UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-10523 --------------------- Nuveen Virginia Dividend Advantage Municipal Fund 2 - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Kevin J. McCarthy Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (312) 917-7700 ------------------- Date of fiscal year end: May 31 ------------------ Date of reporting period: May 31, 2008 ------------------ Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT May 31, 2008 Nuveen Investments MUNICIPAL CLOSED-END FUNDS Photo of: Small child NUVEEN MARYLAND PREMIUM INCOME MUNICIPAL FUND NMY NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND NFM NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND 2 NZR NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND 3 NWI NUVEEN VIRGINIA PREMIUM INCOME MUNICIPAL FUND NPV NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND NGB NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2 NNB IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R) Logo: NUVEEN Investments Photo of: Man working on computer LIFE IS COMPLEX. 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 Investments 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 dividends and statements from your financial advisor or brokerage account. OR www.nuveen.com/accountaccess If you receive your Nuveen Fund dividends and statements directly from Nuveen. Logo: NUVEEN Investments Chairman's LETTER TO SHAREHOLDERS Photo of: Robert P. Bremner Robert P. Bremner Chairman of the Board I'd like to use my initial letter to you to accomplish several things. First, I want to report that after fourteen years of service on your Fund's Board, including the last twelve as chairman, Tim Schwertfeger retired from the Board in June. The Board has elected me to replace him as the chairman, the first time this role has been filled by someone who is not an employee of Nuveen Investments. Electing an independent chairman marks a significant milestone in the management of your Fund, and it aligns us with what is now considered a "best practice" in the fund industry. Further, it demonstrates the independence with which your Board has always acted on your behalf. Following Tim will not be easy. During my eleven previous years on the Nuveen Fund Board, I found that Tim always set a very high standard by combining insightful industry and market knowledge and sound, clear judgment. While the Board will miss his wise counsel, I am certain we will retain the primary commitment Tim shared with all of us - an unceasing dedication to creating and retaining value for Nuveen Fund shareholders. This focus on value over time is a touchstone that I and all the other Board members will continue to use when making decisions on your behalf. Second, I also want to report that we are very fortunate to be welcoming two new Board members to our team. John Amboian, the current chairman and CEO of Nuveen Investments, has agreed to replace Tim as Nuveen's representative on the Board. John's presence will allow the independent Board members to benefit not only from his leadership role at Nuveen but also his broad understanding of the fund industry and Nuveen's role within it. We also are adding Terry Toth as an independent director. A former CEO of the Northern Trust Company's asset management group, Terry will bring extensive experience in the fund industry to our deliberations. Third, on behalf of the entire Board, I would like to acknowledge the effort the whole Nuveen organization is making to resolve the auction rate preferred share situation in a satisfactory manner. As you know, we are actively pursuing a number of possible solutions, all with the goal of providing liquidity for preferred shareholders while preserving the potential benefits of leverage for common shareholders. We appreciate the patience you have shown as we've worked through the many details involved. Finally, I urge you to take the time to review the Portfolio Manager's Comments, the Common Share Dividend and Share Price Information, and the Performance Overview sections of this report. All of us are grateful that you have chosen Nuveen Investments as a partner as you pursue your financial goals, and, on behalf of myself and the other members of your Fund's Board, let me say we look forward to continuing to earn your trust in the months and years ahead. Sincerely, /s/ Robert P. Bremner Robert P. Bremner Chairman of the Board July 15, 2008 Portfolio Managers' COMMENTS Nuveen Investments Municipal Closed-End Funds | NMY, NFM, NZR, NWI, NPV, NGB, NNB Portfolio manager Cathryn Steeves reviews economic and municipal market conditions at both the national and state levels, key investment strategies, and the annual performance of the Nuveen Maryland and Virginia Funds. Cathryn, who joined Nuveen in 1996, has managed these seven Funds since 2006. WHAT FACTORS AFFECTED THE U.S. ECONOMIC AND MUNICIPAL MARKET ENVIRONMENTS DURING THE TWELVE-MONTH REPORTING PERIOD ENDED MAY 31, 2008? During this period, developments in the credit markets led to increased price volatility and tightening liquidity, causing a flight to quality. These developments, which began to take shape last summer, became particularly evident in August 2007 when market concerns about defaults on sub-prime mortgages resulted in a liquidity crisis across all fixed income asset classes. In September 2007, the Federal Reserve (Fed) responded to credit market volatility by launching a series of interest rate cuts that lowered the fed funds rate by 325 basis points--from 5.25% to 2.00%--in eight months, including reductions of 125 basis points in January 2008 alone. The Fed's actions also were a response to increased signs of weakness in the U.S. economy, as evidenced by the slowing growth of the U.S. gross domestic product (GDP), a closely watched measure of economic performance. While GDP expanded at 3.8% in the second quarter of 2007 and 4.9% in the third quarter. This measure dropped sharply to 0.6% in the fourth quarter of 2007 (all GDP numbers annualized). In the first quarter of 2008, GDP grew at an annual rate of 1.0%, restrained by a 25% decline in residential investment and the weakest consumer spending since 2001. Driven largely by increased energy and food prices, the Consumer Price Index (CPI) registered a 4.2% year-over-year gain as of May 2008. The core CPI (which excludes food and energy prices) rose 2.3% between June 2007 and May 2008, remaining above the Fed's unofficial target of 2.0% or lower. In the labor markets, January 2008 marked the first decline in new jobs creation since 2003, breaking the longest string of employment growth (fifty-two months) in U.S. history. The national unemployment rate for May 2008 was 5.5%, its highest level since October 2004, compared with 4.5% in May 2007. The 0.5% increase in this rate between April and May 2008 represented the biggest one-month jump in more than twenty-two years. In the municipal bond market, factors related to the sub-prime mortgage crisis had an indirect, but important, influence on performance. General concerns about the credit markets as well as more specific concerns about municipal bond insurers with exposure to sub-prime mortgages caused some investors to curtail purchases. As a result, in February 2008, hedge funds and other non-traditional buyers of municipal bonds were forced to sell holdings of long-maturity bonds into a market already Discussions of specific investments are for illustrative purposes only and are not intended as recommendations of individual investments. The views expressed in this commentary represent those of the portfolio manager as of the date of this report and are subject to change at any time, based on market conditions and other factors. The Funds disclaim any obligation to advise shareholders of such changes. 4 experiencing a lack of liquidity. Combined with the Fed rate cuts, this selling produced a sharp steepening of the municipal yield curve, as longer-term interest rates rose and short-term interest rates declined. In this environment, bonds with shorter maturities generally outperformed longer maturity bonds and higher quality bonds tended to outperform lower quality issues. Also of note in the municipal market, the U.S. Supreme Court in May 2008 ruled that individual states could continue to offer their residents special tax treatment on municipal bonds issued within their borders. The high court's decision in Department of Revenue of the Commonwealth of Kentucky vs. Davis preserved tax rules in forty-two states, allowing them to continue to exempt from taxation the income their residents earn on in-state municipal bonds while taxing the income earned on municipal bonds issued in other states. Over the twelve months ended May 2008, municipal bond issuance nationwide totaled $467.0 billion, an increase of 2% from the previous twelve months. As of May 31, 2008, insured bonds comprised 25% of new supply, compared with the recent historical figure of approximately 50%. Despite disruptions in the markets, new municipal issuance continued to be met with solid demand by institutional and retail investors as well as nontraditional buyers returning to the market in the last few months. HOW WERE ECONOMIC AND MARKET CONDITIONS IN MARYLAND AND VIRGINIA DURING THIS PERIOD? Maryland's economic growth continued to be driven by education and health services, professional and business services, and the government sector, with Fort George G. Meade ranking as the state's largest employer (military and civilian). Maryland's 2007 economic growth expanded at a rate of 2.0%, which placed 22nd in the nation in terms of state GDP. Maryland continued to make efforts to diversify its economy, and promising developments in the aerospace, medical research, security, and distribution industries should help to increase the state's long-term growth potential. While Maryland's old-line manufacturing sector continued to shed jobs, employment in this sector was about half the national average, which was a positive factor over the past few years. Housing activity in Maryland continued to deteriorate, although not to the extent seen in some other states. However, the consequences were felt in housing-related industries such as construction and financial services. In May 2008, Maryland's jobless rate was 4.0%, up from 3.5% in May 2007, putting unemployment in the state at its highest level since November 2005. For fiscal 2009, the $31 billion Maryland state budget included $340 million for school construction, $100 million for future retiree health costs, increased funding for the environment and public safety, and expansion of health care coverage. The budget also called for adding $739 million to the state's rainy day fund by the end of fiscal 2009. As of May 2008, Moody's and Standard & Poor's (S&P) maintained their ratings on Maryland general obligation debt at Aaa/AAA with stable outlooks. During the twelve months ended May 31, 2008, issuance in the state totaled $7.6 billion, an increase of 9% over the previous twelve-month period. From January-May 2008, Maryland saw $2.9 billion in new municipal paper, down 2% from the first five months of 2007. Virginia's economy continued to be led by government, education and health services, and professional and business services. Further growth in the government sector may be hampered by deficits, which are weighing on all levels of government, as well as by 5 military cutbacks. The commonwealth's manufacturing sector, beleaguered by the disappearance of textile, furniture, and apparel factories over the past few years, continued to decline, negatively affecting employment, especially in rural areas. Virginia has not been immune to the impact of the housing market slump nationwide, and the related construction and financial services sectors also weakened. In 2007, Virginia's 2007 economic growth rate of 1.9%, ranked the state 25th in the country according to state GDP. Over the long term, low business costs, a highly skilled labor force, and a favorable regulatory environment should help Virginia continue to attract new businesses, including high-tech industries and back-office operations. Although unemployment in the commonwealth rose from 3.0% in May 2007 to 3.9% in May 2008, Virginia's jobless rate ranked as the 10th lowest in the nation. As of May 2008, Moody's and S&P rated Virginia general obligation debt at Aaa/AAA with stable outlooks. During the twelve months ended May 31, 2008, issuance in Virginia totaled $8.1 billion, a decrease of 19% from the previous twelve months. The first five months of 2008 saw issuance decline more sharply to $3.4 billion, down 29% from the first five months of 2007. Some of this decrease reflected the fact that issuance totals for the previous periods included a $1.1 billion Virginia tobacco bond refinancing deal in April 2007. WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THIS REPORTING PERIOD? During this twelve-month period, as the municipal market was characterized by volatility and a steepening yield curve, we sought to capitalize on the turbulent environment by continuing to focus on relative value, using a fundamental approach to find undervalued sectors and individual credits with the potential to perform well over the long term. When August's liquidity crisis led the market to discount lower-quality and higher-yielding bonds we took advantage of opportunities that we considered undervalued to selectively add some of these types of bonds to our portfolios. Among the issues we added to the Maryland and Virginia Funds were health care and long-term care/retirement facilities bonds. The Virginia Funds also added housing credits, while the Maryland Funds purchased some lower-rated convention center bonds. All of the Maryland Funds also added exposure to the short end of the yield curve by purchasing small positions in auction rate bonds. Because of their extremely short durations, auction rate securities traditionally have been far more popular with money market fund managers than municipal bond fund managers. But demand for these issues evaporated when the credit markets became relatively illiquid, and their yields rose to unprecedented levels. We saw an opportunity to buy these bonds at attractive prices relative to their income. To generate cash for purchases, we selectively sold some holdings with shorter durations(1). Selling shorter duration bonds and reinvesting further out on the yield curve also helped to improve the Funds' overall call protection profiles. We also took advantage of strong bids to sell bonds that were attractive to the retail market. (1) Duration is a measure of a bond's price sensitivity as interest rates change, with longer duration bonds displaying more sensitivity to these changes than bonds with shorter durations. 6 As part of our disciplined approach to duration management, we used inverse floating rate securities,(2) a type of derivative financial instrument, in all seven of the Maryland and Virginia Funds throughout the reporting period. In addition, we added new inverse floating rate securities to all of these Funds during the last half of this period. Inverse floaters typically provide the dual benefit of bringing the durations of the Funds closer to our strategic target and enhancing their income-generation capabilities. NMY, NFM, NZR, and NPV also used forward interest rate swaps, another type of derivative financial instrument. The goal of this strategy was to help us manage the common share net asset value (NAV) volatility of these Funds without having a negative impact on their income streams or common share dividends over the short term. Given the market environment, we thought it prudent to remove the forward interest rate swaps from these four Funds, and as of May 31, 2008, there were no forward interest rate swaps held in any of the Maryland or Virginia Funds. HOW DID THE FUNDS PERFORM? Individual results for the Nuveen Maryland and Virginia Funds, as well as relevant index and peer group information, are presented in the accompanying table. Total Returns on Common Share Net Asset Value* For periods ended 5/31/08 1-Year 5-Year 10-Year Maryland Funds NMY 1.63% 4.15% 5.45% NFM 1.25% 3.88% N/A NZR 1.54% 3.75% N/A NWI 1.24% 3.83% N/A Virginia Funds NPV 1.56% 3.68% 5.46% NGB 0.23% 4.21% N/A NNB 0.63% 3.80% N/A Lipper Other States Municipal Debt Funds Average(3) 0.84% 3.75% 5.25% Lehman Brothers Municipal Bond Index(4) 3.87% 3.67% 5.06% For the twelve months ended May 31, 2008, the total returns on common share NAV for the performance of NMY, NFM, NZR, NWI, and NPV exceeded the average return for the Lipper Other States peer group, while NGB and NNB trailed the Lipper average. All seven of the Funds underperformed the return on the national Lehman Brothers Municipal Bond Index. * Annualized. Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. For additional information, see the individual Performance Overview for your Fund in this report. (2) An inverse floating rate security is a financial instrument designed to pay long-term tax-exempt interest at a rate that varies inversely with a short-term tax-exempt interest rate index. For the Nuveen Funds, the index typically used is the Securities Industry and Financial Markets (SIFM) Municipal Swap Index (previously referred to as the Bond Market Association Index or BMA). Inverse floaters, including those inverse floating rate securities in which the Funds invested during this reporting period, are further defined within the Notes to Financial Statements and Glossary of Terms Used in This Report sections of this report. (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, 43; 5 years, 43; and 10 years, 18. Fund and Lipper returns assume reinvestment of dividends. (4) The Lehman Brothers Municipal Bond Index is an unleveraged, unmanaged national index comprising a broad range of investment-grade municipal bonds. Results for the Lehman index do not reflect any expenses. 7 One of the more significant factors impacting the performance of these Funds in relation to that of the unleveraged Lehman Brothers Municipal Bond Index was the use of financial leverage. While leverage provides opportunities for additional income and total returns for common shareholders, the benefits of leveraging are impacted by the general price movements of the bonds in each Fund's portfolio. During this period, as the yields on longer-term bonds rose and their prices correspondingly fell, declining valuations had a negative effect on performance that was magnified by the use of leverage. In addition, the Funds' borrowing costs remained relatively high, negatively impacting their total returns. Other key factors that influenced the Funds' returns included yield curve and duration positioning, the use of derivatives, credit exposure and sector allocations and holdings of bonds backed by lower-rated municipal bond insurers. Bonds in the Lehman Brothers Municipal Bond Index with maturities of less than eight years, especially those maturing in approximately four to six years, benefited the most from changes in the interest rate environment. As a result, these bonds generally outperformed credits with longer maturities. Bonds having the longest maturities (twenty-two years and longer) posted the worst returns. For the most part, the duration positioning of these seven Funds was a net positive for performance during this period. Although the Maryland Funds were underexposed to the outperforming shorter maturity categories, this was generally offset by the Fund's heavier allocations to the intermediate part of the yield curve, which performed relatively well, and lower weightings in the underperforming long part of the curve. The story was generally the same among the Virginia Funds, except their weightings in longer maturity bonds were more in line with that of the overall municipal market, which meant that this exposure had a neutral effect on performance. As mentioned earlier, NMY, NFM, NZR, and NPV used forward interest rate swaps during part of this period to synthetically extend the Funds' durations and move them closer to our strategic duration target. Despite the fact that longer duration municipal bonds generally underperformed those with shorter durations, the use of forward interest rate swaps had a positive impact on the return performance of these four Funds. This was due to the fact that these interest rate swaps provided exposure to taxable markets during a period when, in contrast to recent historical trends, the taxable markets and the municipal market moved in the opposite directions. As municipal market performance lagged the gains in the taxable markets, the interest rate swaps performed very well. After the removal of the forward interest rate swaps, the durations of these four Funds remained slightly short of our strategic target, which helped their performances as shorter duration bonds outperformed. In addition, the inverse floaters used by all seven of these Funds throughout the period generally had a negative impact on performance. This resulted from the fact that the inverse floaters effectively increased the Funds' exposure to longer maturity bonds during a period when shorter maturities were in favor in the market. However, 8 the new inverse floating rate securities we added to the Maryland and Virginia Funds late in this period performed well, due mainly to market conditions following their establishment and, secondarily, to the high credit quality of the bonds used to establish these trusts. All of the inverse floaters also benefited these Funds by helping to support their income streams. Bonds rated BBB or lower posted poor returns. The underperformance of the lower credit quality sectors was largely the result of risk-averse investors' flight to quality as disruptions in the financial and housing markets deepened. The Funds' allocations to these credit quality sectors were generally higher than that of the Lehman Brothers Municipal Bond Index, and the negative impact of this greater exposure to credit risk accounted for some of the performance differential between these Funds and the index. In addition, the Dividend Advantage Funds, NFM, NZR, NWI, NGB, and NNB can invest up to 20% of their assets in below-investment-grade securities (bonds rated BB or below) or in non-rated bonds judged to be in the same credit quality category. The greater exposure of these five Funds to this segment of the market detracted from the performance of these Funds relative to NMY and NPV, which overall represented higher credit quality. As of May 31, 2008, NMY and NPV had allocated 15% and 14%, respectively, to bonds rated BBB or lower and non-rated bonds, while the allocations of the five Maryland and Virginia Dividend Advantage Funds ranged from approximately 17% in NNB to 24% in NFM and NWI. In general, bonds that carried any credit risk, regardless of sector, tended to perform poorly. Revenue bonds as a whole, and especially the industrial development and health care (including hospitals and long-term care) sectors that had ranked among the top performers in the Lehman Brothers Municipal Bond Index over the past few years, underperformed the general municipal market. The housing sector also performed poorly, as did lower-rated bonds backed by the 1998 master tobacco settlement agreement, which comprised approximately 1% to 2% of the portfolios of the Maryland Funds and approximately 3% of the Virginia Funds as of May 31, 2008. Sectors of the market that generally contributed positively to the Funds' performances included general obligation bonds, water and sewer, special tax issues, and education. Pre-refunded bonds(5) performed exceptionally well, due primarily to their shorter effective maturities and higher credit quality. Another factor that had an impact on the performance of these Funds was their position in bonds backed by municipal bond insurers that experienced downgrades in their credit ratings. As concern increased about the balance sheets of these insurers, prices on bonds insured by these companies declined, detracting from the Funds' performance. On the whole, the holdings of all of our Funds continued to be well diversified not only between insured and uninsured bonds, but also within the insured bond category. (5) Advance refundings, also known as pre-refundings or refinancings, occur when an issuer sells new bonds and uses the proceeds to fund principal and interest payments of older existing bonds. This process often results in lower borrowing costs for bond issuers. 9 RECENT DEVELOPMENTS REGARDING BOND INSURANCE COMPANIES The portfolios of investments reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. During the period covered by this report, each of these insurers experienced one or more rating reductions by at least one or more rating agencies. Subsequent to May 31, 2008, at least one rating agency further reduced their rating and at least one rating agency had withdrawn their rating for AMBAC-insured and MBIA-insured bonds. At the time this report was prepared, at least one rating agency has placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers. It is important to note that municipal bonds historically have had a very low rate of default. RECENT DEVELOPMENTS IN THE AUCTION RATE PREFERRED SECURITIES (ARPS) MARKETS Beginning in February 2008, more shares for sale were submitted in the regularly scheduled auctions for the preferred shares issued by these Funds than there were offers to buy. This meant that these auctions "failed to clear" and that many or all auction preferred shareholders who wanted to sell their shares in these auctions were unable to do so. This decline in liquidity in auction preferred shares did not lower the credit quality of these shares, and auction preferred shareholders unable to sell their shares received distributions at the "maximum rate" applicable to failed auctions as calculated in accordance with the pre-established terms of the auction preferred shares. At the time this report was prepared, the Funds' managers could not predict when future auctions might succeed in attracting sufficient buyers for the shares offered, if ever. The Funds' managers are working diligently to refund the auction preferred shares, and have made progress in these efforts, but at present there is no assurance that these efforts will succeed. These developments generally do not affect the management or investment policies of these Funds. However, one implication of these auction failures for common shareholders is that the Funds' cost of leverage will likely be higher, at least temporarily, than it otherwise would have been had the auctions continued to be successful. As a result, the Funds' future common share earnings may be lower than they otherwise would have been. On June 11, 2008, Nuveen announced the Fund Board's approval of plans to use tender option bonds (TOBs), also known as floating rate securities, to refinance a portion of the municipal funds' outstanding ARPS, whose auctions have been failing for several months, including an initial phase of approximately $1 billion in forty-one funds. On June 26, 2008, thirteen municipal funds (none of which are included in this shareholder report) issued par redemption notices for a portion of their auction-rate securities aggregating approximately $580 million. For current, up-to-date information, please visit the Nuveen CEF Auction Rate Preferred Resource Center at: http://www.nuveen.com/ResourceCenter/AuctionRatePreferred.aspx. 10 Common Share Dividend and Share Price INFORMATION As previously noted, all of the Funds in this report use leverage to potentially enhance opportunities for additional income for common shareholders. While this strategy continued to provide incremental income, the extent of this benefit was reduced to some degree by the borrowing costs associated with leverage, which remained relatively high. Some of the Funds' income streams were also impacted as the proceeds from older, higher-yielding bonds that matured or were called were reinvested into bonds currently available in the market, which generally offered lower yields than the maturing or called bonds. These factors resulted in one monthly dividend reduction in NMY and NGB during this reporting period. Over the twelve-month reporting period ended May 31, 2008, the dividends, NFM, NZR, NWI, NPV, and NNB remained stable. Due to normal portfolio activity, common shareholders of the following Funds received capital gains and/or net ordinary income distributions at the end of December 2007 as follows: Short-Term Capital Gains Long-Term Capital Gains and/or Ordinary Income (per share) (per share) NMY -- $0.0074 NZR $0.0327 $0.0016 NPV $0.0863 $0.0007 NGB $0.0977 $0.0069 NNB $0.0570 $0.0029 All of the Funds in this report seek to pay stable dividends at rates that reflect each Fund's past results and projected future performance. During certain periods, each Fund may pay dividends at a rate that may be more or less than the amount of net investment income actually earned by the Fund during the period. If a Fund has cumulatively earned more than it has paid in dividends, it holds the excess in reserve as undistributed net investment income (UNII) as part of the Fund's common share NAV. Conversely, if a Fund has cumulatively paid dividends in excess of its earnings, the excess constitutes negative UNII that is likewise reflected in the Fund's common share NAV. Each Fund will, over time, pay all of its net investment income as dividends to shareholders. As of May 31, 2008, all of the Funds in this report had positive UNII balances for tax purposes. NMY, NWI, NPV and NGB had positive UNII balances and NFM, NZR and NNB had negative UNII balances for financial statement purposes. 11 As of May 31, 2008, the Funds' common share prices were trading at premiums or discounts to their common share NAVs as shown in the accompanying chart: 5/31/08 Twelve-Month Average Premium/Discount Premium/Discount NMY -7.68% -8.20% NFM +0.50% -2.66% NZR -0.28% -4.38% NWI -7.20% -8.06% NPV -2.43% -4.93% NGB +4.22% +0.20% NNB +1.81% +0.09% 12 NMY Performance OVERVIEW Nuveen Maryland Premium Income Municipal Fund as of May 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 56% AA 18% A 11% BBB 12% BB or Lower 1% N/R 2% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share(3) Jun 0.0515 Jul 0.0515 Aug 0.0515 Sep 0.0515 Oct 0.0495 Nov 0.0495 Dec 0.0495 Jan 0.0495 Feb 0.0495 Mar 0.0495 Apr 0.0495 May 0.0495 Line Chart: Common Share Price Performance -- Weekly Closing Price 6/01/07 14.73 14.47 14.12 13.94 13.76 13.7 13.46 13.37 13.1984 13.42 13.3 12.95 13.2401 13.68 13.57 13.59 13.23 13.22 13.23 13.08 13.07 13.1399 13.14 12.8 12.42 12.48 12.71 12.94 12.76 12.46 12.63 13.18 13.47 13.31 13.42 13.48 13.53 12.75 12.7 12.25 12.67 12.46 12.48 12.685 12.9 12.8 12.8 12.83 12.92 12.82 12.78 12.92 13.1 5/31/08 13.1 FUND SNAPSHOT - ------------------------------------ Common Share Price $13.10 - ------------------------------------ Common Share Net Asset Value $14.19 - ------------------------------------ Premium/(Discount) to NAV -7.68% - ------------------------------------ Market Yield 4.53% - ------------------------------------ Taxable-Equivalent Yield(2) 6.62% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $150,994 - ------------------------------------ Average Effective Maturity on Securities (Years) 15.79 - ------------------------------------ Leverage-Adjusted Duration 10.23 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/18/93) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -7.55% 1.63% - ------------------------------------ 5-Year -0.19% 4.15% - ------------------------------------ 10-Year 3.98% 5.45% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 22.8% - ------------------------------------ Health Care 14.5% - ------------------------------------ U.S. Guaranteed 14.3% - ------------------------------------ Education and Civic Organizations 11.4% - ------------------------------------ Tax Obligation/Limited 10.1% - ------------------------------------ Housing/Multifamily 8.1% - ------------------------------------ Housing/Single Family 5.0% - ------------------------------------ Other 13.8% - ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.6%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. (3) The Fund paid shareholders a net ordinary income distribution in December 2007 of $0.0074 per share. 13 NFM Performance OVERVIEW Nuveen Maryland Dividend Advantage Municipal Fund as of May 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 46% AA 14% A 16% BBB 16% BB or Lower 1% N/R 7% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share Jun 0.0585 Jul 0.0585 Aug 0.0585 Sep 0.0585 Oct 0.0585 Nov 0.0585 Dec 0.0585 Jan 0.0585 Feb 0.0585 Mar 0.0585 Apr 0.0585 May 0.0585 Line Chart: Common Share Price Performance -- Weekly Closing Price 6/01/07 15.16 14.94 15 14.9 14.62 14.7199 14.51 14.42 14.3 14.68 14.3 13.5 13.78 13.9 14.38 14.06 13.8 14 13.8101 13.73 13.67 13.65 13.36 13.2401 13.07 13.14 13.017 13.35 13 13.01 13.13 13.76 13.89 14 13.96 13.95 13.936 13.74 13.33 12.65 13.13 13.11 13.85 14 14.1 13.72 13.6 13.9 13.95 14.03 14.25 13.91 14.19 5/31/08 14.19 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.19 - ------------------------------------ Common Share Net Asset Value $14.12 - ------------------------------------ Premium/(Discount) to NAV 0.50% - ------------------------------------ Market Yield 4.95% - ------------------------------------ Taxable-Equivalent Yield(2) 7.24% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $59,100 - ------------------------------------ Average Effective Maturity on Securities (Years) 18.53 - ------------------------------------ Leverage-Adjusted Duration 9.90 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 1/23/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -2.31% 1.25% - ------------------------------------ 5-Year 2.94% 3.88% - ------------------------------------ Since Inception 4.68% 5.57% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Health Care 20.9% - ------------------------------------ Tax Obligation/General 15.1% - ------------------------------------ U.S. Guaranteed 13.7% - ------------------------------------ Housing/Multifamily 12.3% - ------------------------------------ Tax Obligation/Limited 10.6% - ------------------------------------ Education and Civic Organizations 8.3% - ------------------------------------ Housing/Single Family 5.4% - ------------------------------------ Other 13.7% - ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.6%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 14 NZR Performance OVERVIEW Nuveen Maryland Dividend Advantage Municipal Fund 2 as of May 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 45% AA 22% A 12% BBB 14% BB or Lower 2% N/R 5% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share(3) Jun 0.0585 Jul 0.0585 Aug 0.0585 Sep 0.0585 Oct 0.0585 Nov 0.0585 Dec 0.0585 Jan 0.0585 Feb 0.0585 Mar 0.0585 Apr 0.0585 May 0.0585 Line Chart: Common Share Price Performance -- Weekly Closing Price 6/01/07 15.31 14.97 14.75 14.5 14.52 14.5 14.33 14.28 14.08 14.35 14.04 13.68 13.85 13.86 14.37 14.05 13.9 14.04 13.85 13.95 13.7 13.78 13.52 13.54 13.05 13.04 13.26 13.39 13.19 12.86 13.17 13.83 14.19 13.95 13.8001 13.8 13.99 13.24 13.43 12.73 13.26 12.94 13.03 13.11 13.355 13.49 13.31 13.75 14 14.05 13.98 14.21 14.25 5/31/08 14.25 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.25 - ------------------------------------ Common Share Net Asset Value $14.29 - ------------------------------------ Premium/(Discount) to NAV -0.28% - ------------------------------------ Market Yield 4.93% - ------------------------------------ Taxable-Equivalent Yield(2) 7.21% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $59,921 - ------------------------------------ Average Effective Maturity on Securities (Years) 17.42 - ------------------------------------ Leverage-Adjusted Duration 9.80 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -2.30% 1.54% - ------------------------------------ 5-Year 3.77% 3.75% - ------------------------------------ Since Inception 4.74% 5.58% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 18.7% - ------------------------------------ Health Care 17.0% - ------------------------------------ U.S. Guaranteed 14.9% - ------------------------------------ Tax Obligation/Limited 11.8% - ------------------------------------ Education and Civic Organizations 9.7% - ------------------------------------ Housing/Multifamily 6.2% - ------------------------------------ Housing/Single Family 5.5% - ------------------------------------ Transportation 3.8% - ------------------------------------ Other 12.4% - ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.6%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. (3) The Fund paid shareholders capital gains and net ordinary income distributions in December 2007 of $.0343 per share. 