies and programs; and coordinating the State's system of internal audit and control. Prior to serving as Director, Ms. Stone worked as a budget analyst/examiner with increasing levels of responsibility over a 30 year period, including approximately five years as Deputy Budget Director. Ms. Stone has also served as Chair of the New York State Racing Association Oversight Board, as Chair of the Public Authorities Control Board, as a Commissioner on the New York State Commission on Public Authority Reform and as a member of the Boards of Directors of several New York State public authorities. These positions have involved overseeing operations and finances of certain entities and assessing the adequacy of project/entity financing and financial reporting. Currently, Ms. Stone is on the Board of Directors of CBOE Holdings, Inc., of the Chicago Board Options Exchange, and of C2 Options Exchange. Ms. Stone's position on the boards of these entities and as a member of both CBOE Holdings' Audit Committee and its Finance Committee has involved, among other things, the oversight of audits, audit plans and preparation of financial statements.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following tables show the amount of fees that Ernst & Young LLP, the Fund's auditor, billed to the Fund during the Fund's last two full fiscal years. For engagements with Ernst & Young LLP the Audit Committee approved in advance all audit services and non-audit services that Ernst & Young LLP provided to the Fund, except for those non-audit services that were subject to the pre-approval exception under Rule 2-01 of Regulation S-X (the “pre-approval exception”). The pre-approval exception for services provided directly to the Fund waives the pre-approval requirement for services other than audit, review or attest services if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid by the Fund to its accountant during the fiscal year in which the services are provided; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The tables also show the percentage of fees subject to the pre-approval exception. The pre-approval exception for services provided to the Adviser and any Affiliated Fund Service Provider (other than audit, review or attest services) waives the pre-approval requirement if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund Service Providers during the fiscal year in which the services are provided that would have to be pre-approved by the Audit Committee; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the Fund's audit is completed.
The following table shows the amount of fees that Ernst & Young LLP billed during the Fund's last two full fiscal years for non-audit services. The Audit Committee is required to pre-approve non-audit services that Ernst & Young LLP provides to the Adviser and any Affiliated Fund Services Provider, if the engagement related directly to the Fund's operations and financial reporting (except for those subject to the pre-approval exception described above). The Audit Committee requested and received information from Ernst & Young LLP about any non-audit services that Ernst & Young LLP rendered during the Fund's last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating Ernst & Young LLP's independence.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit Committee must approve (i) all non-audit services to be performed for the Fund by the Fund's independent accountants and (ii) all audit and non-audit services to be performed by the Fund's independent accountants for the Affiliated Fund Service Providers with respect to operations and financial reporting of the Fund. Regarding tax and research projects conducted by the independent accountants for the Fund and Affiliated Fund Service Providers (with respect to operations and financial reports of the Fund) such engagements will be (i) pre-approved by the Audit Committee if they are expected to be for amounts greater than $10,000; (ii) reported to the Audit Committee chairman for his verbal approval prior to engagement if they are expected to be for amounts under $10,000 but greater than $5,000; and (iii) reported to the Audit Committee at the next Audit Committee meeting if they are expected to be for an amount under $5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
ITEM 6. SCHEDULE OF INVESTMENTS.
a) See Portfolio of Investments in Item 1.
b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
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.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
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.
Kevin J. McCarthy
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.
Gifford R. Zimmerman
Stephen D. Foy