15 NWI Performance OVERVIEW Nuveen Maryland Dividend Advantage Municipal Fund 3 as of May 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 40% AA 25% A 11% BBB 17% BB or Lower 2% N/R 5% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share Jun 0.0525 Jul 0.0525 Aug 0.0525 Sep 0.0525 Oct 0.0525 Nov 0.0525 Dec 0.0525 Jan 0.0525 Feb 0.0525 Mar 0.0525 Apr 0.0525 May 0.0525 Line Chart: Common Share Price Performance -- Weekly Closing Price 6/01/07 14.6 14.51 13.76 13.57 13.56 13.61 13.29 13.16 13.39 13.3 13.2 12.79 12.86 13.39 13.52 13.44 13.04 13.4 13.09 13.06 12.9799 12.95 12.92 12.61 12.21 12.34 12.63 12.56 12.31 12.21 12.38 13.02 13.19 13.04 13.06 13.2 13.32 12.71 12.6 12.5099 12.7 12.29 12.65 12.69 12.76 12.62 12.72 12.7 12.9 12.88 13 13.14 13.01 5/31/08 13.01 FUND SNAPSHOT - ------------------------------------ Common Share Price $13.01 - ------------------------------------ Common Share Net Asset Value $14.02 - ------------------------------------ Premium/(Discount) to NAV -7.20% - ------------------------------------ Market Yield 4.84% - ------------------------------------ Taxable-Equivalent Yield(2) 7.08% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $75,205 - ------------------------------------ Average Effective Maturity on Securities (Years) 17.57 - ------------------------------------ Leverage-Adjusted Duration 10.81 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/02) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -7.38% 1.24% - ------------------------------------ 5-Year 2.44% 3.83% - ------------------------------------ Since Inception 2.60% 4.65% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/Limited 20.7% - ------------------------------------ Health Care 17.2% - ------------------------------------ Tax Obligation/General 14.4% - ------------------------------------ U.S. Guaranteed 11.2% - ------------------------------------ Housing/Multifamily 9.5% - ------------------------------------ Education and Civic Organizations 8.0% - ------------------------------------ Housing/Single Family 3.9% - ------------------------------------ Water and Sewer 3.6% - ------------------------------------ Other 11.5% - ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.6%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 16 NPV Performance OVERVIEW Nuveen Virginia Premium Income Municipal Fund as of May 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 52% AA 25% A 9% BBB 9% BB or Lower 1% N/R 4% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share(3) Jun 0.053 Jul 0.053 Aug 0.053 Sep 0.053 Oct 0.053 Nov 0.053 Dec 0.053 Jan 0.053 Feb 0.053 Mar 0.053 Apr 0.053 May 0.053 Line Chart: Common Share Price Performance -- Weekly Closing Price 6/01/07 15.25 14.91 14.6 14.62 14.6699 14.87 14.43 14.21 14.11 14.1 13.87 13.98 14.28 14.08 14.41 14.38 14.14 14.27 13.94 13.83 13.7 13.94 13.68 13.57 13.1199 13.38 13.29 13.43 13 13 13.17 13.83 13.93 13.88 13.8 14.07 14.1 13.24 13.33 12.95 13.4701 13.08 13 13.33 13.39 13.51 13.35 13.46 13.47 13.8 13.75 13.993 14.04 5/31/08 14.04 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.04 - ------------------------------------ Common Share Net Asset Value $14.39 - ------------------------------------ Premium/(Discount) to NAV -2.43% - ------------------------------------ Market Yield 4.53% - ------------------------------------ Taxable-Equivalent Yield(2) 6.67% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $128,512 - ------------------------------------ Average Effective Maturity on Securities (Years) 16.03 - ------------------------------------ Leverage-Adjusted Duration 10.45 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/18/93) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -2.94% 1.56% - ------------------------------------ 5-Year 0.82% 3.68% - ------------------------------------ 10-Year 4.09% 5.46% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/Limited 21.0% - ------------------------------------ Health Care 16.5% - ------------------------------------ Tax Obligation/General 14.4% - ------------------------------------ U.S. Guaranteed 11.6% - ------------------------------------ Transportation 7.0% - ------------------------------------ Water and Sewer 6.5% - ------------------------------------ Housing/Single Family 5.3% - ------------------------------------ Utilities 4.8% - ------------------------------------ Other 12.9% - ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.1%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. (3) The Fund paid shareholders capital gains and net ordinary income distributions in December 2007 of $.0870 per share. 17 NGB Performance OVERVIEW Nuveen Virginia Dividend Advantage Municipal Fund as of May 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 54% AA 17% A 9% BBB 9% BB or Lower 1% N/R 10% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share(3) Jun 0.0595 Jul 0.0595 Aug 0.0595 Sep 0.0595 Oct 0.0565 Nov 0.0565 Dec 0.0565 Jan 0.0565 Feb 0.0565 Mar 0.0565 Apr 0.0565 May 0.0565 Line Chart: Common Share Price Performance -- Weekly Closing Price 6/01/07 17.52 17.15 17.04 16.6 16.45 15.99 15.289 15.2799 15.06 14.38 14.52 14.47 14.11 14.901 14.8678 15 14.21 14.252 14.29 14.1225 14.45 14.3 14.19 14.0799 13.95 13.51 13.4 13.8506 13.33 13.36 13.4 14.04 14.5 14.4801 14.67 14.32 14.082 13.45 13.42 13.23 13.2 13.41 13.3 13.5 13.67 14.09 14.5499 14.57 14.8 14.65 14.98 14.6804 14.81 5/31/08 14.81 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.81 - ------------------------------------ Common Share Net Asset Value $14.21 - ------------------------------------ Premium/(Discount) to NAV 4.22% - ------------------------------------ Market Yield 4.58% - ------------------------------------ Taxable-Equivalent Yield(2) 6.75% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $44,512 - ------------------------------------ Average Effective Maturity on Securities (Years) 17.05 - ------------------------------------ Leverage-Adjusted Duration 10.85 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 1/26/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -10.58% 0.23% - ------------------------------------ 5-Year 2.13% 4.21% - ------------------------------------ Since Inception 5.24% 5.78% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ U.S. Guaranteed 17.0% - ------------------------------------ Transportation 16.1% - ------------------------------------ Tax Obligation/General 12.7% - ------------------------------------ Tax Obligation/Limited 12.5% - ------------------------------------ Health Care 10.6% - ------------------------------------ Long-Term Care 7.9% - ------------------------------------ Housing/Single Family 6.2% - ------------------------------------ Water and Sewer 4.7% - ------------------------------------ Other 12.3% - ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.1%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. (3) The Fund paid shareholders capital gains and net ordinary income distributions in December 2007 of $0.1046 per share. 18 NNB Performance OVERVIEW Nuveen Virginia Dividend Advantage Municipal Fund 2 as of May 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 51% AA 25% A 7% BBB 7% BB or Lower 1% N/R 9% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share(3) Jun 0.0595 Jul 0.0595 Aug 0.0595 Sep 0.0595 Oct 0.0595 Nov 0.0595 Dec 0.0595 Jan 0.0595 Feb 0.0595 Mar 0.0595 Apr 0.0595 May 0.0595 Line Chart: Common Share Price Performance -- Weekly Closing Price 6/01/07 16.9 16.65 15.92 15.94 15.9 15.9 15.85 15.665 15.139 15.4699 15.5 15 14.9 14.69 15.1 14.6 14.7 14.4 14.46 14.41 14.6 14.56 14.59 14.2499 13.8999 13.9899 13.9 14.01 13.68 13.06 13.34 13.83 14.46 14.3299 14.44 14.52 14.65 13.68 13.8475 13.4 13.95 13.45 13.5 14.35 14.6 14.62 14.55 14.45 14.7 15 14.61 14.33 14.65 5/31/08 14.65 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.65 - ------------------------------------ Common Share Net Asset Value $14.39 - ------------------------------------ Premium/(Discount) to NAV 1.81% - ------------------------------------ Market Yield 4.87% - ------------------------------------ Taxable-Equivalent Yield(2) 7.17% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $82,472 - ------------------------------------ Average Effective Maturity on Securities (Years) 16.94 - ------------------------------------ Leverage-Adjusted Duration 9.98 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 11/15/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -7.58% 0.63% - ------------------------------------ 5-Year 3.71% 3.80% - ------------------------------------ Since Inception 5.26% 5.96% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 17.9% - ------------------------------------ Health Care 15.9% - ------------------------------------ Tax Obligation/Limited 13.1% - ------------------------------------ Water and Sewer 12.1% - ------------------------------------ U.S. Guaranteed 12.1% - ------------------------------------ Housing/Single Family 8.9% - ------------------------------------ Long-Term Care 7.6% - ------------------------------------ Other 12.4% - ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.1%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. (3) The Fund paid shareholders capital gains and net ordinary income distributions in December 2007 of $0.0599 per share. 19 Report of INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE BOARD OF TRUSTEES AND SHAREHOLDERS NUVEEN MARYLAND PREMIUM INCOME MUNICIPAL FUND NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND 2 NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND 3 NUVEEN VIRGINIA PREMIUM INCOME MUNICIPAL FUND NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2 We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Nuveen Maryland Premium Income Municipal Fund, Nuveen Maryland Dividend Advantage Municipal Fund, Nuveen Maryland Dividend Advantage Municipal Fund 2, Nuveen Maryland Dividend Advantage Municipal Fund 3, Nuveen Virginia Premium Income Municipal Fund, Nuveen Virginia Dividend Advantage Municipal Fund and Nuveen Virginia Dividend Advantage Municipal Fund 2 (the Funds) as of May 31, 2008, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the 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 audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of May 31, 2008, 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 Maryland Premium Income Municipal Fund, Nuveen Maryland Dividend Advantage Municipal Fund, Nuveen Maryland Dividend Advantage Municipal Fund 2, Nuveen Maryland Dividend Advantage Municipal Fund 3, Nuveen Virginia Premium Income Municipal Fund, Nuveen Virginia Dividend Advantage Municipal Fund and Nuveen Virginia Dividend Advantage Municipal Fund 2 at May 31, 2008, the results of their operations for the year then ended, changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Chicago, Illinois July 21, 2008 20 NMY Nuveen Maryland Premium Income Municipal Fund Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY - 3.0% (2.0% OF TOTAL INVESTMENTS) $ 4,825 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 A- $ 4,551,615 Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.8% (1.2% OF TOTAL INVESTMENTS) 2,885 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 2,749,809 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 17.1% (11.4% OF TOTAL INVESTMENTS) 1,250 Frederick County, Maryland, Educational Facilities Revenue Bonds, 9/16 at 100.00 BBB- 1,215,375 Mount Saint Mary's College, Series 2006, 5.625%, 9/01/38 1,000 Hartford County, Maryland, Economic Development Revenue Bonds, 4/14 at 100.00 A+ 1,015,990 Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 Maryland Economic Development Corporation, Utility Infrastructure Revenue Bonds, University of Maryland - College Park, Series 2001: 980 5.375%, 7/01/15 - AMBAC Insured 7/11 at 100.00 AAA 1,031,078 980 5.375%, 7/01/16 - AMBAC Insured 7/11 at 100.00 AAA 1,031,078 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Bullis School, Series 2000: 750 5.250%, 7/01/25 - FSA Insured 1/11 at 101.00 AAA 781,440 500 5.250%, 7/01/30 - FSA Insured 1/11 at 101.00 AAA 518,320 1,250 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 1,251,563 Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34 1,500 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AA 1,529,130 Revenue Refunding Bonds, Johns Hopkins University, Series 1997, 5.625%, 7/01/27 1,365 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 1,440,252 Bonds, Montgomery College Arts Center Project, Series 2005A, 5.000%, 5/01/19 9,445 Morgan State University, Maryland, Student Tuition and Fee Revenue No Opt. Call AAA 10,854,853 Refunding Bonds, Academic Fees and Auxiliary Facilities, Series 1993, 6.100%, 7/01/20 - MBIA Insured 1,685 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 1,800,894 Bonds, Series 2006A, 5.000%, 10/01/22 Westminster, Maryland, Educational Facilities Revenue Bonds, McDaniel College, Series 2006: 2,735 5.000%, 11/01/31 11/16 at 100.00 BBB+ 2,593,929 850 4.500%, 11/01/36 11/16 at 100.00 BBB+ 712,470 - ------------------------------------------------------------------------------------------------------------------------------------ 24,290 Total Education and Civic Organizations 25,776,372 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 21.8% (14.5% OF TOTAL INVESTMENTS) 1,525 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 1,547,341 Revenue Bonds, Calvert Memorial Hospital, Series 2004, 5.500%, 7/01/36 3,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 3,285,068 Revenue Bonds, Carroll County General Hospital, Series 2002, 5.800%, 7/01/32 400 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 Baa1 364,960 Revenue Bonds, Carroll Hospital Center, Series 2006, 5.000%, 7/01/40 1,665 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 1,584,164 Revenue Bonds, Civista Medical Center, Series 2005, 5.000%, 7/01/37 - RAAI Insured 21 NMY Nuveen Maryland Premium Income Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) $ 1,740 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa2 $ 1,634,191 Revenue Bonds, Doctors Community Hospital, Series 2007A, 5.000%, 7/01/29 1,400 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,345,470 Revenue Bonds, Frederick Memorial Hospital, Series 2002, 5.125%, 7/01/35 1,500 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 1,467,840 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 - MBIA Insured 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,011,010 Revenue Bonds, Johns Hopkins Hospital, Howard County General Hospital Acquisition, Series 1998, 5.000%, 7/01/19 - MBIA Insured 1,430 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 1,515,485 Revenue Bonds, Johns Hopkins Hospital, Series 2004, Inverse 1003, 11.325%, 7/01/33 (IF) 2,000 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A+ 2,043,700 Revenue Bonds, Kaiser Permanente System, Series 1998A, 5.375%, 7/01/15 3,800 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 3,650,052 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 1,175 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 AAA 1,219,262 Revenue Bonds, LifeBridge Health System, Series 2008, 5.000%, 7/01/28 - AGC Insured 1,750 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A- 1,781,238 Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Medical Center Project, Series 2007A: 1,010 5.000%, 7/01/37 7/17 at 100.00 BBB 895,759 670 5.500%, 7/01/42 7/17 at 100.00 BBB 636,721 1,700 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 A 1,677,186 Revenue Bonds, Peninsula Regional Medical Center, Series 2006, 5.000%, 7/01/36 3,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 3,295,923 Revenue Bonds, Union Hospital of Cecil County, Series 2002, 5.625%, 7/01/32 1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 AAA 1,016,100 Revenue Bonds, University of Maryland Medical System, Series 2004B, 5.000%, 7/01/24 - AMBAC Insured 2,395 Maryland Health and Higher Educational Facilities Authority, 1/18 at 100.00 BBB- 2,331,796 Revenue Bonds, Washington County Hospital, Series 2008, 5.750%, 1/01/38 Prince George's County, Maryland, Revenue Bonds, Dimensions Health Corporation, Series 1994: 420 5.375%, 7/01/14 7/08 at 100.00 B3 372,250 295 5.300%, 7/01/24 7/08 at 100.00 B3 227,973 - ------------------------------------------------------------------------------------------------------------------------------------ 33,375 Total Health Care 32,903,489 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 12.1% (8.1% OF TOTAL INVESTMENTS) 1,450 Maryland Community Development Administration, 2/11 at 101.00 Aaa 1,487,294 FNMA Multifamily Development Revenue Bonds, Edgewater Village Apartments, Series 2000B, 5.800%, 8/01/20 (Alternative Minimum Tax) 2,500 Maryland Community Development Administration, Housing 1/09 at 101.00 Aa2 2,430,025 Revenue Bonds, Series 1999A, 5.350%, 7/01/41 (Alternative Minimum Tax) 880 Maryland Community Development Administration, Housing 1/10 at 100.00 Aa2 891,704 Revenue Bonds, Series 1999B, 6.250%, 7/01/32 (Alternative Minimum Tax) 1,000 Maryland Economic Development Corporation, Senior Lien 10/13 at 100.00 B2 900,060 Student Housing Revenue Bonds, University of Maryland - Baltimore, Series 2003A, 5.625%, 10/01/23 1,000 Maryland Economic Development Corporation, Student Housing 6/09 at 102.00 Baa3 1,025,280 Revenue Bonds, Collegiate Housing Foundation - Salisbury State University, Series 1999A, 6.000%, 6/01/19 1,145 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 A+ 1,045,980 Revenue Refunding Bonds, University of Maryland College Park Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured 3,830 Montgomery County Housing Opportunities Commission, Maryland, 7/08 at 101.00 Aaa 3,847,082 FNMA/FHA-Insured Multifamily Housing Development Bonds, Series 1998A, 5.200%, 7/01/30 22 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY (continued) $ 360 Montgomery County Housing Opportunities Commission, 7/08 at 100.00 Aa2 $ 360,536 Maryland, GNMA/FHA-Insured Multifamily Housing Revenue Bonds, Series 1995A, 5.900%, 7/01/15 2,000 Montgomery County Housing Opportunities Commission, 7/10 at 100.00 Aaa 2,040,980 Maryland, Multifamily Housing Development Bonds, Series 2000A, 6.100%, 7/01/30 540 Prince George's County Housing Authority, Maryland, GNMA 9/09 at 102.00 AAA 549,131 Collateralized Mortgage Revenue Bonds, University Landing Apartments, Series 1999, 6.100%, 3/20/41 (Alternative Minimum Tax) Prince George's County Housing Authority, Maryland, GNMA Collateralized Mortgage Revenue Refunding Bonds, Overlook Apartments, Series 1995A: 2,000 5.700%, 12/20/15 6/08 at 100.00 AAA 2,002,700 1,670 5.750%, 12/20/19 6/08 at 100.00 AAA 1,671,670 - ------------------------------------------------------------------------------------------------------------------------------------ 18,375 Total Housing/Multifamily 18,252,442 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 7.5% (5.0% OF TOTAL INVESTMENTS) 650 Maryland Community Development Administration Department of 3/17 at 100.00 Aa2 627,354 Housing and Community Development, Residential Revenue Bonds, Series 2007H, 5.000%, 9/01/27 (Alternative Minimum Tax) 1,195 Maryland Community Development Administration, Department 9/15 at 100.00 Aa2 1,146,172 of Housing and Community Development, Residential Revenue Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax) 4,100 Maryland Community Development Administration, Department 3/16 at 100.00 Aa2 3,920,542 of Housing and Community Development, Residential Revenue Bonds, Series 2006I, 4.875%, 9/01/26 (Alternative Minimum Tax) 1,630 Maryland Community Development Administration, Department 9/16 at 100.00 Aa2 1,532,934 of Housing and Community Development, Residential Revenue Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax) 1,200 Maryland Community Development Administration, Department 3/17 at 100.00 Aa2 1,080,660 of Housing and Community Development, Residential Revenue Bonds, Series 2007D, 4.850%, 9/01/37 (Alternative Minimum Tax) 2,330 Maryland Community Development Administration, Residential 9/14 at 100.00 Aa2 2,155,600 Revenue Bonds, Series 2005E, 4.900%, 9/01/36 (Alternative Minimum Tax) 600 Maryland Community Development Administration, Residential 9/15 at 100.00 Aa2 569,448 Revenue Bonds, Series 2006B, 4.750%, 9/01/25 (Alternative Minimum Tax) 5 Prince George's County Housing Authority, Maryland, 8/10 at 100.00 AAA 5,055 FHLMC/FNMA/GNMA Collateralized Single Family Mortgage Revenue Bonds, Series 2000A, 6.150%, 8/01/19 (Alternative Minimum Tax) 320 Puerto Rico Housing Finance Authority, Mortgage-Backed 6/13 at 100.00 AAA 300,496 Securities Program Home Mortgage Revenue Bonds, Series 2003A, 4.875%, 6/01/34 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 12,030 Total Housing/Single Family 11,338,261 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.3% (0.8% OF TOTAL INVESTMENTS) 2,010 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 1,896,556 Disposal Revenue Bonds, Waste Management Inc., Series 2002, 4.600%, 4/01/16 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 2.8% (1.9% OF TOTAL INVESTMENTS) 2,455 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 2,269,058 Series 2007A, 5.000%, 1/01/37 1,000 Carroll County, Maryland, Revenue Refunding Bonds, EMA 1/09 at 101.00 AA 1,013,690 Obligated Group, Series 1999A, 5.625%, 1/01/25 - RAAI Insured 1,065 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 928,424 Revenue Bonds, Mercy Ridge Retirement Community, Series 2007, 4.750%, 7/01/34 - ------------------------------------------------------------------------------------------------------------------------------------ 4,520 Total Long-Term Care 4,211,172 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 34.2% (22.8% OF TOTAL INVESTMENTS) 2,030 Anne Arundel County, Maryland, General Obligation Bonds, 4/14 at 100.00 AAA 2,201,657 Series 2004, 5.000%, 4/01/16 Anne Arundel County, Maryland, General Obligation Bonds, Series 2006: 1,310 5.000%, 3/01/21 3/16 at 100.00 AAA 1,399,932 1,000 5.000%, 3/01/21 3/16 at 100.00 AAA 1,068,650 685 Anne Arundel County, Maryland, Water and Sewer Revenue Bonds, 3/16 at 100.00 AAA 753,425 Series 2006, 5.000%, 3/01/17 23 NMY Nuveen Maryland Premium Income Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) Baltimore County, Maryland, Metropolitan District Special Assessment Bonds, 67th Issue: $ 2,500 5.000%, 6/01/25 6/11 at 101.00 AAA $ 2,583,375 3,500 5.000%, 6/01/26 6/11 at 101.00 AAA 3,599,540 1,000 Baltimore, Maryland, Consolidated General Obligation Public No Opt. Call AA- 1,018,890 Improvement Bonds, Series 1989B, 7.150%, 10/15/08 1,540 Baltimore, Maryland, General Obligation Consolidated Public 10/14 at 100.00 AAA 1,620,080 Improvement Bonds, Series 2004A, 5.000%, 10/15/22 - AMBAC Insured 700 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA 773,374 Series 2005A, 5.000%, 12/01/16 Charles County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series 2006: 2,185 5.000%, 3/01/14 No Opt. Call AA 2,398,846 820 5.000%, 3/01/16 No Opt. Call AA 909,306 1,500 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 1,656,795 Bonds, Series 2006, 5.000%, 11/01/20 Howard County, Maryland, Consolidated Public Improvement Bonds, Series 2004B: 1,625 5.000%, 8/15/17 2/14 at 100.00 AAA 1,758,348 1,180 5.000%, 8/15/19 2/14 at 100.00 AAA 1,270,801 1,725 Howard County, Maryland, Metropolitan District Refunding Bonds, 2/12 at 100.00 AAA 1,829,345 Series 2002A, 5.250%, 8/15/18 1,190 Maryland National Capital Park Planning Commission, 1/14 at 100.00 AA+ 1,283,403 Prince George's County, General Obligation Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17 3,000 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 3,325,830 Public Improvement Bonds, Series 2005A, 5.000%, 7/01/15 3,520 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 3,915,789 Public Improvement Bonds, Series 2006, 5.000%, 5/01/16 Montgomery County, Maryland, Consolidated General Obligation Public Improvement Refunding Bonds, Series 2001: 1,750 5.250%, 10/01/13 10/11 at 101.00 AAA 1,887,165 2,000 5.250%, 10/01/18 10/11 at 101.00 AAA 2,137,800 2,000 Prince George's County, Maryland, General Obligation Consolidated 9/12 at 101.00 AAA 2,030,520 Public Improvement Bonds, Series 2002, 4.100%, 9/15/19 5,770 Prince George's County, Maryland, General Obligation Consolidated 10/13 at 100.00 AAA 6,117,007 Public Improvement Bonds, Series 2003A, 5.000%, 10/01/18 Washington Suburban Sanitary District, Montgomery and Prince George's Counties, Maryland, Sewerage Disposal Bonds, Series 2005: 2,000 5.000%, 6/01/16 6/15 at 100.00 AAA 2,201,200 1,235 5.000%, 6/01/23 6/15 at 100.00 AAA 1,303,604 1,235 5.000%, 6/01/24 6/15 at 100.00 AAA 1,298,998 1,235 5.000%, 6/01/25 6/15 at 100.00 AAA 1,295,169 - ------------------------------------------------------------------------------------------------------------------------------------ 48,235 Total Tax Obligation/General 51,638,849 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 15.2% (10.1% OF TOTAL INVESTMENTS) 300 Baltimore, Maryland, Special Obligation Bonds, North Locust 9/15 at 101.00 N/R 265,332 Point Project, Series 2005, 5.500%, 9/01/34 340 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA 348,456 Development Special Obligation Bonds, Series 2001A, 5.700%, 7/01/29 - RAAI Insured 900 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 827,802 Town Center Project, Series 2004, 5.750%, 7/01/34 Maryland Department of Transportation, Certificates of Participation, Mass Transit Administration Project, Series 2000: 875 5.500%, 10/15/19 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 910,560 925 5.500%, 10/15/20 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 958,374 4,250 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 4,846,317 Revenue Bonds, Series 2002, 5.500%, 2/01/16 24 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,875 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ $ 2,007,975 Bonds, Department of Transportation Headquarters Building, Series 2002, 5.375%, 6/01/19 1,700 Maryland Stadium Authority, Lease Revenue Bonds, Montgomery 6/13 at 100.00 AA+ 1,774,919 County Conference Center Facilities, Series 2003, 5.000%, 6/15/24 1,000 Montgomery County, Maryland, Lease Revenue Bonds, Metrorail 6/12 at 100.00 AA 1,049,280 Garage, Series 2002, 5.000%, 6/01/21 675 Montgomery County, Maryland, Special Obligation Bonds, West 7/12 at 101.00 AA 691,241 Germantown Development District, Senior Series 2002A, 5.500%, 7/01/27 - RAAI Insured 635 New Baltimore City Board of School Commissioners, Maryland, 11/10 at 100.00 AA+ 668,255 School System Revenue Bonds, Series 2000, 5.125%, 11/01/15 Puerto Rico Highway and Transportation Authority, Highway Revenue Bonds, Series 2007N: 1,000 5.500%, 7/01/29 - AMBAC Insured No Opt. Call AAA 1,082,420 2,500 5.250%, 7/01/31 - AMBAC Insured No Opt. Call AAA 2,637,875 1,000 5.250%, 7/01/33 - MBIA Insured No Opt. Call AAA 1,057,640 2,100 Puerto Rico Municipal Finance Agency, Series 2002A, 8/12 at 100.00 AAA 2,208,003 5.250%, 8/01/21 - FSA Insured 1,500 Puerto Rico, Highway Revenue Bonds, Highway and Transportation No Opt. Call AAA 1,607,385 Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 21,575 Total Tax Obligation/Limited 22,941,834 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 4.6% (3.1% OF TOTAL INVESTMENTS) 1,060 Baltimore, Maryland, Revenue Refunding Bonds, Parking System No Opt. Call A2 1,145,807 Facilities, Series 1998A, 5.250%, 7/01/17 - FGIC Insured 4,335 Maryland Transportation Authority, Revenue Bonds, Transportation 7/17 at 100.00 AAA 4,511,456 Facilities Projects, Series 2007, 5.000%, 7/01/30 - FSA Insured (UB) 2,075 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 6/08 at 100.00 CCC+ 1,336,487 American Airlines Inc., Series 1996A, 6.250%, 6/01/26 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 7,470 Total Transportation 6,993,750 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 21.4% (14.3% OF TOTAL INVESTMENTS) (4) 2,000 Baltimore, Maryland, Revenue Refunding Bonds, Water Projects, No Opt. Call AA (4) 2,118,960 Series 1998A, 5.000%, 7/01/28 - FGIC Insured (ETM) 2,000 Baltimore, Maryland, Revenue Refunding Bonds, Water System No Opt. Call AA (4) 2,154,760 Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured (ETM) 1,245 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 Aaa 1,380,581 Series 2006C, 5.000%, 7/01/31 (Pre-refunded 7/01/16) - AMBAC Insured Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary's College, Series 2001A: 200 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 213,528 200 5.800%, 9/01/30 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 213,700 3,000 Frederick County, Maryland, General Obligation Public Facilities 7/09 at 101.00 AAA 3,134,700 Bonds, Series 1999, 5.250%, 7/01/18 (Pre-refunded 7/01/09) 275 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA (4) 298,969 Development Special Obligation Bonds, Series 2001A, 5.700%, 7/01/29 (Pre-refunded 7/01/10) - RAAI Insured 2,255 Gaithersburg, Maryland, Hospital Facilities Revenue Refunding and No Opt. Call AAA 2,455,064 Improvement Bonds, Shady Grove Adventist Hospital, Series 1995, 6.500%, 9/01/12 - FSA Insured (ETM) 575 Howard County, Maryland, Consolidated Public Improvement 2/12 at 100.00 AAA 622,265 Refunding Bonds, Series 2002A, 5.250%, 8/15/18 (Pre-refunded 2/15/12) Maryland Economic Development Corporation, Health and Mental Hygiene Providers Revenue Bonds, Series 1996A: 870 7.625%, 4/01/21 (Pre-refunded 4/01/11) 4/11 at 102.00 N/R (4) 987,894 660 7.625%, 4/01/21 (Pre-refunded 4/01/11) 4/11 at 102.00 N/R (4) 749,437 25 NMY Nuveen Maryland Premium Income Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 2,250 Maryland Economic Development Corporation, Student Housing 6/09 at 102.00 Baa2 (4) $ 2,375,483 Revenue Bonds, Collegiate Housing Foundation - College Park, Series 1999A, 5.750%, 6/01/24 (Pre-refunded 6/01/09) 3,200 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 3,449,536 Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/27 - AMBAC Insured (ETM) 3,125 Maryland Health and Higher Educational Facilities Authority, 7/08 at 100.00 Aaa 3,192,750 Revenue Bonds, Howard County General Hospital, Series 1993, 5.500%, 7/01/25 (ETM) 2,040 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A (4) 2,231,352 Revenue Bonds, LifeBridge Health System, Series 2004A, 5.125%, 7/01/34 (Pre-refunded 7/01/14) 1,500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A (4) 1,662,960 Revenue Bonds, University of Maryland Medical System, Series 2002, 6.000%, 7/01/22 (Pre-refunded 7/01/12) 210 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 240,496 Transportation Facilities Projects, First Series 1978, 6.800%, 7/01/16 (ETM) 1,000 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 1,048,370 Bonds, Series 2000A, 5.500%, 10/01/20 1,000 Puerto Rico, Highway Revenue Bonds, Highway and Transportation 7/16 at 100.00 Aaa 1,150,780 Authority, Series 1996Y, 5.500%, 7/01/36 (Pre-refunded 7/01/16) 385 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 402,348 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded 7/01/10) 2,000 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ (4) 2,205,740 Loan Note, Series 1999A, 6.500%, 10/01/24 (Pre-refunded 10/01/10) - ------------------------------------------------------------------------------------------------------------------------------------ 29,990 Total U.S. Guaranteed 32,289,673 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 4.0% (2.6% OF TOTAL INVESTMENTS) 2,500 Maryland Energy Financing Administration, Revenue Bonds, 7/08 at 100.00 N/R 2,494,125 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) 3,500 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/14 at 100.00 A3 3,485,860 Series 2004PP, 5.000%, 7/01/22 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 6,000 Total Utilities 5,979,985 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 3.3% (2.2% OF TOTAL INVESTMENTS) 1,045 Baltimore, Maryland, Revenue Refunding Bonds, Water System No Opt. Call AA 1,100,636 Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured 1,655 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 Aaa 1,716,185 Series 2006C, 5.000%, 7/01/31 - AMBAC Insured 1,260 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/17 at 100.00 AAA 1,276,481 Series 2007D, 5.000%, 7/01/32 - AMBAC Insured 26 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 860 Maryland Water Quality Financing Administration, Revolving No Opt. Call AAA $ 954,161 Loan Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ 4,820 Total Water and Sewer 5,047,463 - ------------------------------------------------------------------------------------------------------------------------------------ $ 220,400 Total Investments (cost $223,871,270) - 150.1% 226,571,270 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (2.2)% (3,250,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 4.5% 6,772,689 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (52.4)% (5) (79,100,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $150,993,959 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Preferred Shares, at Liquidation Value as a percentage of total investments is (34.9)%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 27 NFM Nuveen Maryland Dividend Advantage Municipal Fund Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY - 4.7% (3.1% OF TOTAL INVESTMENTS) $ 2,115 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 A- $ 1,995,164 Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured 310 Baltimore, Maryland, Subordinate Lien Convention Center Hotel 9/16 at 100.00 Ba1 286,322 Revenue Bonds, Series 2006B, 5.875%, 9/01/39 650 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 506,415 Chesapeake Bay Hyatt Conference Center, Series 2006A, 5.000%, 12/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ 3,075 Total Consumer Discretionary 2,787,901 - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.3% (1.5% OF TOTAL INVESTMENTS) 1,440 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 1,372,522 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 12.7% (8.3% OF TOTAL INVESTMENTS) 645 Hartford County, Maryland, Economic Development Revenue Bonds, 4/14 at 100.00 A+ 655,314 Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 980 Maryland Economic Development Corporation, Utility Infrastructure 7/11 at 100.00 AAA 1,000,306 Revenue Bonds, University of Maryland - College Park, Series 2001, 5.000%, 7/01/19 - AMBAC Insured 1,500 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 BBB- 1,505,580 Educational Facilities Leasehold Mortgage Revenue Bonds, McLean School, Series 2001, 6.000%, 7/01/31 500 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 500,625 Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34 565 Maryland Health and Higher Educational Facilities Authority, 6/17 at 100.00 Baa1 524,874 Revenue Bonds, Maryland Institute College of Art, Series 2007, 5.000%, 6/01/36 475 Maryland Industrial Development Financing Authority, Revenue 5/15 at 100.00 N/R 476,435 Bonds, Our Lady of Good Counsel High School, Series 2005A, 6.000%, 5/01/35 615 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 645,276 Bonds, Montgomery College Arts Center Project, Series 2005A, 5.000%, 5/01/20 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System, Series 1999: 215 5.375%, 2/01/19 2/09 at 101.00 BBB- 215,671 410 5.375%, 2/01/29 2/09 at 101.00 BBB- 392,227 800 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 855,024 Bonds, Series 2006A, 5.000%, 10/01/22 900 Westminster, Maryland, Educational Facilities Revenue Bonds, 11/16 at 100.00 BBB+ 754,380 McDaniel College, Series 2006, 4.500%, 11/01/36 - ------------------------------------------------------------------------------------------------------------------------------------ 7,605 Total Education and Civic Organizations 7,525,712 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 32.0% (20.9% OF TOTAL INVESTMENTS) 1,325 Maryland Health and Higher Education Facilities Authority, 7/16 at 100.00 A 1,307,219 Revenue Bonds, University of Maryland Medical System, Series 2006, 5.000%, 7/01/36 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,010,960 Revenue Bonds, Anne Arundel Medical Center, Series 1998, 5.125%, 7/01/28 - FSA Insured 28 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) $ 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 A2 $ 1,000,050 Revenue Bonds, Calvert Memorial Hospital, Series 1998, 5.000%, 7/01/28 1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,029,800 Revenue Bonds, Carroll County General Hospital, Series 2002, 6.000%, 7/01/26 400 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 Baa1 364,960 Revenue Bonds, Carroll Hospital Center, Series 2006, 5.000%, 7/01/40 750 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 713,588 Revenue Bonds, Civista Medical Center, Series 2005, 5.000%, 7/01/37 - RAAI Insured 710 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa2 666,825 Revenue Bonds, Doctors Community Hospital, Series 2007A, 5.000%, 7/01/29 500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 480,525 Revenue Bonds, Frederick Memorial Hospital, Series 2002, 5.125%, 7/01/35 650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 636,064 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 - MBIA Insured 1,250 Maryland Health and Higher Educational Facilities Authority, 5/11 at 100.00 A+ 1,271,613 Revenue Bonds, Johns Hopkins Hospital, Series 2001, 5.000%, 5/15/21 585 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 619,971 Revenue Bonds, Johns Hopkins Hospital, Series 2004, Inverse 1003, 11.325%, 7/01/33 (IF) 2,225 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A+ 2,273,615 Revenue Bonds, Kaiser Permanente System, Series 1998A, 5.375%, 7/01/15 1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 960,540 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 485 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 AAA 503,270 Revenue Bonds, LifeBridge Health System, Series 2008, 5.000%, 7/01/28 - AGC Insured 700 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A- 712,495 Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Medical Center Project, Series 2007A: 415 5.000%, 7/01/37 7/17 at 100.00 BBB 368,059 270 5.500%, 7/01/42 7/17 at 100.00 BBB 256,589 1,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 BBB 1,000,640 Revenue Bonds, Mercy Medical Center, Series 2001, 5.625%, 7/01/31 700 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 A 690,606 Revenue Bonds, Peninsula Regional Medical Center, Series 2006, 5.000%, 7/01/36 1,000 Maryland Health and Higher Educational Facilities Authority, 7/15 at 100.00 A3 964,730 Revenue Bonds, Union Hospital of Cecil County, Series 2005, 5.000%, 7/01/35 980 Maryland Health and Higher Educational Facilities Authority, 1/18 at 100.00 BBB- 954,138 Revenue Bonds, Washington County Hospital, Series 2008, 5.750%, 1/01/38 570 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 A3 571,556 Revenue Refunding Bonds, Union Hospital of Cecil County, Series 1998, 5.100%, 7/01/22 700 Prince George's County, Maryland, Revenue Bonds, Dimensions 7/08 at 100.00 B3 540,953 Health Corporation, Series 1994, 5.300%, 7/01/24 - ------------------------------------------------------------------------------------------------------------------------------------ 19,215 Total Health Care 18,898,766 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 18.7% (12.3% OF TOTAL INVESTMENTS) 750 Baltimore County, Maryland, GNMA Collateralized Revenue 10/08 at 102.00 AAA 753,795 Refunding Bonds, Cross Creek Apartments, Series 1998A, 5.250%, 10/20/33 2,000 Maryland Community Development Administration, Housing Revenue 7/08 at 101.00 Aa2 2,001,840 Bonds, Series 1998A, 5.625%, 1/01/40 (Alternative Minimum Tax) 29 NFM Nuveen Maryland Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY (continued) $ 1,000 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa $ 1,000,610 Housing Revenue Bonds, Princess Anne Apartments, Series 2001D, 5.450%, 12/15/33 (Alternative Minimum Tax) Maryland Economic Development Corporation, Senior Lien Student Housing Revenue Bonds, University of Maryland - Baltimore, Series 2003A: 215 4.250%, 10/01/10 No Opt. Call B2 208,096 50 5.000%, 10/01/15 10/13 at 100.00 B2 46,349 210 5.625%, 10/01/23 10/13 at 100.00 B2 189,013 1,800 Maryland Economic Development Corporation, Student Housing 7/11 at 101.00 N/R 1,671,444 Revenue Bonds, Sheppard Pratt University Village, Series 2001, 6.000%, 7/01/33 - ACA Insured 475 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 A+ 433,922 Revenue Refunding Bonds, University of Maryland College Park Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured 750 Montgomery County Housing Opportunities Commission, 7/08 at 101.00 Aaa 743,355 Maryland, FNMA/FHA-Insured Multifamily Housing Development Bonds, Series 1998A, 5.250%, 7/01/29 (Alternative Minimum Tax) 2,000 Montgomery County Housing Opportunities Commission, 7/10 at 100.00 Aaa 2,027,519 Maryland, Multifamily Housing Development Bonds, Series 2000B, 6.200%, 7/01/30 (Alternative Minimum Tax) 2,000 Montgomery County Housing Opportunities Commission, 7/11 at 100.00 Aaa 2,001,120 Maryland, Multifamily Housing Development Bonds, Series 2001A, 5.600%, 7/01/42 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 11,250 Total Housing/Multifamily 11,077,063 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 8.2% (5.4% OF TOTAL INVESTMENTS) 250 Maryland Community Development Administration Department of 3/17 at 100.00 Aa2 241,290 Housing and Community Development, Residential Revenue Bonds, Series 2007H, 5.000%, 9/01/27 (Alternative Minimum Tax) 300 Maryland Community Development Administration, Department of 9/15 at 100.00 Aa2 287,742 Housing and Community Development, Residential Revenue Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax) 1,200 Maryland Community Development Administration, Department of 3/16 at 100.00 Aa2 1,147,476 Housing and Community Development, Residential Revenue Bonds, Series 2006I, 4.875%, 9/01/26 (Alternative Minimum Tax) 815 Maryland Community Development Administration, Department of 9/16 at 100.00 Aa2 766,467 Housing and Community Development, Residential Revenue Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax) 500 Maryland Community Development Administration, Department of 3/17 at 100.00 Aa2 450,275 Housing and Community Development, Residential Revenue Bonds, Series 2007D, 4.850%, 9/01/37 (Alternative Minimum Tax) 470 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 475,983 Revenue Bonds, Series 2001B, 5.450%, 9/01/32 (Alternative Minimum Tax) 970 Maryland Community Development Administration, Residential 9/14 at 100.00 Aa2 897,396 Revenue Bonds, Series 2005E, 4.900%, 9/01/36 (Alternative Minimum Tax) 600 Maryland Community Development Administration, Residential 9/15 at 100.00 Aa2 569,448 Revenue Bonds, Series 2006B, 4.750%, 9/01/25 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 5,105 Total Housing/Single Family 4,836,077 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 2.4% (1.5% OF TOTAL INVESTMENTS) 410 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 386,860 Disposal Revenue Bonds, Waste Management Inc., Series 2002, 4.600%, 4/01/16 (Alternative Minimum Tax) 1,000 Northeast Maryland Waste Disposal Authority, Baltimore, Resource 1/09 at 101.00 BBB 1,002,150 Recovery Revenue Bonds, RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 1,410 Total Industrials 1,389,010 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 3.5% (2.3% OF TOTAL INVESTMENTS) 850 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 785,621 Series 2007A, 5.000%, 1/01/37 300 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 N/R 278,190 Revenue Bonds, Edenwald, Series 2006A, 5.400%, 1/01/31 720 Maryland Health and Higher Educational Facilities Authority, 1/17 at 100.00 N/R 625,061 Revenue Bonds, King Farm Presbyterian Community, Series 2007A, 5.250%, 1/01/27 30 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE (continued) $ 440 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ $ 383,574 Revenue Bonds, Mercy Ridge Retirement Community, Series 2007, 4.750%, 7/01/34 - ------------------------------------------------------------------------------------------------------------------------------------ 2,310 Total Long-Term Care 2,072,446 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 23.1% (15.1% OF TOTAL INVESTMENTS) Anne Arundel County, Maryland, General Obligation Bonds, Series 2006: 730 5.000%, 3/01/21 3/16 at 100.00 AAA 780,115 565 5.000%, 3/01/21 3/16 at 100.00 AAA 603,787 3,500 Baltimore County, Maryland, Metropolitan District Special 6/11 at 101.00 AAA 3,588,198 Assessment Bonds, 67th Issue, 5.000%, 6/01/27 300 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA 331,446 Series 2005A, 5.000%, 12/01/16 500 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 552,265 Bonds, Series 2006, 5.000%, 11/01/20 Frederick, Maryland, General Obligation Bonds, Series 2005: 600 5.000%, 8/01/16 - MBIA Insured 8/15 at 100.00 AAA 658,398 500 5.000%, 8/01/17 - MBIA Insured 8/15 at 100.00 AAA 538,945 1,360 Howard County, Maryland, Consolidated Public Improvement 2/09 at 101.00 AAA 1,378,156 Bonds, Series 2001A, 4.750%, 2/15/21 1,000 Maryland National Capital Park Planning Commission, 1/14 at 100.00 AA+ 1,078,490 Prince George's County, General Obligation Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17 1,360 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 1,512,918 Public Improvement Bonds, Series 2006, 5.000%, 5/01/16 740 Ocean City, Maryland, General Obligation Bonds, Series 2001, 3/11 at 101.00 A1 762,607 4.875%, 3/01/19 - FGIC Insured 1,000 Prince George's County, Maryland, General Obligation 10/13 at 100.00 AAA 1,075,770 Consolidated Public Improvement Bonds, Series 2003A, 5.000%, 10/01/17 700 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 770,420 Prince George's Counties, Maryland,Sewerage Disposal Bonds, Series 2005, 5.000%, 6/01/16 - ------------------------------------------------------------------------------------------------------------------------------------ 12,855 Total Tax Obligation/General 13,631,515 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 16.1% (10.6% OF TOTAL INVESTMENTS) 625 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 541,188 Project, Series 2005A, 5.350%, 7/01/34 465 Anne Arundel County, Maryland, Tax Increment Financing No Opt. Call N/R 475,923 Revenue Bonds, Parole Town Center Project, Series 2002, 5.000%, 7/01/12 350 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 321,923 Town Center Project, Series 2004, 5.750%, 7/01/34 1,500 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 1,710,465 Revenue Bonds, Series 2002, 5.500%, 2/01/16 1,405 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 1,504,643 Bonds, Department of Transportation Headquarters Building, Series 2002, 5.375%, 6/01/19 370 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 398,986 Bonds, Montgomery County Town Square Parking Garage, Series 2002A, 5.000%, 9/15/13 740 Prince George's County, Maryland, Lease Revenue Bonds, 6/13 at 100.00 AAA 799,851 Upper Marlboro Justice Center, Series 2003A, 5.000%, 6/30/14 - MBIA Insured 270 Prince George's County, Maryland, Special Obligation Bonds, 7/15 at 100.00 N/R 228,695 National Harbor Project, Series 2005, 5.200%, 7/01/34 450 Prince George's County, Maryland, Special Tax District Bonds, 7/13 at 100.00 N/R 382,518 Victoria Falls Project, Series 2005, 5.250%, 7/01/35 1,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,055,150 Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured 700 Puerto Rico, Highway Revenue Bonds, Highway and Transportation No Opt. Call AAA 750,113 Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 31 NFM Nuveen Maryland Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,290 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ $ 1,372,328 Loan Note, Series 1999A, 6.375%, 10/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ 9,165 Total Tax Obligation/Limited 9,541,783 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 4.3% (2.8% OF TOTAL INVESTMENTS) 650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 AAA 658,684 Parking Facilities Revenue Bonds, Johns Hopkins Hospital, Series 2001, 5.000%, 7/01/27 - AMBAC Insured 1,785 Maryland Transportation Authority, Revenue Bonds, Transportation 7/17 at 100.00 AAA 1,857,658 Facilities Projects, Series 2007, 5.000%, 7/01/30 - FSA Insured (UB) - ------------------------------------------------------------------------------------------------------------------------------------ 2,435 Total Transportation 2,516,342 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 21.0% (13.7% OF TOTAL INVESTMENTS) (4) 1,015 Baltimore, Maryland, Revenue Refunding Bonds, Water Projects, No Opt. Call AA (4) 1,075,372 Series 1998A, 5.000%, 7/01/28 - FGIC Insured (ETM) 215 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA 238,414 Series 2006C, 5.000%, 7/01/31 (Pre-refunded 7/01/16) - AMBAC Insured Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary's College, Series 2001A: 465 5.700%, 9/01/20 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 496,057 500 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 533,820 500 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R (4) 555,255 Revenue Bonds, Collington Episcopal Life Care Community Inc., Series 2001A, 6.750%, 4/01/23 (Pre-refunded 4/01/11) 585 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A (4) 639,873 Revenue Bonds, LifeBridge Health System, Series 2004A, 5.125%, 7/01/34 (Pre-refunded 7/01/14) 625 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 (4) 672,063 Revenue Bonds, Maryland Institute College of Art, Series 2001, 5.500%, 6/01/32 (Pre-refunded 6/01/11) 2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A (4) 2,139,259 Revenue Bonds, University of Maryland Medical System, Series 2001, 5.250%, 7/01/28 (Pre-refunded 7/01/11) 775 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 887,546 Transportation Facilities Projects, First Series 1978, 6.800%, 7/01/16 (ETM) Puerto Rico Infrastructure Financing Authority, Special Obligation Bonds, Series 2000A: 2,300 5.500%, 10/01/32 10/10 at 101.00 AAA 2,395,472 1,700 5.500%, 10/01/40 10/10 at 101.00 AAA 1,767,473 960 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,003,258 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded 7/01/10) - ------------------------------------------------------------------------------------------------------------------------------------ 11,640 Total U.S. Guaranteed 12,403,862 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 1.7% (1.1% OF TOTAL INVESTMENTS) 1,000 Maryland Energy Financing Administration, Revenue Bonds, 7/08 at 100.00 N/R 997,650 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 32 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 2.1% (1.4% OF TOTAL INVESTMENTS) $ 285 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA $ 295,536 Series 2006C, 5.000%, 7/01/31 - AMBAC Insured 540 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/17 at 100.00 AAA 547,063 Series 2007D, 5.000%, 7/01/32 - AMBAC Insured 355 Maryland Water Quality Financing Administration, Revolving Loan No Opt. Call AAA 393,869 Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ 1,180 Total Water and Sewer 1,236,468 - ------------------------------------------------------------------------------------------------------------------------------------ $ 89,685 Total Investments (cost $90,410,738) - 152.8% 90,287,117 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (2.3)% (1,338,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.6% 2,150,526 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (54.1)% (5) (32,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $59,099,643 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Preferred Shares, at Liquidation Value as a percentage of total investments is (35.4)%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 33 NZR Nuveen Maryland Dividend Advantage Municipal Fund 2 Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY - 5.0% (3.3% OF TOTAL INVESTMENTS) $ 2,320 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 A- $ 2,188,548 Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured 310 Baltimore, Maryland, Subordinate Lien Convention Center Hotel 9/16 at 100.00 Ba1 286,322 Revenue Bonds, Series 2006B, 5.875%, 9/01/39 650 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 506,415 Chesapeake Bay Hyatt Conference Center, Series 2006A, 5.000%, 12/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ 3,280 Total Consumer Discretionary 2,981,285 - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.3% (1.5% OF TOTAL INVESTMENTS) 725 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 691,027 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 800 Tobacco Settlement Financing Corporation, Virgin Islands, 5/11 at 100.00 Baa3 697,544 Tobacco Settlement Asset-Backed Bonds, Series 2001, 5.000%, 5/15/31 - ------------------------------------------------------------------------------------------------------------------------------------ 1,525 Total Consumer Staples 1,388,571 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 14.8% (9.7% OF TOTAL INVESTMENTS) 1,100 Anne Arundel County, Maryland, Economic Development Revenue 9/12 at 102.00 A3 1,128,589 Bonds, Community College Project, Series 2002, 5.125%, 9/01/22 500 Frederick County, Maryland, Educational Facilities Revenue Bonds, 9/16 at 100.00 BBB- 486,150 Mount Saint Mary's College, Series 2006, 5.625%, 9/01/38 645 Hartford County, Maryland, Economic Development Revenue Bonds, 4/14 at 100.00 A+ 655,314 Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 250 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 BBB- 250,930 Educational Facilities Leasehold Mortgage Revenue Bonds, McLean School, Series 2001, 6.000%, 7/01/31 415 Maryland Health and Higher Educational Facilities Authority, 1/11 at 101.00 AAA 430,206 Revenue Bonds, Bullis School, Series 2000, 5.250%, 7/01/30 - FSA Insured 500 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 500,625 Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34 565 Maryland Health and Higher Educational Facilities Authority, 6/17 at 100.00 Baa1 524,874 Revenue Bonds, Maryland Institute College of Art, Series 2007, 5.000%, 6/01/36 500 Maryland Industrial Development Financing Authority, Revenue 5/15 at 100.00 N/R 501,510 Bonds, Our Lady of Good Counsel High School, Series 2005A, 6.000%, 5/01/35 590 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 626,067 Bonds, Montgomery College Arts Center Project, Series 2005A, 5.000%, 5/01/18 500 Morgan State University, Maryland, Student Tuition and Fee 7/12 at 100.00 A+ 510,830 Revenue Bonds, Academic Fees and Auxiliary Facilities, Series 2001, 4.900%, 7/01/21 - FGIC Insured 500 Morgan State University, Maryland, Student Tuition and Fee 7/13 at 100.00 A+ 517,090 Revenue Bonds, Academic Fees and Auxiliary Facilities, Series 2003A, 5.000%, 7/01/20 - FGIC Insured 1,140 University of Maryland, Auxiliary Facility and Tuition Revenue 4/11 at 100.00 AA 1,162,903 Bonds, Series 2001B, 4.500%, 4/01/19 650 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 694,707 Bonds, Series 2006A, 5.000%, 10/01/22 34 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS (continued) $ 950 Westminster, Maryland, Educational Facilities Revenue Bonds, 11/16 at 100.00 BBB+ $ 900,999 McDaniel College, Series 2006, 5.000%, 11/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ 8,805 Total Education and Civic Organizations 8,890,794 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 25.9% (17.0% OF TOTAL INVESTMENTS) 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,009,710 Revenue Bonds, Anne Arundel Medical Center, Series 1998, 5.125%, 7/01/33 - FSA Insured 775 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 786,354 Revenue Bonds, Calvert Memorial Hospital, Series 2004, 5.500%, 7/01/36 1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,029,800 Revenue Bonds, Carroll County General Hospital, Series 2002, 6.000%, 7/01/26 750 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 713,588 Revenue Bonds, Civista Medical Center, Series 2005, 5.000%, 7/01/37 - RAAI Insured 715 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa2 671,521 Revenue Bonds, Doctors Community Hospital, Series 2007A, 5.000%, 7/01/29 500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 480,525 Revenue Bonds, Frederick Memorial Hospital, Series 2002, 5.125%, 7/01/35 650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 636,064 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 - MBIA Insured 585 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 619,971 Revenue Bonds, Johns Hopkins Hospital, Series 2004, Inverse 1003, 11.325%, 7/01/33 (IF) 1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 960,540 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 480 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 AAA 498,082 Revenue Bonds, LifeBridge Health System, Series 2008, 5.000%, 7/01/28 - AGC Insured 700 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A- 712,495 Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Medical Center Project, Series 2007A: 415 5.000%, 7/01/37 7/17 at 100.00 BBB 368,059 280 5.500%, 7/01/42 7/17 at 100.00 BBB 266,092 1,500 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 BBB 1,500,960 Revenue Bonds, Mercy Medical Center, Series 2001, 5.625%, 7/01/31 700 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 A 690,606 Revenue Bonds, Peninsula Regional Medical Center, Series 2006, 5.000%, 7/01/36 1,500 Maryland Health and Higher Educational Facilities Authority, 7/15 at 100.00 A3 1,431,990 Revenue Bonds, Union Hospital of Cecil County, Series 2005, 5.000%, 7/01/40 980 Maryland Health and Higher Educational Facilities Authority, 1/18 at 100.00 BBB- 954,138 Revenue Bonds, Washington County Hospital, Series 2008, 5.750%, 1/01/38 1,610 Montgomery County, Maryland, Economic Development Revenue 12/11 at 100.00 AA 1,627,726 Bonds, Trinity Healthcare Group, Series 2001, 5.125%, 12/01/22 700 Prince George's County, Maryland, Revenue Bonds, Dimensions 7/08 at 100.00 B3 540,953 Health Corporation, Series 1994, 5.300%, 7/01/24 - ------------------------------------------------------------------------------------------------------------------------------------ 15,840 Total Health Care 15,499,174 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 9.4% (6.2% OF TOTAL INVESTMENTS) 10 Maryland Community Development Administration, Insured 5/11 at 100.00 Aa2 10,066 Multifamily Housing Mortgage Loan Revenue Bonds, Series 2001A, 5.100%, 5/15/28 3,145 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa 3,146,917 Development Revenue Bonds, Waters Towers Senior Apartments, Series 2001F, 5.450%, 12/15/33 (Alternative Minimum Tax) 35 NZR Nuveen Maryland Dividend Advantage Municipal Fund 2 (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY (continued) $ 1,110 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa $ 1,110,677 Housing Revenue Bonds, Princess Anne Apartments, Series 2001D, 5.450%, 12/15/33 (Alternative Minimum Tax) 1,000 Maryland Economic Development Corporation, Senior Lien Student 10/13 at 100.00 B2 900,060 Housing Revenue Bonds, University of Maryland - Baltimore, Series 2003A, 5.625%, 10/01/23 520 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 A+ 475,030 Revenue Refunding Bonds, University of Maryland College Park Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured - ------------------------------------------------------------------------------------------------------------------------------------ 5,785 Total Housing/Multifamily 5,642,750 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 8.4% (5.5% OF TOTAL INVESTMENTS) 250 Maryland Community Development Administration Department of 3/17 at 100.00 Aa2 241,290 Housing and Community Development, Residential Revenue Bonds, Series 2007H, 5.000%, 9/01/27 (Alternative Minimum Tax) 300 Maryland Community Development Administration, Department of 9/15 at 100.00 Aa2 287,742 Housing and Community Development, Residential Revenue Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax) 1,000 Maryland Community Development Administration, Department of 3/16 at 100.00 Aa2 956,230 Housing and Community Development, Residential Revenue Bonds, Series 2006I, 4.875%, 9/01/26 (Alternative Minimum Tax) 815 Maryland Community Development Administration, Department of 9/16 at 100.00 Aa2 766,467 Housing and Community Development, Residential Revenue Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax) 500 Maryland Community Development Administration, Department of 3/17 at 100.00 Aa2 450,275 Housing and Community Development, Residential Revenue Bonds, Series 2007D, 4.850%, 9/01/37 (Alternative Minimum Tax) 845 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 841,290 Revenue Bonds, Series 2001H, 5.350%, 9/01/32 (Alternative Minimum Tax) 970 Maryland Community Development Administration, Residential 9/14 at 100.00 Aa2 897,396 Revenue Bonds, Series 2005E, 4.900%, 9/01/36 (Alternative Minimum Tax) 600 Maryland Community Development Administration, Residential 9/15 at 100.00 Aa2 569,448 Revenue Bonds, Series 2006B, 4.750%, 9/01/25 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 5,280 Total Housing/Single Family 5,010,138 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 2.6% (1.7% OF TOTAL INVESTMENTS) 410 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 386,860 Disposal Revenue Bonds, Waste Management Inc., Series 2002, 4.600%, 4/01/16 (Alternative Minimum Tax) 1,150 Northeast Maryland Waste Disposal Authority, Baltimore, Resource 1/09 at 101.00 BBB 1,152,473 Recovery Revenue Bonds, RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 1,560 Total Industrials 1,539,333 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 3.5% (2.3% OF TOTAL INVESTMENTS) 860 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 794,864 Series 2007A, 5.000%, 1/01/37 300 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 N/R 278,190 Revenue Bonds, Edenwald, Series 2006A, 5.400%, 1/01/31 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, King Farm Presbyterian Community, Series 2007A: 500 5.000%, 1/01/17 No Opt. Call N/R 480,240 220 5.250%, 1/01/27 1/17 at 100.00 N/R 190,991 435 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 379,216 Revenue Bonds, Mercy Ridge Retirement Community, Series 2007, 4.750%, 7/01/34 - ------------------------------------------------------------------------------------------------------------------------------------ 2,315 Total Long-Term Care 2,123,501 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 28.4% (18.7% OF TOTAL INVESTMENTS) 750 Anne Arundel County, Maryland, General Obligation Bonds, 8/09 at 101.00 AAA 763,418 Consolidated Water and Sewerage, Series 1999, 4.500%, 8/01/19 Anne Arundel County, Maryland, General Obligation Bonds, Series 2006: 845 5.000%, 3/01/21 3/16 at 100.00 AAA 903,009 650 5.000%, 3/01/21 3/16 at 100.00 AAA 694,623 36 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 750 Baltimore, Maryland, General Obligation Consolidated Public 10/14 at 100.00 AAA $ 789,000 Improvement Bonds, Series 2004A, 5.000%, 10/15/22 - AMBAC Insured 300 Carroll County, Maryland, Consolidated Public Improvement 12/15 at 100.00 AA 331,446 Bonds, Series 2005A, 5.000%, 12/01/16 Cecil County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series 2001B: 975 4.600%, 8/01/18 8/11 at 101.00 AA- 1,010,159 1,020 4.600%, 8/01/19 8/11 at 101.00 AA- 1,053,650 750 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 828,398 Bonds, Series 2006, 5.000%, 11/01/20 Frederick, Maryland, General Obligation Bonds, Series 2005: 600 5.000%, 8/01/16 - MBIA Insured 8/15 at 100.00 AAA 658,398 500 5.000%, 8/01/17 - MBIA Insured 8/15 at 100.00 AAA 538,945 510 Frederick, Maryland, General Obligation Refunding and 12/11 at 101.00 AA- 534,414 Improvement Bonds, Series 2001, 4.750%, 12/01/19 1,000 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 1,108,610 Public Improvement Bonds, Series 2005A, 5.000%, 7/01/15 4,730 Montgomery County, Maryland, Consolidated General Obligation 10/11 at 101.00 AAA 5,055,893 Public Improvement Refunding Bonds, Series 2001, 5.250%, 10/01/18 770 Puerto Rico, General Obligation and Public Improvement Bonds, 7/11 at 100.00 AAA 789,512 Series 2001, 5.000%, 7/01/24 - FSA Insured 800 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 880,480 Prince George's Counties, Maryland, Sewerage Disposal Bonds, Series 2005, 5.000%, 6/01/16 1,000 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 1,100,600 Prince George's Counties, Maryland, Water Supply Bonds, Series 2005, 5.000%, 6/01/16 - ------------------------------------------------------------------------------------------------------------------------------------ 15,950 Total Tax Obligation/General 17,040,555 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 17.9% (11.8% OF TOTAL INVESTMENTS) 625 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 541,188 Project, Series 2005A, 5.350%, 7/01/34 465 Anne Arundel County, Maryland, Tax Increment Financing Revenue No Opt. Call N/R 475,923 Bonds, Parole Town Center Project, Series 2002, 5.000%, 7/01/12 530 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 570,593 Bonds, City Public School System, Series 2003A, 5.000%, 5/01/15 Baltimore County, Maryland, Certificates of Participation, Health and Social Services Building Project, Series 2001: 1,580 5.000%, 8/01/20 8/11 at 101.00 AA+ 1,636,327 1,660 5.000%, 8/01/21 8/11 at 101.00 AA+ 1,714,182 110 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA 112,736 Development Special Obligation Bonds, Series 2001A, 5.700%, 7/01/29 - RAAI Insured 350 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 321,923 Town Center Project, Series 2004, 5.750%, 7/01/34 1,000 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 1,140,310 Revenue Bonds, Series 2002, 5.500%, 2/01/16 1,405 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 1,504,643 Bonds, Department of Transportation Headquarters Building, Series 2002, 5.375%, 6/01/19 1,000 Montgomery County, Maryland, Special Obligation Bonds, West 7/12 at 101.00 AA 1,024,060 Germantown Development District, Senior Series 2002A, 5.500%, 7/01/27 - RAAI Insured 270 Prince George's County, Maryland, Special Obligation Bonds, 7/15 at 100.00 N/R 228,695 National Harbor Project, Series 2005, 5.200%, 7/01/34 475 Prince George's County, Maryland, Special Tax District Bonds, 7/13 at 100.00 N/R 403,769 Victoria Falls Project, Series 2005, 5.250%, 7/01/35 37 NZR Nuveen Maryland Dividend Advantage Municipal Fund 2 (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA $ 1,055,150 Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 10,470 Total Tax Obligation/Limited 10,729,499 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 5.9% (3.8% OF TOTAL INVESTMENTS) Maryland Health and Higher Educational Facilities Authority, Parking Facilities Revenue Bonds, Johns Hopkins Hospital, Series 2001: 650 5.000%, 7/01/27 - AMBAC Insured 7/11 at 100.00 AAA 658,684 1,000 5.000%, 7/01/34 - AMBAC Insured 7/11 at 100.00 AAA 1,001,650 1,780 Maryland Transportation Authority, Revenue Bonds, Transportation 7/17 at 100.00 AAA 1,852,455 Facilities Projects, Series 2007, 5.000%, 7/01/30 - FSA Insured (UB) - ------------------------------------------------------------------------------------------------------------------------------------ 3,430 Total Transportation 3,512,789 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 22.7% (14.9% OF TOTAL INVESTMENTS) (4) 1,000 Baltimore County, Maryland, Consolidated General Obligation 8/12 at 100.00 AAA 1,055,090 Public Improvement Bonds, Series 2002, 5.000%, 8/01/18 (Pre-refunded 8/01/12) 215 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA 238,414 Series 2006C, 5.000%, 7/01/31 (Pre-refunded 7/01/16) - AMBAC Insured Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary's College, Series 2001A: 100 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 106,764 100 5.800%, 9/01/30 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 106,850 90 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA (4) 97,844 Development Special Obligation Bonds, Series 2001A, 5.700%, 7/01/29 (Pre-refunded 7/01/10) - RAAI Insured Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Collington Episcopal Life Care Community Inc., Series 2001A: 31 6.750%, 4/01/20 (Pre-refunded 4/01/09) 4/09 at 100.00 N/R (4) 31,976 25 6.750%, 4/01/23 (Pre-refunded 4/01/11) 4/11 at 101.00 N/R (4) 27,763 1,260 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 1,363,635 Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/17 - AMBAC Insured (ETM) 525 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A (4) 574,245 Revenue Bonds, LifeBridge Health System, Series 2004A, 5.125%, 7/01/34 (Pre-refunded 7/01/14) 1,250 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 (4) 1,344,125 Revenue Bonds, Maryland Institute College of Art, Series 2001, 5.500%, 6/01/32 (Pre-refunded 6/01/11) 2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A (4) 2,139,259 Revenue Bonds, University of Maryland Medical System, Series 2001, 5.250%, 7/01/28 (Pre-refunded 7/01/11) 1,090 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 1,248,290 Transportation Facilities Projects, First Series 1978, 6.800%, 7/01/16 (ETM) 1,000 Prince George's County, Maryland, General Obligation 12/11 at 101.00 AAA 1,092,060 Consolidated Public Improvement Bonds, Series 2001, 5.250%, 12/01/20 (Pre-refunded 12/01/11) - FGIC Insured 3,000 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 3,119,069 Bonds, Series 2000A, 5.500%, 10/01/40 1,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,060,720 Asset-Backed Bonds, Series 2000, 6.000%, 7/01/26 (Pre-refunded 7/01/10) - ------------------------------------------------------------------------------------------------------------------------------------ 12,686 Total U.S. Guaranteed 13,606,104 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 3.3% (2.2% OF TOTAL INVESTMENTS) 1,000 Guam Power Authority, Revenue Bonds, Series 1999A, 10/09 at 101.00 AAA 1,001,450 5.250%, 10/01/34 - MBIA Insured 1,000 Maryland Energy Financing Administration, Revenue Bonds, 7/08 at 100.00 N/R 997,650 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 2,000 Total Utilities 1,999,100 - ------------------------------------------------------------------------------------------------------------------------------------ 38 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 2.1% (1.4% OF TOTAL INVESTMENTS) $ 285 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA $ 295,536 Series 2006C, 5.000%, 7/01/31 - AMBAC Insured 540 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/17 at 100.00 AAA 547,063 Series 2007D, 5.000%, 7/01/32 - AMBAC Insured 355 Maryland Water Quality Financing Administration, Revolving No Opt. Call AAA 393,869 Loan Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ 1,180 Total Water and Sewer 1,236,468 - ------------------------------------------------------------------------------------------------------------------------------------ $ 90,106 Total Investments (cost $90,958,298) - 152.2% 91,200,061 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (2.2)% (1,335,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.4% 2,055,759 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (53.4)% (5) (32,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $59,920,820 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Preferred Shares, at Liquidation Value as a percentage of total investments is (35.1)%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 39 NWI Nuveen Maryland Dividend Advantage Municipal Fund 3 Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY - 4.2% (2.8% OF TOTAL INVESTMENTS) $ 2,385 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 A- $ 2,249,866 Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured 380 Baltimore, Maryland, Subordinate Lien Convention Center Hotel 9/16 at 100.00 Ba1 350,976 Revenue Bonds, Series 2006B, 5.875%, 9/01/39 700 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 545,370 Chesapeake Bay Hyatt Conference Center, Series 2006A, 5.000%, 12/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ 3,465 Total Consumer Discretionary 3,146,212 - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 3.2% (2.1% OF TOTAL INVESTMENTS) 2,515 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 2,397,147 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 12.2% (8.0% OF TOTAL INVESTMENTS) 225 Anne Arundel County, Maryland, Economic Development Revenue 9/12 at 102.00 A3 230,848 Bonds, Community College Project, Series 2002, 5.125%, 9/01/22 625 Frederick County, Maryland, Educational Facilities Revenue Bonds, 9/16 at 100.00 BBB- 607,688 Mount Saint Mary's College, Series 2006, 5.625%, 9/01/38 690 Hartford County, Maryland, Economic Development Revenue Bonds, 4/14 at 100.00 A+ 701,033 Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 625 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 625,781 Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34 1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 AA 1,014,710 Revenue Bonds, Johns Hopkins University, Series 2002A, 5.000%, 7/01/32 625 Maryland Industrial Development Financing Authority, Revenue 5/15 at 100.00 N/R 626,888 Bonds, Our Lady of Good Counsel High School, Series 2005A, 6.000%, 5/01/35 710 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 753,402 Bonds, Montgomery College Arts Center Project, Series 2005A, 5.000%, 5/01/18 1,000 Morgan State University, Maryland, Student Tuition and Fee 7/13 at 100.00 A+ 1,010,690 Revenue Bonds, Academic Fees and Auxiliary Facilities, Series 2003A, 5.000%, 7/01/32 - FGIC Insured 985 University of Maryland, Auxiliary Facility and Tuition Revenue 4/11 at 100.00 AA 1,002,572 Bonds, Series 2001B, 4.625%, 4/01/21 800 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 855,024 Bonds, Series 2006A, 5.000%, 10/01/22 1,815 Westminster, Maryland, Educational Facilities Revenue Bonds, 11/16 at 100.00 BBB+ 1,721,382 McDaniel College, Series 2006, 5.000%, 11/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ 9,100 Total Education and Civic Organizations 9,150,018 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 26.0% (17.2% OF TOTAL INVESTMENTS) 700 Maryland Health and Higher Education Facilities Authority, 7/16 at 100.00 A 698,068 Revenue Bonds, University of Maryland Medical System, Series 2006, 5.000%, 7/01/31 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,009,710 Revenue Bonds, Anne Arundel Medical Center, Series 1998, 5.125%, 7/01/33 - FSA Insured 775 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 786,354 Revenue Bonds, Calvert Memorial Hospital, Series 2004, 5.500%, 7/01/36 40 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) $ 1,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 $ 1,263,488 Revenue Bonds, Carroll County General Hospital, Series 2002, 5.800%, 7/01/32 1,750 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 Baa1 1,596,700 Revenue Bonds, Carroll Hospital Center, Series 2006, 5.000%, 7/01/40 870 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 827,762 Revenue Bonds, Civista Medical Center, Series 2005, 5.000%, 7/01/37 - RAAI Insured 885 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa2 831,183 Revenue Bonds, Doctors Community Hospital, Series 2007A, 5.000%, 7/01/29 700 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 672,735 Revenue Bonds, Frederick Memorial Hospital, Series 2002, 5.125%, 7/01/35 800 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 782,848 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 - MBIA Insured 1,000 Maryland Health and Higher Educational Facilities Authority, 5/11 at 100.00 A+ 1,017,290 Revenue Bonds, Johns Hopkins Hospital, Series 2001, 5.000%, 5/15/21 735 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 778,938 Revenue Bonds, Johns Hopkins Hospital, Series 2004, Inverse 1003, 11.325%, 7/01/33 (IF) 1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 960,540 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 595 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 AAA 617,414 Revenue Bonds, LifeBridge Health System, Series 2008, 5.000%, 7/01/28 - AGC Insured 900 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A- 916,065 Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Medical Center Project, Series 2007A: 525 5.000%, 7/01/37 7/17 at 100.00 BBB 465,617 340 5.500%, 7/01/42 7/17 at 100.00 BBB 323,112 650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 BBB 650,416 Revenue Bonds, Mercy Medical Center, Series 2001, 5.625%, 7/01/31 850 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 A 838,593 Revenue Bonds, Peninsula Regional Medical Center, Series 2006, 5.000%, 7/01/36 1,845 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 1,871,070 Revenue Bonds, Union Hospital of Cecil County, Series 2002, 5.625%, 7/01/32 1,220 Maryland Health and Higher Educational Facilities Authority, 1/18 at 100.00 BBB- 1,187,804 Revenue Bonds, Washington County Hospital, Series 2008, 5.750%, 1/01/38 775 Maryland Health and Higher Educational Facilities Authority, 1/13 at 101.00 Baa2 788,260 Revenue Refunding Bonds, Adventist Healthcare, Series 2003A, 5.750%, 1/01/25 900 Prince George's County, Maryland, Revenue Bonds, Dimensions 7/08 at 100.00 B3 695,511 Health Corporation, Series 1994, 5.300%, 7/01/24 - ------------------------------------------------------------------------------------------------------------------------------------ 20,065 Total Health Care 19,579,478 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 14.4% (9.5% OF TOTAL INVESTMENTS) 980 Maryland Community Development Administration, Housing 7/12 at 100.00 Aa2 925,963 Revenue Bonds, Series 2002B, 4.950%, 7/01/32 (Alternative Minimum Tax) 1,250 Maryland Economic Development Corporation, Senior Lien Student 10/13 at 100.00 B2 1,125,075 Housing Revenue Bonds, University of Maryland - Baltimore, Series 2003A, 5.625%, 10/01/23 Maryland Economic Development Corporation, Student Housing Revenue Bonds, Sheppard Pratt University Village, Series 2001: 20 5.875%, 7/01/21 - ACA Insured 7/11 at 101.00 N/R 19,606 150 6.000%, 7/01/33 - ACA Insured 7/11 at 101.00 N/R 139,287 475 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 A+ 433,922 Revenue Refunding Bonds, University of Maryland College Park Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured 41 NWI Nuveen Maryland Dividend Advantage Municipal Fund 3 (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY (continued) Montgomery County Housing Opportunities Commission, Maryland, Multifamily Housing Development Bonds, Series 2002B: $ 515 5.100%, 7/01/33 (Alternative Minimum Tax) 7/12 at 100.00 Aaa $ 497,310 3,000 5.200%, 7/01/44 (Alternative Minimum Tax) 7/12 at 100.00 Aaa 2,841,359 4,860 Prince George's County Housing Authority, Maryland, 11/12 at 100.00 AAA 4,870,011 GNMA Collateralized Mortgage Revenue Bonds, Fairview and Hillside Projects, Series 2002A, 4.700%, 11/20/22 - ------------------------------------------------------------------------------------------------------------------------------------ 11,250 Total Housing/Multifamily 10,852,533 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 5.9% (3.9% OF TOTAL INVESTMENTS) 350 Maryland Community Development Administration Department 3/17 at 100.00 Aa2 337,806 of Housing and Community Development, Residential Revenue Bonds, Series 2007H, 5.000%, 9/01/27 (Alternative Minimum Tax) 595 Maryland Community Development Administration, Department 9/15 at 100.00 Aa2 570,688 of Housing and Community Development, Residential Revenue Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax) 1,200 Maryland Community Development Administration, Department 3/16 at 100.00 Aa2 1,147,476 of Housing and Community Development, Residential Revenue Bonds, Series 2006I, 4.875%, 9/01/26 (Alternative Minimum Tax) 815 Maryland Community Development Administration, Department 9/16 at 100.00 Aa2 766,467 of Housing and Community Development, Residential Revenue Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax) 620 Maryland Community Development Administration, Department 3/17 at 100.00 Aa2 558,341 of Housing and Community Development, Residential Revenue Bonds, Series 2007D, 4.850%, 9/01/37 (Alternative Minimum Tax) 1,160 Maryland Community Development Administration, Residential 9/14 at 100.00 Aa2 1,073,174 Revenue Bonds, Series 2005E, 4.900%, 9/01/36 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 4,740 Total Housing/Single Family 4,453,952 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 2.0% (1.3% OF TOTAL INVESTMENTS) 510 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 481,216 Disposal Revenue Bonds, Waste Management Inc., Series 2002, 4.600%, 4/01/16 (Alternative Minimum Tax) 1,000 Northeast Maryland Waste Disposal Authority, Baltimore, 1/09 at 101.00 BBB 1,002,150 Resource Recovery Revenue Bonds, RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 1,510 Total Industrials 1,483,366 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 3.4% (2.2% OF TOTAL INVESTMENTS) 1,050 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 970,473 Series 2007A, 5.000%, 1/01/37 400 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 N/R 370,920 Revenue Bonds, Edenwald, Series 2006A, 5.400%, 1/01/31 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, King Farm Presbyterian Community, Series 2007A: 280 5.000%, 1/01/17 No Opt. Call N/R 268,934 520 5.250%, 1/01/27 1/17 at 100.00 N/R 451,433 540 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 470,750 Revenue Bonds, Mercy Ridge Retirement Community, Series 2007, 4.750%, 7/01/34 - ------------------------------------------------------------------------------------------------------------------------------------ 2,790 Total Long-Term Care 2,532,510 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 21.9% (14.4% OF TOTAL INVESTMENTS) 1,000 Annapolis, Maryland, General Obligation Public Improvement 4/12 at 101.00 AA 1,038,410 Refunding Bonds, Series 2002, 4.375%, 4/01/17 Anne Arundel County, Maryland, General Obligation Bonds, Series 2006: 845 5.000%, 3/01/21 3/16 at 100.00 AAA 903,009 650 5.000%, 3/01/21 3/16 at 100.00 AAA 694,623 380 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA 419,832 Series 2005A, 5.000%, 12/01/16 1,260 Charles County, Maryland, Consolidated General Obligation 1/12 at 101.00 AA 1,314,533 Public Improvement Bonds, Series 2002, 4.400%, 1/15/16 42 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 500 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA $ 552,265 Bonds, Series 2006, 5.000%, 11/01/20 Frederick, Maryland, General Obligation Bonds, Series 2005: 710 5.000%, 8/01/16 - MBIA Insured 8/15 at 100.00 AAA 779,104 535 5.000%, 8/01/17 - MBIA Insured 8/15 at 100.00 AAA 576,671 1,000 Maryland National Capital Park Planning Commission, 1/14 at 100.00 AA+ 1,078,490 Prince George's County, General Obligation Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17 1,850 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 2,050,929 Public Improvement Bonds, Series 2005A, 5.000%, 7/01/15 1,440 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 1,601,914 Public Improvement Bonds, Series 2006, 5.000%, 5/01/16 1,000 Prince George's County, Maryland, General Obligation Consolidated 10/13 at 100.00 AAA 1,075,770 Public Improvement Bonds, Series 2003A, 5.000%, 10/01/17 1,000 Prince George's County, Maryland, General Obligation Consolidated No Opt. Call AAA 1,077,180 Public Improvement Bonds, Series 2004C, 5.000%, 12/01/11 1,000 St. Mary's County, Maryland, General Obligation Hospital Bonds, No Opt. Call AA 1,084,950 Series 2002, 5.000%, 10/01/12 1,000 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 1,100,600 Prince George's Counties, Maryland, Sewerage Disposal Bonds, Series 2005, 5.000%, 6/01/16 1,000 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 1,100,600 Prince George's Counties, Maryland, Water Supply Bonds, Series 2005, 5.000%, 6/01/16 - ------------------------------------------------------------------------------------------------------------------------------------ 15,170 Total Tax Obligation/General 16,448,880 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 31.2% (20.7% OF TOTAL INVESTMENTS) 750 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 649,425 Project, Series 2005A, 5.350%, 7/01/34 1,000 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 1,076,590 Bonds, City Public School System, Series 2003A, 5.000%, 5/01/15 135 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA 139,454 Development Special Obligation Bonds, Series 2001A, 5.600%, 7/01/20 - RAAI Insured 450 Hyattsville, Maryland, Special Obligation Bonds, University Town 7/14 at 102.00 N/R 413,901 Center Project, Series 2004, 5.750%, 7/01/34 5,000 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 5,701,548 Revenue Bonds, Series 2002, 5.500%, 2/01/16 2,200 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 2,250,094 Bonds, Department of Transportation Headquarters Building, Series 2002, 4.750%, 6/01/22 450 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 485,253 Bonds, Montgomery County Town Square Parking Garage, Series 2002A, 5.000%, 9/15/13 2,935 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 3,159,556 Bonds, Montgomery County Wayne Avenue Parking Project, Series 2002A, 5.250%, 9/15/16 Maryland Stadium Authority, Lease Revenue Bonds, Montgomery County Conference Center Facilities, Series 2003: 1,465 5.000%, 6/15/21 6/13 at 100.00 AA+ 1,544,257 1,620 5.000%, 6/15/23 6/13 at 100.00 AA+ 1,693,273 460 Prince George's County, Maryland, Special Obligation Bonds, 7/15 at 100.00 N/R 389,629 National Harbor Project, Series 2005, 5.200%, 7/01/34 575 Prince George's County, Maryland, Special Tax District Bonds, 7/13 at 100.00 N/R 488,773 Victoria Falls Project, Series 2005, 5.250%, 7/01/35 1,200 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,266,180 Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured 43 NWI Nuveen Maryland Dividend Advantage Municipal Fund 3 (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Bonds, Series 2002G: $ 1,000 5.250%, 7/01/17 7/12 at 100.00 BBB- $ 1,011,850 1,205 5.250%, 7/01/20 7/12 at 100.00 BBB- 1,212,640 1,275 5.250%, 7/01/21 7/12 at 100.00 BBB- 1,279,820 700 Puerto Rico, Highway Revenue Bonds, Highway and Transportation No Opt. Call AAA 750,113 Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 22,420 Total Tax Obligation/Limited 23,512,356 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 3.1% (2.0% OF TOTAL INVESTMENTS) 2,210 Maryland Transportation Authority, Revenue Bonds, Transportation 7/17 at 100.00 AAA 2,299,958 Facilities Projects, Series 2007, 5.000%, 7/01/30 - FSA Insured (UB) - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 17.0% (11.2% OF TOTAL INVESTMENTS) (4) 10 Anne Arundel County, Maryland, General Obligation Bonds, 5/09 at 101.00 AAA 10,388 Consolidated General Improvements, Series 1999, 5.000%, 5/15/19 (Pre-refunded 5/15/09) 255 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA 282,770 Series 2006C, 5.000%, 7/01/31 (Pre-refunded 7/01/16) - AMBAC Insured Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary's College, Series 2001A: 100 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 106,764 100 5.800%, 9/01/30 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 106,850 100 Frederick County, Maryland, General Obligation Public Facilities 7/09 at 101.00 AAA 104,490 Bonds, Series 1999, 5.250%, 7/01/17 (Pre-refunded 7/01/09) 110 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA (4) 119,364 Development Special Obligation Bonds, Series 2001A, 5.600%, 7/01/20 (Pre-refunded 7/01/10) - RAAI Insured 280 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R (4) 310,943 Revenue Bonds, Collington Episcopal Life Care Community Inc., Series 2001A, 6.750%, 4/01/23 (Pre-refunded 4/01/11) 285 Maryland Health and Higher Educational Facilities Authority, No Opt. Call Aaa 308,441 Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/17 - AMBAC Insured (ETM) 725 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A (4) 793,005 Revenue Bonds, LifeBridge Health System, Series 2004A, 5.125%, 7/01/34 (Pre-refunded 7/01/14) 935 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 1,070,781 Transportation Facilities Projects, First Series 1978, 6.800%, 7/01/16 (ETM) 1,525 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/10 at 101.00 AAA 1,632,741 Series 2000HH, 5.250%, 7/01/29 (Pre-refunded 7/01/10) - FSA Insured 3,500 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 3,638,914 Bonds, Series 2000A, 5.500%, 10/01/40 1,000 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call AAA 1,079,430 Appropriation Bonds, Series 1998A, 5.125%, 6/01/24 - AMBAC Insured (ETM) Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 2002E: 700 5.500%, 8/01/29 (Pre-refunded 2/01/12) 2/12 at 100.00 Aaa 751,975 235 5.500%, 8/01/29 (Pre-refunded 2/01/12) 2/12 at 100.00 AAA 252,449 2,000 University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, 4/12 at 100.00 AA (4) 2,159,240 Series 2002A, 5.125%, 4/01/22 (Pre-refunded 4/01/12) 25 Washington Suburban Sanitary District, Montgomery and 6/11 at 101.00 AAA 26,920 Prince George's Counties, Maryland, General Obligation Construction Bonds, Second Series 2001, 5.000%, 6/01/17 (Pre-refunded 6/01/11) - ------------------------------------------------------------------------------------------------------------------------------------ 11,885 Total U.S. Guaranteed 12,755,465 - ------------------------------------------------------------------------------------------------------------------------------------ 44 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 1.6% (1.1% OF TOTAL INVESTMENTS) $ 1,250 Maryland Energy Financing Administration, Revenue Bonds, 7/08 at 100.00 N/R $ 1,247,063 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 5.4% (3.6% OF TOTAL INVESTMENTS) 2,570 Baltimore, Maryland, Revenue Refunding Bonds, Wastewater 7/12 at 100.00 AA 2,577,761 Projects, Series 2002A, 5.125%, 7/01/42 - FGIC Insured 345 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA 357,755 Series 2006C, 5.000%, 7/01/31 - AMBAC Insured 660 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/17 at 100.00 AAA 668,633 Series 2007D, 5.000%, 7/01/32 - AMBAC Insured 430 Maryland Water Quality Financing Administration, Revolving No Opt. Call AAA 477,081 Loan Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ 4,005 Total Water and Sewer 4,081,230 - ------------------------------------------------------------------------------------------------------------------------------------ $ 112,375 Total Investments (cost $114,618,167) - 151.5% 113,940,168 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (2.2)% (1,657,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.6% 1,921,719 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (51.9)% (5) (39,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $75,204,887 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Preferred Shares, at Liquidation Value as a percentage of total investments is (34.2)%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 45 NPV Nuveen Virginia Premium Income Municipal Fund Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 4.0% (2.6% OF TOTAL INVESTMENTS) $ 6,640 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB $ 5,091,419 Settlement Asset Backed Bonds, Series 2007B1, 5.000%, 6/01/47 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 4.8% (3.2% OF TOTAL INVESTMENTS) 1,000 Prince William County Industrial Development Authority, Virginia, 10/13 at 101.00 A3 1,015,400 Educational Facilities Revenue Bonds, Catholic Diocese of Arlington, Series 2003, 5.500%, 10/01/33 500 Prince William County Park Authority, Virginia, Park Facilities 10/09 at 101.00 A3 518,025 Revenue Refunding and Improvement Bonds, Series 1999, 6.000%, 10/15/28 700 Puerto Rico Industrial, Tourist, Educational, Medical and 12/12 at 101.00 BBB- 700,987 Environmental Control Facilities Financing Authority, Higher Education Revenue Refunding Bonds, Ana G. Mendez University System, Series 2002, 5.375%, 12/01/21 2,120 Virginia College Building Authority, Educational Facilities Revenue 9/11 at 100.00 AA+ 2,163,820 Bonds, Public Higher Education Financing Program, Series 2001A, 5.000%, 9/01/26 - MBIA Insured 1,635 Virginia Commonwealth University, Revenue Bonds, Series 2004A, 5/14 at 101.00 AAA 1,748,109 5.000%, 5/01/17 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 5,955 Total Education and Civic Organizations 6,146,341 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 24.6% (16.5% OF TOTAL INVESTMENTS) 2,000 Albemarle County Industrial Development Authority, Virginia, 10/12 at 100.00 A2 1,979,800 Hospital Revenue Bonds, Martha Jefferson Hospital, Series 2002, 5.250%, 10/01/35 650 Charlotte County Industrial Development Authority, Virginia, 9/17 at 100.00 A- 648,752 Hospital Revenue Bonds, Halifax Regional Hospital Incorporated, Series 2007, 5.000%, 9/01/27 4,850 Fairfax County Industrial Development Authority, Virginia, Hospital No Opt. Call AA+ 5,109,183 Revenue Refunding Bonds, Inova Health System, Series 1993A, 5.000%, 8/15/23 1,000 Fredericksburg Economic Development Authority, Virginia, Hospital No Opt. Call A3 1,046,700 Facilities Revenue Bonds, MediCorp Health System, Series 2007, 5.250%, 6/15/23 1,250 Fredericksburg Industrial Development Authority, Virginia, Revenue 6/12 at 100.00 A3 1,206,400 Bonds, MediCorp Health System, Series 2002B, 5.125%, 6/15/33 1,000 Hanover County Industrial Development Authority, Virginia, Hospital No Opt. Call AAA 1,146,480 Revenue Bonds, Memorial Regional Medical Center, Series 1995, 6.375%, 8/15/18 - MBIA Insured 2,300 Harrisonburg Industrial Development Authority, Virginia, Hospital 8/16 at 100.00 AAA 2,305,980 Facilities Revenue Bonds, Rockingham Memorial Hospital, Series 2006, 5.000%, 8/15/31 - AMBAC Insured 1,440 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 1,470,542 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 1,500 Henrico County Industrial Development Authority, Virginia, No Opt. Call AAA 1,732,305 Healthcare Revenue Bonds, Bon Secours Health System, Series 1996, 6.250%, 8/15/20 - MBIA Insured 1,500 Manassas Industrial Development Authority, Virginia, Hospital 4/13 at 100.00 A2 1,481,430 Revenue Bonds, Prince William Hospital, Series 2002, 5.250%, 4/01/33 4,750 Medical College of Virginia Hospital Authority, General Revenue 7/08 at 102.00 AAA 4,803,580 Bonds, Series 1998, 5.125%, 7/01/23 - MBIA Insured 46 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) $ 3,000 Roanoke Industrial Development Authority, Virginia, Hospital 7/12 at 100.00 AAA $ 3,149,520 Revenue Bonds, Carilion Health System, Series 2002A, 5.500%, 7/01/19 - MBIA Insured Stafford County Economic Development Authority, Virginia, Hospital Facilities Revenue Bonds, MediCorp Health System, Series 2006: 2,000 5.250%, 6/15/26 6/16 at 100.00 A3 2,041,360 1,010 5.250%, 6/15/31 6/16 at 100.00 A3 1,014,242 1,210 Virginia Small Business Financing Authority, Wellmont Health 9/17 at 100.00 BBB+ 1,121,489 System Project Revenue Bonds, Series 2007A, 5.250%, 9/01/37 1,425 Winchester Industrial Development Authority, Virginia, Hospital 1/17 at 100.00 AA- 1,430,330 Revenue Bonds, Winchester Medical Center, Series 2007, 5.125%, 1/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ 30,885 Total Health Care 31,688,093 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 3.5% (2.3% OF TOTAL INVESTMENTS) 1,395 Arlington County Industrial Development Authority, Virginia, 5/10 at 100.00 Aaa 1,437,129 Multifamily Housing Revenue Bonds, Patrick Henry Apartments, Series 2000, 6.050%, 11/01/32 (Mandatory put 11/01/20) (Alternative Minimum Tax) Danville Industrial Development Authority, Virginia, Student Housing Revenue Bonds, Collegiate Housing Foundation, Averett College, Series 1999A: 500 6.875%, 6/01/20 6/09 at 102.00 N/R 515,100 1,500 7.000%, 6/01/30 6/09 at 102.00 N/R 1,536,330 1,000 Lynchburg Redevelopment and Housing Authority, Virginia, 4/10 at 102.00 AAA 1,006,700 Vistas GNMA Mortgage-Backed Revenue Bonds, Series 2000A, 6.200%, 1/20/40 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 4,395 Total Housing/Multifamily 4,495,259 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 7.8% (5.3% OF TOTAL INVESTMENTS) 335 Puerto Rico Housing Finance Authority, Mortgage-Backed Securities 6/13 at 100.00 AAA 314,582 Program Home Mortgage Revenue Bonds, Series 2003A, 4.875%, 6/01/34 (Alternative Minimum Tax) 1,000 Virginia Housing Development Authority, Commonwealth Mortgage 7/11 at 100.00 AAA 1,011,330 Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured 1,500 Virginia Housing Development Authority, Commonwealth Mortgage 1/15 at 100.00 AAA 1,370,610 Bonds, Series 2005C-2, 4.750%, 10/01/32 (Alternative Minimum Tax) 2,740 Virginia Housing Development Authority, Commonwealth Mortgage 7/15 at 100.00 AAA 2,565,243 Bonds, Series 2006 D1, 4.900%, 1/01/33 (Alternative Minimum Tax) 1,340 Virginia Housing Development Authority, Commonwealth Mortgage 7/15 at 100.00 AAA 1,260,337 Bonds, Series 2006, 4.800%, 7/01/29 (Alternative Minimum Tax) 3,900 Virginia Housing Development Authority, Commonwealth Mortgage 7/16 at 100.00 AAA 3,565,380 Bonds, Series 2007B, 4.750%, 7/01/32 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 10,815 Total Housing/Single Family 10,087,482 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.6% (1.0% OF TOTAL INVESTMENTS) 2,000 Charles County Industrial Development Authority, Virginia, No Opt. Call BBB 2,009,700 Solid Waste Disposal Facility Revenue Refunding Bonds, USA Waste of Virginia Inc., Series 1999, 4.875%, 2/01/09 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 4.7% (3.2% OF TOTAL INVESTMENTS) 2,765 Fairfax County Economic Development Authority, Virginia, 10/17 at 100.00 N/R 2,513,938 Residential Care Facilities Mortgage Revenue Bonds, Goodwin House, Inc., Series 2007A, 5.125%, 10/01/37 47 NPV Nuveen Virginia Premium Income Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE (continued) $ 800 Fairfax County Economic Development Authority, Virginia, 10/16 at 100.00 BBB $ 687,712 Retirement Center Revenue Bonds, Greenspring Village, Series 2006A, 4.875%, 10/01/36 1,495 Henrico County Economic Development Authority, Virginia, 7/09 at 102.00 AAA 1,560,810 GNMA Mortgage-Backed Securities Program Assisted Living Revenue Bonds, Beth Sholom, Series 1999A, 5.900%, 7/20/29 Henrico County Economic Development Authority, Virginia, Residential Care Facility Revenue Bonds, Westminster Canterbury of Richmond, Series 2006: 100 5.000%, 10/01/27 10/11 at 103.00 BBB- 94,199 1,345 5.000%, 10/01/35 No Opt. Call BBB- 1,201,623 - ------------------------------------------------------------------------------------------------------------------------------------ 6,505 Total Long-Term Care 6,058,282 - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 1.0% (0.6% OF TOTAL INVESTMENTS) 500 Bedford County Industrial Development Authority, Virginia, 8/08 at 102.00 B2 413,110 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative Minimum Tax) (4) 1,000 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 B2 831,090 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation Project, Series 1998, 5.650%, 12/01/25 (Alternative Minimum Tax) (4) - ------------------------------------------------------------------------------------------------------------------------------------ 1,500 Total Materials 1,244,200 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 21.5% (14.4% OF TOTAL INVESTMENTS) Chesapeake, Virginia, General Obligation Bonds, Water and Sewerage Series 2003B: 1,880 5.000%, 6/01/21 6/13 at 100.00 AA 1,958,076 2,060 5.000%, 6/01/23 6/13 at 100.00 AA 2,132,718 1,355 Harrisonburg, Virginia, General Obligation Bonds, Public Safety 7/12 at 101.00 Aa3 1,410,420 and Steam Plant, Series 2002, 5.000%, 7/15/19 - FGIC Insured 2,105 Loudoun County, Virginia, General Obligation Bonds, 12/16 at 100.00 AAA 2,225,911 Series 2006, 5.000%, 12/01/25 105 Loudoun County, Virginia, General Obligation Public 5/12 at 100.00 AAA 110,728 Improvement Bonds, Series 2002A, 5.250%, 5/01/22 1,435 Loudoun County, Virginia, General Obligation Public 6/15 at 100.00 AAA 1,553,847 Improvement Bonds, Series 2005B, 5.000%, 6/01/18 1,185 Lynchburg, Virginia, General Obligation Bonds, Series 2004, 6/14 at 100.00 AA 1,249,559 5.000%, 6/01/21 1,350 Newport News, Virginia, General Obligation Bonds, Series 2004C, 5/14 at 101.00 AA 1,473,674 5.000%, 5/01/16 1,280 Portsmouth, Virginia, General Obligation Bonds, Series 2005A, No Opt. Call AAA 1,407,616 5.000%, 4/01/15 - MBIA Insured 1,480 Richmond, Virginia, General Obligation Bonds, Series 2004A, 7/14 at 100.00 AAA 1,561,104 5.000%, 7/15/21 - FSA Insured 1,430 Roanoke, Virginia, General Obligation Public Improvement Bonds, 10/12 at 101.00 AA 1,538,437 Series 2002A, 5.000%, 10/01/17 1,135 Suffolk, Virginia, General Obligation Bonds, Series 2005, No Opt. Call Aa3 1,254,130 5.000%, 12/01/15 2,155 Virginia Beach, Virginia, General Obligation Bonds, Series 2003B, 5/13 at 100.00 AAA 2,318,026 5.000%, 5/01/15 1,100 Virginia Beach, Virginia, General Obligation Bonds, Series 2005, 1/16 at 100.00 AAA 1,182,104 5.000%, 1/15/20 4,500 Virginia Beach, Virginia, General Obligation Bonds, 10/17 at 100.00 AAA 4,722,210 5.000%, 10/01/27 (UB) 1,425 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AAA 1,501,394 Bonds, Series 2001, 5.000%, 6/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ 25,980 Total Tax Obligation/General 27,599,954 - ------------------------------------------------------------------------------------------------------------------------------------ 48 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 31.4% (21.0% OF TOTAL INVESTMENTS) Buena Vista Public Recreational Facilities Authority, Virginia, Lease Revenue Bonds, Golf Course Project, Series 2005A: $ 335 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 N/R $ 303,818 260 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 N/R 221,634 1,340 Culpeper Industrial Development Authority, Virginia, Lease 1/15 at 100.00 AAA 1,399,509 Revenue Bonds, School Facilities Project, Series 2005, 5.000%, 1/01/20 - MBIA Insured Cumberland County, Virginia, Certificates of Participation, Series 1997: 1,075 6.200%, 7/15/12 No Opt. Call N/R 1,133,276 1,375 6.375%, 7/15/17 No Opt. Call N/R 1,514,191 1,000 Dinwiddie County Industrial Development Authority, Virginia, 2/14 at 100.00 AAA 1,070,220 Lease Revenue Bonds, Series 2004B, 5.125%, 2/15/16 - MBIA Insured 1,000 Fairfax County Economic Development Authority, Virginia, 5/16 at 100.00 AA+ 1,077,100 Lease Revenue Bonds, Joint Public Uses Community Project, Series 2006, 5.000%, 5/15/18 Fairfax County Economic Development Authority, Virginia, Lease Revenue Bonds, Laurel Hill Public Facilities Projects, Series 2003: 2,260 5.000%, 6/01/14 6/13 at 101.00 AA+ 2,462,134 1,165 5.000%, 6/01/22 6/13 at 101.00 AA+ 1,219,347 1,660 Front Royal and Warren County Industrial Development Authority, 4/14 at 100.00 AAA 1,762,405 Virginia, Lease Revenue Bonds, Series 2004B, 5.000%, 4/01/18 - FSA Insured 1,270 James City County Economic Development Authority, Virginia, 7/15 at 100.00 AA 1,350,353 Revenue Bonds, County Government Projects, Series 2005, 5.000%, 7/15/19 1,930 Prince William County, Virginia, Certificates of Participation, 6/15 at 100.00 Aaa 2,020,324 County Facilities, Series 2005, 5.000%, 6/01/18 - AMBAC Insured 1,185 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 1,200,227 Revenue Bonds, Series 2002D, 5.000%, 7/01/32 - FSA Insured 2,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 2,110,300 Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured 5,000 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 694,050 Revenue Bonds, Series 2005A, 0.000%, 7/01/43 - AMBAC Insured 5,875 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 1,993,858 Revenue Bonds, Series 2005C, 0.000%, 7/01/28 - AMBAC Insured Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Refunding Bonds, Series 2002D: 265 5.250%, 7/01/27 7/12 at 100.00 BBB- 265,085 320 5.250%, 7/01/36 7/12 at 100.00 BBB- 318,355 1,110 Spotsylvania County Industrial Development Authority, Virginia, 8/13 at 100.00 AAA 1,105,382 Lease Revenue Bonds, School Facilities, Series 2003B, 4.375%, 8/01/20 - AMBAC Insured 1,600 Stafford County and Staunton Industrial Development Authority, 8/16 at 100.00 AAA 1,660,736 Virginia, Revenue Bonds, Virginia Municipal League and Virginia Association of Counties Finance Program, Series 2006A, 5.000%, 8/01/23 - MBIA Insured 2,500 Stafford County Economic Development Authority, Virginia, 4/18 at 100.00 AAA 2,582,250 Public Project Lease Revenue Bonds, 5.000%, 4/01/33 - AGC Insured (UB) 49 NPV Nuveen Virginia Premium Income Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,400 Virginia Beach Development Authority, Public Facilities Revenue 5/15 at 100.00 AA+ $ 1,468,404 Bonds, Series 2005A, 5.000%, 5/01/22 2,000 Virginia Public School Authority, School Financing Bonds, 8/10 at 101.00 AA+ 2,090,240 1997 Resolution, Series 2000B, 5.000%, 8/01/18 - MBIA Insured 1,625 Virginia Public School Authority, School Financing Bonds, 8/15 at 100.00 AA+ 1,771,088 1997 Resolution, Series 2005C, 5.000%, 8/01/17 Virginia Resources Authority, Infrastructure Revenue Bonds, Pooled Loan Bond Program, Series 2000B: 95 5.500%, 5/01/20 - FSA Insured 5/10 at 101.00 AAA 100,027 550 5.500%, 5/01/30 - FSA Insured 5/10 at 101.00 AAA 571,835 1,740 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/11 at 101.00 AA 1,821,084 Pooled Loan Bond Program, Series 2002A, 5.000%, 5/01/19 2,815 Virginia Resources Authority, Infrastructure Revenue Bonds, 11/16 at 100.00 AAA 2,906,656 Pooled Loan Bond Program, Series 2006C, 5.000%, 11/01/36 2,000 Virginia Transportation Board, Transportation Revenue Bonds, 5/14 at 100.00 AA+ 2,182,300 U.S. Route 58 Corridor Development Program, Series 2004B, 5.000%, 5/15/15 - ------------------------------------------------------------------------------------------------------------------------------------ 46,750 Total Tax Obligation/Limited 40,376,188 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 10.4% (7.0% OF TOTAL INVESTMENTS) 2,500 Metropolitan Washington D.C. Airports Authority, System Revenue 10/17 at 100.00 AAA 2,395,650 Bonds, Series 2007B, 5.000%, 10/01/35 - AMBAC Insured (Alternative Minimum Tax) 4,000 Norfolk Airport Authority, Virginia, Airport Revenue Bonds, 7/11 at 100.00 A3 3,989,080 Series 2001A, 5.125%, 7/01/31 - FGIC Insured 1,000 Norfolk, Virginia, Parking System Revenue Bonds, Series 2005A, 2/15 at 100.00 AAA 1,024,420 5.000%, 2/01/23 - MBIA Insured 2,500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call Baa3 2,743,775 Bonds, Expressway System, Series 2002, 5.250%, 7/15/22 - FGIC Insured 1,260 Virginia Port Authority, Revenue Bonds, Port Authority Facilities, 7/13 at 100.00 Aa3 1,190,977 Series 2006, 5.000%, 7/01/36 - FGIC Insured (Alternative Minimum Tax) 2,000 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 2,072,840 Bonds, Series 2001A, 5.250%, 8/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ 13,260 Total Transportation 13,416,742 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 17.3% (11.6% OF TOTAL INVESTMENTS) (5) 3,500 Alexandria Industrial Development Authority, Virginia, Fixed Rate 10/10 at 101.00 AAA 3,815,105 Revenue Bonds, Institute for Defense Analyses, Series 2000A, 5.900%, 10/01/30 (Pre-refunded 10/01/10) - AMBAC Insured 750 Bristol, Virginia, General Obligation Utility System Revenue Bonds, No Opt. Call AAA 811,808 Series 2002, 5.000%, 11/01/24 - FSA Insured (ETM) 925 Fairfax County Water Authority, Virginia, Water Revenue Refunding 4/12 at 100.00 AAA 1,007,686 Bonds, Series 2002, 5.375%, 4/01/19 (Pre-refunded 4/01/12) 600 Greater Richmond Convention Center Authority, Virginia, Hotel 6/10 at 101.00 AAA 651,096 Tax Revenue Bonds, Convention Center Expansion Project, Series 2000, 6.125%, 6/15/25 (Pre-refunded 6/15/10) 60 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A3 (5) 66,490 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 (Pre-refunded 11/15/12) 50 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (5) (continued) Loudoun County Industrial Development Authority, Virginia, Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A: $ 375 6.000%, 6/01/22 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (5) $ 420,949 800 6.100%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (5) 901,016 815 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 Aaa 881,300 Revenue Bonds, Series 2002D, 5.000%, 7/01/32 (Pre-refunded 7/01/12) - FSA Insured 2,500 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 2,599,225 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Refunding Bonds, Series 2002D: 735 5.250%, 7/01/27 (Pre-refunded 7/01/12) 7/12 at 100.00 BBB- (5) 786,009 880 5.250%, 7/01/36 (Pre-refunded 7/01/12) 7/12 at 100.00 BBB- (5) 941,072 625 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 653,163 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded 7/01/10) 475 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 105.00 B2 (5) 533,145 Horse Center Revenue Refunding Bonds, Series 2001C, 6.850%, 7/15/21 (Pre-refunded 7/15/11) Tobacco Settlement Financing Corporation of Virginia, Tobacco Settlement Asset-Backed Bonds, Series 2005: 1,575 5.250%, 6/01/19 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 1,670,351 3,850 5.500%, 6/01/26 (Pre-refunded 6/01/15) 6/15 at 100.00 AAA 4,273,346 2,000 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ (5) 2,205,740 Loan Note, Series 1999A, 6.500%, 10/01/24 (Pre-refunded 10/01/10) - ------------------------------------------------------------------------------------------------------------------------------------ 20,465 Total U.S. Guaranteed 22,217,501 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 7.2% (4.8% OF TOTAL INVESTMENTS) Bristol, Virginia, Utility System Revenue Refunding Bonds, Series 2003: 1,705 5.250%, 7/15/14 - MBIA Insured 7/13 at 100.00 AAA 1,832,466 1,800 5.250%, 7/15/15 - MBIA Insured 7/13 at 100.00 AAA 1,937,178 2,775 5.250%, 7/15/23 - MBIA Insured 7/13 at 100.00 AAA 2,917,108 2,500 Mecklenburg County Industrial Development Authority, Virginia, 10/12 at 100.00 Baa1 2,615,100 Revenue Bonds, UAE Mecklenburg Cogeneration LP, Series 2002, 6.500%, 10/15/17 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 8,780 Total Utilities 9,301,852 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 9.7% (6.5% OF TOTAL INVESTMENTS) Fairfax County Water Authority, Virginia, Water Revenue Refunding Bonds, Series 2002: 105 5.375%, 4/01/19 4/12 at 100.00 AAA 111,791 800 5.000%, 4/01/27 4/12 at 100.00 AAA 816,440 1,770 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ 1,796,320 Refunding Bonds, Series 1999, 5.000%, 5/01/28 1,000 Loudoun County Sanitation Authority, Virginia, Water and Sewerage 1/15 at 100.00 AA+ 1,041,490 System Revenue Bonds, Series 2004, 5.000%, 1/01/26 51 NPV Nuveen Virginia Premium Income Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) Norfolk, Virginia, Water Revenue Refunding Bonds, Series 2001: $ 1,310 5.000%, 11/01/21 - FGIC Insured 11/11 at 100.00 AA+ $ 1,349,785 1,380 5.000%, 11/01/22 - FGIC Insured 11/11 at 100.00 AA+ 1,425,885 2,250 Virginia Beach, Virginia, Storm Water Utility Revenue Bonds, 9/10 at 101.00 Aa3 2,390,985 Series 2000, 6.000%, 9/01/24 1,800 Virginia Beach, Virginia, Water and Sewer System Revenue Bonds, 10/15 at 100.00 AA 1,851,066 Series 2005, 5.000%, 10/01/30 1,660 Virginia Resources Authority, Clean Water State Revolving Fund 10/17 at 100.00 AAA 1,655,219 Revenue Bonds, Series 2007, Residuals 1006, 9.690%, 10/01/29 (IF) 12,075 Total Water and Sewer 12,438,981 - ------------------------------------------------------------------------------------------------------------------------------------ $ 196,005 Total Investments (cost $190,378,324) - 149.5% 192,171,994 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (4.1)% (5,250,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 4.2% 5,390,311 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.6)% (6) (63,800,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $128,512,305 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) The issuer has received a formal adverse determination from the Internal Revenue Service (the "IRS") regarding the tax-exempt status of the bonds' coupon payments. The Fund will continue to treat coupon payments as tax-exempt income until such time that it is formally determined that the interest on the bonds should be treated as taxable. (5) 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. (6) Preferred Shares, at Liquidation Value as a percentage of total investments is (33.2)%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 52 NGB Nuveen Virginia Dividend Advantage Municipal Fund Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 3.8% (2.5% OF TOTAL INVESTMENTS) $ 1,660 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB $ 1,272,855 Settlement Asset Backed Bonds, Series 2007B1, 5.000%, 6/01/47 715 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB 435,242 Settlement Asset-Backed Bonds, Series 2007B2, 0.000%, 6/01/46 - ------------------------------------------------------------------------------------------------------------------------------------ 2,375 Total Consumer Staples 1,708,097 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 6.4% (4.2% OF TOTAL INVESTMENTS) 500 Danville Industrial Development Authority, Virginia, Educational 3/11 at 102.00 N/R 499,715 Facilities Revenue Bonds, Averett University, Series 2001, 6.000%, 3/15/22 500 Prince William County Industrial Development Authority, Virginia, 10/13 at 101.00 A3 507,700 Educational Facilities Revenue Bonds, Catholic Diocese of Arlington, Series 2003, 5.500%, 10/01/33 850 Prince William County Park Authority, Virginia, Park Facilities 10/09 at 101.00 A3 880,643 Revenue Refunding and Improvement Bonds, Series 1999, 6.000%, 10/15/28 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System, Series 1999: 160 5.375%, 2/01/19 2/09 at 101.00 BBB- 160,499 320 5.375%, 2/01/29 2/09 at 101.00 BBB- 306,128 500 Virginia College Building Authority, Educational Facilities 7/08 at 101.00 AA 504,600 Revenue Refunding Bonds, Marymount University, Series 1998, 5.100%, 7/01/18 - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ 2,830 Total Education and Civic Organizations 2,859,285 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 16.3% (10.6% OF TOTAL INVESTMENTS) 250 Charlotte County Industrial Development Authority, Virginia, 9/17 at 100.00 A- 238,713 Hospital Revenue Bonds, Halifax Regional Hospital Incorporated, Series 2007, 5.000%, 9/01/37 100 Fairfax County Industrial Development Authority, Virginia, No Opt. Call AA+ 105,344 Hospital Revenue Refunding Bonds, Inova Health System, Series 1993A, 5.000%, 8/15/23 1,000 Fauquier County Industrial Development Authority, Virginia, 10/12 at 102.00 AA 1,010,660 Hospital Revenue Bonds, Fauquier Hospital, Series 2002, 5.250%, 10/01/25 - RAAI Insured 500 Fredericksburg Economic Development Authority, Virginia, No Opt. Call A3 523,350 Hospital Facilities Revenue Bonds, MediCorp Health System, Series 2007, 5.250%, 6/15/23 500 Fredericksburg Industrial Development Authority, Virginia, 6/12 at 100.00 A3 482,560 Revenue Bonds, MediCorp Health System, Series 2002B, 5.125%, 6/15/33 820 Harrisonburg Industrial Development Authority, Virginia, Hospital 8/16 at 100.00 AAA 822,132 Facilities Revenue Bonds, Rockingham Memorial Hospital, Series 2006, 5.000%, 8/15/31 - AMBAC Insured 480 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 490,181 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 525 Manassas Industrial Development Authority, Virginia, Hospital 4/13 at 100.00 A2 518,501 Revenue Bonds, Prince William Hospital, Series 2002, 5.250%, 4/01/33 800 Norton Industrial Development Authority, Virginia, Hospital 12/11 at 101.00 N/R 816,680 Revenue Refunding and Improvement Bonds, Norton Community Hospital, Series 2001, 6.000%, 12/01/22 - ACA Insured 53 NGB Nuveen Virginia Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) Stafford County Economic Development Authority, Virginia, Hospital Facilities Revenue Bonds, MediCorp Health System, Series 2006: $ 750 5.250%, 6/15/25 6/16 at 100.00 A3 $ 768,008 360 5.250%, 6/15/31 6/16 at 100.00 A3 361,512 430 Virginia Small Business Financing Authority, Wellmont Health 9/17 at 100.00 BBB+ 398,546 System Project Revenue Bonds, Series 2007A, 5.250%, 9/01/37 715 Winchester Industrial Development Authority, Virginia, Hospital 1/17 at 100.00 AA- 717,674 Revenue Bonds, Winchester Medical Center, Series 2007, 5.125%, 1/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ 7,230 Total Health Care 7,253,861 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 4.6% (3.0% OF TOTAL INVESTMENTS) 1,000 Arlington County Industrial Development Authority, Virginia, 11/11 at 102.00 AAA 1,032,520 Multifamily Housing Mortgage Revenue Bonds, Arlington View Terrace Apartments, Series 2001, 5.150%, 11/01/31 (Mandatory put 11/01/19) (Alternative Minimum Tax) 1,000 Virginia Housing Development Authority, Rental Housing Bonds, 10/10 at 100.00 AA+ 1,012,450 Series 2000G, 5.625%, 10/01/20 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 2,000 Total Housing/Multifamily 2,044,970 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 9.4% (6.2% OF TOTAL INVESTMENTS) 1,000 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA 1,011,330 Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured 600 Virginia Housing Development Authority, Commonwealth 1/15 at 100.00 AAA 548,244 Mortgage Bonds, Series 2005C-2, 4.750%, 10/01/32 (Alternative Minimum Tax) 960 Virginia Housing Development Authority, Commonwealth 7/15 at 100.00 AAA 898,771 Mortgage Bonds, Series 2006 D1, 4.900%, 1/01/33 (Alternative Minimum Tax) 480 Virginia Housing Development Authority, Commonwealth 7/15 at 100.00 AAA 451,464 Mortgage Bonds, Series 2006, 4.800%, 7/01/29 (Alternative Minimum Tax) 1,400 Virginia Housing Development Authority, Commonwealth 7/16 at 100.00 AAA 1,279,880 Mortgage Bonds, Series 2007B, 4.750%, 7/01/32 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 4,440 Total Housing/Single Family 4,189,689 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 0.1% (0.1% OF TOTAL INVESTMENTS) 50 Charles County Industrial Development Authority, Virginia, No Opt. Call BBB 50,243 Solid Waste Disposal Facility Revenue Refunding Bonds, USA Waste of Virginia Inc., Series 1999, 4.875%, 2/01/09 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 12.0% (7.9% OF TOTAL INVESTMENTS) 700 Albemarle County Industrial Development Authority, Virginia, 1/17 at 100.00 N/R 641,893 Residential Care Facilities Mortgage Revenue Bonds, Westminster-Cantebury of the Blue Ridge, Series 2007, 5.000%, 1/01/31 350 Chesterfield County Health Center Commission, Virginia, 12/15 at 100.00 N/R 315,266 Mortgage Revenue Bonds, Lucy Corr Village, Series 2005, 5.625%, 12/01/39 1,005 Fairfax County Economic Development Authority, Virginia, 10/17 at 100.00 N/R 913,746 Residential Care Facilities Mortgage Revenue Bonds, Goodwin House, Inc., Series 2007A, 5.125%, 10/01/37 500 Fairfax County Economic Development Authority, Virginia, 10/16 at 100.00 BBB 450,045 Retirement Center Revenue Bonds, Greenspring Village, Series 2006A, 4.750%, 10/01/26 540 Henrico County Economic Development Authority, Virginia, No Opt. Call BBB- 482,436 Residential Care Facility Revenue Bonds, Westminster Canterbury of Richmond, Series 2006, 5.000%, 10/01/35 54 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE (continued) $ 700 Industrial Development Authority of the County of Prince William, 1/17 at 100.00 N/R $ 638,085 Virginia, Residential Care Facility Revenue Bonds, Westminster at Lake, First Mortgage, Series 2006, 5.125%, 1/01/26 650 James City County Industrial Development Authority, Virginia, 3/12 at 101.00 N/R 652,990 Residential Care Facility First Mortgage Revenue Refunding Bonds, Williamsburg Landing Inc., Series 2003A, 6.000%, 3/01/23 530 Roanoke Industrial Development Authority, Virginia, Residential 12/16 at 100.00 N/R 435,819 Revenue Bonds, Virginia Lutheran Homes Incorporated, Series 2006, 5.000%, 12/01/39 350 Suffolk Industrial Development Authority, Virginia, Retirement 9/16 at 100.00 N/R 317,146 Facilities First Mortgage Revenue Bonds, Lake Prince Center, Series 2006, 5.300%, 9/01/31 350 Virginia Beach Development Authority, Virginia, Residential 11/15 at 100.00 N/R 341,730 Care Facility Mortgage Revenue Bonds, Westminster Canterbury on Chesapeake Bay, Series 2005, 5.000%, 11/01/22 175 Winchester Industrial Development Authority, Virginia, 1/15 at 100.00 N/R 168,474 Residential Care Facility Revenue Bonds, Westminster-Canterbury of Winchester Inc., Series 2005A, 5.200%, 1/01/27 - ------------------------------------------------------------------------------------------------------------------------------------ 5,850 Total Long-Term Care 5,357,630 - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 1.6% (1.0% OF TOTAL INVESTMENTS) 100 Bedford County Industrial Development Authority, Virginia, 8/08 at 102.00 B2 82,622 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative Minimum Tax) (4) 20 Bedford County Industrial Development Authority, Virginia, 12/09 at 101.00 B2 18,374 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1999A, 6.550%, 12/01/25 (Alternative Minimum Tax) (4) 220 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 B2 182,840 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation Project, Series 1998, 5.650%, 12/01/25 (Alternative Minimum Tax) (4) 500 Hopewell Industrial Development Authority, Virginia, Environmental No Opt. Call B- 431,585 Improvement Revenue Bonds, Smurfit Stone Container Corporation, Series 2005, 5.250%, 6/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ 840 Total Materials 715,421 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 19.4% (12.7% OF TOTAL INVESTMENTS) 600 Arlington County, Virginia, General Obligation Bonds, Series 2006, 8/16 at 100.00 AAA 648,552 5.000%, 8/01/20 700 Loudoun County, Virginia, General Obligation Bonds, Series 2006, 12/16 at 100.00 AAA 740,208 5.000%, 12/01/25 500 Loudoun County, Virginia, General Obligation Public Improvement 6/15 at 100.00 AAA 541,410 Bonds, Series 2005B, 5.000%, 6/01/18 845 Newport News, Virginia, General Obligation Bonds, Series 2004C, 5/14 at 101.00 AA 922,410 5.000%, 5/01/16 620 Richmond, Virginia, General Obligation Bonds, Series 2005A, 7/15 at 100.00 AAA 672,681 5.000%, 7/15/17 - FSA Insured 400 Suffolk, Virginia, General Obligation Bonds, Series 2005, No Opt. Call Aa3 441,984 5.000%, 12/01/15 400 Virginia Beach, Virginia, General Obligation Bonds, Series 2005, 1/16 at 100.00 AAA 429,856 5.000%, 1/15/20 1,600 Virginia Beach, Virginia, General Obligation Bonds, 10/17 at 100.00 AAA 1,684,032 5.000%, 10/01/26 (UB) 2,425 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AAA 2,555,004 Bonds, Series 2001, 5.000%, 6/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ 8,090 Total Tax Obligation/General 8,636,137 - ------------------------------------------------------------------------------------------------------------------------------------ 55 NGB Nuveen Virginia Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 19.1% (12.5% OF TOTAL INVESTMENTS) $ 100 Bell Creek Community Development Authority, Virginia, 3/13 at 101.00 N/R $ 101,731 Special Assessment Bonds, Series 2003A, 6.750%, 3/01/22 500 Broad Street Community Development Authority, Virginia, 6/13 at 102.00 N/R 526,770 Revenue Bonds, Series 2003, 7.500%, 6/01/33 Buena Vista Public Recreational Facilities Authority, Virginia, Lease Revenue Bonds, Golf Course Project, Series 2005A: 120 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 N/R 108,830 95 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 N/R 80,982 500 Fairfax County Economic Development Authority, Virginia, 5/16 at 100.00 AA+ 538,550 Lease Revenue Bonds, Joint Public Uses Community Project, Series 2006, 5.000%, 5/15/18 580 Prince William County, Virginia, Certificates of Participation, 6/15 at 100.00 Aaa 599,331 County Facilities, Series 2005, 5.000%, 6/01/20 - AMBAC Insured 700 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 738,605 Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured 3,000 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 958,290 Revenue Bonds, Series 2005A, 0.000%, 7/01/29 - AMBAC Insured 1,000 Spotsylvania County Industrial Development Authority, Virginia, 8/13 at 100.00 AAA 1,040,450 Lease Revenue Bonds, School Facilities, Series 2003B, 5.125%, 8/01/23 - AMBAC Insured 600 Stafford County and Staunton Industrial Development Authority, 8/16 at 100.00 AAA 622,776 Virginia, Revenue Bonds, Virginia Municipal League and Virginia Association of Counties Finance Program, Series 2006A, 5.000%, 8/01/23 - MBIA Insured 890 Stafford County Economic Development Authority, Virginia, 4/18 at 100.00 AAA 919,281 Public Project Lease Revenue Bonds, 5.000%, 4/01/33 - AGC Insured (UB) 960 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ 1,021,267 Loan Note, Series 1999A, 6.375%, 10/01/19 500 Virginia Beach Development Authority, Public Facilities Revenue 5/15 at 100.00 AA+ 524,430 Bonds, Series 2005A, 5.000%, 5/01/22 348 Virginia Gateway Community Development Authority, 3/13 at 102.00 N/R 350,704 Prince William County, Special Assessment Bonds, Series 2003, 6.375%, 3/01/30 345 Virginia Public School Authority, School Financing Bonds, 8/15 at 100.00 AA+ 376,016 1997 Resolution, Series 2005C, 5.000%, 8/01/17 - ------------------------------------------------------------------------------------------------------------------------------------ 10,238 Total Tax Obligation/Limited 8,508,013 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 24.7% (16.1% OF TOTAL INVESTMENTS) 1,000 Capital Region Airport Authority, Richmond, Virginia, Revenue 7/15 at 100.00 AAA 1,060,510 Bonds, Richmond International Airport, Series 2005A, 5.000%, 7/01/18 - FSA Insured 1,000 Chesapeake Bay Bridge and Tunnel Commission, Virginia, No Opt. Call AAA 1,141,510 General Resolution Revenue Refunding Bonds, Series 1998, 5.500%, 7/01/25 - MBIA Insured 3,000 Metropolitan Washington D.C. Airports Authority, Airport System 10/11 at 101.00 AAA 3,022,737 Revenue Bonds, Series 2001A, 5.500%, 10/01/27 - MBIA Insured (Alternative Minimum Tax) 250 Metropolitan Washington D.C. Airports Authority, Airport 10/11 at 101.00 AAA 254,435 System Revenue Bonds, Series 2001B, 5.000%, 10/01/21 - MBIA Insured 1,500 Norfolk Airport Authority, Virginia, Airport Revenue Bonds, 7/11 at 100.00 A3 1,495,905 Series 2001A, 5.125%, 7/01/31 - FGIC Insured 500 Norfolk, Virginia, Parking System Revenue Bonds, Series 2005A, 2/15 at 100.00 AAA 512,210 5.000%, 2/01/23 - MBIA Insured 56 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION (continued) $ 500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call Baa3 $ 548,755 Bonds, Expressway System, Series 2002, 5.250%, 7/15/22 - FGIC Insured 455 Virginia Port Authority, Revenue Bonds, Port Authority Facilities, 7/13 at 100.00 Aa3 430,075 Series 2006, 5.000%, 7/01/36 - FGIC Insured (Alternative Minimum Tax) 1,225 Virginia Resources Authority, Airports Revolving Fund 2/11 at 100.00 Aa2 1,269,615 Revenue Bonds, Series 2001A, 5.250%, 8/01/23 1,250 Virginia Resources Authority, Airports Revolving Fund 2/11 at 100.00 Aa2 1,241,613 Revenue Bonds, Series 2001B, 5.125%, 8/01/27 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 10,680 Total Transportation 10,977,365 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 26.1% (17.0% OF TOTAL INVESTMENTS) (5) 500 Albemarle County Industrial Development Authority, Virginia, 1/12 at 100.00 N/R (5) 553,550 Residential Care Facility Revenue Bonds, Westminster Canterbury of the Blue Ridge First Mortgage, Series 2001, 6.200%, 1/01/31 (Pre-refunded 1/01/12) 1,000 Bristol, Virginia, Utility System Revenue Refunding Bonds, No Opt. Call AAA 1,081,510 Series 2001, 5.000%, 7/15/21 - FSA Insured (ETM) Guam Economic Development Authority, Tobacco Settlement Asset-Backed Bonds, Series 2001A: 30 5.000%, 5/15/22 (Pre-refunded 5/15/11) 5/11 at 100.00 Baa3 (5) 31,852 850 5.400%, 5/15/31 (Pre-refunded 5/15/11) 5/11 at 100.00 Baa3 (5) 912,067 20 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A3 (5) 22,163 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 (Pre-refunded 11/15/12) 2,310 Leesburg, Virginia, General Obligation Public Improvement Bonds, 1/11 at 101.00 AA (5) 2,483,735 Series 2000, 5.125%, 1/15/21 (Pre-refunded 1/15/11) - FGIC Insured 425 Loudoun County Industrial Development Authority, Virginia, 6/12 at 101.00 BBB (5) 477,075 Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A, 6.000%, 6/01/22 (Pre-refunded 6/01/12) Puerto Rico Infrastructure Financing Authority, Special Obligation Bonds, Series 2000A: 1,500 5.500%, 10/01/32 10/10 at 101.00 AAA 1,562,265 1,500 5.500%, 10/01/40 10/10 at 101.00 AAA 1,559,535 250 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 261,265 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded 7/01/10) 230 Rockbridge County Industrial Development Authority, Virginia, No Opt. Call B2 (5) 243,421 Horse Center Revenue Refunding Bonds, Series 2001B, 6.125%, 7/15/11 (ETM) 950 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 105.00 B2 (5) 1,066,290 Horse Center Revenue Refunding Bonds, Series 2001C, 6.850%, 7/15/21 (Pre-refunded 7/15/11) 725 Tobacco Settlement Financing Corporation of Virginia, 6/15 at 100.00 AAA 804,721 Tobacco Settlement Asset-Backed Bonds, Series 2005, 5.500%, 6/01/26 (Pre-refunded 6/01/15) 500 Virginia College Building Authority, Educational Facilities 2/12 at 100.00 AA+ (5) 536,605 Revenue Bonds, 21st Century College Program, Series 2002A, 5.000%, 2/01/22 (Pre-refunded 2/01/12) - ------------------------------------------------------------------------------------------------------------------------------------ 10,790 Total U.S. Guaranteed 11,596,054 - ------------------------------------------------------------------------------------------------------------------------------------ 57 NGB Nuveen Virginia Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 2.4% (1.5% OF TOTAL INVESTMENTS) $ 1,000 Mecklenburg County Industrial Development Authority, Virginia, 10/12 at 100.00 Baa1 $ 1,046,040 Revenue Bonds, UAE Mecklenburg Cogeneration LP, Series 2002, 6.500%, 10/15/17 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 7.1% (4.7% OF TOTAL INVESTMENTS) 2,000 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ 2,063,020 Refunding Bonds, Series 1999, 5.000%, 5/01/22 500 Virginia Beach, Virginia, Water and Sewer System Revenue 10/15 at 100.00 AA 514,185 Bonds, Series 2005, 5.000%, 10/01/30 595 Virginia Resources Authority, Clean Water State Revolving 10/17 at 100.00 AAA 593,286 Fund Revenue Bonds, Series 2007, Residuals 1006, 9.690%, 10/01/29 (IF) - ------------------------------------------------------------------------------------------------------------------------------------ 3,095 Total Water and Sewer 3,170,491 - ------------------------------------------------------------------------------------------------------------------------------------ $ 69,508 Total Investments (cost $68,166,095) - 153.0% 68,113,296 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (4.2)% (1,865,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 5.1% 2,263,808 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (53.9)% (6) (24,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $44,512,104 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) The issuer has received a formal adverse determination from the Internal Revenue Service (the "IRS") regarding the tax-exempt status of the bonds' coupon payments. The Fund will continue to treat coupon payments as tax-exempt income until such time that it is formally determined that the interest on the bonds should be treated as taxable. (5) 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. (6) Preferred Shares, at Liquidation Value as a percentage of total investments is (35.2)%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 58 NNB Nuveen Virginia Dividend Advantage Municipal Fund 2 Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 4.0% (2.6% OF TOTAL INVESTMENTS) $ 3,100 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB $ 2,377,018 Settlement Asset Backed Bonds, Series 2007B1, 5.000%, 6/01/47 1,430 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB 870,484 Settlement Asset-Backed Bonds, Series 2007B2, 0.000%, 6/01/46 - ------------------------------------------------------------------------------------------------------------------------------------ 4,530 Total Consumer Staples 3,247,502 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 6.8% (4.4% OF TOTAL INVESTMENTS) 1,000 Fairfax County Economic Development Authority, Virginia, 9/09 at 101.00 Aaa 1,026,830 Revenue Bonds, National Wildlife Federation, Series 1999, 5.375%, 9/01/29 - MBIA Insured 1,000 Prince William County Industrial Development Authority, 10/13 at 101.00 A3 1,015,400 Virginia, Educational Facilities Revenue Bonds, Catholic Diocese of Arlington, Series 2003, 5.500%, 10/01/33 1,500 Puerto Rico Industrial, Tourist, Educational, Medical and 12/12 at 101.00 BBB- 1,502,115 Environmental Control Facilities Financing Authority, Higher Education Revenue Refunding Bonds, Ana G. Mendez University System, Series 2002, 5.375%, 12/01/21 2,000 Winchester Industrial Development Authority, Virginia, Educational 10/08 at 102.00 AAA 2,047,800 Facilities First Mortgage Revenue Bonds, Shenandoah University, Series 1998, 5.250%, 10/01/28 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 5,500 Total Education and Civic Organizations 5,592,145 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 24.3% (15.9% OF TOTAL INVESTMENTS) 1,500 Albemarle County Industrial Development Authority, Virginia, 10/12 at 100.00 A2 1,484,850 Hospital Revenue Bonds, Martha Jefferson Hospital, Series 2002, 5.250%, 10/01/35 450 Charlotte County Industrial Development Authority, Virginia, 9/17 at 100.00 A- 449,136 Hospital Revenue Bonds, Halifax Regional Hospital Incorporated, Series 2007, 5.000%, 9/01/27 3,000 Fauquier County Industrial Development Authority, Virginia, 10/12 at 102.00 AA 3,031,979 Hospital Revenue Bonds, Fauquier Hospital, Series 2002, 5.250%, 10/01/25 - RAAI Insured 1,000 Fredericksburg Economic Development Authority, Virginia, No Opt. Call A3 1,046,700 Hospital Facilities Revenue Bonds, MediCorp Health System, Series 2007, 5.250%, 6/15/23 675 Fredericksburg Industrial Development Authority, Virginia, 6/12 at 100.00 A3 651,456 Revenue Bonds, MediCorp Health System, Series 2002B, 5.125%, 6/15/33 1,500 Harrisonburg Industrial Development Authority, Virginia, 8/16 at 100.00 AAA 1,503,900 Hospital Facilities Revenue Bonds, Rockingham Memorial Hospital, Series 2006, 5.000%, 8/15/31 - AMBAC Insured 960 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 980,362 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 1,155 Manassas Industrial Development Authority, Virginia, Hospital 4/13 at 100.00 A2 1,140,701 Revenue Bonds, Prince William Hospital, Series 2002, 5.250%, 4/01/33 1,200 Norton Industrial Development Authority, Virginia, Hospital 12/11 at 101.00 N/R 1,225,020 Revenue Refunding and Improvement Bonds, Norton Community Hospital, Series 2001, 6.000%, 12/01/22 - ACA Insured 1,000 Prince William County Industrial Development Authority, 10/08 at 102.00 Aaa 1,024,810 Virginia, Hospital Facility Revenue Refunding Bonds, Potomac Hospital Corporation of Prince William, Series 1998, 5.000%, 10/01/18 - FSA Insured 3,915 Roanoke Industrial Development Authority, Virginia, Hospital 7/12 at 100.00 AAA 4,095,911 Revenue Bonds, Carilion Health System, Series 2002A, 5.500%, 7/01/20 - MBIA Insured 59 NNB Nuveen Virginia Dividend Advantage Municipal Fund 2 (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) Stafford County Economic Development Authority, Virginia, Hospital Facilities Revenue Bonds, MediCorp Health System, Series 2006: $ 1,250 5.250%, 6/15/25 6/16 at 100.00 A3 $ 1,280,013 655 5.250%, 6/15/31 6/16 at 100.00 A3 657,751 785 Virginia Small Business Financing Authority, Wellmont Health 9/17 at 100.00 BBB+ 727,577 System Project Revenue Bonds, Series 2007A, 5.250%, 9/01/37 715 Winchester Industrial Development Authority, Virginia, Hospital 1/17 at 100.00 AA- 717,674 Revenue Bonds, Winchester Medical Center, Series 2007, 5.125%, 1/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ 19,760 Total Health Care 20,017,840 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 13.6% (8.9% OF TOTAL INVESTMENTS) 7,485 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA 7,569,803 Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured 500 Virginia Housing Development Authority, Commonwealth 1/15 at 100.00 AAA 456,870 Mortgage Bonds, Series 2005C-2, 4.750%, 10/01/32 (Alternative Minimum Tax) 870 Virginia Housing Development Authority, Commonwealth 7/15 at 100.00 AAA 818,279 Mortgage Bonds, Series 2006, 4.800%, 7/01/29 (Alternative Minimum Tax) 2,600 Virginia Housing Development Authority, Commonwealth 7/16 at 100.00 AAA 2,376,920 Mortgage Bonds, Series 2007B, 4.750%, 7/01/32 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 11,455 Total Housing/Single Family 11,221,872 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 11.5% (7.6% OF TOTAL INVESTMENTS) 1,300 Albemarle County Industrial Development Authority, Virginia, 1/17 at 100.00 N/R 1,192,087 Residential Care Facilities Mortgage Revenue Bonds, Westminster-Cantebury of the Blue Ridge, Series 2007, 5.000%, 1/01/31 650 Chesterfield County Health Center Commission, Virginia, 12/15 at 100.00 N/R 585,494 Mortgage Revenue Bonds, Lucy Corr Village, Series 2005, 5.625%, 12/01/39 1,815 Fairfax County Economic Development Authority, Virginia, 10/17 at 100.00 N/R 1,650,198 Residential Care Facilities Mortgage Revenue Bonds, Goodwin House, Inc., Series 2007A, 5.125%, 10/01/37 500 Fairfax County Economic Development Authority, Virginia, 10/16 at 100.00 BBB 450,045 Retirement Center Revenue Bonds, Greenspring Village, Series 2006A, 4.750%, 10/01/26 855 Henrico County Economic Development Authority, Virginia, No Opt. Call BBB- 763,857 Residential Care Facility Revenue Bonds, Westminster Canterbury of Richmond, Series 2006, 5.000%, 10/01/35 1,300 Industrial Development Authority of the County of 1/17 at 100.00 N/R 1,185,015 Prince William, Virginia, Residential Care Facility Revenue Bonds, Westminster at Lake, First Mortgage, Series 2006, 5.125%, 1/01/26 1,350 James City County Industrial Development Authority, Virginia, 3/12 at 101.00 N/R 1,356,210 Residential Care Facility First Mortgage Revenue Refunding Bonds, Williamsburg Landing Inc., Series 2003A, 6.000%, 3/01/23 970 Roanoke Industrial Development Authority, Virginia, Residential 12/16 at 100.00 N/R 797,631 Revenue Bonds, Virginia Lutheran Homes Incorporated, Series 2006, 5.000%, 12/01/39 650 Suffolk Industrial Development Authority, Virginia, Retirement 9/16 at 100.00 N/R 588,985 Facilities First Mortgage Revenue Bonds, Lake Prince Center, Series 2006, 5.300%, 9/01/31 650 Virginia Beach Development Authority, Virginia, Residential 11/15 at 100.00 N/R 634,641 Care Facility Mortgage Revenue Bonds, Westminster Canterbury on Chesapeake Bay, Series 2005, 5.000%, 11/01/22 325 Winchester Industrial Development Authority, Virginia, 1/15 at 100.00 N/R 312,881 Residential Care Facility Revenue Bonds, Westminster-Canterbury of Winchester Inc., Series 2005A, 5.200%, 1/01/27 - ------------------------------------------------------------------------------------------------------------------------------------ 10,365 Total Long-Term Care 9,517,044 - ------------------------------------------------------------------------------------------------------------------------------------ 60 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 1.7% (1.1% OF TOTAL INVESTMENTS) $ 165 Bedford County Industrial Development Authority, Virginia, 8/08 at 102.00 B2 $ 136,326 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative Minimum Tax) (4) 460 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 B2 382,301 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation Project, Series 1998, 5.650%, 12/01/25 (Alternative Minimum Tax) (4) 1,000 Hopewell Industrial Development Authority, Virginia, Environmental No Opt. Call B- 863,170 Improvement Revenue Bonds, Smurfit Stone Container Corporation, Series 2005, 5.250%, 6/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ 1,625 Total Materials 1,381,797 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 27.3% (17.9% OF TOTAL INVESTMENTS) 500 Arlington County, Virginia, General Obligation Bonds, Series 2006, 8/16 at 100.00 AAA 540,460 5.000%, 8/01/20 1,750 Chesapeake, Virginia, General Obligation Bonds, Series 2001, 12/11 at 100.00 AA 1,891,663 5.500%, 12/01/16 1,000 Loudoun County, Virginia, General Obligation Bonds, Series 2006, 12/16 at 100.00 AAA 1,057,440 5.000%, 12/01/25 1,730 Loudoun County, Virginia, General Obligation Public Improvement 11/11 at 101.00 AAA 1,799,287 Bonds, Series 2001C, 4.500%, 11/01/17 95 Loudoun County, Virginia, General Obligation Public Improvement 5/12 at 100.00 AAA 100,182 Bonds, Series 2002A, 5.250%, 5/01/22 1,000 Loudoun County, Virginia, General Obligation Public Improvement 6/15 at 100.00 AAA 1,082,820 Bonds, Series 2005B, 5.000%, 6/01/18 40 Portsmouth, Virginia, General Obligation Public Utility Refunding 6/08 at 100.00 AA- 40,052 Bonds, Series 2001B, 5.000%, 6/01/21 - FGIC Insured Powhatan County, Virginia, General Obligation Bonds, Series 2001: 660 5.000%, 1/15/23 - AMBAC Insured 1/11 at 101.00 AAA 678,579 1,000 5.000%, 1/15/27 - AMBAC Insured 1/11 at 101.00 AAA 1,008,840 1,000 Richmond, Virginia, General Obligation Bonds, Series 2004A, 7/14 at 100.00 AAA 1,054,800 5.000%, 7/15/21 - FSA Insured Roanoke, Virginia, General Obligation Public Improvement Bonds, Series 2002A: 2,400 5.000%, 10/01/18 10/12 at 101.00 AA 2,547,456 2,435 5.000%, 10/01/19 10/12 at 101.00 AA 2,584,606 1,280 Roanoke, Virginia, General Obligation Public Improvement Bonds, 10/12 at 101.00 AA 1,332,467 Series 2002B, 5.000%, 10/01/15 - FGIC Insured (Alternative Minimum Tax) 600 Virginia Beach, Virginia, General Obligation Bonds, Series 2005, 1/16 at 100.00 AAA 644,784 5.000%, 1/15/20 2,900 Virginia Beach, Virginia, General Obligation Bonds, 10/17 at 100.00 AAA 3,052,308 5.000%, 10/01/26 (UB) 1,500 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AAA 1,580,415 Bonds, Series 2001, 5.000%, 6/01/19 1,420 Virginia Beach, Virginia, General Obligation Refunding and Public 3/12 at 100.00 AAA 1,476,970 Improvement Bonds, Series 2002, 5.000%, 3/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ 21,310 Total Tax Obligation/General 22,473,129 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 20.0% (13.1% OF TOTAL INVESTMENTS) 130 Bell Creek Community Development Authority, Virginia, Special 3/13 at 101.00 N/R 132,250 Assessment Bonds, Series 2003A, 6.750%, 3/01/22 1,000 Broad Street Community Development Authority, Virginia, Revenue 6/13 at 102.00 N/R 1,053,540 Bonds, Series 2003, 7.500%, 6/01/33 61 NNB Nuveen Virginia Dividend Advantage Municipal Fund 2 (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) Buena Vista Public Recreational Facilities Authority, Virginia, Lease Revenue Bonds, Golf Course Project, Series 2005A: $ 210 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 N/R $ 190,453 165 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 N/R 140,653 800 Fairfax County Economic Development Authority, Virginia, Lease 5/16 at 100.00 AA+ 861,680 Revenue Bonds, Joint Public Uses Community Project, Series 2006, 5.000%, 5/15/18 1,800 Loudoun County Industrial Development Authority, Virginia, 3/13 at 100.00 AA+ 1,895,022 Lease Revenue Refunding Bonds,Public Facility Project, Series 2003, 5.000%, 3/01/19 1,300 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,371,695 Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured 2,000 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 638,860 Revenue Bonds, Series 2005A, 0.000%, 7/01/29 - AMBAC Insured 400 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 BBB- 400,128 Facilities Revenue Refunding Bonds, Series 2002D, 5.250%, 7/01/27 1,000 Spotsylvania County Industrial Development Authority, Virginia, 8/13 at 100.00 AAA 1,040,450 Lease Revenue Bonds, School Facilities, Series 2003B, 5.125%, 8/01/23 - AMBAC Insured 1,000 Stafford County and Staunton Industrial Development Authority, 8/16 at 100.00 AAA 1,037,960 Virginia, Revenue Bonds, Virginia Municipal League and Virginia Association of Counties Finance Program, Series 2006A, 5.000%, 8/01/23 - MBIA Insured 1,610 Stafford County Economic Development Authority, Virginia, 4/18 at 100.00 AAA 1,662,969 Public Project Lease Revenue Bonds, 5.000%, 4/01/33 - AGC Insured (UB) 800 Virginia Beach Development Authority, Public Facilities Revenue 5/15 at 100.00 AA+ 839,088 Bonds, Series 2005A, 5.000%, 5/01/22 679 Virginia Gateway Community Development Authority, 3/13 at 102.00 N/R 684,276 Prince William County, Special Assessment Bonds, Series 2003, 6.375%, 3/01/30 2,540 Virginia Public School Authority, School Financing Bonds, 8/11 at 101.00 AA+ 2,674,036 1997 Resolution, Series 2001B, 5.000%, 8/01/19 570 Virginia Public School Authority, School Financing Bonds, 8/15 at 100.00 AA+ 621,243 1997 Resolution, Series 2005C, 5.000%, 8/01/17 1,265 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/10 at 101.00 AA 1,286,922 Pooled Loan Bond Program, Series 2001D, 5.000%, 5/01/26 - ------------------------------------------------------------------------------------------------------------------------------------ 17,269 Total Tax Obligation/Limited 16,531,225 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 4.0% (2.6% OF TOTAL INVESTMENTS) 1,000 Metropolitan Washington D.C. Airports Authority, Airport System 10/12 at 100.00 AA- 992,300 Revenue Bonds, Series 2002A, 5.125%, 10/01/26 - FGIC Insured (Alternative Minimum Tax) 1,500 Norfolk, Virginia, Parking System Revenue Bonds, Series 2005A, 2/15 at 100.00 AAA 1,536,630 5.000%, 2/01/23 - MBIA Insured 825 Virginia Port Authority, Revenue Bonds, Port Authority Facilities, 7/13 at 100.00 Aa3 779,807 Series 2006, 5.000%, 7/01/36 - FGIC Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 3,325 Total Transportation 3,308,737 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 18.4% (12.1% OF TOTAL INVESTMENTS) (5) 165 Albemarle County Industrial Development Authority, Virginia, 1/12 at 100.00 N/R (5) 182,672 Residential Care Facility Revenue Bonds, Westminster Canterbury of the Blue Ridge First Mortgage, Series 2001, 6.200%, 1/01/31 (Pre-refunded 1/01/12) 1,000 Bristol, Virginia, General Obligation Utility System Revenue No Opt. Call AAA 1,082,410 Bonds, Series 2002, 5.000%, 11/01/24 - FSA Insured (ETM) 62 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (5) (continued) $ 40 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A3 (5) $ 44,327 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 (Pre-refunded 11/15/12) Loudoun County Industrial Development Authority, Virginia, Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A: 250 6.000%, 6/01/22 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (5) 280,633 600 6.100%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (5) 675,762 1,000 Newport News, Virginia, General Obligation Bonds, 11/13 at 100.00 AA (5) 1,095,760 Series 2003B, 5.000%, 11/01/22 (Pre-refunded 11/01/13) 2,750 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 2,859,148 Bonds, Series 2000A, 5.500%, 10/01/40 1,100 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 BBB- (5) 1,176,340 Facilities Revenue Refunding Bonds, Series 2002D, 5.250%, 7/01/27 (Pre-refunded 7/01/12) Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 2002E: 545 5.500%, 8/01/29 (Pre-refunded 2/01/12) 2/12 at 100.00 Aaa 585,466 455 5.500%, 8/01/29 (Pre-refunded 2/01/12) 2/12 at 100.00 AAA 488,784 475 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 105.00 B2 (5) 533,145 Horse Center Revenue Refunding Bonds, Series 2001C, 6.850%, 7/15/21 (Pre-refunded 7/15/11) 1,260 Salem, Virginia, General Obligation Public Improvement Bonds, 1/12 at 100.00 Aa3 (5) 1,366,571 Series 2002, 5.375%, 1/01/23 (Pre-refunded 1/01/12) 1,000 Staunton, Virginia, General Obligation Bonds, Series 2004, 2/14 at 101.00 AAA 1,167,110 6.250%, 2/01/25 (Pre-refunded 2/01/14) - AMBAC Insured Tobacco Settlement Financing Corporation of Virginia, Tobacco Settlement Asset-Backed Bonds, Series 2005: 600 5.250%, 6/01/19 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 636,324 2,700 5.500%, 6/01/26 (Pre-refunded 6/01/15) 6/15 at 100.00 AAA 2,996,891 - ------------------------------------------------------------------------------------------------------------------------------------ 13,940 Total U.S. Guaranteed 15,171,343 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 2.5% (1.7% OF TOTAL INVESTMENTS) 2,000 Mecklenburg County Industrial Development Authority, Virginia, 10/12 at 100.00 Baa1 2,092,080 Revenue Bonds, UAE Mecklenburg Cogeneration LP, Series 2002, 6.500%, 10/15/17 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 18.5% (12.1% OF TOTAL INVESTMENTS) 805 Fairfax County Water Authority, Virginia, Water Revenue 4/12 at 100.00 AAA 821,543 Refunding Bonds, Series 2002, 5.000%, 4/01/27 Henry County Public Service Authority, Virginia, Water and Sewerage Revenue Refunding Bonds, Series 2001: 1,000 5.500%, 11/15/17 - FSA Insured No Opt. Call AAA 1,137,660 3,000 5.500%, 11/15/19 - FSA Insured No Opt. Call AAA 3,449,969 Norfolk, Virginia, Water Revenue Refunding Bonds, Series 2001: 1,130 5.000%, 11/01/18 - FGIC Insured 11/11 at 100.00 AA+ 1,176,556 1,190 5.000%, 11/01/19 - FGIC Insured 11/11 at 100.00 AA+ 1,239,028 1,450 5.000%, 11/01/23 - FGIC Insured 11/11 at 100.00 AA+ 1,498,213 1,525 5.000%, 11/01/24 - FGIC Insured 11/11 at 100.00 AA+ 1,567,792 1,000 Virginia Beach, Virginia, Water and Sewer System Revenue Bonds, 10/15 at 100.00 AA 1,028,370 Series 2005, 5.000%, 10/01/30 1,080 Virginia Resources Authority, Clean Water State Revolving Fund 10/17 at 100.00 AAA 1,076,890 Revenue Bonds, Series 2007, Residuals 1006, 9.690%, 10/01/29 (IF) 63 NNB Nuveen Virginia Dividend Advantage Municipal Fund 2 (continued) Portfolio of INVESTMENTS May 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 2,250 Virginia Resources Authority, Water and Sewerage System Revenue 5/11 at 101.00 AA $ 2,288,138 Bonds, Caroline County Public Improvements Project, Series 2001, 5.000%, 5/01/32 - ------------------------------------------------------------------------------------------------------------------------------------ 14,430 Total Water and Sewer 15,284,159 - ------------------------------------------------------------------------------------------------------------------------------------ $ 125,509 Total Investments (cost $124,718,630) - 152.6% 125,838,873 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (4.1)% (3,385,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.4% 2,017,697 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (50.9)% (6) (42,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $82,471,570 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) The issuer has received a formal adverse determination from the Internal Revenue Service (the "IRS") regarding the tax-exempt status of the bonds' coupon payments. The Fund will continue to treat coupon payments as tax-exempt income until such time that it is formally determined that the interest on the bonds should be treated as taxable. (5) 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. (6) Preferred Shares, at Liquidation Value as a percentage of total investments is (33.4)%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 64 Statement of ASSETS & LIABILITIES May 31, 2008 MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at value (cost $223,871,270, $90,410,738, $90,958,298 and $114,618,167, respectively) $226,571,270 $90,287,117 $91,200,061 $113,940,168 Cash 3,269,228 384,403 682,027 406,364 Receivables: Interest 4,030,251 1,637,451 1,595,228 1,851,508 Investments sold 135,000 425,207 75,068 -- Other assets 7,256 7,955 4,657 4,777 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 234,013,005 92,742,133 93,557,041 116,202,817 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Floating Rate Obligations 3,250,000 1,338,000 1,335,000 1,657,000 Accrued expenses: Management fees 122,730 37,460 33,890 38,257 Other 54,765 26,009 26,270 29,705 Common share dividends payable 478,184 229,674 229,710 261,905 Preferred share dividends payable 13,367 11,347 11,351 11,063 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 3,919,046 1,642,490 1,636,221 1,997,930 - ------------------------------------------------------------------------------------------------------------------------------------ Preferred shares, at liquidation value 79,100,000 32,000,000 32,000,000 39,000,000 ==================================================================================================================================== Net assets applicable to Common shares $150,993,959 $59,099,643 $59,920,820 $ 75,204,887 ==================================================================================================================================== Common shares outstanding 10,640,076 4,185,344 4,192,551 5,363,909 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 14.19 $ 14.12 $ 14.29 $ 14.02 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: - ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 106,401 $ 41,853 $ 41,926 $ 53,639 Paid-in surplus 147,794,543 59,392,514 59,488,757 75,714,486 Undistributed (Over-distribution of) net investment income 199,876 (27,384) (42,143) 38,423 Accumulated net realized gain (loss) from investments and derivative transactions 193,139 (183,719) 190,517 76,338 Net unrealized appreciation (depreciation) of investments and derivative transactions 2,700,000 (123,621) 241,763 (677,999) - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $150,993,959 $59,099,643 $59,920,820 $ 75,204,887 ==================================================================================================================================== Authorized shares: Common Unlimited Unlimited Unlimited Unlimited Preferred Unlimited Unlimited Unlimited Unlimited ==================================================================================================================================== See accompanying notes to financial statements. 65 Statement of ASSETS & LIABILITIES (continued) May 31, 2008 VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at value (cost $190,378,324, $68,166,095 and $124,718,630, respectively) $192,171,994 $68,113,296 $125,838,873 Cash 2,706,979 1,327,004 578,454 Receivables: Interest 3,029,939 1,061,310 1,849,725 Investments sold 220,000 90,000 -- Other assets 8,956 7,849 6,478 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 198,137,868 70,599,459 128,273,530 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Floating Rate Obligations 5,250,000 1,865,000 3,385,000 Accrued expenses: Management fees 102,913 28,168 45,891 Other 47,898 20,886 31,532 Common share dividends payable 413,004 168,253 324,645 Preferred share dividends payable 11,748 5,048 14,892 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 5,825,563 2,087,355 3,801,960 - ------------------------------------------------------------------------------------------------------------------------------------ Preferred shares, at liquidation value 63,800,000 24,000,000 42,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $128,512,305 $44,512,104 $ 82,471,570 ==================================================================================================================================== Common shares outstanding 8,933,535 3,133,062 5,731,510 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 14.39 $ 14.21 $ 14.39 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: - ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 89,335 $ 31,331 $ 57,315 Paid-in surplus 125,791,437 44,441,742 81,360,370 Undistributed (Over-distribution of) net investment income 263,247 37,356 (107,261) Accumulated net realized gain (loss) from investments and derivative transactions 574,616 54,474 40,903 Net unrealized appreciation (depreciation) of investments and derivative transactions 1,793,670 (52,799) 1,120,243 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $128,512,305 $44,512,104 $ 82,471,570 ==================================================================================================================================== Authorized shares: Common Unlimited Unlimited Unlimited Preferred Unlimited Unlimited Unlimited ==================================================================================================================================== See accompanying notes to financial statements. 66 Statement of OPERATIONS Year Ended May 31, 2008 MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $11,245,471 $ 4,589,433 $ 4,527,208 $ 5,410,116 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 1,455,543 582,153 587,568 729,031 Preferred shares - auction fees 198,021 80,110 80,110 97,632 Preferred shares - dividend disbursing agent fees 20,005 10,000 10,011 10,011 Shareholders' servicing agent fees and expenses 20,890 1,743 1,196 1,193 Interest expense on floating rate obligations 23,042 9,427 9,414 11,666 Custodian's fees and expenses 73,238 34,369 38,639 44,038 Trustees' fees and expenses 4,859 1,941 2,282 2,551 Professional fees 18,651 12,103 11,515 13,591 Shareholders' reports - printing and mailing expenses 45,611 20,462 20,056 24,327 Stock exchange listing fees 9,508 454 455 582 Investor relations expense 19,524 8,172 8,452 10,483 Other expenses 17,228 13,158 13,213 14,150 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 1,906,120 774,092 782,911 959,255 Custodian fee credit (28,906) (11,482) (13,166) (13,308) Expense reimbursement -- (168,471) (200,658) (306,399) - ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 1,877,214 594,139 569,087 639,548 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 9,368,257 3,995,294 3,958,121 4,770,568 - ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from: Investments (16,478) 306,804 268,320 203,469 Forward swaps 363,696 115,883 69,275 -- Change in net unrealized appreciation (depreciation) of: Investments (4,721,520) (2,733,280) (2,314,193) (2,833,522) Forward swaps -- 39,197 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) (4,374,302) (2,271,396) (1,976,598) (2,630,053) - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (2,550,899) (1,005,532) (1,008,770) (1,213,876) From accumulated net realized gains -- -- (42,112) -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (2,550,899) (1,005,532) (1,050,882) (1,213,876) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations $ 2,443,056 $ 718,366 $ 930,641 $ 926,639 ==================================================================================================================================== See accompanying notes to financial statements. 67 Statement of OPERATIONS (continued) Year Ended May 31, 2008 VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $ 9,455,915 $ 3,430,444 $ 6,235,491 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 1,221,701 439,332 797,202 Preferred shares - auction fees 159,719 60,081 105,144 Preferred shares - dividend disbursing agent fees 20,009 10,000 10,016 Shareholders' servicing agent fees and expenses 17,525 1,070 1,379 Interest expense on floating rate obligations 22,168 7,875 14,294 Custodian's fees and expenses 73,414 22,921 42,225 Trustees' fees and expenses 4,341 1,597 2,958 Professional fees 17,755 11,107 14,123 Shareholders' reports - printing and mailing expenses 38,392 14,633 23,205 Stock exchange listing fees 9,560 340 622 Investor relations expense 21,306 7,696 13,446 Other expenses 16,692 12,445 14,381 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 1,622,582 589,097 1,038,995 Custodian fee credit (12,144) (11,565) (5,620) Expense reimbursement -- (127,184) (282,908) - ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 1,610,438 450,348 750,467 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 7,845,477 2,980,096 5,485,024 - ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from: Investments 831,194 60,379 66,158 Forward swaps 109,060 -- -- Change in net unrealized appreciation (depreciation) of: Investments (4,632,677) (2,198,596) (3,628,537) Forward swaps 39,197 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) (3,653,226) (2,138,217) (3,562,379) - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (1,939,555) (678,177) (1,366,380) From accumulated net realized gains (258,821) (97,853) (102,026) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (2,198,376) (776,030) (1,468,406) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations $ 1,993,875 $ 65,849 $ 454,239 ==================================================================================================================================== See accompanying notes to financial statements. 68 Statement of CHANGES in NET ASSETS MARYLAND PREMIUM MARYLAND DIVIDEND MARYLAND DIVIDEND INCOME (NMY) ADVANTAGE (NFM) ADVANTAGE 2 (NZR) ----------------------------- ---------------------------- ----------------------------- YEAR YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 5/31/08 5/31/07 5/31/08 5/31/07 5/31/08 5/31/07 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 9,368,257 $ 9,341,191 $ 3,995,294 $ 3,974,853 $ 3,958,121 $ 3,931,107 Net realized gain (loss) from: Investments (16,478) 19,964 306,804 137,858 268,320 176,432 Forward swaps 363,696 -- 115,883 -- 69,275 -- Change in net unrealized appreciation (depreciation) of: Investments (4,721,520) 1,306,051 (2,733,280) 379,809 (2,314,193) 233,703 Forward swaps -- -- 39,197 (39,197) -- -- Distributions to Preferred Shareholders: From net investment income (2,550,899) (2,475,539) (1,005,532) (986,560) (1,008,770) (969,809) From accumulated net realized gains -- -- -- -- (42,112) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 2,443,056 8,191,667 718,366 3,466,763 930,641 3,371,433 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (6,484,065) (7,114,011) (2,936,953) (3,120,217) (2,949,879) (3,190,218) From accumulated net realized gains -- -- -- -- (137,096) -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (6,484,065) (7,114,011) (2,936,953) (3,120,217) (3,086,975) (3,190,218) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 30,834 92,621 56,801 152,937 12,749 156,976 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 30,834 92,621 56,801 152,937 12,749 156,976 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (4,010,175) 1,170,277 (2,161,786) 499,483 (2,143,585) 338,191 Net assets applicable to Common shares at the beginning of year 155,004,134 153,833,857 61,261,429 60,761,946 62,064,405 61,726,214 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $150,993,959 $155,004,134 $59,099,643 $61,261,429 $59,920,820 $62,064,405 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ 199,876 $ (54,806) $ (27,384) $ (79,783) $ (42,143) $ (41,412) ==================================================================================================================================== See accompanying notes to financial statements. 69 Statement of CHANGES in NET ASSETS (continued) MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB) ----------------------------- ---------------------------- ----------------------------- YEAR YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 5/31/08 5/31/07 5/31/08 5/31/07 5/31/08 5/31/07 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 4,770,568 $ 4,702,597 $ 7,845,477 $ 7,820,312 $ 2,980,096 $ 3,009,500 Net realized gain (loss) from: Investments 203,469 120,873 831,194 662,460 60,379 467,890 Forward swaps -- 33,256 109,060 -- -- -- Change in net unrealized appreciation (depreciation) of: Investments (2,833,522) 907,283 (4,632,677) 53,189 (2,198,596) (52,127) Forward swaps -- (211,923) 39,197 (39,197) -- -- Distributions to Preferred Shareholders: From net investment income (1,213,876) (1,185,502) (1,939,555) (2,029,334) (678,177) (757,118) From accumulated net realized gains -- -- (258,821) (38,016) (97,853) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 926,639 4,366,584 1,993,875 6,429,414 65,849 2,668,145 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (3,379,332) (3,570,184) (5,687,847) (6,247,006) (2,183,084) (2,464,212) From accumulated net realized gains -- -- (770,964) (191,731) (306,068) -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (3,379,332) (3,570,184) (6,458,811) (6,438,737) (2,489,152) (2,464,212) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 17,895 34,058 77,205 282,861 27,521 78,442 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 17,895 34,058 77,205 282,861 27,521 78,442 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (2,434,798) 830,458 (4,387,731) 273,538 (2,395,782) 282,375 Net assets applicable to Common shares at the beginning of year 77,639,685 76,809,227 132,900,036 132,626,498 46,907,886 46,625,511 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $75,204,887 $77,639,685 $128,512,305 $132,900,036 $44,512,104 $46,907,886 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ 38,423 $ (138,732) $ 263,247 $ 45,172 $ 37,356 $ (81,479) ==================================================================================================================================== See accompanying notes to financial statements. 70 VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ----------------------------- YEAR YEAR ENDED ENDED 5/31/08 5/31/07 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 5,485,024 $ 5,503,149 Net realized gain (loss) from: Investments 66,158 658,811 Forward swaps -- -- Change in net unrealized appreciation (depreciation) of: Investments (3,628,537) (33,280) Forward Swaps -- -- Distributions to Preferred Shareholders: From net investment income (1,366,380) (1,363,368) From accumulated net realized gains (102,026) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 454,239 4,765,312 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (4,107,601) (4,420,783) From accumulated net realized gains (326,601) -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (4,434,202) (4,420,783) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 69,440 150,558 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 69,440 150,558 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (3,910,523) 495,087 Net assets applicable to Common shares at the beginning of year 86,382,093 85,887,006 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $82,471,570 $86,382,093 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ (107,261) $ (117,479) ==================================================================================================================================== See accompanying notes to financial statements. 71 Notes to FINANCIAL STATEMENTS 1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES The funds covered in this report and their corresponding Common share stock exchange symbols are Nuveen Maryland Premium Income Municipal Fund (NMY), Nuveen Maryland Dividend Advantage Municipal Fund (NFM), Nuveen Maryland Dividend Advantage Municipal Fund 2 (NZR), Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI), Nuveen Virginia Premium Income Municipal Fund (NPV), Nuveen Virginia Dividend Advantage Municipal Fund (NGB) and Nuveen Virginia Dividend Advantage Municipal Fund 2 (NNB) (collectively, the "Funds"). Common shares of Maryland Premium Income (NMY) and Virginia Premium Income (NPV) are traded on the New York Stock Exchange while Common shares of Maryland Dividend Advantage (NFM), Maryland Dividend Advantage 2 (NZR), Maryland Dividend Advantage 3 (NWI), Virginia Dividend Advantage (NGB) and Virginia Dividend Advantage 2 (NNB) are traded on the American Stock Exchange. The Funds are registered under the Investment Company Act of 1940, as amended, as closed-end management investment companies. Each Fund seeks to provide current income exempt from both regular federal and designated state income taxes by investing primarily in a diversified portfolio of municipal obligations issued by state and local government authorities within a single state or certain U.S. territories. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with U.S. generally accepted accounting principles. Investment Valuation The prices of municipal bonds in each Fund's investment portfolio are provided by a pricing service approved by the Fund's Board of Trustees. When market price quotes are not readily available (which is usually the case for municipal securities), the pricing service may establish fair value based on yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, indications of value from securities dealers, evaluations of anticipated cash flows or collateral and general market conditions. Prices of forward swap contracts are also provided by an independent pricing service approved by each Fund's Board of Trustees. If the pricing service is unable to supply a price for a municipal bond or forward swap contract, each Fund may use market quotes provided by major broker/dealers in such investments. If it is determined that the market price for an investment or derivative instrument is unavailable or inappropriate, the Board of Trustees of the Funds, or its designee, may establish fair value in accordance with procedures established in good faith by the Board of Trustees. Temporary investments in securities that have variable rate and demand features qualifying them as short-term investments are valued at amortized cost, which approximates market value. Investment Transactions Investment transactions are recorded on a trade date basis. Realized gains and losses from transactions are determined on the specific identification method. Investments purchased on a when-issued/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, 2008, there were no such outstanding purchase commitments in any of the Funds. Investment Income Interest income, which includes the amortization of premiums and accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Interest income also includes paydown gains and losses, if any. 72 Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all of its net investment income and net capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income tax provision is required. Furthermore, each Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from regular federal and designated state income taxes, to retain such tax-exempt status when distributed to shareholders of the Funds. Net realized capital gains and ordinary income distributions paid by the Funds are subject to federal taxation. Effective November 30, 2007, the Funds adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Funds' tax returns to determine whether it is "more-likely-than-not" (i.e., a greater than 50-percent likelihood) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold may result in a tax benefit or expense in the current year. Implementation of FIN 48 required management of the Funds to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). The Funds have no examinations in progress. For all open tax years and all major taxing jurisdictions through the end of the reporting period, management of the Funds has reviewed all tax positions taken or expected to be taken in the preparation of the Funds' tax returns and concluded the adoption of FIN 48 resulted in no impact to the Funds' net assets or results of operations as of and during the fiscal year ended May 31, 2008. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Dividends and Distributions to Common Shareholders Dividends from tax-exempt net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders at least annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards. Distributions to Common shareholders of tax-exempt net investment income, net realized capital gains and/or market discount, if any, are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Preferred Shares The Funds have issued and outstanding Preferred shares, $25,000 stated value per share, as a means of effecting financial leverage. Each Fund's Preferred shares are issued in one or more Series. The dividend rate paid by the Funds on each Series is determined every seven days, pursuant to a dutch auction process overseen by the auction agent, and is payable at the end of each rate period. The number of Preferred shares outstanding, by Series and in total, for each Fund is as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - -------------------------------------------------------------------------------- Number of shares: Series M -- 1,280 -- -- Series T -- -- -- 1,560 Series W 1,404 -- -- -- Series TH 1,760 -- -- -- Series F -- -- 1,280 -- - -------------------------------------------------------------------------------- Total 3,164 1,280 1,280 1,560 ================================================================================ 73 Notes to FINANCIAL STATEMENTS (continued) VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - -------------------------------------------------------------------------------- Number of shares: Series M -- -- 1,680 Series T 832 -- -- Series W -- 960 -- Series TH 1,720 -- -- Series F -- -- -- - -------------------------------------------------------------------------------- Total 2,552 960 1,680 ================================================================================ Beginning in February 2008, more shares for sale were submitted in the regularly scheduled auctions for the Preferred shares issued by the Funds than there were offers to buy. This meant that these auctions "failed to clear," and that many Preferred shareholders who wanted to sell their shares in these auctions were unable to do so. Preferred shareholders unable to sell their shares received distributions at the "maximum rate" applicable to failed auctions as calculated in accordance with the pre-established terms of the Preferred shares. These developments generally do not affect the management or investment policies of the Funds. However, one implication of these auction failures for Common shareholders is that the Funds' cost of leverage will likely be higher, at least temporarily, than it otherwise would have been had the auctions continued to be successful. As a result, the Funds' future Common share earnings may be lower than they otherwise would have been. 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"). A Fund may also enter into shortfall and forbearance agreements (sometimes referred to as a "recourse trust" or "credit recovery swap") 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, as well as any shortfalls in interest cash flows. The inverse floater held by a Fund gives the Fund the right (a) to cause the holders of the floating rate certificates to tender their notes at par, and (b) to have the broker transfer the fixed-rate bond held by the trust to the Fund, thereby collapsing the trust. An investment in an externally-deposited inverse floater is identified in the Portfolio of Investments as an "Inverse floating rate investment". An investment in a self-deposited inverse floater, recourse trust or credit 74 recovery swap is accounted for as a financing transaction in accordance with Statement of Financial Accounting Standards (SFAS) No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities". In such instances, a fixed-rate bond deposited into a special purpose trust is identified in the Portfolio of Investments as an "Underlying bond of an inverse floating rate trust", with the Fund accounting for the short-term floating rate certificates issued by the trust as "Floating rate obligations" on the Statement of Assets and Liabilities. In addition, the Fund reflects in Investment Income the entire earnings of the underlying bond and accounts for the related interest paid to the holders of the short-term floating rate certificates as "Interest expense on floating rate obligations" in the Statement of Operations. During the fiscal year ended May 31, 2008, each Fund invested in externally deposited inverse floaters and/or self-deposited inverse floaters. 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, 2008, were as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------ Average floating rate obligations $862,432 $353,546 $352,948 $437,598 Average annual interest rate and fees 2.67% 2.67% 2.67% 2.67% ================================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------ Average floating rate obligations $982,582 $349,030 $633,552 Average annual interest rate and fees 2.26% 2.26% 2.26% ================================================================================================================== Forward Swap Transactions Each Fund is authorized to invest in forward interest rate swap transactions. Each Fund's use of forward interest rate swap transactions is intended to help the Fund manage its overall interest rate sensitivity, either shorter or longer, generally to more closely align the Fund's interest rate sensitivity with that of the broader municipal market. Forward interest rate swap transactions involve each Fund's agreement with a counterparty to pay, in the future, a fixed or variable rate payment in exchange for the counterparty paying the Fund a variable or fixed rate payment, the accruals for which would begin at a specified date in the future (the "effective date"). The amount of the payment obligation is based on the notional amount of the forward swap contract and the termination date of the swap (which is akin to a bond's maturity). The value of the Fund's swap commitment would increase or decrease based primarily on the extent to which long-term interest rates for bonds having a maturity of the swap's termination date increases or decreases. The Funds may terminate a swap contract prior to the effective date, at which point a realized gain or loss is recognized. When a forward swap is terminated, it ordinarily does not involve the delivery of securities or other underlying assets or principal, but rather is settled in cash on a net basis. Each Fund intends, but is not obligated, to terminate its forward swaps before the effective date. Accordingly, the risk of loss with respect to the swap counterparty on such transactions is limited to the credit risk associated with a counterparty failing to honor its commitment to pay any realized gain to the Fund upon termination. To reduce such credit risk, all counterparties are required to pledge collateral daily (based on the daily valuation of each swap) on behalf of each Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when any of the Funds have an unrealized loss on a swap contract, the Funds have instructed the custodian to pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate, either up or down, by at least the predetermined threshold amount. Maryland Premium Income (NMY), Maryland Dividend Advantage (NFM), Maryland Dividend Advantage 2 (NZR) and Virginia Premium Income (NPV) were the only Funds to invest in forward interest rate swap transactions during the fiscal year ended May 31, 2008. Zero Coupon Securities Each Fund is authorized to invest in zero coupon securities. A zero coupon security does not pay a regular interest coupon to its holders during the life of the security. Tax-exempt income to the holder of the security comes from accretion of the difference between the original purchase price of the security at issuance and the par value of the security at maturity and is effectively paid at maturity. Such securities are included in the Portfolios of Investments with a 0.000% coupon rate in their description. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically. 75 Notes to FINANCIAL STATEMENTS (continued) 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. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to Common shares from operations during the reporting period. Actual results may differ from those estimates. 2. FUND SHARES Transactions in Common shares were as follows: MARYLAND PREMIUM MARYLAND DIVIDEND MARYLAND DIVIDEND INCOME (NMY) ADVANTAGE (NFM) ADVANTAGE 2 (NZR) --------------------- -------------------- -------------------- YEAR YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 5/31/08 5/31/07 5/31/08 5/31/07 5/31/08 5/31/07 - ------------------------------------------------------------------------------------------------------------------ Common shares issued to shareholders due to reinvestment of distributions 2,122 6,252 3,983 9,782 863 9,920 ================================================================================================================== MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB) --------------------- -------------------- -------------------- YEAR YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 5/31/08 5/31/07 5/31/08 5/31/07 5/31/08 5/31/07 - ------------------------------------------------------------------------------------------------------------------ Common shares issued to shareholders due to reinvestment of distributions 1,239 2,324 5,228 18,377 1,821 4,617 ================================================================================================================== VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) -------------------- YEAR YEAR ENDED ENDED 5/31/08 5/31/07 - ------------------------------------------------------------------------------------------------------------------ Common shares issued to shareholders due to reinvestment of distributions 4,680 9,265 ================================================================================================================== 76 3. INVESTMENT TRANSACTIONS Purchases and sales (including maturities but excluding short-term investments and derivative transactions) during the fiscal year ended May 31, 2008, were as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------ Purchases $32,021,857 $10,933,359 $12,113,937 $15,997,827 Sales and maturities 33,847,662 11,860,939 12,785,289 $15,335,019 ================================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------ Purchases $27,724,865 $7,232,317 $13,129,575 Sales and maturities 29,324,257 6,594,952 12,397,952 ================================================================================================================== 4. INCOME TAX INFORMATION The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to timing differences in recognizing taxable market discount, timing differences in recognizing certain gains and losses on investment transactions and the treatment of investments in inverse floating rate transactions subject to SFAS No. 140. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts on the Statement of Assets and Liabilities presented in the annual report, based on their federal tax basis treatment; temporary differences do not require reclassification. Temporary and permanent differences do not impact the net asset values of the Funds. At May 31, 2008, the cost of investments was as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------ Cost of investments $220,689,330 $89,023,167 $89,574,831 $112,968,527 ================================================================================================ VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------ Cost of investments $184,760,632 $66,288,495 $121,288,853 ================================================================================================ Gross unrealized appreciation and gross unrealized depreciation of investments at May 31, 2008, were as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------ Gross unrealized: Appreciation $ 6,995,021 $ 1,817,592 $ 2,096,389 $ 1,767,524 Depreciation (4,362,877) (1,891,519) (1,806,159) (2,452,802) - ------------------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) of investments $ 2,632,144 $ (73,927) $ 290,230 $ (685,278) ================================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------ Gross unrealized: Appreciation $ 6,184,522 $ 1,732,118 $ 3,928,443 Depreciation (4,023,160) (1,771,988) (2,763,752) - ------------------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) of investments $ 2,161,362 $ (39,870) $ 1,164,691 ================================================================================================================== 77 Notes to FINANCIAL STATEMENTS (continued) The tax components of undistributed net tax-exempt income, net ordinary income and net long-term capital gains at May 31, 2008, the Funds' tax year end, were as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------ Undistributed net tax-exempt income * $603,666 $170,872 $157,399 $283,959 Undistributed net ordinary income ** 77,161 8,237 73,371 7,997 Undistributed net long-term capital gains 320,091 -- 125,752 122,752 ================================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------ Undistributed net tax-exempt income * $380,781 $206,494 $177,008 Undistributed net ordinary income ** 109,298 -- 18,227 Undistributed net long-term capital gains 465,316 54,477 56,020 ================================================================================================================== * Undistributed net tax-exempt income (on a tax basis) has not been reduced for the dividend declared on May 1, 2008, paid on June 2, 2008. ** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. The tax character of distributions paid during the Funds' tax years ended May 31, 2008 and May 31, 2007, was designated for purposes of the dividends paid deduction as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 2008 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income *** $9,009,735 $3,953,181 $3,960,918 $4,602,748 Distributions from net ordinary income ** 106,313 -- 8,769 3,541 Distributions from net long-term capital gains **** -- -- 179,208 -- ================================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 2008 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income *** $7,666,828 $2,850,082 $5,465,830 Distributions from net ordinary income ** 8,291 28,583 21,724 Distributions from net long-term capital gains **** 1,029,785 403,921 428,627 ================================================================================================================== ** 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, 2008, as Exempt Interest Dividends. **** The Funds designated as a long-term capital gain dividend, pursuant to the Internal Revenue Code Section 852(b)(3), the amount necessary to reduce earnings and profits of the Funds related to net capital gain to zero for the tax year ended May 31, 2008. 78 MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 2007 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income $9,664,847 $4,128,452 $4,166,021 $4,771,527 Distributions from net ordinary income ** -- -- 6,683 -- Distributions from net long-term capital gains -- -- 562 -- ================================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 2007 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income $8,317,694 $3,260,186 $5,809,897 Distributions from net ordinary income ** -- -- -- Distributions from net long-term capital gains 229,747 -- -- ================================================================================================================== ** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. At May 31, 2008, the Funds' tax year end, Maryland Dividend Advantage (NFM) had unused capital loss carryforwards of $183,719 available for federal income tax purposes to be applied against future capital gains, if any. If not applied, $106,052, $15,613 and $62,504 of the carryforward will expire in the years ended May 31, 2012, 2013 and 2014, respectively. Virginia Dividend Advantage 2 (NNB) elected to defer net realized losses from investments incurred from November 1, 2007 through May 31, 2008 ("post-October losses") in accordance with federal income tax regulations. Post-October losses of $6,148 were treated as having arisen on the first day of the following fiscal year. 5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Each Fund's management fee is separated into two components - a complex-level component, based on the aggregate amount of all fund assets managed by Nuveen Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen Investments, Inc. ("Nuveen"), and a specific fund-level component, based only on the amount of assets within each individual Fund. This pricing structure enables Nuveen fund shareholders to benefit from growth in the assets within each individual fund as well as from growth in the amount of complex-wide assets managed by the Adviser. The annual fund-level fee, payable monthly, for each Fund is based upon the average daily net assets (including net assets attributable to Preferred shares) of each Fund as follows: AVERAGE DAILY NET ASSETS MARYLAND PREMIUM INCOME (NMY) (INCLUDING NET ASSETS VIRGINIA PREMIUM INCOME (NPV) ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE - -------------------------------------------------------------------------------- For the first $125 million .4500% For the next $125 million .4375 For the next $250 million .4250 For the next $500 million .4125 For the next $1 billion .4000 For the next $3 billion .3875 For net assets over $5 billion .3750 ================================================================================ 79 Notes to FINANCIAL STATEMENTS (continued) MARYLAND DIVIDEND ADVANTAGE (NFM) MARYLAND DIVIDEND ADVANTAGE 2 (NZR) MARYLAND DIVIDEND ADVANTAGE 3 (NWI) AVERAGE DAILY NET ASSETS VIRGINIA DIVIDEND ADVANTAGE (NGB) (INCLUDING NET ASSETS VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE - -------------------------------------------------------------------------------- For the first $125 million .4500% For the next $125 million .4375 For the next $250 million .4250 For the next $500 million .4125 For the next $1 billion .4000 For net assets over $2 billion .3750 ================================================================================ The annual complex-level fee, payable monthly, which is additive to the fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the aggregate amount of total fund assets managed as stated in the tables below. As of May 31, 2008, the complex-level fee rate was .1851%. Effective August 20, 2007, the complex-level fee schedule is as follows: COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL - -------------------------------------------------------------------------------- $55 billion .2000% $56 billion .1996 $57 billion .1989 $60 billion .1961 $63 billion .1931 $66 billion .1900 $71 billion .1851 $76 billion .1806 $80 billion .1773 $91 billion .1691 $125 billion .1599 $200 billion .1505 $250 billion .1469 $300 billion .1445 ================================================================================ 80 Prior to August 20, 2007, the complex-level fee schedule was as follows: COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL - -------------------------------------------------------------------------------- $55 billion .2000% $56 billion .1996 $57 billion .1989 $60 billion .1961 $63 billion .1931 $66 billion .1900 $71 billion .1851 $76 billion .1806 $80 billion .1773 $91 billion .1698 $125 billion .1617 $200 billion .1536 $250 billion .1509 $300 billion .1490 ================================================================================ (1) The complex-level fee component of the management fee for the funds is calculated based upon the aggregate Managed Assets ("Managed Assets" means the average daily net assets of each fund including assets attributable to preferred stock issued by or borrowings by the Nuveen funds) of Nuveen-sponsored funds in the U.S. The management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Funds pay no compensation directly to those of its Trustees who are affiliated with the Adviser or to its Officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board of Trustees has adopted a deferred compensation plan for independent Trustees that enables Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen advised funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen advised funds. For the first ten years of Maryland Dividend Advantage's (NFM) and Virginia Dividend Advantage's (NGB) operations, the Adviser has agreed to reimburse the Funds, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING 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. 81 Notes to FINANCIAL STATEMENTS (continued) The Adviser has not agreed to reimburse Maryland Dividend Advantage (NFM) and Virginia Dividend Advantage (NGB) for any portion of their fees and expenses beyond January 31, 2011. For the first ten years of Maryland Dividend Advantage 2's (NZR) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING SEPTEMBER 30, SEPTEMBER 30, - -------------------------------------------------------------------------------- 2001* .30% 2007 .25% 2002 .30 2008 .20 2003 .30 2009 .15 2004 .30 2010 .10 2005 .30 2011 .05 2006 .30 ================================================================================ * From the commencement of operations. The Adviser has not agreed to reimburse Maryland Dividend Advantage 2 (NZR) for any portion of its fees and expenses beyond September 30, 2011. For the first eight years of Maryland Dividend Advantage 3's (NWI) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING SEPTEMBER 30, SEPTEMBER 30, - -------------------------------------------------------------------------------- 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 Maryland Dividend Advantage 3 (NWI) for any portion of its fees and expenses beyond September 30, 2010. 82 For the first ten years of Virginia Dividend Advantage 2's (NNB) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING NOVEMBER 30, NOVEMBER 30, - -------------------------------------------------------------------------------- 2001* .30% 2007 .25% 2002 .30 2008 .20 2003 .30 2009 .15 2004 .30 2010 .10 2005 .30 2011 .05 2006 .30 ================================================================================ * From the commencement of operations. The Adviser has not agreed to reimburse Virginia Dividend Advantage 2 (NNB) for any portion of its fees and expenses beyond November 30, 2011. Agreement and Plan of Merger On June 20, 2007, Nuveen Investments announced that it had entered into a definitive Agreement and Plan of Merger ("Merger Agreement") with Windy City Investments, Inc. ("Windy City"), a corporation formed by investors led by Madison Dearborn Partners, LLC ("Madison Dearborn"), pursuant to which Windy City would acquire Nuveen Investments. Madison Dearborn is a private equity investment firm based in Chicago, Illinois. The merger was consummated on November 13, 2007. The consummation of the merger was deemed to be an "assignment" (as that term is defined in the Investment Company Act of 1940) of the investment management agreement between each Fund and the Adviser, and resulted in the automatic termination of each Fund's agreement. The Board of Trustees of each Fund considered and approved a new investment management agreement with the Adviser on the same terms as the previous agreement. Each new ongoing agreement, was approved by the shareholders of each Fund and took effect on November 13, 2007. The investors led by Madison Dearborn includes an affiliate of Merrill Lynch. As a result, Merrill Lynch is an indirect "affiliated person" (as that term is defined in the Investment Company Act of 1940) of each Fund. Certain conflicts of interest may arise as a result of such indirect affiliation. For example, the Funds are generally prohibited from entering into principal transactions with Merrill Lynch and its affiliates. The Adviser does not believe that any such prohibitions or limitations as a result of Merrill Lynch's affiliation will significantly impact the ability of the Funds to pursue their investment objectives and policies. 6. NEW ACCOUNTING PRONOUNCEMENTS Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157 In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The changes to current generally accepted accounting principles from the application of this standard relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. As of May 31, 2008, management does not believe the adoption of SFAS No. 157 will impact the financial statement amounts; however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements included within the Statement of Operations for the period. Financial Accounting Standards Board Statement of Financial Accounting Standards No. 161 In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities." This standard is intended to enhance financial statement disclosures for derivative instruments and hedging activities and enable investors to understand: a) how and why a fund uses derivative instruments, b) how derivative instruments and related hedge items are accounted for, and c) how derivative instruments and related hedge items affect a fund's financial position, results of operations and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. As of May 31, 2008, management does not believe the adoption of SFAS No. 161 will impact the financial statement amounts; however, additional footnote disclosures may be required about the use of derivative instruments and hedging items. 83 Notes to FINANCIAL STATEMENTS (continued) 7. SUBSEQUENT EVENTS Distributions to Common Shareholders The Funds declared Common share dividend distributions from their tax-exempt net investment income which were paid on July 1, 2008, to shareholders of record on June 15, 2008, as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - -------------------------------------------------------------------------------- Dividend per share $.0495 $.0585 $.0585 $.0525 ================================================================================ VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - -------------------------------------------------------------------------------- Dividend per share $.0530 $.0565 $.0595 ================================================================================ Auction Rate Preferred Shares (ARPS) On June 11, 2008, Nuveen announced the Fund Board's approval of plans to use tender option bonds (TOBs), also known as floating rate securities, to refinance a portion of the municipal funds' outstanding ARPS, whose auctions have been failing for several months, including an initial phase of approximately $1 billion in forty-one funds. On June 26, 2008, thirteen municipal funds (none of which are included in this shareholder report) issued par redemption notices for a portion of their auction-rate securities aggregating approximately $580 million. 84 Financial HIGHLIGHTS 85 Financial HIGHLIGHTS Selected data for a Common share outstanding throughout each period: Investment Operations Less Distributions ------------------------------------------------------------------ --------------------------------- Distributions Distributions from Net from Net Beginning Investment Capital Investment Capital Common Net Income to Gains to Income to Gains to Share Net Realized/ Preferred Preferred Common Common Net Asset Investment Unrealized Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== MARYLAND PREMIUM INCOME (NMY) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 $14.57 $ .88 $ (.41) $(.24) $ -- $ .23 $(.61) $ -- $(.61) 2007 14.47 .88 .12 (.23) -- .77 (.67) -- (.67) 2006 15.12 .89 (.56) (.18) -- .15 (.78) (.02) (.80) 2005 14.28 .92 .92 (.10) -- 1.74 (.90) -- (.90) 2004 15.10 .96 (.81) (.06) -- .09 (.91) -- (.91) MARYLAND DIVIDEND ADVANTAGE (NFM) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 14.65 .95 (.54) (.24) -- .17 (.70) -- (.70) 2007 14.57 .95 .12 (.24) -- .83 (.75) -- (.75) 2006 15.13 .95 (.47) (.19) -- .29 (.85) -- (.85) 2005 14.43 .98 .75 (.10) -- 1.63 (.93) -- (.93) 2004 15.47 1.01 (1.07) (.05) -- (.11) (.93) -- (.93) ==================================================================================================================================== Total Returns ---------------------- Based Ending on Common Based Common Share Ending on Share Net Net Asset Market Market Asset Value Value Value* Value* ============================================================================ MARYLAND PREMIUM INCOME (NMY) - ---------------------------------------------------------------------------- Year Ended 5/31: 2008 $14.19 $13.10 (7.55)% 1.63% 2007 14.57 14.84 6.96 5.35 2006 14.47 14.52 (2.94) 1.08 2005 15.12 15.78 15.64 12.52 2004 14.28 14.45 (10.77) .64 MARYLAND DIVIDEND ADVANTAGE (NFM) - ---------------------------------------------------------------------------- Year Ended 5/31: 2008 14.12 14.19 (2.31) 1.25 2007 14.65 15.28 5.51 5.74 2006 14.57 15.19 2.51 1.95 2005 15.13 15.63 6.22 11.60 2004 14.43 15.62 2.99 (.69) ============================================================================ Ratios/Supplemental Data ------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Ratios to Average Net Assets Applicable to Common Shares Applicable to Common Shares Before Credit/Reimbursement After Credit/Reimbursement*** ------------------------------------------ ------------------------------------------- Ending Net Assets Applicable Expenses Expenses Net Expenses Expenses Net Portfolio to Common Including Excluding Investment Including Excluding Investment Turnover Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate ==================================================================================================================================== MARYLAND PREMIUM INCOME (NMY) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 $150,994 1.25% 1.24% 6.13% 1.23% 1.22% 6.15% 14% 2007 155,004 1.27 1.23 5.95 1.26 1.22 5.96 13 2006 153,834 1.23 1.23 6.05 1.21 1.21 6.07 13 2005 160,496 1.24 1.24 6.22 1.23 1.23 6.22 10 2004 151,107 1.24 1.24 6.54 1.23 1.23 6.55 16 MARYLAND DIVIDEND ADVANTAGE (NFM) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 59,100 1.30 1.28 6.39 .99 .98 6.69 12 2007 61,261 1.30 1.26 6.06 .93 .89 6.43 12 2006 60,762 1.26 1.26 5.99 .81 .81 6.44 14 2005 63,051 1.26 1.26 6.11 .79 .79 6.57 11 2004 60,041 1.24 1.24 6.34 .78 .78 6.80 10 ==================================================================================================================================== Floating Rate Obligations Preferred Shares at End of Period at End of Period -------------------------------------- ------------------------- Aggregate Liquidation Aggregate Amount and Market Asset Amount Asset Outstanding Value Coverage Outstanding Coverage (000) Per Share Per Share (000) Per $1,000 ================================================================================ MARYLAND PREMIUM INCOME (NMY) - -------------------------------------------------------------------------------- Year Ended 5/31: 2008 $79,100 $25,000 $72,722 $3,250 $71,798 2007 79,100 25,000 73,990 2,800 84,609 2006 79,100 25,000 73,620 -- -- 2005 79,100 25,000 75,726 -- -- 2004 79,100 25,000 72,758 -- -- MARYLAND DIVIDEND ADVANTAGE (NFM) - -------------------------------------------------------------------------------- Year Ended 5/31: 2008 32,000 25,000 71,172 1,338 69,086 2007 32,000 25,000 72,860 1,133 83,314 2006 32,000 25,000 72,470 -- -- 2005 32,000 25,000 74,259 -- -- 2004 32,000 25,000 71,907 -- -- ================================================================================ * Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. 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 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 calculation. Total returns are not annualized. ** After custodian fee credit and expense reimbursement, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Preferred shareholders; income ratios reflect income earned on assets attributable to Preferred shares. (a) Interest expense arises from the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Inverse Floating Rate Securities. See accompanying notes to financial statements. 86-87 spread Financial HIGHLIGHTS (continued) Selected data for a Common share outstanding throughout each period: Investment Operations Less Distributions ------------------------------------------------------------------ --------------------------------- Distributions Distributions from Net from Net Beginning Investment Capital Investment Capital Common Net Income to Gains to Income to Gains to Share Net Realized/ Preferred Preferred Common Common Net Asset Investment Unrealized Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== MARYLAND DIVIDEND ADVANTAGE 2 (NZR) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 $14.81 $.94 $ (.48) $(.24) $(.01) $ .21 $(.70) $(.03) $(.73) 2007 14.76 .94 .10 (.23) -- .81 (.76) -- (.76) 2006 15.45 .94 (.59) (.18) -- .17 (.83) (.03) (.86) 2005 14.64 .94 .90 (.09) -- 1.75 (.88) (.06) (.94) 2004 15.71 .96 (1.08) (.06) -- (.18) (.87) (.02) (.89) MARYLAND DIVIDEND ADVANTAGE 3 (NWI) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 14.48 .89 (.49) (.23) -- .17 (.63) -- (.63) 2007 14.33 .88 .16 (.22) -- .82 (.67) -- (.67) 2006 14.82 .86 (.46) (.18) -- .22 (.71) -- (.71) 2005 13.88 .86 .97 (.10) -- 1.73 (.78) (.01) (.79) 2004 14.89 .87 (1.03) (.06) -- (.22) (.79) -- (.79) ==================================================================================================================================== Total Returns ---------------------- Based Ending on Common Based Common Share Ending on Share Net Net Asset Market Market Asset Value Value Value* Value* ========================================================================= MARYLAND DIVIDEND ADVANTAGE 2 (NZR) - ------------------------------------------------------------------------- Year Ended 5/31: 2008 $14.29 $14.25 (2.30)% 1.54% 2007 14.81 15.38 9.32 5.56 2006 14.76 14.76 1.13 1.14 2005 15.45 15.41 14.71 12.22 2004 14.64 14.28 (2.90) (1.16) MARYLAND DIVIDEND ADVANTAGE 3 (NWI) - ------------------------------------------------------------------------- Year Ended 5/31: 2008 14.02 13.01 (7.38) 1.24 2007 14.48 14.74 11.47 5.75 2006 14.33 13.85 1.09 1.55 2005 14.82 14.40 14.98 12.67 2004 13.88 13.24 (5.97) (1.51) ========================================================================= Ratios/Supplemental Data ------------------------------------------------------------------------------------------------------------------ Ratios to Average Net Assets Ratios to Average Net Assets Applicable to Common Shares Applicable to Common Shares Before Credit/Reimbursement After Credit/Reimbursement** ------------------------------------------ ------------------------------------------- Ending Net Assets Applicable Expenses Expenses Net Expenses Expenses Net Portfolio to Common Including Excluding Investment Including Excluding Investment Turnover Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate ==================================================================================================================================== MARYLAND DIVIDEND ADVANTAGE 2 (NZR) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 $59,921 1.29% 1.28% 6.18% .94% .92% 6.53% 13% 2007 62,064 1.32 1.28 5.86 .90 .86 6.28 10 2006 61,726 1.25 1.25 5.76 .77 .77 6.23 15 2005 64,500 1.23 1.23 5.74 .77 .77 6.20 10 2004 61,064 1.24 1.24 5.90 .78 .78 6.36 11 MARYLAND DIVIDEND ADVANTAGE 3 (NWI) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 75,205 1.26 1.25 5.86 .84 .83 6.29 13 2007 77,640 1.28 1.24 5.52 .79 .75 6.01 11 2006 76,809 1.23 1.23 5.41 .73 .73 5.91 14 2005 79,443 1.23 1.23 5.40 .74 .74 5.89 12 2004 74,369 1.22 1.22 5.59 .73 .73 6.08 15 ==================================================================================================================================== Floating Rate Obligations Preferred Shares at End of Period at End of Period -------------------------------------- ------------------------- Aggregate Liquidation Aggregate Amount and Market Asset Amount Asset Outstanding Value Coverage Outstanding Coverage (000) Per Share Per Share (000) Per $1,000 ================================================================================ MARYLAND DIVIDEND ADVANTAGE 2 (NZR) - -------------------------------------------------------------------------------- Year Ended 5/31: 2008 $32,000 $25,000 $71,813 $1,335 $69,855 2007 32,000 25,000 73,488 1,133 84,022 2006 32,000 25,000 73,224 -- -- 2005 32,000 25,000 75,390 -- -- 2004 32,000 25,000 72,706 -- -- MARYLAND DIVIDEND ADVANTAGE 3 (NWI) - -------------------------------------------------------------------------------- Year Ended 5/31: 2008 39,000 25,000 73,208 1,657 69,923 2007 39,000 25,000 74,769 1,400 84,314 2006 39,000 25,000 74,237 -- -- 2005 39,000 25,000 75,925 -- -- 2004 39,000 25,000 72,672 -- -- ================================================================================ * Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. 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 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 calculation. Total returns are not annualized. ** After custodian fee credit and expense reimbursement, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Preferred shareholders; income ratios reflect income earned on assets attributable to Preferred shares. (a) Interest expense arises from the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Inverse Floating Rate Securities. See accompanying notes to financial statements. 88-89 spread Financial HIGHLIGHTS (continued) Selected data for a Common share outstanding throughout each period: Investment Operations Less Distributions ------------------------------------------------------------------ --------------------------------- Distributions Distributions from Net from Net Beginning Investment Capital Investment Capital Common Net Income to Gains to Income to Gains to Share Net Realized/ Preferred Preferred Common Common Net Asset Investment Unrealized Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== VIRGINIA PREMIUM INCOME (NPV) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 $14.89 $ .88 $ (.40) $(.22) $(.03) $ .23 $(.64) $(.09) $ (.73) 2007 14.89 .88 .07 (.23) --* .72 (.70) (.02) (.72) 2006 15.82 .88 (.59) (.15) (.03) .11 (.80) (.24) (1.04) 2005 14.95 .93 .93 (.09) -- 1.77 (.90) -- (.90) 2004 15.93 .97 (.99) (.05) -- (.07) (.91) -- (.91) VIRGINIA DIVIDEND ADVANTAGE (NGB) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 14.98 .95 (.67) (.22) (.03) .03 (.70) (.10) (.80) 2007 14.91 .96 .14 (.24) -- .86 (.79) -- (.79) 2006 15.52 .97 (.54) (.17) -- .26 (.87) -- (.87) 2005 14.42 .99 1.13 (.09) -- 2.03 (.93) -- (.93) 2004 15.43 1.02 (1.05) (.05) -- (.08) (.93) -- (.93) ==================================================================================================================================== Total Returns ---------------------- Based Ending on Common Based Common Share Ending on Share Net Net Asset Market Market Asset Value Value Value** Value** ============================================================================= VIRGINIA PREMIUM INCOME (NPV) - ----------------------------------------------------------------------------- Year Ended 5/31: 2008 $14.39 $14.04 (2.94)% 1.56% 2007 14.89 15.24 7.18 4.89 2006 14.89 14.91 (9.98) 0.71 2005 15.82 17.65 24.54 12.13 2004 14.95 14.95 (10.70) (.42) VIRGINIA DIVIDEND ADVANTAGE (NGB) - ----------------------------------------------------------------------------- Year Ended 5/31: 2008 14.21 14.81 (10.58) .23 2007 14.98 17.51 7.24 5.82 2006 14.91 17.10 5.86 1.74 2005 15.52 16.99 19.11 14.46 2004 14.42 15.07 (8.11) (.50) ============================================================================= Ratios/Supplemental Data ------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Ratios to Average Net Assets Applicable to Common Shares Applicable to Common Shares Before Credit/Reimbursement After Credit/Reimbursement** ------------------------------------------ ------------------------------------------- Ending Net Assets Applicable Expenses Expenses Net Expenses Expenses Net Portfolio to Common Including Excluding Investment Including Excluding Investment Turnover Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate ==================================================================================================================================== VIRGINIA PREMIUM INCOME (NPV) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 $128,512 1.25% 1.23% 6.02% 1.24% 1.22% 6.03% 14% 2007 132,900 1.20 1.20 5.80 1.19 1.19 5.82 16 2006 132,626 1.19 1.19 5.75 1.17 1.17 5.77 16 2005 140,340 1.20 1.20 5.98 1.19 1.19 5.99 17 2004 132,122 1.20 1.20 6.33 1.19 1.19 6.34 14 VIRGINIA DIVIDEND ADVANTAGE (NGB) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 44,512 1.30 1.28 6.28 1.00 .98 6.59 10 2007 46,908 1.27 1.27 5.99 .90 .90 6.36 23 2006 46,626 1.26 1.26 5.93 .82 .82 6.38 16 2005 48,474 1.28 1.28 6.13 .81 .81 6.59 15 2004 44,988 1.24 1.24 6.39 .77 .77 6.86 7 ==================================================================================================================================== Floating Rate Obligations Preferred Shares at End of Period at End of Period -------------------------------------- ------------------------- Aggregate Liquidation Aggregate Amount and Market Asset Amount Asset Outstanding Value Coverage Outstanding Coverage (000) Per Share Per Share (000) Per $1,000 ================================================================================ VIRGINIA PREMIUM INCOME (NPV) - -------------------------------------------------------------------------------- Year Ended 5/31: 2008 $63,800 $25,000 $75,357 $5,250 $37,631 2007 63,800 25,000 77,077 -- -- 2006 63,800 25,000 76,970 -- -- 2005 63,800 25,000 79,992 -- -- 2004 63,800 25,000 76,772 -- -- VIRGINIA DIVIDEND ADVANTAGE (NGB) - -------------------------------------------------------------------------------- Year Ended 5/31: 2008 24,000 25,000 71,367 1,865 37,736 2007 24,000 25,000 73,862 -- -- 2006 24,000 25,000 73,568 -- -- 2005 24,000 25,000 75,493 -- -- 2004 24,000 25,000 71,863 -- -- ================================================================================ * Distributions from Capital Gains to Preferred Shareholders rounds to less than $.01 per share. ** Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. 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 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 calculation. Total returns are not annualized. *** After custodian fee credit and expense reimbursement, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Preferred shareholders; income ratios reflect income earned on assets attributable to Preferred shares. (a) Interest expense arises from the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Inverse Floating Rate Securities. See accompanying notes to financial statements. 90-91 spread Financial HIGHLIGHTS (continued) Selected data for a Common share outstanding throughout each period: Investment Operations Less Distributions ------------------------------------------------------------------ --------------------------------- Distributions Distributions from Net from Net Beginning Investment Capital Investment Capital Common Net Income to Gains to Income to Gains to Share Net Realized/ Preferred Preferred Common Common Net Asset Investment Unrealized Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 $15.08 $.96 $ (.61) $(.24) $(.02) $ .09 $(.72) $(.06) $ (.78) 2007 15.02 .96 .11 (.24) -- .83 (.77) -- (.77) 2006 15.70 .95 (.52) (.18) (.01) .24 (.85) (.07) (.92) 2005 14.79 .96 1.13 (.09) (.01) 1.99 (.89) (.19) (1.08) 2004 16.02 .99 (1.22) (.06) -- (.29) (.89) (.05) (.94) ==================================================================================================================================== Total Returns ---------------------- Based Ending on Common Based Common Share Ending on Share Net Net Asset Market Market Asset Value Value Value* Value* ========================================================================== VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) - -------------------------------------------------------------------------- Year Ended 5/31: 2008 $14.39 $14.65 (7.58)% .63% 2007 15.08 16.73 6.96 5.60 2006 15.02 16.40 3.45 1.53 2005 15.70 16.74 21.96 13.75 2004 14.79 14.65 (3.81) (1.84) ========================================================================== Ratios/Supplemental Data ------------------------------------------------------------------------------------------------------------------ Ratios to Average Net Assets Ratios to Average Net Assets Applicable to Common Shares Applicable to Common Shares Before Credit/Reimbursement After Credit/Reimbursement** ------------------------------------------ ------------------------------------------- Ending Net Assets Applicable Expenses Expenses Net Expenses Expenses Net Portfolio to Common Including Excluding Investment Including Excluding Investment Turnover Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate ==================================================================================================================================== VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2008 $82,472 1.24% 1.22% 6.21% .90% .88% 6.56% 10% 2007 86,382 1.21 1.21 5.89 .78 .78 6.31 19 2006 85,887 1.19 1.19 5.75 .73 .73 6.21 10 2005 89,626 1.19 1.19 5.74 .74 .74 6.19 13 2004 84,248 1.20 1.20 5.99 .74 .74 6.44 16 ==================================================================================================================================== Floating Rate Obligations Preferred Shares at End of Period at End of Period -------------------------------------- ------------------------- Aggregate Liquidation Aggregate Amount and Market Asset Amount Asset Outstanding Value Coverage Outstanding Coverage (000) Per Share Per Share (000) Per $1,000 ================================================================================ VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) - -------------------------------------------------------------------------------- Year Ended 5/31: 2008 $42,000 $25,000 $74.090 $3,385 $37,772 2007 42,000 25,000 76,418 -- -- 2006 42,000 25,000 76,123 -- -- 2005 42,000 25,000 78,349 -- -- 2004 42,000 25,000 75,148 -- -- ================================================================================ * Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. 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 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 calculation. Total returns are not annualized. ** After custodian fee credit and expense reimbursement, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Preferred shareholders; income ratios reflect income earned on assets attributable to Preferred shares. (a) Interest expense arises from the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Inverse Floating Rate Securities. See accompanying notes to financial statements. 92-93 spread Board Members & Officers The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board Members of the Funds. The number of board members of the Fund is currently set at nine. None of the board members who are not "interested" persons of the Funds (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, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) & ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER AND TERM(1) OVERSEEN BY DIRECTORSHIPS BOARD MEMBER DURING PAST 5 YEARS INDEPENDENT BOARD MEMBERS: [] ROBERT P. BREMNER Private Investor and Management Consultant. 8/22/40 Chairman of 1997 333 W. Wacker Drive the Board CLASS III 186 Chicago, IL 60606 and Board member [] JACK B. EVANS President, The Hall-Perrine Foundation, a 10/22/48 1999 private philanthropic corporation (since 333 W. Wacker Drive Board member CLASS III 186 1996); Director and Vice Chairman, United Chicago, IL 60606 Fire Group, a publicly held company; Member of the Board of Regents for the State of Iowa University System; Director, Gazette Companies; Life Trustee of Coe College and Iowa College Foundation; Member of the Advisory Council of the Department of Finance in the Tippie College of Business, University of Iowa; formerly, Director, Alliant Energy; formerly, Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm. [] WILLIAM C. HUNTER Dean, Tippie College of Business, 3/6/48 2004 University of Iowa (since July 2006); 333 W. Wacker Drive Board member ANNUAL 186 formerly, Dean and Distinguished Chicago, IL 60606 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); Director (since 1997), Credit Research Center at Georgetown University; Director (since 2004) of Xerox Corporation; Director (since 2005), Beta Gamma Sigma International Honor Society; Director, SS&C Technologies, Inc. (May 2005-October 2005). [] DAVID J. KUNDERT Director, Northwestern Mutual Wealth 10/28/42 2005 Management Company; Retired (since 2004) 333 W. Wacker Drive Board member CLASS II 186 as Chairman, JPMorgan Fleming Asset Chicago, IL 60606 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 Investment Committee, Greater Milwaukee Foundation. [] WILLIAM J. SCHNEIDER Chairman, formerly, Senior Partner and 9/24/44 1997 Chief Operating Officer (retired, 2004) 333 W. Wacker Drive Board member ANNUAL 186 of Miller-Valentine Partners Ltd., a real Chicago, IL 60606 estate investment company; Director, Dayton Development Coalition; formerly, member, Business Advisory Council, Cleveland Federal Reserve Bank. 94 NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) & ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER AND TERM(1) OVERSEEN BY DIRECTORSHIPS BOARD MEMBER DURING PAST 5 YEARS INDEPENDENT BOARD MEMBERS: [] JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy 12/29/47 1997 Donnelley Foundation (since 1994); prior 333 W. Wacker Drive Board member CLASS I 186 thereto, Executive Director, Great Lakes Chicago, IL 60606 Protection Fund (from 1990 to 1994). [] CAROLE E. STONE Director, Chicago Board Options Exchange 6/28/47 2007 (since 2006); Chair New York Racing 333 W. Wacker Drive Board member CLASS I 186 Association Oversight Board (since 2005); Chicago, IL 60606 Commissioner, New York State Commission on Public Authority Reform (since 2005); formerly Director, New York State Division of the Budget (2000-2004), Chair, Public Authorities Control Board (2000-2004) and Director, Local Government Assistance Corporation (2000-2004). [] TERENCE J. TOTH(2) 9/29/59 2008 Private Investor (since 2007); CEO and 333 W. Wacker Drive Board Member CLASS II 174(4) President, Northern Trust Investments Chicago, IL 60606 (2004-2007); Executive Vice President, Quantitative Management & Securities Lending (2007-2004); prior thereto, various positions with Northern Trust Company (since 1994); Member: Goodman Theatre Board (Since 2004); Chicago Fellowship Boards (since 2005), University of Illinois Leadership Council Board (since 2007) and Catalyst Schools of Chicago Board (since 2008); formerly Member: Northern Trust Mutual Funds Board (2005-2007), Northern Trust Japan Board (2004-2007), Northern Trust Securities Inc. Board (2003-2007) and Northern Trust Hong Kong Board (1997-2004). INTERESTED BOARD MEMBER: [] JOHN P. AMBOIAN(2)(3) Chief Executive Officer (since July 2007) 6/14/61 2008 and Director (since 1999) of Nuveen 333 W. Wacker Drive Board Member CLASS II 174(4) Investments, Inc.; Chief Executive Chicago, IL 60606 Officer (since 2007) of Nuveen Asset Management, Rittenhouse Asset Management, Nuveen Investments Advisors, Inc. formerly, President (1999-2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. OFFICERS OF THE FUND: [] GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant 9/9/56 Chief Secretary and Associate General Counsel, 333 W. Wacker Drive Administrative 1988 186 formerly, Vice President and Assistant Chicago, IL 60606 Officer General Counsel, of Nuveen Investments, LLC; Managing Director (since 2002), Associate General Counsel and Assistant Secretary, of Nuveen Asset Management; Vice President and Assistant Secretary of NWQ Investment Management Company, LLC. (since 2002), Nuveen Investments Advisers Inc. (since 2002), Symphony Asset Management LLC, and NWQ Investment Management Company, LLC (since 2003), Tradewinds Global Investors, LLC, and Santa Barbara Asset Management, LLC (since 2006); Nuveen HydePark Group LLC and Richards & Tierney, Inc. (since 2007); Managing Director, Associate General Counsel and Assistant Secretary of Rittenhouse Asset Management, Inc. (since 2003); Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; formerly, Managing Director (2002-2004), General Counsel (1998-2004) and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(5); Chartered Financial Analyst. [] WILLIAM ADAMS IV Executive Vice President, U.S. Structured 6/9/55 Products of Nuveen Investments, LLC, 333 W. Wacker Drive Vice President 2007 120 (since 1999), prior thereto, Managing Chicago, IL 60606 Director of Structured Investments. 95 NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) AND ADDRESS APPOINTED(6) IN FUND COMPLEX DURING PAST 5 YEARS OVERSEEN BY OFFICER OFFICERS OF THE FUND: [] CEDRIC H. ANTOSIEWICZ 1/11/62 Managing Director, (since 2004) 333 W. Wacker Drive Vice President 2007 120 previously, Vice President (1993-2004) of Chicago, IL 60606 Nuveen Investments, LLC. [] MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen 2/3/66 Vice President Investments, LLC. 333 W. Wacker Drive and Assistant 2000 186 Chicago, IL 60606 Secretary [] LORNA C. FERGUSON Managing Director (since 2004), formerly, 10/24/45 Vice President of Nuveen Investments, 333 W. Wacker Drive Vice President 1998 186 LLC, Managing Director (2004) formerly, Chicago, IL 60606 Vice President (1998-2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(5); Managing Director (since 2005) of Nuveen Asset Management. [] STEPHEN D. FOY Vice President (since 1993) and Funds 5/31/54 Vice President Controller (since 1998) of Nuveen 333 W. Wacker Drive and Controller 1998 186 Investments, LLC; formerly, Vice Chicago, IL 60606 President and Funds Controller (1998-2004) of Nuveen Investments, Inc.; Certified Public Accountant. [] WALTER M. KELLY Senior Vice President (since 2008), Vice 2/24/70 Chief Compliance President (2006-2008) formerly, Assistant 333 W. Wacker Drive Officer and 2003 186 Vice President and Assistant General Chicago, IL 60606 Vice President Counsel (2003-2006) of Nuveen Investments, LLC; Vice President (since 2006) and Assistant Secretary (since 2008) of Nuveen Asset Management. [] DAVID J. LAMB Vice President (since 2000) of Nuveen 3/22/63 Investments, LLC; Certified Public 333 W. Wacker Drive Vice President 2000 186 Accountant. Chicago, IL 60606 [] TINA M. LAZAR Vice President of Nuveen Investments, LLC 8/27/61 (since 1999). 333 W. Wacker Drive Vice President 2002 186 Chicago, IL 60606 [] LARRY W. MARTIN Vice President, Assistant Secretary and 7/27/51 Vice President Assistant General Counsel of Nuveen 333 W. Wacker Drive and Assistant 1988 186 Investments, LLC; Vice President (since Chicago, IL 60606 Secretary 2005) and Assistant Secretary of Nuveen Investments, Inc.; Vice President (since 2005) and Assistant Secretary (since 1997) of Nuveen Asset Management; Vice President (since 2000), Assistant Secretary and Assistant General Counsel (since 1998) of Rittenhouse Asset Management, Inc.; Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); NWQ Investment Management Company, LLC (since 2002), Symphony Asset Management LLC (since 2003), Tradewinds Global Investors, LLC, Santa Barbara Asset Management LLC (since 2006) and of Nuveen HydePark Group, LLC and Richards & Tierney, Inc. (since 2007); formerly, Vice President and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(5) 96 NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) AND ADDRESS APPOINTED(6) IN FUND COMPLEX DURING PAST 5 YEARS OVERSEEN BY OFFICER OFFICERS OF THE FUND: [] KEVIN J. MCCARTHY Managing Director (since 2008), formerly, 3/26/66 Vice President Vice President (2007-2008), Nuveen 333 W. Wacker Drive and Secretary 2007 186 Investments, LLC; Vice President, and Chicago, IL 60606 Assistant Secretary, Nuveen Asset Management, Rittenhouse Asset Management, Inc., Nuveen Investment Advisers Inc., Nuveen Investment Institutional Services Group LLC, 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 and Richards & Tierney, Inc. (since 2007); Managing Director (since 2008), formerly, Vice President (2007-2008) and Assistant General Counsel, Nuveen Investments, Inc. prior thereto, Partner, Bell, Boyd & Lloyd LLP (1997-2007). [] JOHN V. MILLER Managing Director (since 2007), formerly, 4/10/67 Vice President Vice President (2002-2007) of Nuveen 333 W. Wacker Drive and Assistant 2007 186 Investments, LLC; Chartered Financial Chicago, IL 60606 Analyst. [] CHRISTOPHER M. ROHRBACHER Vice President, Nuveen Investments, LLC 8/1/71 Vice President (since 2008); Vice President and 333 W. Wacker Drive and Assistant 2008 186 Assistant Secretary, Nuveen Asset Chicago, IL 60606 Secretary Management (since 2008); Vice President and Assistant General Counsel, Nuveen Investment, Inc. (since 2008); prior thereto, Associate, Skadden, Arps, Slate Meagher & Flom LLP (2002-2008). [] JAMES F. RUANE Vice President, Nuveen Investments since 7/3/62 Vice President 2007; prior thereto, Partner, Deloitte & 333 W. Wacker Drive and Assistant 2007 186 Touche USA LLP (since 2005), formerly, Chicago, IL 60606 Secretary senior tax manager (since 2002); Certified Public Accountant. [] MARK L. WINGET Vice President, Nuveen Investments, LLC 12/21/68 Vice President (since 2008); Vice President and 333 W. Wacker Drive and Assistant 2008 186 Assistant Secretary, Nuveen Asset Chicago, IL 60606 Secretary Management (since 2008); Vice President and Assistant General Counsel, Nuveen Investments Inc. (since 2008); prior thereto, Counsel, Vedder Price P.C. (1997-2007). (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) Mr. Amboian and Mr. Toth were appointed to the Board of Trustees of certain Nuveen Funds, effective July 1, 2008. In connection with the appointment of Mr. Amboian as trustee, Timothy R. Schwertfeger, an interested trustee, resigned from the Board of Trustees, effective July 1, 2008. (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) Mr. Amboian and Mr. Toth are standing for election to the Boards of twelve Nuveen closed-end funds whose annual meeting on June 30, 2008 was adjourned to July 29, 2008. (5) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were reorganized into Nuveen Asset Management, effective January 1, 2005. (6) Officers serve one year terms through July of each year. The year first elected or appointed represents the year in which the Officer was first elected or appointed to any fund in the Nuveen Complex. 97 Annual Investment Management Agreement APPROVAL PROCESS The Investment Company Act of 1940, as amended (the "1940 Act"), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuance is approved at least annually by the fund's board members, including by a vote of a majority of the board members who are not parties to the advisory agreement or "interested persons" of any parties (the "Independent Board Members"), cast in person at a meeting called for the purpose of considering such approval. In connection with such approvals, the fund's board members must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the advisory agreement. Accordingly, at a meeting held on May 28-29, 2008 (the "May Meeting"), the Boards of Trustees or Directors (as the case may be)(each a "Board" and each Trustee or Director, a "Board Member") of the Funds, including a majority of the Independent Board Members, considered and approved the continuation of the advisory agreement (each, an "Advisory Agreement") between each Fund and Nuveen Asset Management ("NAM") for an additional one-year period. In preparation for their considerations at the May Meeting, the Board also held a separate meeting on April 23, 2008 (the "April Meeting"). Accordingly, the factors considered and determinations made regarding the renewals by the Independent Board Members include those made at the April Meeting. In addition, in evaluating the Advisory Agreements, as described in further detail below, the Independent Board Members reviewed a broad range of information relating to the Funds and NAM, including absolute performance, fee and expense information for the Funds as well as comparative performance, fee and expense information for a comparable peer group of funds, the performance information of recognized benchmarks (as applicable), the profitability of Nuveen for its advisory activities (which includes its wholly owned subsidiaries), and other information regarding the organization, personnel, and services provided by NAM. The Independent Board Members also met quarterly as well as at other times as the need arose during the year and took into account the information provided at such meetings and the knowledge gained therefrom. Prior to approving the renewal of the Advisory Agreements, the Independent Board Members reviewed the foregoing information with their independent legal counsel and with management, reviewed materials from independent legal counsel describing applicable law and their duties in reviewing advisory contracts, and met with independent legal counsel in private sessions without management present. The Independent Board Members considered the legal advice provided by independent legal counsel and relied upon their knowledge of NAM, its services and the Funds resulting from their meetings and other interactions throughout the year and their own business judgment in determining the factors to be considered in evaluating the Advisory Agreements. 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 Agreement. 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 NAM's services, including advisory services and administrative services. The Independent Board Members reviewed materials outlining, among other things, NAM's organization and business; the types of services that NAM or its affiliates provide and are expected to provide to the Funds; 98 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. With respect to personnel, the Independent Board Members evaluated the background, experience and track record of NAM's investment personnel. In this regard, the Independent Board Members considered the additional investment in personnel to support Nuveen fund advisory activities, including in operations, product management and marketing as well as related fund support functions, including sales, executive, finance, human resources and information technology. The Independent Board Members also reviewed information regarding portfolio manager compensation arrangements to evaluate NAM's ability to attract and retain high quality investment personnel. In evaluating the services of NAM, the Independent Board Members also considered NAM's ability to supervise the Fund's other service providers and given the importance of compliance, NAM's compliance program. Among other things, the Independent Board Members considered the report of the chief compliance officer regarding the Funds' compliance policies and procedures. In addition to advisory services, the Independent Board Members considered the quality of administrative services provided by NAM and its affiliates including product management, fund administration, oversight of service providers, shareholder services, administration of Board relations, regulatory and portfolio compliance and legal support. In addition to the foregoing services, the Independent Board Members also noted the additional services that NAM or its affiliates provide to closed-end funds, including, in particular, its secondary market support activities and the costs of such activities. The Independent Board Members recognized Nuveen's continued commitment to supporting the secondary market for the common shares of its closed-end funds through a variety of programs designed to raise investor and analyst awareness and understanding of closed-end funds. These efforts include maintaining an investor relations program to timely provide information and education to financial advisers and investors; providing advertising and marketing for the closed-end funds; maintaining its closed-end fund website; and providing educational seminars. With respect to closed-end funds that utilize leverage through the issuance of auction rate preferred securities ("ARPS"), the Board has recognized the unprecedented market conditions in the auction rate market industry with the failure of the auction process. The Independent Board Members noted Nuveen's efforts and the resources and personnel employed to analyze the situation, explore potential alternatives and develop and implement solutions that serve the interests of the respective Fund and all of its shareholders. The Independent Board Members further noted Nuveen's commitment and efforts to keep investors and financial advisers informed as to its progress in addressing the ARPS situation through, among other things, conference calls, press releases, and information posted on its website as well as its refinancing activities. The Independent Board Members also noted Nuveen's continued support for holders of preferred shares of its closed-end funds by, among other things, seeking distribution for preferred shares with new market participants, managing relations with remarketing agents and the broker community, maintaining the leverage and risk management of leverage and maintaining systems necessary to test compliance with rating agency criteria. Based on their review, the Independent Board Members found that, overall, the nature, extent and quality of services provided (and expected to be provided) to the respective Funds under the Advisory Agreements were satisfactory. B. THE INVESTMENT PERFORMANCE OF THE FUNDS AND NAM The Board considered the investment performance of each Fund, including the Fund's historic performance as well as its performance compared to funds with similar investment objectives (the "Performance Peer Group") based on data provided by an independent third party (as described below). The Independent Board Members also reviewed portfolio level performance (which does not reflect fund level fees, expenses and leverage), as described in further detail below. 99 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS (continued) In evaluating the performance information, the Board considered whether the Fund has operated within its investment objectives and parameters and the impact that the investment mandates may have had on performance. In addition, in comparing a Fund's performance with that of its Performance Peer Group, the Independent Board Members took into account that the closest Performance Peer Group in certain instances may not adequately reflect the respective Fund's investment objectives and strategies thereby hindering a meaningful comparison of the Fund's performance with that of the Performance Peer Group. With respect to state specific municipal funds, the Independent Board Members also recognized that certain funds lack comparable peers in which case their performance is measured against a more general municipal category for various states. The closed-end municipal funds that do not have corresponding state-specific Performance Peer Groups are from states other than New York, California, Florida, New Jersey, Michigan, and Pennsylvania. With respect to municipal funds, the Independent Board Members reviewed performance information including, among other things, total return information compared with the Fund's Performance Peer Group and recognized benchmarks for the one-, three- and five-year periods (as applicable) ending December 31, 2007 and with the Performance Peer Group for the quarter and same yearly periods ending March 31, 2008. The Independent Board Members also reviewed the Fund's portfolio level performance (which does not reflect fund level fees and expenses (and leverage for closed-end funds)) compared to recognized benchmarks for the one- three, and five-year periods ending December 31, 2007 (as applicable). The analysis was used to assess the efficacy of investment decisions against appropriate measures of risk and total return, within specific market segments. This information supplemented the Fund performance information provided to the Board at each of its quarterly meetings. Based on their review, the Independent Board Members determined that each Fund's investment performance over time 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 (which take into account breakpoints), net management fees (which take into account fee waivers or reimbursements) and total expense ratios (before and after expense reimbursements and/or waivers) in absolute terms as well as compared to the gross management fees, net management fees (after waivers and/or reimbursements) and total expense ratios (before and after waivers) of a comparable universe of unaffiliated funds based on data provided by an independent data provider (the "Peer Universe") and/or a more focused subset of funds therein (the "Peer Group"). The Independent Board Members further reviewed data regarding the construction of Peer Groups as well as the methods of measurement for the fee and expense analysis and the performance analysis. In reviewing the comparisons of fee and expense information, the Independent Board Members took into account that in certain instances various factors such as the size of the Fund relative to peers, the size and particular composition of the Peer Group, the investment objectives of the peers, expense anomalies, and the timing of information used may impact the comparative data, thereby limiting the ability to make a meaningful comparison. With respect to closed-end funds, the Independent Board Members also considered, among other things, the differences in the use of leverage and with respect to municipal funds, the Independent Board Members considered the differences in the use of insurance as well as the states reflected in a respective Peer Group for the state municipal funds (such as the use of a general "other states" category for closed-end state funds (other than New York and California)). 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 100 since 1999). Based on their review of the fee and expense information provided, the Independent Board Members determined that each Fund's management fees and net total expense ratio 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 NAM to other clients. With respect to municipal funds, such other clients include NAM's municipal separately managed accounts. 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. 3. PROFITABILITY OF NUVEEN 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 and the allocation methodology used in preparing the profitability data. 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 had also appointed an Independent Board Member 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 considered Nuveen's profitability compared with other fund sponsors prepared by two independent third party service providers as well as comparisons of the revenues, expenses and profit margins of various unaffiliated management firms with similar amounts of assets under management prepared by Nuveen. 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 Nuveeninvestment in its fund business. Based on its review, the Independent Board Members concluded that Nuveen'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 NAM by the Funds as well as any indirect benefits (such as soft dollar arrangements, if any) NAM and its affiliates receive, or are expected to receive, that are directly attributable to the 101 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS (continued) management of the Funds, if any. See Section E below for additional information on indirect benefits NAM 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 recognized the potential benefits resulting from the costs of a Fund being spread over a larger asset base. The Independent Board Members therefore considered whether the Funds have appropriately benefited from any economies of scale and whether there is potential realization of any further economies of scale. In considering economies of scale, the Independent Board Members have recognized that economies of scale are difficult to measure and predict with precision, particularly on a fund-by-fund basis. Notwithstanding the foregoing, one method to help ensure the shareholders share in these benefits is to include breakpoints in the advisory fee schedule. Accordingly, the Independent Board Members reviewed and considered the fund-level breakpoints in the advisory fee schedules that reduce advisory fees. In this regard, given that the Funds are closed-end funds, the Independent Board Members recognized that although the Funds may from time to time make additional share offerings, the growth in their assets will occur primarily through appreciation of such Fund's 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, including the Funds, are reduced as the assets in the fund complex reach certain levels. In evaluating the complex-wide fee arrangement, the Independent Board Members recognized that the complex-wide fee schedule was recently revised in 2007 to provide for additional fee savings to shareholders and considered the amended schedule. The Independent Board Members further considered that 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 schedule and complex-wide fee arrangement were acceptable and desirable in providing benefits from economies of scale to shareholders. E. INDIRECT BENEFITS In evaluating fees, the Independent Board Members received and considered information regarding potential "fall out" or ancillary benefits NAM or its affiliates may receive as a result of its relationship with each Fund. In this regard, the Independent Board Members considered revenues received by affiliates of NAM for serving as agent at Nuveen's preferred trading desk and for serving as a co-manager in the initial public offering of new closed-end exchange traded funds. In addition to the above, the Independent Board Members considered whether NAM 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 NAM in managing the assets of the Funds and other clients. The Independent Board Members noted that NAM does not currently have any soft dollar arrangements; however, to the extent certain bona fide agency transactions that occur on markets that traditionally trade on a principal basis and riskless principal transactions are considered as generating "commissions," NAM intends to comply with the applicable safe harbor provisions. 102 Based on their review, the Independent Board Members concluded that any indirect benefits received by NAM 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 the Advisory Agreements are fair and reasonable, that NAM's fees are reasonable in light of the services provided to each Fund and that the Advisory Agreements be renewed. 103 Reinvest Automatically EASILY and CONVENIENTLY NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR REINVESTMENT ACCOUNT. NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN Your Nuveen Closed-End Fund allows you to conveniently reinvest dividends and/or capital gains distributions in additional Fund shares. By choosing to reinvest, you'll be able to invest money regularly and automatically, and watch your investment grow through the power of tax-free compounding. Just like dividends or distributions in cash, there may be times when income or capital gains taxes may be payable on dividends or distributions that are reinvested. It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market. EASY AND CONVENIENT To make recordkeeping easy and convenient, each month you'll receive a statement showing your total dividends and distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own. HOW SHARES ARE PURCHASED The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the greater of the net asset value or 95% of the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. If the Plan Agent begins purchasing Fund shares on the open market while shares are trading below net asset value, but the Fund's shares subsequently trade at or above their net asset value before the Plan Agent is able to complete its purchases, the Plan Agent may cease open-market purchases and may invest the uninvested portion of the distribution in newly-issued Fund shares at a price equal to the greater of the shares' net asset value or 95% of the shares' market value on the last business day immediately prior to the purchase date. Dividends and distributions received to purchase shares in the open market will normally be invested shortly after the dividend payment date. No interest will be paid on dividends and distributions awaiting reinvestment. Because the market price of the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions. 104 FLEXIBLE You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change. Should you withdraw, you can receive a certificate for all whole shares credited to your reinvestment account and cash payment for fractional shares, or cash payment for all reinvestment account shares, less brokerage commissions and a $2.50 service fee. You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your investment advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan. The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time. CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787. 105 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 average of the number of years to maturity of the bonds in a Fund's portfolio, computed by weighting each bond's time to maturity (the date the security comes due) by the market value of the security. This figure does not account for the likelihood of prepayments or the exercise of call provisions unless an escrow account has been established to redeem the bond before maturity. The market value weighting for an investment in an inverse floating rate security is the value of the portfolio's residual interest in the inverse floating rate trust, and does not include the value of the floating rate securities issued by the trust. [] INVERSE FLOATERS: Inverse floating rate securities are created by depositing a municipal bond, typically with a fixed interest rate, into a special purpose trust created by a broker-dealer. This trust, in turn, (a) issues floating rate certificates typically paying short-term tax-exempt interest rates to third parties in amounts equal to some fraction of the deposited bond's par amount or market value, and (b) issues an inverse floating rate certificate (sometimes referred to as an "inverse floater") to an investor (such as a Fund) interested in gaining investment exposure to a long-term municipal bond. The income received by the holder of the inverse floater varies inversely with the short-term rate paid to the floating rate certificates' holders, and in most circumstances the holder of the inverse floater bears substantially all of the underlying bond's downside investment risk. The holder of the inverse floater typically also benefits disproportionately from any potential appreciation of the underlying bond's value. Hence, an inverse floater essentially represents an investment in the underlying bond on a leveraged basis. [] LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period over which a bond's principal and interest will be paid, and consequently is a measure of the sensitivity of a bond's or bond Fund's value to changes when market interest rates change. Generally, the longer a bond's or Fund's duration, the more the price of the bond or Fund will change as interest rates change. Leverage-adjusted duration takes into account the leveraging process for a Fund and therefore is longer than the duration of the Fund's portfolio of bonds. [] MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's current annualized dividend divided by its current market price. [] NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by subtracting the liabilities of the Fund (including any Preferred shares issued in order to leverage the Fund) from its total assets and then dividing the remainder by the number of shares outstanding. Fund NAVs are calculated at the end of each business day. [] TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to equal, on an after-tax basis, the yield of a municipal bond investment. [] 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. 106 Other Useful INFORMATION QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION You may obtain (i) each Fund's quarterly portfolio of investments, (ii) information regarding how the Funds voted proxies relating to portfolio securities held during the twelve-month period ended June 30, 2007, and (iii) a description of the policies and procedures that the Funds used to determine how to vote proxies relating to portfolio securities without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at www.nuveen.com. You may also obtain this and other Fund information directly from the Securities and Exchange Commission ("SEC"). The SEC may charge a copying fee for this information. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington, D.C. Call the SEC at (202) 942-8090 for room hours and operation. You may also request Fund information by sending an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public References Section at 100 F Street NE, Washington, D.C. 20549. CEO CERTIFICATION DISCLOSURE Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange (NYSE) the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the Securities and Exchange Commission the certification of its Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act. BOARD OF TRUSTEES John P. Amboian Robert P. Bremner Jack B. Evans William C. Hunter David J. Kundert William J. Schneider Judith M. Stockdale Carole E. Stone Terence J. Toth FUND MANAGER Nuveen Asset Management 333 West Wacker Drive Chicago, IL 60606 CUSTODIAN State Street Bank & Trust Company Boston, MA TRANSFER AGENT AND SHAREHOLDER SERVICES State Street Bank & Trust Company Nuveen Funds P.O. Box 43071 Providence, RI 02940-3071 (800) 257-8787 LEGAL COUNSEL Chapman and Cutler LLP Chicago, IL INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Chicago, IL Each Fund intends to repurchase shares of its own common or preferred stock in the future at such times and in such amounts as is deemed advisable. No common or preferred shares were repurchased during the period covered by this report. Any future repurchases will be reported to shareholders in the next annual or semi-annual report. 107 Nuveen Investments: - ------------------- SERVING INVESTORS FOR GENERATIONS Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions. For the past century, Nuveen Investments has adhered to the belief that the best approach to investing is to apply conservative risk-management principles to help minimize volatility. Building on this tradition, we today offer a range of high quality equity and fixed-income solutions that are integral to a well-diversified core portfolio. Our clients have come to appreciate this diversity, as well as our continued adherence to proven, long-term investing principles. We offer many different investing solutions for our clients' different needs. Managing $153 billion in assets, as of March 31, 2008, Nuveen Investments offers access to a number of different asset classes and investing solutions through a variety of products. Nuveen Investments markets its capabilities under six distinct brands: Nuveen, a leader in fixed-income investments; NWQ, a leader in value-style equities; Rittenhouse, a leader in growth-style equities; Symphony, a leading institutional manager of market-neutral alternative investment portfolios; Santa Barbara, a leader in growth equities; and Tradewinds, a leader in global equities. Find out how we can help you reach your financial goals. To learn more about the products and services Nuveen Investments offers, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Be sure to obtain a prospectus, where applicable. Investors should consider the investment objective and policies, risk considerations, charges and expenses of the Fund carefully before investing. The prospectus contains this and other information relevant to an investment in the Fund. For a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money. Learn more about Nuveen Funds at: www.nuveen.com/etf Share prices Fund details Daily financial news Investor education Interactive planning tools EAN-A-0508D ITEM 2. CODE OF ETHICS. As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no amendments to or waivers from the Code during the period covered by this report. The registrant has posted the code of ethics on its website at www.nuveen.com/etf. (To view the code, click on the Shareholder Resources drop down menu box, click on Fund Governance and then click on Code of Conduct.) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors or Trustees determined that the registrant has at least one "audit committee financial expert" (as defined in Item 3 of Form N-CSR) serving on its Audit Committee. The registrant's audit committee financial expert is Jack B. Evans, who is "independent" for purposes of Item 3 of Form N-CSR. Mr. Evans was formerly President and Chief Operating Officer of SCI Financial Group, Inc., a full service registered broker-dealer and registered investment adviser ("SCI"). As part of his role as President and Chief Operating Officer, Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and actively supervised the CFO's preparation of financial statements and other filings with various regulatory authorities. In such capacity, Mr. Evans was actively involved in the preparation of SCI's financial statements and the resolution of issues raised in connection therewith. Mr. Evans has also served on the audit committee of various reporting companies. At such companies, Mr. Evans was involved in the oversight of audits, audit plans, and the preparation of financial statements. Mr. Evans also formerly chaired the audit committee of the Federal Reserve Bank of Chicago. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Nuveen Virginia Dividend Advantage Municipal Fund 2 The following tables show the amount of fees that Ernst & Young LLP, the Fund's auditor, billed to the Fund during the Fund's last two full fiscal years. For engagements with Ernst & Young LLP the Audit Committee approved in advance all audit services and non-audit services that Ernst & Young LLP provided to the Fund, except for those non-audit services that were subject to the pre-approval exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The pre-approval exception for services provided directly to the Fund waives the pre-approval requirement for services other than audit, review or attest services if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid by the Fund to its accountant during the fiscal year in which the services are provided; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the audit is completed. The Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in his absence, any other member of the Audit Committee). SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4) - -------------------------------------------------------------------------------------------------------------------------------- May 30, 2008 $ 11,022 $ 0 $ 500 $ 800 - -------------------------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception - -------------------------------------------------------------------------------------------------------------------------------- May 31, 2007 $ 9,757 $ 0 $ 0 $ 2,250 - -------------------------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception - -------------------------------------------------------------------------------------------------------------------------------- (1) "Audit Fees" are the aggregate fees billed for professional services for the audit of the Fund's annual financial statements and services provided in connection with statutory and regulatory filings or engagements. (2) "Audit Related Fees" are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements and are not reported under "Audit Fees". (3) "Tax Fees" are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. (4) "All Other Fees" are the aggregate fees billed for products and services for agreed upon procedures engagements performed for leveraged funds. SERVICES THAT THE FUND'S AUDITOR BILLED TO THE ADVISER AND AFFILIATED FUND SERVICE PROVIDERS The following tables show the amount of fees billed by Ernst & Young LLP to Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling, controlled by or under common control with NAM ("Control Affiliate") that provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for engagements directly related to the Fund's operations and financial reporting, during the Fund's last two full fiscal years. The tables also show the percentage of fees subject to the pre-approval exception. The pre-approval exception for services provided to the Adviser and any Affiliated Fund Service Provider (other than audit, review or attest services) waives the pre-approval requirement if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund Service Providers during the fiscal year in which the services are provided that would have to be pre-approved by the Audit Committee; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the Fund's audit is completed. FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND SERVICE PROVIDERS SERVICE PROVIDERS SERVICE PROVIDERS - -------------------------------------------------------------------------------------------------------------- May 30, 2008 $ 0 $ 0 $ 0 - -------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception - -------------------------------------------------------------------------------------------------------------- May 31, 2007 $ 0 $ 0 $ 0 - -------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception - -------------------------------------------------------------------------------------------------------------- NON-AUDIT SERVICES The following table shows the amount of fees that Ernst & Young LLP billed during the Fund's last two full fiscal years for non-audit services. The Audit Committee is required to pre-approve non-audit services that Ernst & Young LLP provides to the Adviser and any Affiliated Fund Services Provider, if the engagement related directly to the Fund's operations and financial reporting (except for those subject to the de minimis exception described above). The Audit Committee requested and received information from Ernst & Young LLP about any non-audit services that Ernst & Young LLP rendered during the Fund's last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating Ernst & Young LLP's independence. FISCAL YEAR ENDED TOTAL NON-AUDIT FEES BILLED TO ADVISER AND AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL - ----------------------------------------------------------------------------------------------------------------------------- May 30, 2008 $ 1,300 $ 0 $ 0 $ 1,300 May 31, 2007 $ 2,250 $ 0 $ 0 $ 2,250 "Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax Fees" billed to Adviser in their respective amounts from the previous table. Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit Committee must approve (i) all non-audit services to be performed for the Fund by the Fund's independent accountants and (ii) all audit and non-audit services to be performed by the Fund's independent accountants for the Affiliated Fund Service Providers with respect to operations and financial reporting of the Fund. Regarding tax and research projects conducted by the independent accountants for the Fund and Affiliated Fund Service Providers (with respect to operations and financial reports of the Fund) such engagements will be (i) pre-approved by the Audit Committee if they are expected to be for amounts greater than $10,000; (ii) reported to the Audit Committee chairman for his verbal approval prior to engagement if they are expected to be for amounts under $10,000 but greater than $5,000; and (iii) reported to the Audit Committee at the next Audit Committee meeting if they are expected to be for an amount under $5,000. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. The registrant's Board of Directors or Trustees has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). As of May 31, 2008, the members of the audit committee are Robert P. Bremner, Jack B. Evans, William J. Schneider and David J. Kundert. ITEM 6. SCHEDULE OF INVESTMENTS. See Portfolio of Investments in Item 1. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The registrant invests its assets primarily in municipal bonds and cash management securities. On rare occasions the registrant may acquire, directly or through a special purpose vehicle, equity securities of a municipal bond issuer whose bonds the registrant already owns when such bonds have deteriorated or are expected shortly to deteriorate significantly in credit quality. The purpose of acquiring equity securities generally will be to acquire control of the municipal bond issuer and to seek to prevent the credit deterioration or facilitate the liquidation or other workout of the distressed issuer's credit problem. In the course of exercising control of a distressed municipal issuer, NAM may pursue the registrant's interests in a variety of ways, which may entail negotiating and executing consents, agreements and other arrangements, and otherwise influencing the management of the issuer. NAM does not consider such activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but nevertheless provides reports to the registrant's Board of Trustees on its control activities on a quarterly basis. In the rare event that a municipal issuer were to issue a proxy or that the registrant were to receive a proxy issued by a cash management security, NAM would either engage an independent third party to determine how the proxy should be voted or vote the proxy with the consent, or based on the instructions, of the registrant's Board of Trustees or its representative. A member of NAM's legal department would oversee the administration of the voting, and ensure that records were maintained in accordance with Rule 206(4)-6, reports were filed with the SEC on Form N-PX, and the results provided to the registrant's Board of Trustees and made available to shareholders as required by applicable rules. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. THE PORTFOLIO MANAGER The following individual has primary responsibility for the day-to-day implementation of the registrant's investment strategies: NAME FUND Cathryn P. Steeves Nuveen Virginia Dividend Advantage Municipal Fund 2 Other Accounts Managed. In addition to managing the registrant, the portfolio manager is also primarily responsible for the day-to-day portfolio management of the following accounts: TYPE OF ACCOUNT NUMBER OF PORTFOLIO MANAGER MANAGED ACCOUNTS ASSETS - -------------------------------------------------------------------------------- Cathryn P. Steeves Registered Investment Company 41 $8.235 billion Other Pooled Investment Vehicles 0 $0 Other Accounts 0 $0 * Assets are as of May 31, 2008. None of the assets in these accounts are subject to an advisory fee based on performance. Compensation. Each portfolio manager's compensation consists of three basic elements--base salary, cash bonus and long-term incentive compensation. The compensation strategy is to annually compare overall compensation to the market in order to create a compensation structure that is competitive and consistent with similar financial services companies. As discussed below, several factors are considered in determining each portfolio manager's total compensation. In any year these factors may include, among others, the effectiveness of the investment strategies recommended by the portfolio manager's investment team, the investment performance of the accounts managed by the portfolio manager, and the overall performance of Nuveen Investments, Inc. (the parent company of NAM). Although investment performance is a factor in determining the portfolio manager's compensation, it is not necessarily a decisive factor. The portfolio manager's performance is evaluated in part by comparing manager's performance against a specified investment benchmark. This fund-specific benchmark is a customized subset (limited to bonds in each Fund's specific state and with certain maturity parameters) of the S&P/Investortools Municipal Bond index, an index comprised of bonds held by managed municipal bond fund customers of Standard & Poor's Securities Pricing, Inc. that are priced daily and whose fund holdings aggregate at least $2 million. As of June 30, 2008, the S&P/Investortools Municipal Bond index was comprised of 52,385 securities with an aggregate current market value of $1,052 billion. Base salary. Each portfolio manager is paid a base salary that is set at a level determined by NAM in accordance with its overall compensation strategy discussed above. NAM is not under any current contractual obligation to increase a portfolio manager's base salary. Cash bonus. Each portfolio manager is also eligible to receive an annual cash bonus. The level of this bonus is based upon evaluations and determinations made by each portfolio manager's supervisors, along with reviews submitted by his peers. These reviews and evaluations often take into account a number of factors, including the effectiveness of the investment strategies recommended to the NAM's investment team, the performance of the accounts for which he serves as portfolio manager relative to any benchmarks established for those accounts, his effectiveness in communicating investment performance to stockholders and their representatives, and his contribution to the NAM's investment process and to the execution of investment strategies. The cash bonus component is also impacted by the overall performance of Nuveen Investments, Inc. in achieving its business objectives. Long-term incentive compensation. In connection with the acquisition of Nuveen Investments, Inc., by a group of investors lead by Madison Dearborn Partners in November 2007, certain employees, including portfolio managers, received profit interests in Nuveen's parent. These profit interests entitle the holders to participate in the appreciation in the value of Nuveen beyond the issue date and vest over five to seven years, or earlier in the case of a liquidity event. Material Conflicts of Interest. Each portfolio manager's simultaneous management of the registrant and the other accounts noted above may present actual or apparent conflicts of interest with respect to the allocation and aggregation of securities orders placed on behalf of the Registrant and the other account. NAM, however, believes that such potential conflicts are mitigated by the fact that the NAM has adopted several policies that address potential conflicts of interest, including best execution and trade allocation policies that are designed to ensure (1) that portfolio management is seeking the best price for portfolio securities under the circumstances, (2) fair and equitable allocation of investment opportunities among accounts over time and (3) compliance with applicable regulatory requirements. All accounts are to be treated in a non-preferential manner, such that allocations are not based upon account performance, fee structure or preference of the portfolio manager, although the allocation procedures may provide allocation preferences to funds with special characteristics (such as favoring state funds versus national funds for allocations of in-state bonds). In addition, NAM has adopted a Code of Conduct that sets forth policies regarding conflicts of interest. Beneficial Ownership of Securities. As of May 31, 2008, the portfolio manager beneficially owned the following dollar range of equity securities issued by the Registrant and other Nuveen Funds managed by NAM's municipal investment team. DOLLAR RANGE OF EQUITY SECURITIES DOLLAR RANGE OF BENEFICIALLY OWNED EQUITY IN THE REMAINDER OF SECURITIES NUVEEN FUNDS MANAGED BENEFICIALLY BY NAM'S MUNICIPAL NAME OF PORTFOLIO MANAGER FUND OWNED IN FUND INVESTMENT TEAM - ------------------------------------------------------------------------------------------------------------------ Cathryn P. Steeves Nuveen Virginia Dividend Advantage Municipal $0 $10,001-$50,000 Fund 2 PORTFOLIO MANAGER BIO: Cathryn P. Steeves, PhD is currently a portfolio manager for 42 state-specific municipal bond funds. She joined Nuveen in 1996 and worked as a senior analyst in the healthcare sector. Ms. Steeves has an undergraduate degree from Wake Forest University as well as an MA, an MPhil and a PhD from Columbia University. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the registrants Board implemented after the registrant last provided disclosure in response to this item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable because the code is posted on registrant's website at www.nuveen.com/etf and there were no amendments during the period covered by this report. (To view the code, click on the Investor Resources drop down menu box, click on Fund Governance and then Code of Conduct.) (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT Attached hereto. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Ex-99.906 CERT attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Nuveen Virginia Dividend Advantage Municipal Fund 2 ----------------------------------------------------------- By (Signature and Title) /s/ Kevin J. McCarthy ---------------------------------------------- Kevin J. McCarthy Vice President and Secretary Date: August 7, 2008 ------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /s/ Gifford R. Zimmerman ---------------------------------------------- Gifford R. Zimmerman Chief Administrative Officer (principal executive officer) Date: August 7, 2008 ------------------------------------------------------------------- By (Signature and Title) /s/ Stephen D. Foy ---------------------------------------------- Stephen D. Foy Vice President and Controller (principal financial officer) Date: August 7, 2008 -------------------------------------------------------------------